n the www.halfpasthuman.com predictive linguistic work, we're in what's labeled an 'emotional release' period. Generally, the whole world when you step back far enough most times is either 'building tension' or 'releasing tension'. The 'building' periods are when you suck in your breath, watch with building expectation, knowing that something's going to come of whatever it is that holds attention, but not sure when it will begin. "Release' on the other hand, runs from the moment of state-change to whenever 'release' has run its course.
A somewhat practical application on the concept comes from watching the activities of Somali pirates of late. Today, they have released the Greek motor vessel (MV) Centauri after holding it more than two months. She carries 17,000 tons of salt.
During their 'building period' the pirates have amassed about a dozen ships. Since we're in a 'release period', among the news items I would not be surprised to read about would be more releases, especially since countries like Germany are going, in effect "WTF?" and are offering to send military forces to the region.
George Bush is about to be 'released' from office, and on the way out, seems he wants to be seen by the writers of history as the 'liberator of millions.' You know what they say about history, right? It's written by the winners.
Release figured into the events of Black Friday, too. Shoppers, anxious for 'release' into a New York area Wal-Mart broke down doors and killed a Wal-Mart worker in the stampede to spend.
At some level, I find myself asking "What's wrong with the world?" In a sense, we have militant Islamic groups and Al Qaida's #2 threatening, to kill those who don't convert to their way of thinking, yet on the other The West doesn't seem to mind invading resource-critical areas and forcing whole populations to convert to Western consumerism (with a guestimated 90,000 deaths along the way) - and guarantee us oil (even if it is at $80-bucks a barrel) in the process.
Meantime, the 'rage' being released in the Mumbai siege has about come to an end, but with India looking at Pakistan as the source, I figure violence along that socioeconomic front is just starting to ramp up.
The key thing from a tactic standpoint is the reference in one report that "...the terrorists arrived with only basic communications but had then seized mobile phones and Blackberries from their hostages and used them to contact each other and monitor world reaction."
The reason you'll want to pay close attention to the communications aspect of this is that 'terrorist' activity is continuing to increase global government's interest in more or less complete electronic surveillance. I was talking to a reader in New Zealand this week who is in a position to know such things, and he tells me that the Kiwi government plans to have its 'total surveillance' plans operational by mid-summer of 2009. It will be such that anything on a cell phone or email can be readily tracked.
The reason you'll want to pay close attention to the communications aspect of this is that 'terrorist' activity is continuing to increase global government's interest in more or less complete electronic surveillance. I was talking to a reader in New Zealand this week who is in a position to know such things, and he tells me that the Kiwi government plans to have its 'total surveillance' plans operational by mid-summer of 2009. It will be such that anything on a cell phone or email can be readily tracked.
Not that it comes as any surprise, especially if you read the Electronic Frontier Foundation's briefing on NSA spying done on American citizens. Warrants? Constitution? Good police work? Hello?
The recent - and widely publicized, death on the internet while being cheered on remotely, is just one example of headlines that might be trotted out to justify licensure of 'net use. Terrorists using Blackberries, web-assisted suicide, and now a "Microsoft study finds the internet can make you sicker: 'Cyberchondria' identified as cause of false illness..." And did I mention the headlines out of China that "Report: U.S. military networks under cyber attacks"?
And a couple of other data points to watch - since I'm not doing this Saturday update: "The Fed released a report that says emergency loan activity has increased." mercy for folks facing foreclosures? LOL - What planet are you from? Nope - this is bankster money activity.
About us hapless bags of skin who own homes? The Mortgage Bankers Association reported this week that:
"The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 21, 2008. The Market Composite Index, a measure of mortgage loan application volume, was 404.4, an increase of 1.5 percent on a seasonally adjusted basis from 398.6 one week earlier. On an unadjusted basis, the Index decreased 1.0 percent compared with the previous week and was down 21.9 percent compared with the same week one year earlier. "Down 21.9%? WTF? Mortgages collapsing while bailouts increase? Gee, wonder what the outcome of that might be?
Back to current events: The imagery coming out of India is predominately 'military' in the wake of 119 people being killed by gunmen who Indian authorities link to Pakistani elements. This morning the running battles between gunmen and Indian commandos continue.
I don't think that Cliff and Igor of www.halfpasthuman.com would mind my sharing a bit of the predictive linguistics from last week because this gunfire in the streets of India seems to be just a warm-up act.
The reader also said "you guys worry me..." - (as they do me more or less constantly) but they took time off from holiday pie making to clarify:
More linguistic 'hits' seem directly ahead, so plan accordingly. Shopping is only a short-term therapy.
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Returning to this morning's cup-o-mud, not much doubt that this is another linguistic 'hit' but seems like every time I post one, I get flooded by emails from people who don't want to believe that the future leaks into the present via subtle changes in language. I've posted plenty of those over the 7+ years we've had this project going. While we can't get down to who's going to win the next Power Ball lotto (or what the numbers will be, not that it matters) that's not the focus. Clarity of thought in fuzzy-think times is.
If you knew, or had even the sketchy preview of what was coming over the balance of 2009, you'd be out getting in shape, and even working on gardening and food preservation every waking moment.
Alarmist? Apocalyptic? No, not really. Just looking at a long series of 'hits' and trying to keep my personal activities aligned with the most peeks into the future. The longer term linguistics highlight 'summer of/from hell' and lots of other reasons to be acting now, so if you are not a subscriber to Cliff's work, or Peoplenomics which I write, pardon the deaf ear to chatty emails. I read 'most everything, but can't answer most; especially argumentative notes from folks who 'ain't gettin' it'.
No time for idle chatter. Not being rude, just looking at clocks, calendars, and ALTA reports. Not to be preachy - just worried.
"As if the current rate of emotional tension release is not enough, there are indications from the movement of Populace/USofA entity through modelspace that [anger] and [rage], and [revenge] will be rising [visibility] within the [populace/usofa] from late in the day on December 1, and continuing to rise through to December 15th where it reaches a plateau that extends at the same level until late in January. The precipitating 'events' that will trigger the [onset of visible rage/anger] will themselves start to become [visible] just after midnight on the 26th of November. These events will continue at a low(ish) level through the last few days of November and then become much more dramatic in both [scope] and [presence] as we turn the calendar into December. The data sets indicate that the [financial calamity] of late September and early October *will* be revisited on a [scale/extent] that is both [broad] and [deep] within the USofA [financial structure(s)] over these 17/seventeen days (or thereabouts). The longer term data sets are indicating that the [manifesting circumstances] of this November 27th through to December 14th (more or less) will also be [echoed] again, only with more intensity, and at deeper levels of the [social economic order] from January 25th through February 14th."Cliff was kind enough to cc me on a clarification requested by one of his subscribers who wanted to know in part: "Are there specific linguistics around the [midnight] referred to here, i.e. > are there explicit references to the midnight of local time, or is the > beginning of this 17-day period marked more by a general (i.e. > cumulative) change in the state of modelspace at that time point?"
The reader also said "you guys worry me..." - (as they do me more or less constantly) but they took time off from holiday pie making to clarify:
"just checked, and the midnight was 'local to the event time'. Sorry about that one should have put that in. The rage and anger will be both military and economic based. Hard to separate out at this coming point in time as some will be pissed about 1/one and others, t'other....make sense. So again. Sorry about that. Will attempt to be clearer in future.Although I've been more the Rolaids kind of fellow, I've grown my moustache and beard back for the winter, hoping Igor's onto something by gnawing on mustache. Maybe something miraculous/medicinal about it - we shall see.
Apple sounds good. I almost die each time I eat pecan pies, so I have sworn off them (for a while at least).
we worry ourselves all the time, and poor igor barely has any mustache left (he chews it when anxious)."
More linguistic 'hits' seem directly ahead, so plan accordingly. Shopping is only a short-term therapy.
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Returning to this morning's cup-o-mud, not much doubt that this is another linguistic 'hit' but seems like every time I post one, I get flooded by emails from people who don't want to believe that the future leaks into the present via subtle changes in language. I've posted plenty of those over the 7+ years we've had this project going. While we can't get down to who's going to win the next Power Ball lotto (or what the numbers will be, not that it matters) that's not the focus. Clarity of thought in fuzzy-think times is.
If you knew, or had even the sketchy preview of what was coming over the balance of 2009, you'd be out getting in shape, and even working on gardening and food preservation every waking moment.
Alarmist? Apocalyptic? No, not really. Just looking at a long series of 'hits' and trying to keep my personal activities aligned with the most peeks into the future. The longer term linguistics highlight 'summer of/from hell' and lots of other reasons to be acting now, so if you are not a subscriber to Cliff's work, or Peoplenomics which I write, pardon the deaf ear to chatty emails. I read 'most everything, but can't answer most; especially argumentative notes from folks who 'ain't gettin' it'.
No time for idle chatter. Not being rude, just looking at clocks, calendars, and ALTA reports. Not to be preachy - just worried.
Not everyone is as fixed on increasing self-sufficiency and sustainability, however. While Cliff's back into martial arts training, and I'm getting in shape by wrestling with building materials at the ranch, the balance of the country seems quite happy pursuing/continuing the sedentary - spendiary - lifestyle. "Holiday sales begin before turkey grows cold" announced one headline, while on one of the money-honey channels, the fact that "Wal-Mart's website back up" was important enough to warrant the "Breaking News" banner.
Ain't defending paradigms fun?
The San Francisco Chronicle's site has a handy-dandy chart so you can see how the government and non-governmental Fed have burned through $8.5-trillion dollars - so far.
When I read reports like how Citigroup forecasts gold hitting $2000 in 2009, that was before the refocus on the global revolution got kicked up another notch with events in India. I figure global revolution may tack $500 to $1500 on top of the $2000 forecast - but depends on how fast the dollar repudiation takes place.
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You're welcome to spend your money any way you want, but just for the heck of it, consider that if you give folks things that will be dual-use, it might be a wiser way to spend money than single paradigm gifts.
An example of an 'single paradigm gift' might be something like the latest video game. No, I don't mean the latest copy of TurboTax (got mine already so we can model end-of-year spending). Nope, I mean the kind where you pay for a computer, get more graphics and less utility, and have a 'dead box' once the power goes off because of the falling dollar and soaring energy prices at some point.
A selection of garden tools of decent quality, a can (or assortment) of heritage seeds, hiking boots, actual physical books on practical matters like carpentry, machining, first aid - those would be dual use. In other words, useful now and also useful after the turn into whatever shows up in late 2009 as we careen through 'transformation' on many levels. Ham radio? Solar Panels? Greenhouse? Now you're talking...
It's your money though, so you can spend for today and yesterday if you want. It's just not our cup of tea around here.
Speaking of which, I have to get my tea bush seedlings going. Transformation or not in 2009, I don't plan to miss caffeine, one way or the other.
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It'll be especially necessary as the world spins on toward a showdown over the forces of excess production/unsustainable economics on the one hand and too many people who collective 'aren't going to put up with it' on the other. I have to wonder how many times the world would have blown itself up already if the US and former Soviet Union (FSU) we
are as close as India and Pakistan? Those 20-minutes of flight time allow more reasoned responses than 5-minutes, or less.
http://www.urbansurvival.com/week.htm
Ain't defending paradigms fun?
The San Francisco Chronicle's site has a handy-dandy chart so you can see how the government and non-governmental Fed have burned through $8.5-trillion dollars - so far.
When I read reports like how Citigroup forecasts gold hitting $2000 in 2009, that was before the refocus on the global revolution got kicked up another notch with events in India. I figure global revolution may tack $500 to $1500 on top of the $2000 forecast - but depends on how fast the dollar repudiation takes place.
---
You're welcome to spend your money any way you want, but just for the heck of it, consider that if you give folks things that will be dual-use, it might be a wiser way to spend money than single paradigm gifts.
An example of an 'single paradigm gift' might be something like the latest video game. No, I don't mean the latest copy of TurboTax (got mine already so we can model end-of-year spending). Nope, I mean the kind where you pay for a computer, get more graphics and less utility, and have a 'dead box' once the power goes off because of the falling dollar and soaring energy prices at some point.
A selection of garden tools of decent quality, a can (or assortment) of heritage seeds, hiking boots, actual physical books on practical matters like carpentry, machining, first aid - those would be dual use. In other words, useful now and also useful after the turn into whatever shows up in late 2009 as we careen through 'transformation' on many levels. Ham radio? Solar Panels? Greenhouse? Now you're talking...
It's your money though, so you can spend for today and yesterday if you want. It's just not our cup of tea around here.
Speaking of which, I have to get my tea bush seedlings going. Transformation or not in 2009, I don't plan to miss caffeine, one way or the other.
---
It'll be especially necessary as the world spins on toward a showdown over the forces of excess production/unsustainable economics on the one hand and too many people who collective 'aren't going to put up with it' on the other. I have to wonder how many times the world would have blown itself up already if the US and former Soviet Union (FSU) we
are as close as India and Pakistan? Those 20-minutes of flight time allow more reasoned responses than 5-minutes, or less.
http://www.urbansurvival.com/week.htm
Here's one to read - if you have time today - I mean busy shopping day and all:
George, I don't know if you've heard about this guy but he wrote a program which uses game theory to predict the future. He is used by corporations and governmental agencies. Our intelligence agencies use him and say he is spot on most the time, 97% correct. I'm just wondering, so why didn't they listen to him about 9/11 or did that just happen to be one of his misses, and why did we go into Iraq based on flawed intelligence. He also co-wrote a book with Condi Rice.Good read...fer sure...
Linguistic Inputs: First in Cliff's linguistic modelspace, there is always a 'window' for events, not a specific day or hour. The nature of predictive linguistics is such that sometimes it's spot on (October 7th was a damn fine call, in case you missed it), but on other occasions, things 'drift around' a bit. So while his work expects the markets to decline, there are a million and one reasons why the linguistics can be 'off' from precisely what happens in the market. The ALTA reports are not specific timing tools! On the other hand are they great 'big picture, what's happening next? Absolutely. So that's minor point A.
Minor point B is that many people who pick up the bits and pieces that I'm allowed to post are market-centric, American-centric, bounded range thinkers in their perspective. So while yeah, the market has been in a little bounce here, I expect it will now resume downward action but as this site's disclaimer says, I do not offer financial advice - just my opinion, and that's what drives trading in my own account.
Wave Inputs: Now, in my own account, did I expect to see a short 'pop' - a snapback rally - despite the linguistics? Yes. The internal market wave structure, which we'll get to in a minute, and the predictive linguistics are often in conflict especially if you look only at US market action.
For example (from right here, right now) the linguistic outputs offer that we should be in a period of decline at the global macro level, but the US market rally can most certainly rally lasted longer than I expected by a couple of days. It did get to my targets, even if it cost me something.
On the other hand the linguistics point to Nov 20-ish as decline resuming (globally) is working out just fine. I trust you noticed the rioting in Iceland was right (+/- 2 days) on schedule, which ain't bad for a month+ lead-time. Not only that, but over the past couple of days, tension has been building (and rioting has broken out and now the International Airport has been taken over) in Thailand. This might mean that Thailand will have a change of government, which in turn means trouble for the Thai Baht, which in turn is another currency implosion. To sum up, the global collapse is still in play.
Reconciling and Trading: Anyone who reads this site and makes a trade and doesn't understand the multiplicity of factors involved should rethink their ideas about investing, IMHO.
Investing in today's markets must, of necessity, be founded on multiple layers of information. Which is how I can be watching a short-term counter-trend rally in the US markets while seeing at the global level that things are sliding again and not be concerned in the slighted by what someone might accuse me of 'putting out both sides' of expectations.
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Now, if you want a chart of the US only and you're not looking at the broader context, here's an interesting note from a friend CS:
From a short-term trading standpoint, I will not be trading this one because I have chosen to get all my money onto the relative) safety of the sidelines. The 'loading the boat' was predicated on a rally being shorter and sharper (and more timely) than its completion this week.
The idea behind that trade was that I would buy call options, take the money from that trade and then go short.
I have been telling you for how many months that "You should ONLY play the paper assets game with money you CAN afford to lose nowadays!"
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If you insist on playing the market, you might want to be watching CNBC this afternoon about 2:20 Eastern/ 11:20 Pacific (tentatively) because my old friend Peter Eliades was scheduled to be on. Peter's one of the all-time greats at figuring out cycles - and you should look at his website www.stockmarketcycles.com.
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Yes, crashes seem to happen in 5th waves. Yes, I expect the market will work down from here. Now, I don't think the bottom is in. But am I going to play it? I did buy a few call options in the double Dow tracking stock last week on my expectation that we'd see a rally. Yeah, the market rallied at the end of last week. But no, the market didn't get to a high enough level to put those options in the money and they expired worthless.
Things didn't work out that way, but that was OK because I follow my own advice - which was "Don't play markets with money you can't afford to lose!".
I lost - couple of hundred bucks is all - because I knew it was a long shot. The linguistics are saying (globally and in effect), "lookout below." But even as the global collapse of Titanic proportions is underway, there will be be eddy currents, counter-trend rallies, and dead cat bounces. I set off to trade one in my own account, and had I picked December options instead of the higher (potential return) options expiring Friday, I would have done fine. Oh well.
Since the timing didn't work out, I have gone to the sidelines to think a bit more.
Not to drag this out indefinitely: Elaine's getting a new stove and hood for the kitchen, in part because we expect global trade to collapse and the dollar fail (or resume its downward movement which has been interrupted by a counter-trend rally - in 2009.
So in 2008, we've bought a new water heater, new washer, new dryer, a good-sized solar panel set up, a water-well drilling rig, and some machine tools. If I have the odd losing trade in options, it's way less than I've sent to the local food bank this year.
Write this down somewhere: If you have money in paper assets, you may lose it ALL in the next year or two. I think - and I am living - the idea that investing in self-sufficiency is THE best possible investment there is. Is that 'spin'? I don't think so.
Minor point B is that many people who pick up the bits and pieces that I'm allowed to post are market-centric, American-centric, bounded range thinkers in their perspective. So while yeah, the market has been in a little bounce here, I expect it will now resume downward action but as this site's disclaimer says, I do not offer financial advice - just my opinion, and that's what drives trading in my own account.
Wave Inputs: Now, in my own account, did I expect to see a short 'pop' - a snapback rally - despite the linguistics? Yes. The internal market wave structure, which we'll get to in a minute, and the predictive linguistics are often in conflict especially if you look only at US market action.
For example (from right here, right now) the linguistic outputs offer that we should be in a period of decline at the global macro level, but the US market rally can most certainly rally lasted longer than I expected by a couple of days. It did get to my targets, even if it cost me something.
On the other hand the linguistics point to Nov 20-ish as decline resuming (globally) is working out just fine. I trust you noticed the rioting in Iceland was right (+/- 2 days) on schedule, which ain't bad for a month+ lead-time. Not only that, but over the past couple of days, tension has been building (and rioting has broken out and now the International Airport has been taken over) in Thailand. This might mean that Thailand will have a change of government, which in turn means trouble for the Thai Baht, which in turn is another currency implosion. To sum up, the global collapse is still in play.
Reconciling and Trading: Anyone who reads this site and makes a trade and doesn't understand the multiplicity of factors involved should rethink their ideas about investing, IMHO.
Investing in today's markets must, of necessity, be founded on multiple layers of information. Which is how I can be watching a short-term counter-trend rally in the US markets while seeing at the global level that things are sliding again and not be concerned in the slighted by what someone might accuse me of 'putting out both sides' of expectations.
---
Now, if you want a chart of the US only and you're not looking at the broader context, here's an interesting note from a friend CS:
"The height of the rally has negated an Elliott wave pattern calling it a 2nd wave. However, it makes the drop from the Nov. 4th high into last weeks low a double zig zag pattern, which is a 3 wave structure. So, what does this mean? My friend***, here in Atlanta, whose chart you posted a few weeks ago, called me late [Monday] and walked me through the structure. The drop into Oct 10th was, obviously, wave 3:3, a pattern that is clearly 5 wave declines and 3 wave advances.Am I 'loading the boat' like I planned, in order to play the short side? NO!
From the Oct 10 low, the market rallied into Oct 14th, a total of 204.51 SPX points. That rally appears to be wave a:A:4:3 The drop from that high at 1044.31 to the low on Oct. 28 at 845.27 was wave b:A:4:3 The rally into Nov 4th at the Election Day high of 1007.51 was wave c:A:4:3. this ENTIRE rally pattern was an a-b-c wave A of 4 of 3
The drop from Election Day into last week was the double zig zag as described above, wave B:4:3. This strikes some as odd because of the new low, but it’s common in Elliott wave analysis that a “B” wave exceeds the terminal point of the previous impulse wave, in this case wave 3:3.
The ensuing rally off last week’s low has unfolded as a 5 wave structure. Since the drop into last week’s low was 3 waves (the double zig zag), this must be wave C of 4 of 3, which will complete wave 4 when it terminates.
There is a very interesting part of this in the Fibonacci relationship of certain waves in the structure. The rally from Oct 10-14 was 204.51 points and the rally from Oct 28 – Nov 4 was 162.24 points, a nearly perfect .786 relationship. The rally from last week’s 741.02 to this mornings 868.94 missed a perfect .786 relationship to the 162.24 by only .40.
I have attached a chart showing the wave count, in which wave C of 4 of 3 probably ended this morning [Tuesday] , and now in wave 5 of 3.
From a short-term trading standpoint, I will not be trading this one because I have chosen to get all my money onto the relative) safety of the sidelines. The 'loading the boat' was predicated on a rally being shorter and sharper (and more timely) than its completion this week.
The idea behind that trade was that I would buy call options, take the money from that trade and then go short.
I have been telling you for how many months that "You should ONLY play the paper assets game with money you CAN afford to lose nowadays!"
---
If you insist on playing the market, you might want to be watching CNBC this afternoon about 2:20 Eastern/ 11:20 Pacific (tentatively) because my old friend Peter Eliades was scheduled to be on. Peter's one of the all-time greats at figuring out cycles - and you should look at his website www.stockmarketcycles.com.
---
Yes, crashes seem to happen in 5th waves. Yes, I expect the market will work down from here. Now, I don't think the bottom is in. But am I going to play it? I did buy a few call options in the double Dow tracking stock last week on my expectation that we'd see a rally. Yeah, the market rallied at the end of last week. But no, the market didn't get to a high enough level to put those options in the money and they expired worthless.
Things didn't work out that way, but that was OK because I follow my own advice - which was "Don't play markets with money you can't afford to lose!".
I lost - couple of hundred bucks is all - because I knew it was a long shot. The linguistics are saying (globally and in effect), "lookout below." But even as the global collapse of Titanic proportions is underway, there will be be eddy currents, counter-trend rallies, and dead cat bounces. I set off to trade one in my own account, and had I picked December options instead of the higher (potential return) options expiring Friday, I would have done fine. Oh well.
Since the timing didn't work out, I have gone to the sidelines to think a bit more.
Not to drag this out indefinitely: Elaine's getting a new stove and hood for the kitchen, in part because we expect global trade to collapse and the dollar fail (or resume its downward movement which has been interrupted by a counter-trend rally - in 2009.
So in 2008, we've bought a new water heater, new washer, new dryer, a good-sized solar panel set up, a water-well drilling rig, and some machine tools. If I have the odd losing trade in options, it's way less than I've sent to the local food bank this year.
Write this down somewhere: If you have money in paper assets, you may lose it ALL in the next year or two. I think - and I am living - the idea that investing in self-sufficiency is THE best possible investment there is. Is that 'spin'? I don't think so.
I got an email from one of these folks, which was CC'ed to a number of colleagues. It outlined how they are now actively thinking that the country is presently in deflation but that at some point, we may swing into hyperinflation.
Some of their thinking is obvious. Evidence of deflation at a personal level is laid out in the latest Case-Shiller housing numbers that document how average home prices in the top 20 US cities are down 17.4% in the past year.
On the other hand, we know that the Bushbama Bailouts are going to cost somewhere between $7.4 and $8-trillion - although it could be more.
Stepping back, the personal strategic question is "when does the swing from deflation to inflation begin?"
What's gnawing on me this morning is that here are all my brightest of the bright friends and except for Robin Landry, I can't think of another who has actually figured out that if the real you-know-what hits the fan, how you gonna live?
In other words it's almost like there's a developing consensus that 'yeah, we may see that happen, alright...' but only Robin and I in this group of esteemed colleagues seem to have gotten to the hinterlands and actually done something about it.
That's the stuff cognitive dissonance is about: It's one thing to see a possibility of something really bad coming down the economic pike, but it's an entirely different matter to actively prepare for it. yet, curiously, 'smart' as all of my friends are, I don't know that any (except Landry) have looked at their own data and said "Oh-oh...maybe I oughta do something about it..."
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A couple of readers have asked some great questions, however, about how to play this potential collapse that is common enough knowledge that even the Russians are writing about it, for goodness sakes. Even if my smart friends are still trying to figure out how to keep up the six-figure lifestyle.
Except for the occasional wildly speculative trade, made with some level of awareness of the conflicting layers of data, I hold that the single best investment out there in today's world is investing in self-reliance.
"So should we take money out of our 401(k) and pay off our house?" asks one reader?
I don't know the specifics of this person's economic situation, but the answer is simple. Build a spreadsheet and put all the variables in: Likely return on the 401(k) given a wide range of expectations (including going to zero, or near enough if this Russian fellow is right) and then paying off the mortgage so you can have a free & clear place to live. Almost, that is, because government is always your silent partner via the confiscatory tax system.
"But that's so complicated" came the answer after I explained about setting up the model to take into account paying off the house with 'cheaper dollars' once inflation kicks in (and I can think of 7.4 trillion reasons it might, along with a dollar repudiation that stubbornly appears in Cliff's work.
One way to get to the answer is to reduce everything to how many hours of work you'll have to do to pay off the house. After all, time spent in this life is the ultimate currency, right? The goal here is to get as much self-reliance as possible and my 2¢ is that if you're going to pay your house off, the sooner you stop paying the debt monster, the better off you'll be.
If you bought a $60,000 house in 1980, inflation alone would bring the house value to $158,990 says the Minneapolis Fed inflation calculator. And, depending on your interest rates, you would pay about $180,000 for it.
If the average income over this period started from $10, you should now be making $26.17 per hour just to stay even with inflation. Call it an average of $18.085 per hour.
If you had paid the house off when you bought it, you would have worked 6,000 hours to buy the house (not counting taxes, of course). Given that most folks work 2,000 hours per year, then you'd put about three years labor into buying the house.
On the other hand, with an average of $18.085 per hour and principal plus interest of $180,000 (varies by interest rate, which I assume to be fixed), then you would work for 9,952 hours to pay off the house, or just under 5-years. Longer, actually, because of indexing of taxes which would be forcing you into higher and higher brackets.
Not saying this will be the case in the future, but a reader wanted to know, so that's how I look at damn near everything economic: What gives me the most bang for the most buck? "Oh don't worry about the payments because you'll just be paying the loan back with cheaper dollars.." is obviously nonsense, especially with the National Layoff Festival about to be sprung on us.
So, if you paid off your house with three years worth of labor in 1983, you would have 25-years of no house payment - just taxes. yeah, no mortgage write off' but counterbalancing that is the delicious ability to say 'Take this job and shove it" any time you wanted, because you weren't locked in to a house payment.
In the end, debt is a yoke of financial oppression which the ruling class seems to wield effectively to keep themselves living off the efforts of others. Think of it this way: The difference between the 6,000 hours to buy a house cash and 9,952 hours bought on credit didn't 'disappear'. It went someplace. And that place is into the ruling elite's pocket.
Run your own numbers - they may be different.
---
Sorry to lay this on you the day before Turkey, but that rally's probably over, and the 'gravy' you've been making is feeding those who are already fattest.
Oh, and about that delayed decline in the market? One of my smart friends says "Presuming wave 5 of 3 bottoms over the next 2-3 weeks, in a complete collapse to SPX 575 or even to the high 400’s, this would complete wave 3 from the May 19th high."
If you ignore the whole rest of the world, it can be argued the linguistics may have been off for a few days. But look around and the signs are everywhere: Social dynamics are about to "Kill the Turkey (Rally).
Some of their thinking is obvious. Evidence of deflation at a personal level is laid out in the latest Case-Shiller housing numbers that document how average home prices in the top 20 US cities are down 17.4% in the past year.
On the other hand, we know that the Bushbama Bailouts are going to cost somewhere between $7.4 and $8-trillion - although it could be more.
Stepping back, the personal strategic question is "when does the swing from deflation to inflation begin?"
What's gnawing on me this morning is that here are all my brightest of the bright friends and except for Robin Landry, I can't think of another who has actually figured out that if the real you-know-what hits the fan, how you gonna live?
In other words it's almost like there's a developing consensus that 'yeah, we may see that happen, alright...' but only Robin and I in this group of esteemed colleagues seem to have gotten to the hinterlands and actually done something about it.
That's the stuff cognitive dissonance is about: It's one thing to see a possibility of something really bad coming down the economic pike, but it's an entirely different matter to actively prepare for it. yet, curiously, 'smart' as all of my friends are, I don't know that any (except Landry) have looked at their own data and said "Oh-oh...maybe I oughta do something about it..."
---
A couple of readers have asked some great questions, however, about how to play this potential collapse that is common enough knowledge that even the Russians are writing about it, for goodness sakes. Even if my smart friends are still trying to figure out how to keep up the six-figure lifestyle.
Except for the occasional wildly speculative trade, made with some level of awareness of the conflicting layers of data, I hold that the single best investment out there in today's world is investing in self-reliance.
"So should we take money out of our 401(k) and pay off our house?" asks one reader?
I don't know the specifics of this person's economic situation, but the answer is simple. Build a spreadsheet and put all the variables in: Likely return on the 401(k) given a wide range of expectations (including going to zero, or near enough if this Russian fellow is right) and then paying off the mortgage so you can have a free & clear place to live. Almost, that is, because government is always your silent partner via the confiscatory tax system.
"But that's so complicated" came the answer after I explained about setting up the model to take into account paying off the house with 'cheaper dollars' once inflation kicks in (and I can think of 7.4 trillion reasons it might, along with a dollar repudiation that stubbornly appears in Cliff's work.
One way to get to the answer is to reduce everything to how many hours of work you'll have to do to pay off the house. After all, time spent in this life is the ultimate currency, right? The goal here is to get as much self-reliance as possible and my 2¢ is that if you're going to pay your house off, the sooner you stop paying the debt monster, the better off you'll be.
If you bought a $60,000 house in 1980, inflation alone would bring the house value to $158,990 says the Minneapolis Fed inflation calculator. And, depending on your interest rates, you would pay about $180,000 for it.
If the average income over this period started from $10, you should now be making $26.17 per hour just to stay even with inflation. Call it an average of $18.085 per hour.
If you had paid the house off when you bought it, you would have worked 6,000 hours to buy the house (not counting taxes, of course). Given that most folks work 2,000 hours per year, then you'd put about three years labor into buying the house.
On the other hand, with an average of $18.085 per hour and principal plus interest of $180,000 (varies by interest rate, which I assume to be fixed), then you would work for 9,952 hours to pay off the house, or just under 5-years. Longer, actually, because of indexing of taxes which would be forcing you into higher and higher brackets.
Not saying this will be the case in the future, but a reader wanted to know, so that's how I look at damn near everything economic: What gives me the most bang for the most buck? "Oh don't worry about the payments because you'll just be paying the loan back with cheaper dollars.." is obviously nonsense, especially with the National Layoff Festival about to be sprung on us.
So, if you paid off your house with three years worth of labor in 1983, you would have 25-years of no house payment - just taxes. yeah, no mortgage write off' but counterbalancing that is the delicious ability to say 'Take this job and shove it" any time you wanted, because you weren't locked in to a house payment.
In the end, debt is a yoke of financial oppression which the ruling class seems to wield effectively to keep themselves living off the efforts of others. Think of it this way: The difference between the 6,000 hours to buy a house cash and 9,952 hours bought on credit didn't 'disappear'. It went someplace. And that place is into the ruling elite's pocket.
Run your own numbers - they may be different.
---
Sorry to lay this on you the day before Turkey, but that rally's probably over, and the 'gravy' you've been making is feeding those who are already fattest.
Oh, and about that delayed decline in the market? One of my smart friends says "Presuming wave 5 of 3 bottoms over the next 2-3 weeks, in a complete collapse to SPX 575 or even to the high 400’s, this would complete wave 3 from the May 19th high."
If you ignore the whole rest of the world, it can be argued the linguistics may have been off for a few days. But look around and the signs are everywhere: Social dynamics are about to "Kill the Turkey (Rally).
i quite agree
The Worst Is Yet To Come
Anonymous Banker Weighs In On The Coming Credit Card Debacle
By Joe Nocera
A few weeks ago, I published an e-mail message sent to me from an executive who works in the banking industry — and had become disgusted by what he sees all around him. This weekend, that same banker sent me another e-mail message, which he has also agree to let me publish. It’s another wake-up call. Too bad nobody is listening. Continue
Anonymous Banker Weighs In On The Coming Credit Card Debacle
By Joe Nocera
A few weeks ago, I published an e-mail message sent to me from an executive who works in the banking industry — and had become disgusted by what he sees all around him. This weekend, that same banker sent me another e-mail message, which he has also agree to let me publish. It’s another wake-up call. Too bad nobody is listening. Continue
The Dow looks to open down about 200 points today, but if that's the extent of losses by the end of the week, I'd count it as something of a miracle. Things are not going well in the world's financial markets and the end of year selling is ramping up, hedge funds are getting ready for end of quarter withdrawals, and in Russia, the communists are figuring to use the financial crisis deepening there, too, as a tool to regain power.
---
Just to make a point about how crazy the world of debt is, look at the headline that "Hedge Fund Manager Hendry Bets on Deflation with U.K. War Loans." As you read into the story, you awaken to the idea that the debt involved is from World War One - that's how fine the Brits are at pushing paper about. But not just any paper:
---
Despite the world dropping into a global recession - not my conclusion, but that of a UN group - the Mid East Oilers are talking about holding oil in the $70-$90 range so a possible production cut looms for the December 17th OPEC meeting.
American consumer tightening is also starting to be felt in China, where manufacturing has declined by the most on record.
---
While UN Secretary General Ban Ki Moon is saying that the 'recession must not lead to human crisis' it strikes me as much the same thing as arguing against gravity. This is one that won't be banished with a few trite calls for 'bold and effective efforts".
The facts are pretty simple: 6% of world population consumers 25% of resource and 'pays' for it with paper that has nothing tangible behind it other than a promise to convert to a new kind of paper at some point.
That's not a recipe for a 'recession' even if global in nature. Nor, may at stop at 'depression' although you will want to read "The Return of Depression Economics and the Crisis of 2008" by Paul Krugman reviewed by Brad DeLong in the L.A. Times.
Nope there's a word beyond depression on the economic scale that's not even being talked about yet. The word is 'die-off.' It's what happens when you have a global depression that takes out food and other necessities. People simply die-off.
While the first week of December promises more economic thrills, and then we get into the twin earthquakes of mid December, out at the longer view toward the horizon, there are these four horsemen...
---
Just to make a point about how crazy the world of debt is, look at the headline that "Hedge Fund Manager Hendry Bets on Deflation with U.K. War Loans." As you read into the story, you awaken to the idea that the debt involved is from World War One - that's how fine the Brits are at pushing paper about. But not just any paper:
"The gilts, known as perpetuals because they have no maturity date, have a coupon of 3.5 percent compared with the U.K.’s 4.5 percent inflation rate. Investors hold about 1.9 billion pounds ($2.9 billion) of the securities that still pay interest 90 years after the end of the Great War, according to the U.K.’s Debt Management Office."In a grand way, the British are behind much of the world's inflation disease the way I've got it figured. At a minimum, they are certainly not gilt-free.
---
Despite the world dropping into a global recession - not my conclusion, but that of a UN group - the Mid East Oilers are talking about holding oil in the $70-$90 range so a possible production cut looms for the December 17th OPEC meeting.
American consumer tightening is also starting to be felt in China, where manufacturing has declined by the most on record.
---
While UN Secretary General Ban Ki Moon is saying that the 'recession must not lead to human crisis' it strikes me as much the same thing as arguing against gravity. This is one that won't be banished with a few trite calls for 'bold and effective efforts".
The facts are pretty simple: 6% of world population consumers 25% of resource and 'pays' for it with paper that has nothing tangible behind it other than a promise to convert to a new kind of paper at some point.
That's not a recipe for a 'recession' even if global in nature. Nor, may at stop at 'depression' although you will want to read "The Return of Depression Economics and the Crisis of 2008" by Paul Krugman reviewed by Brad DeLong in the L.A. Times.
Nope there's a word beyond depression on the economic scale that's not even being talked about yet. The word is 'die-off.' It's what happens when you have a global depression that takes out food and other necessities. People simply die-off.
While the first week of December promises more economic thrills, and then we get into the twin earthquakes of mid December, out at the longer view toward the horizon, there are these four horsemen...
Although it doesn't show up in the predictive linguistics work of www.halfpasthuman.com until about mid-spring of 2009, we have to look at the headlines out of Venice that water is knee-deep in their worst flooding in 22-years and ask "Is this a precursor event?" Ask me next year at this time. ---
Send snip and save items to george@ure.net
Send snip and save items to george@ure.net
Wise Ben
Nice to see that the NY Times recently got around to asking in a Ben Stein column "What if a Slowdown is a Never-Ending Story?" Nice of them to ask. Look up www.dieoff.org for clues.
Nice to see that the NY Times recently got around to asking in a Ben Stein column "What if a Slowdown is a Never-Ending Story?" Nice of them to ask. Look up www.dieoff.org for clues.
George Ure anticipates that in the wake of the attacks in India that not only will India go with a DHS-styled internal security force, but this also sets/builds on the premise that there should be some kind of 'world police force" to fight "terrorism". This morning, he reports, that the traditional bar on deploying military forces on US soil seems now headed for the scrap heap of history as the Washington Post Headlines in this morning's editions that "Pentagon to Detail Troops to Bolster Domestic Security." ---
He writes: "While I don't claim to be a good student of American history, I do know the basic Constitutional guarantees and the right to keep and bear arms is one of them. In a world where there are plenty of threats, why owning a gun for defensive purposes should be considered 'dangerous' is absurd.
Once government is given an inch, they seem inclined to take a mile. Evidence of this is especially true when it comes to the Second Amendment rights as it's been revealed that Delaware's use of occasional 'superchecks' into gun owner histories may have been illegal. In effect, the state may have accessed supposedly confidential medical histories of folks, and in some cases apparently, confiscated firearms based on what amounted to an unauthorized intrusion into privacy.
The gun control issue is not going away. With a change of administrations in coming weeks, there has been (probably justified concern) that the new Obama administration will act to restrict or ban the ownership of guns of certain calibers. There's more to it, of course, and a read of what's available on the net - like " Why Gun Sales are Booming" - are good background.
The Brady Center has issued a report titled "Brady Background Checks: Fifteen years of saving lives" that should also be on your reading list, but seems to me that it hasn't stopped events like the Virginia Tech Massacre from occurring. In such a case, just one holder of a concealed weapon (and permit) could have scaled down the size of the tragedy.
Nevertheless, there seems likely to be - in the wake of recent events in India - another round of misinformation and 'legislating' on the horizon to 'deal with' guns, especially what are commonly called 'black guns' as many 'sport utility rifles' like my coyote gun (which happens to be black and shoots 7.62 X 39) are. Am I using an "assault weapon"? I imagine the local Coyote Protection Association might claim that, but as the National Shooting Sports Foundation says:
For that matter, street crime perps don't seem to have very good taste in weapons. My Glock, for example, tends to throw spent cartridges back into my face when using a standard double-handed shooting grip, where my Ruger P-85 doesn't. All I can figure is that my Ruger is not a "Hollywood gun". They both shoot snakes equally well, however, and both produce a nice 4" pattern from the 10-yard line on our pistol range.
---
In addition to fear of certain calibers, anti-gun folks periodically trot out things like the "laser serial numbers" on bullets idea, as in a November 26 note from Right Side News. Again, best I can tell, this would be one of those well-intended but easily circumvented ideas. Catch shell casings, leave no evidence.
---
The issue continues to crop up in big cities - and we expect to see lots of headlines around Seattle's upcoming discussion of whether guns should be banned from city property including parks and such.
---
The attacks in India have exposed the vulnerabilities of luxury hotels. But they've done something else, too: They've set up a discussion about how much military presence should be allowed on American home soil and it has reignited debate over disarming the civilian population on the theory that government can provide all -- including adequate security.
---
Stand by for the international police force to follow on the pretext of 'protecting' folks."
http://www.urbansurvival.com/week.htm
He writes: "While I don't claim to be a good student of American history, I do know the basic Constitutional guarantees and the right to keep and bear arms is one of them. In a world where there are plenty of threats, why owning a gun for defensive purposes should be considered 'dangerous' is absurd.
Once government is given an inch, they seem inclined to take a mile. Evidence of this is especially true when it comes to the Second Amendment rights as it's been revealed that Delaware's use of occasional 'superchecks' into gun owner histories may have been illegal. In effect, the state may have accessed supposedly confidential medical histories of folks, and in some cases apparently, confiscated firearms based on what amounted to an unauthorized intrusion into privacy.
The gun control issue is not going away. With a change of administrations in coming weeks, there has been (probably justified concern) that the new Obama administration will act to restrict or ban the ownership of guns of certain calibers. There's more to it, of course, and a read of what's available on the net - like " Why Gun Sales are Booming" - are good background.
The Brady Center has issued a report titled "Brady Background Checks: Fifteen years of saving lives" that should also be on your reading list, but seems to me that it hasn't stopped events like the Virginia Tech Massacre from occurring. In such a case, just one holder of a concealed weapon (and permit) could have scaled down the size of the tragedy.
Nevertheless, there seems likely to be - in the wake of recent events in India - another round of misinformation and 'legislating' on the horizon to 'deal with' guns, especially what are commonly called 'black guns' as many 'sport utility rifles' like my coyote gun (which happens to be black and shoots 7.62 X 39) are. Am I using an "assault weapon"? I imagine the local Coyote Protection Association might claim that, but as the National Shooting Sports Foundation says:
"Homicide statistics demonstrate that the miniscule use of so-called "assault weapons" in crime (less than 1 percent) continued to decrease after the ten-year ban expired in 2004 and their manufacturing and sales resumed.Similarly, anti-gun folks seem to get worked up over certain calibers like the .50 BMG used in a few long range weapons. Most crime in America, hate to tell you, is committed by thugs who have no clue about long range shooting. I'll take 'missed by a .50' over 'hit with a .22' any time...
Another study, commissioned by Congress, found "the banned weapons and magazines were never used in more than a modest fraction of all gun murders."
The report also noted that so-called "assault weapons" were "rarely used in gun crimes even before the ban."
For that matter, street crime perps don't seem to have very good taste in weapons. My Glock, for example, tends to throw spent cartridges back into my face when using a standard double-handed shooting grip, where my Ruger P-85 doesn't. All I can figure is that my Ruger is not a "Hollywood gun". They both shoot snakes equally well, however, and both produce a nice 4" pattern from the 10-yard line on our pistol range.
---
In addition to fear of certain calibers, anti-gun folks periodically trot out things like the "laser serial numbers" on bullets idea, as in a November 26 note from Right Side News. Again, best I can tell, this would be one of those well-intended but easily circumvented ideas. Catch shell casings, leave no evidence.
---
The issue continues to crop up in big cities - and we expect to see lots of headlines around Seattle's upcoming discussion of whether guns should be banned from city property including parks and such.
---
The attacks in India have exposed the vulnerabilities of luxury hotels. But they've done something else, too: They've set up a discussion about how much military presence should be allowed on American home soil and it has reignited debate over disarming the civilian population on the theory that government can provide all -- including adequate security.
---
Stand by for the international police force to follow on the pretext of 'protecting' folks."
http://www.urbansurvival.com/week.htm
Confronting the Terrorist Within
By Chris Hedges
The wars in Iraq and Afghanistan, when viewed from the receiving end, are state-sponsored acts of terrorism. These wars defy every ethical and legal code that seek to determine when a nation can wage war, from Just War Theory to the statutes of international law largely put into place by the United States after World War II. These wars are criminal wars of aggression. Continue
By Chris Hedges
The wars in Iraq and Afghanistan, when viewed from the receiving end, are state-sponsored acts of terrorism. These wars defy every ethical and legal code that seek to determine when a nation can wage war, from Just War Theory to the statutes of international law largely put into place by the United States after World War II. These wars are criminal wars of aggression. Continue
Breakdown of the Global Monetary System by Summer 2009
By GEAB
Without a complete overhaul of the system inherited from 1944 by summer 2009, the failing of the current system and that of the United States at the center, will lead the whole planet to an unprecedented economic, social, political and strategic instability, and more specifically to a breakdown of the global monetary system by summer 2009. Continue
By GEAB
Without a complete overhaul of the system inherited from 1944 by summer 2009, the failing of the current system and that of the United States at the center, will lead the whole planet to an unprecedented economic, social, political and strategic instability, and more specifically to a breakdown of the global monetary system by summer 2009. Continue
Did I, or did I not, tell you to expect 'Smackdown Monday" about this here time yesterday? And while there was some flight to safety (like the Dow stocks are 'safe'? LOL), the real story was not in the Dow's performance on Monday, but in the broader indices such as the S&P 500 and the NASDAQ Composite which both lost a tuna sandwich less than 9%.
Although the futures seem to point to a bit of a 'bounce' at the open today, the linguistics about the first couple of weeks in December, leading up to the 'twin quakes' around December 12, is likely to be a really rough ride. And yes, that's why last weekend's Peoplenomics report was titled "Fasten your seat belt: Quake, Famine, and Anarchy". Just got to know where (and when) to be looking.
But before venturing off into the linguistic hinterlands, and while the coffee soaks in, let's first look at the little 'chart problem' the Fed's back office is no doubt pondering if the Dow were to close out the week about current levels:
http://www.urbansurvival.com/week.htm
While the market will no doubt rally early, at least based on the futures, and we have no clue how much of that is really puffed up money from the Plunge Protection Team pumped in through Channel Island, Turks, and GCM proxies to keep up the illusion that 'all's well...'
It ain't.
---
The astute reader of this site, assuming they have ignored our previous dissing of paper 'assets' (ROFL), should keep in mind two simple background points about now.
Background Point #1:
The market seems to be in an 'e' wave crash mode at the moment. So, what do we expect? First, since most impulsive Elliott Wave moves are five-step affairs, the action on Monday was maybe step 1 down. If we bounce today (say 400 points) that could be viewed as a 50% retracement for wave 2. Putting a pencil to it, that would point to something like 8,500 on the Dow (plus or minus an order of linguini with clam sauce).
We all know that the third waves are often 1.5 to 2.5 times the decline of wave 1, so that would lead me to expect from 8,500 a drop to 7,400 on the Dow in short order - maybe even by the end of this week. Then a bounce, and then maybe a test of Robin Landry's 7,200.
Landry's also been kind enough to previously share the insight that 'crashes happen in the fifth wave' so could we collapse through 7,200 and visit the next major support area - 5,800 - on the Dow in coming weeks (before Christmas)? Oh sure - it's possible. Not saying it's going to happen - as I don't do 'investment advice' but the column a few weeks back "Dow 4,000 by Christmas" has just gone up two clicks on the 'possibility' scale.
We'll see how the market does today, because if we happen to get another major leg down - like a drop of several hundred points today, then I'd be getting very worried that the 4,000 range by Christmas could be delivered as the planetary lump of coal for bad little hedge fund managers.
My buddy CS in Atlanta sent this:
Things ain't gonna get better any time soon based on the latest conversation with The Bond Dude. You may recall his simple explanation of how the real money in the investment world works: It chases highest yields. If the yields in the fixed income markets are low, money is driven into the equities (stock) markets. When things are playing off like crazy in fixed incomes, who needs stocks? (Apparently, not many judging by the Monday action...).
"So what are you ,bidding?" I asked him - knowing that a 10% fixed income yield would support a Dow P/E ratio or 10, while a 25% fixed income ratio would imply a Dow P/E of about 4, etc.
Turns out he had just priced a 2-year old mortgage bond. For this particular bond, which started as a pool of about 500 mortgages in 2006, there are 410 mortgages left in it after foreclosures and such - or, to look at it from the homeowner perspective, 21% of the homes involved are in foreclosure or are already in the REO column (real estate owned - by bank repo departments).
The way he's looking at this bond, over the life of the bond 85% of the mortgages will be foreclosed or end up REO. No, this is not so-called 'toxic waste'. This is mezzanine AAA 69% California pay option ARM with an underlying 82% LTV which will likely go for somewhere between 25-35% on the dollar.
From the fixed income perspective, with 85% of the mortgages turning bad over the life of the bond, the discount has to be such that if the remaining homes are sold for $315,000, the 'after expenses' net would have to return money to the Bond Dudes (or Dudettes) that take the large risks now.
Of course there's just the one little fly in the ointment: If the yield on such (admittedly risky) deals pops up over 30% (and it is happenings) then that implies a stock market P/E ration of less than 4.
If we guesstimate - just for the purposes of discussion - that at current prices, the S&P P/E is 15 (go do your own research, this is a ballpark) then the S&P over the next year could decline to something like whatever one-third of Monday's closing 816 is. (S&P 270 - do I have to do everything around here???) And the Dow could fall to whatever a third of 8,149 is. (Dow 2,690 - sheesh...)
---
Think this is a crazy outlook from some nutter in the East Texas outback, cowering due to the imminent breakdown on civility out there in six-figure corporate road warrior land? Probably.
But, if the deterioration is severe enough that the US Military is looking at deploying 20,000 troops in the USA over the next two years, seems I may not be the only 'nutter'. Sure, it wreck Posse Comitatus, but federal troops for security and appointment coupons to visit a bank - those kind of things would not surprise me the least - if we all make it to 2011, but that's another discussion.
---
"Why would you talk about 'coupons to visit banks?" you're thinking?
How's your Icelandic? Mine's not really good...p*ss poor is closer to it, but even at this hour I can figure out what "IJslanders bestormen centrale bank in Reykjavik..." (Helps to have the predictive linguistic spiders reading a few terabytes of data daily, jah?)
When the Amerikanishers start to bestormen here you'll fer sure want to have 20,000 troops to keep things straight. Not that it will work mind you, but we're hearing the rumbles and from a policy perspective it makes sense.
Far as we can reckon, the winning hand to hold - and the one we'll be working on for the next couple of weekends for Peoplenomics.com subscribers is getting far, far ahead of events by voluntarily entering [bogslife].
Since statistically, the odds are very small that you subscribe to the www.halfpasthuman.com predictive linguistics runs, [bogslife] means (beyond organization/government systems).
Or, to put it more bluntly (as you may still be shaking off the effects of the overnight coma: If you missed being a hippy and living on a commune in the 60's or 70's - you may get your chance yet. Such self-organizing collectives may be your best chance to 'keep it together' over the next couple of years, although it may not become obvious u8ntil we get to the 'summer of hell' in 2009.
And yes, to bring things full circle, a Dow under 3,000 would sure fit the bill. Or, also a possibility, a Dow right where it is right now but with a 100% annual inflation rate would also do the trick.
Folks laughed when I bought $365 gold, too.
http://www.urbansurvival.com/week.htm
Although the futures seem to point to a bit of a 'bounce' at the open today, the linguistics about the first couple of weeks in December, leading up to the 'twin quakes' around December 12, is likely to be a really rough ride. And yes, that's why last weekend's Peoplenomics report was titled "Fasten your seat belt: Quake, Famine, and Anarchy". Just got to know where (and when) to be looking.
But before venturing off into the linguistic hinterlands, and while the coffee soaks in, let's first look at the little 'chart problem' the Fed's back office is no doubt pondering if the Dow were to close out the week about current levels:
http://www.urbansurvival.com/week.htm
While the market will no doubt rally early, at least based on the futures, and we have no clue how much of that is really puffed up money from the Plunge Protection Team pumped in through Channel Island, Turks, and GCM proxies to keep up the illusion that 'all's well...'
It ain't.
---
The astute reader of this site, assuming they have ignored our previous dissing of paper 'assets' (ROFL), should keep in mind two simple background points about now.
Background Point #1:
The market seems to be in an 'e' wave crash mode at the moment. So, what do we expect? First, since most impulsive Elliott Wave moves are five-step affairs, the action on Monday was maybe step 1 down. If we bounce today (say 400 points) that could be viewed as a 50% retracement for wave 2. Putting a pencil to it, that would point to something like 8,500 on the Dow (plus or minus an order of linguini with clam sauce).
We all know that the third waves are often 1.5 to 2.5 times the decline of wave 1, so that would lead me to expect from 8,500 a drop to 7,400 on the Dow in short order - maybe even by the end of this week. Then a bounce, and then maybe a test of Robin Landry's 7,200.
Landry's also been kind enough to previously share the insight that 'crashes happen in the fifth wave' so could we collapse through 7,200 and visit the next major support area - 5,800 - on the Dow in coming weeks (before Christmas)? Oh sure - it's possible. Not saying it's going to happen - as I don't do 'investment advice' but the column a few weeks back "Dow 4,000 by Christmas" has just gone up two clicks on the 'possibility' scale.
We'll see how the market does today, because if we happen to get another major leg down - like a drop of several hundred points today, then I'd be getting very worried that the 4,000 range by Christmas could be delivered as the planetary lump of coal for bad little hedge fund managers.
My buddy CS in Atlanta sent this:
WAVE 5 of 3 has started, headed to 5800 Dow, 597 SPX at a minimum, by December 12thBackground Point #2:
ATCH @1565 x .382 = 1597 EW wave 5 of 3 = .618 x waves 1 through 3 @ 596.33
Things ain't gonna get better any time soon based on the latest conversation with The Bond Dude. You may recall his simple explanation of how the real money in the investment world works: It chases highest yields. If the yields in the fixed income markets are low, money is driven into the equities (stock) markets. When things are playing off like crazy in fixed incomes, who needs stocks? (Apparently, not many judging by the Monday action...).
"So what are you ,bidding?" I asked him - knowing that a 10% fixed income yield would support a Dow P/E ratio or 10, while a 25% fixed income ratio would imply a Dow P/E of about 4, etc.
Turns out he had just priced a 2-year old mortgage bond. For this particular bond, which started as a pool of about 500 mortgages in 2006, there are 410 mortgages left in it after foreclosures and such - or, to look at it from the homeowner perspective, 21% of the homes involved are in foreclosure or are already in the REO column (real estate owned - by bank repo departments).
The way he's looking at this bond, over the life of the bond 85% of the mortgages will be foreclosed or end up REO. No, this is not so-called 'toxic waste'. This is mezzanine AAA 69% California pay option ARM with an underlying 82% LTV which will likely go for somewhere between 25-35% on the dollar.
From the fixed income perspective, with 85% of the mortgages turning bad over the life of the bond, the discount has to be such that if the remaining homes are sold for $315,000, the 'after expenses' net would have to return money to the Bond Dudes (or Dudettes) that take the large risks now.
Of course there's just the one little fly in the ointment: If the yield on such (admittedly risky) deals pops up over 30% (and it is happenings) then that implies a stock market P/E ration of less than 4.
If we guesstimate - just for the purposes of discussion - that at current prices, the S&P P/E is 15 (go do your own research, this is a ballpark) then the S&P over the next year could decline to something like whatever one-third of Monday's closing 816 is. (S&P 270 - do I have to do everything around here???) And the Dow could fall to whatever a third of 8,149 is. (Dow 2,690 - sheesh...)
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Think this is a crazy outlook from some nutter in the East Texas outback, cowering due to the imminent breakdown on civility out there in six-figure corporate road warrior land? Probably.
But, if the deterioration is severe enough that the US Military is looking at deploying 20,000 troops in the USA over the next two years, seems I may not be the only 'nutter'. Sure, it wreck Posse Comitatus, but federal troops for security and appointment coupons to visit a bank - those kind of things would not surprise me the least - if we all make it to 2011, but that's another discussion.
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"Why would you talk about 'coupons to visit banks?" you're thinking?
How's your Icelandic? Mine's not really good...p*ss poor is closer to it, but even at this hour I can figure out what "IJslanders bestormen centrale bank in Reykjavik..." (Helps to have the predictive linguistic spiders reading a few terabytes of data daily, jah?)
When the Amerikanishers start to bestormen here you'll fer sure want to have 20,000 troops to keep things straight. Not that it will work mind you, but we're hearing the rumbles and from a policy perspective it makes sense.
Far as we can reckon, the winning hand to hold - and the one we'll be working on for the next couple of weekends for Peoplenomics.com subscribers is getting far, far ahead of events by voluntarily entering [bogslife].
Since statistically, the odds are very small that you subscribe to the www.halfpasthuman.com predictive linguistics runs, [bogslife] means (beyond organization/government systems).
Or, to put it more bluntly (as you may still be shaking off the effects of the overnight coma: If you missed being a hippy and living on a commune in the 60's or 70's - you may get your chance yet. Such self-organizing collectives may be your best chance to 'keep it together' over the next couple of years, although it may not become obvious u8ntil we get to the 'summer of hell' in 2009.
And yes, to bring things full circle, a Dow under 3,000 would sure fit the bill. Or, also a possibility, a Dow right where it is right now but with a 100% annual inflation rate would also do the trick.
Folks laughed when I bought $365 gold, too.
http://www.urbansurvival.com/week.htm
Already, the predictive linguistics crowd is seeing bogslife behind increasing headlines - just most 'average' folks can't wrap their minds around the concept. That is what makes them average, though, I suppose. But from the 'gettin it' crowd:
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Not that the HPH team is the only group out there sniffing out words and concepts on the 'net. "Bailout," "change" crowned the words of 2008 as figured by the Merriam-Webster folks.
When the word 'rescue' started (absurdly) appearing around the word 'bailout', you might remember that in a www.news.google.com search, 'rescue' was being used only 18% of the time.
Since we haven't update this metric for a while, the current Google cache is 135,041 returns for bailout while rescue pops in with 164,129. Which is to say 'rescue' is now being used 54.86% of the time - a HUGE increase from first use tracking.
I understand that the 'word use' spin around network news center is not put in writing - it just comes as 'calls from upstairs.' And who's calling the folks 'upstairs' I'll leave it to you to figure out. But I've personally talked to folks who get those calls. Ain't no 'spin-free zone'. Without 'media control' even at a gross word-use level, the stability of the PowersThatBe could be threatened and we can't have that now, can we?
---
So that's a 'big picture' look at how things are working behind the pabulum dished down from space to the Cyclops in the rec room. Dandy, huh?
"A few Predictive Linguistics matches ....Dawn of life in the bogs.
Bogslife signs:
New York Times: At a “cohousing” project planned for Fort Greene, Brooklyn, the residents will share all decisions and some meals.
CNN - Global Coastal event: Scientists have identified new rifts on an Antarctic ice shelf that could lead to it breaking away from the Antarctic Peninsula
Foxnews - Retasking of foreclosed properties: Miami Activist Moves Homeless Into Foreclosed Homes "
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Not that the HPH team is the only group out there sniffing out words and concepts on the 'net. "Bailout," "change" crowned the words of 2008 as figured by the Merriam-Webster folks.
When the word 'rescue' started (absurdly) appearing around the word 'bailout', you might remember that in a www.news.google.com search, 'rescue' was being used only 18% of the time.
Since we haven't update this metric for a while, the current Google cache is 135,041 returns for bailout while rescue pops in with 164,129. Which is to say 'rescue' is now being used 54.86% of the time - a HUGE increase from first use tracking.
I understand that the 'word use' spin around network news center is not put in writing - it just comes as 'calls from upstairs.' And who's calling the folks 'upstairs' I'll leave it to you to figure out. But I've personally talked to folks who get those calls. Ain't no 'spin-free zone'. Without 'media control' even at a gross word-use level, the stability of the PowersThatBe could be threatened and we can't have that now, can we?
---
So that's a 'big picture' look at how things are working behind the pabulum dished down from space to the Cyclops in the rec room. Dandy, huh?
]The Hyperinflationary Depression
Nov 30, 2008 - 05:37 AM By: Eric_deCarbonnel
http://www.marketoracle.co.uk/Article7539.html
Nov 30, 2008 - 05:37 AM By: Eric_deCarbonnel
http://www.marketoracle.co.uk/Article7539.html
Where is the outrage!
By Greg Hunter 12/01/08
The uneven form the financial bailout has taken is really quite galling to me. The headline: Not a single bank president has been asked to step down or a single plan asked for from the big banks. Chuck Prince did leave on his own last November with a 38 million dollar pay package but I would call that "getting out while the getting was good." Since then, all the major banks in this country have been at the public Fed begging bowl. The big money has come from the many "lending" facilities such as the TAF, TSLF, PDCF and many more that have been created by the Federal Reserve. This money, experts say, is necessary to keep these institutions solvent. Has congress asked the banks for a plan make sure these insolvency problems will not happen again? Contrast that with the big 3. These companies are being asked for detailed plans for recovery before they get somewhere in the neighborhood of 25 billion dollars. It has been reported the CEO’S of the big 3 could be asked to resign as part of the deal!!! We’ve already handed out 150 billion to A I G and recently 325 billion to Citi!!! So far the financial rescue has cost a total 8.5 trillion dollars. The money by and large has gone to any banker with a sad story or stupid investment into derivatives. Today Meredith Whitney said on CNBC that all …"the big banks are going to need more capital!!!! " More Capital and NO PLAN!!!!! WHAT GIVES???? Where is the outrage!!!!!!!!!!!!!
This all gets back to OTC DERIVATIVES… THE REAL UNDERLYING PROBLEM. I am talking about securitized debt. The financial wizards of the world securitized every debt imaginable…mortgages, credit cards, car loans, student loans. You name the debt and it was wrapped up into some sort of security. It is safe to say the size of the problem is somewhere between 500 and 1000 trillion dollars depending on who you talk to. Whatever the amount is the problem is BIG, VERY VERY BIG!!!! The biggest financial problem ever in the history of the world! THERE IS NO PUBLIC MARKET FOR OTC DERIVATIVES and nobody is talking about creating one as part of a solution!!! THERE IS NO WAY THAT THIS FINANCIAL CRISIS WILL EVER BE OVER UNTIL THERE IS A FINANCIAL MARKET FOR THIS CRAP. But of course, if there is a market that would provide a "price discovery" and then we would find out this stuff is worthless or near worthless. So the powers that be are just throwing good money after bad. I think the most outrageous part of the whole story is even though the taxpayer is on the hook for several trillion dollars we do not get to know which banks are getting the money and what "assets" the banks are unloading on the government. I suspect these "assets" are probably akin to candy wrappers and toilet paper. Fed Chairman Ben Bernanke has said the reason they will not disclose this information to the public is that it would not be "helpful". THE SECRECY BEHIND ALL THIS GOVERNMENT ACTION IS OUTRAGEOUS!!!!! What in fact the powers that be are hoping for is that this money printing will "unclog" the credit markets and get things back to "normal." These toxic "securities" or derivatives can then start trading again the way they used to without a public market. No public market means trading would again be done without regulation, guarantee or standards of any kind. I say no way! We do not have a credit problem but a collateral problem and the banks do not trust the collateral. There is going to be a new "normal" and most people are not going to like what that feels and looks like. I guess then there will be OUTRAGE!!!
Jim Sinclair’s Commentary
Alf has been spot on now for a significant time. It might be interesting for the Elliot gang out there to study his work. For that matter, it might be interesting for everyone.
You have to understand that no chart work will tell you what the Exchange Stabilization Fund will do. Today’s action demonstrates short term limitations to TA.
Alf field’s Elliott Wave Chart of Gold Shows Gold To Be In Elliott Wave 3 Up
Monday, 22. October 2007, 21:05:09
The Elliott Wave chart of gold from the article Elliott Wave Gold Update 16 by Alf Field shows gold to be in an Elliott Wave 3 Up.
More…
Jim Sinclair’s Commentary
The only meaningful tool left for the Fed is "Benign Neglect" of the US dollar. That means not referring to it in public addresses with glee and not softening declines via the Exchange Stabilization Fund when it tries to break down out of its recent technical money flow up trend. Basically, this means putting a muzzle on the Media Spin Team as they have no clue that a rising dollar, for any reason, is totally contra-productive to all other methods of anti-deflation employed in central bank moves. The trend in the dollar will become market related. Market related means rejoining its long term down trend.
Gold is a currency and it will be proven once again in the inverse to the dollar very soon.
Gold’s primary excuse for existence is monetary.
Gold priced at $248 reflected its monetary performance.
Gold at $1650 will be a totally monetary event.
The monetary boss spoke today and the equity market regurgitated.
You can be sure it is panic time at the Fed in which every tool, even the tools of last resort will be employed. Today was an example of just that
This headline should be changed to “Dow Plunges 680 Points As The Chairman Of The Federal Reserve Presents His Plans To Avoid An Equity Implosion.”
Dow Plunges 680 Points as Recession Is Declared
The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.
But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.
The sharp declines on Wall Street — the Dow Jones industrial average dropped 679.95 points or 7.7 percent — appeared more about profit-taking than the economy. Investors have long assumed that the country was in recession, and analysts said that after last week’s gains, including the biggest five-day rally in decades, a sell-off was to be expected.
Still, Monday’s losses were striking, and they reminded investors that nothing can be predicted in today’s environment. The major indexes fell by hundreds of points from the start, led by huge declines in shares of financial firms. Citigroup, Merrill Lynch and Morgan Stanley shares all dropped nearly 20 percent. Most other major Wall Street banks were also in double-digit percentage declines.
More…
By Greg Hunter 12/01/08
The uneven form the financial bailout has taken is really quite galling to me. The headline: Not a single bank president has been asked to step down or a single plan asked for from the big banks. Chuck Prince did leave on his own last November with a 38 million dollar pay package but I would call that "getting out while the getting was good." Since then, all the major banks in this country have been at the public Fed begging bowl. The big money has come from the many "lending" facilities such as the TAF, TSLF, PDCF and many more that have been created by the Federal Reserve. This money, experts say, is necessary to keep these institutions solvent. Has congress asked the banks for a plan make sure these insolvency problems will not happen again? Contrast that with the big 3. These companies are being asked for detailed plans for recovery before they get somewhere in the neighborhood of 25 billion dollars. It has been reported the CEO’S of the big 3 could be asked to resign as part of the deal!!! We’ve already handed out 150 billion to A I G and recently 325 billion to Citi!!! So far the financial rescue has cost a total 8.5 trillion dollars. The money by and large has gone to any banker with a sad story or stupid investment into derivatives. Today Meredith Whitney said on CNBC that all …"the big banks are going to need more capital!!!! " More Capital and NO PLAN!!!!! WHAT GIVES???? Where is the outrage!!!!!!!!!!!!!
This all gets back to OTC DERIVATIVES… THE REAL UNDERLYING PROBLEM. I am talking about securitized debt. The financial wizards of the world securitized every debt imaginable…mortgages, credit cards, car loans, student loans. You name the debt and it was wrapped up into some sort of security. It is safe to say the size of the problem is somewhere between 500 and 1000 trillion dollars depending on who you talk to. Whatever the amount is the problem is BIG, VERY VERY BIG!!!! The biggest financial problem ever in the history of the world! THERE IS NO PUBLIC MARKET FOR OTC DERIVATIVES and nobody is talking about creating one as part of a solution!!! THERE IS NO WAY THAT THIS FINANCIAL CRISIS WILL EVER BE OVER UNTIL THERE IS A FINANCIAL MARKET FOR THIS CRAP. But of course, if there is a market that would provide a "price discovery" and then we would find out this stuff is worthless or near worthless. So the powers that be are just throwing good money after bad. I think the most outrageous part of the whole story is even though the taxpayer is on the hook for several trillion dollars we do not get to know which banks are getting the money and what "assets" the banks are unloading on the government. I suspect these "assets" are probably akin to candy wrappers and toilet paper. Fed Chairman Ben Bernanke has said the reason they will not disclose this information to the public is that it would not be "helpful". THE SECRECY BEHIND ALL THIS GOVERNMENT ACTION IS OUTRAGEOUS!!!!! What in fact the powers that be are hoping for is that this money printing will "unclog" the credit markets and get things back to "normal." These toxic "securities" or derivatives can then start trading again the way they used to without a public market. No public market means trading would again be done without regulation, guarantee or standards of any kind. I say no way! We do not have a credit problem but a collateral problem and the banks do not trust the collateral. There is going to be a new "normal" and most people are not going to like what that feels and looks like. I guess then there will be OUTRAGE!!!
Jim Sinclair’s Commentary
Alf has been spot on now for a significant time. It might be interesting for the Elliot gang out there to study his work. For that matter, it might be interesting for everyone.
You have to understand that no chart work will tell you what the Exchange Stabilization Fund will do. Today’s action demonstrates short term limitations to TA.
Alf field’s Elliott Wave Chart of Gold Shows Gold To Be In Elliott Wave 3 Up
Monday, 22. October 2007, 21:05:09
The Elliott Wave chart of gold from the article Elliott Wave Gold Update 16 by Alf Field shows gold to be in an Elliott Wave 3 Up.
More…
Jim Sinclair’s Commentary
The only meaningful tool left for the Fed is "Benign Neglect" of the US dollar. That means not referring to it in public addresses with glee and not softening declines via the Exchange Stabilization Fund when it tries to break down out of its recent technical money flow up trend. Basically, this means putting a muzzle on the Media Spin Team as they have no clue that a rising dollar, for any reason, is totally contra-productive to all other methods of anti-deflation employed in central bank moves. The trend in the dollar will become market related. Market related means rejoining its long term down trend.
Gold is a currency and it will be proven once again in the inverse to the dollar very soon.
Gold’s primary excuse for existence is monetary.
Gold priced at $248 reflected its monetary performance.
Gold at $1650 will be a totally monetary event.
The monetary boss spoke today and the equity market regurgitated.
You can be sure it is panic time at the Fed in which every tool, even the tools of last resort will be employed. Today was an example of just that
This headline should be changed to “Dow Plunges 680 Points As The Chairman Of The Federal Reserve Presents His Plans To Avoid An Equity Implosion.”
Dow Plunges 680 Points as Recession Is Declared
The evidence of a recession has been widespread for months: slower production, stagnant wages and hundreds of thousands of lost jobs.
But the nonpartisan National Bureau of Economic Research, charged with making the call for the history books, waited until now to make it official — and the announcement came on a day when the American stock market fell nearly 9 percent in a single session.
The sharp declines on Wall Street — the Dow Jones industrial average dropped 679.95 points or 7.7 percent — appeared more about profit-taking than the economy. Investors have long assumed that the country was in recession, and analysts said that after last week’s gains, including the biggest five-day rally in decades, a sell-off was to be expected.
Still, Monday’s losses were striking, and they reminded investors that nothing can be predicted in today’s environment. The major indexes fell by hundreds of points from the start, led by huge declines in shares of financial firms. Citigroup, Merrill Lynch and Morgan Stanley shares all dropped nearly 20 percent. Most other major Wall Street banks were also in double-digit percentage declines.
More…
Allen L Roland: *CREDIT CARD CRISIS IS HERE / DERIVATIVES NEXT The year long Bush Recession, which Bush still does not acknowledge, has now become a rapidly accelerating Depression fueled by a credit card crisis which is now a reality. Credit card companies are pulling back credit lines by close to 50% and consumers will soon stop shopping as the Retail economy sinks into a severe depression. Derivatives are next : Allen L Roland
Dan Lieberman: Stimulating the U.S. Government to Bankruptcy Secretary Paulson's contradictory and not easily decipherable plans are doomed to either provoke a huge depression or bankrupt the US treasury. President elect Barack Obama's proposals for stimulating the economy by massive government investments in infrastructure and job creation also leads to huge government deficits, but promises to increase the tax base and tax revenue so that deficits don't regenerate.
Serious Accusations of Corruption on Wall Street & The Justice Department 
www.contrahour.com/ItsJustTimeMartinArmstrong.pdf
The above link has the latest 77 page article written on a typewriter in prison by Martin Armstrong who in this writer's opinion should get the Nobel Prize in Economics for his brilliant work.
This article details alleged corruption by the top Wall Street firms and also the Justice Department of the United States.
President Elect Obama and his Economic team should be investigating this information and looking into pardoning Martin Armstrong.
Mr. Armstrong predicted this financial crisis we are in over two decades ago! Martin Armstrong has solid advice on what the government should do now to overcome this crisis and save the United States of America from further disintegration!
Unfortunately things are going to get worse in this part of the cycle which Martin is warning about in this latest report, there are several important cycles that are converging in mid 2011 when the Pi cycle will reach its next major low according to Martin, and this is promising to be a Grand Convergence of these major cycles which means we can expect something likely much worse than has already happened with the banks and financial institutions, perhaps a different sector of the economy will become a problem or it could be a major currency crisis which affects the confidence in the bond markets.
http://princetoneconomics.blogspot.com/
www.contrahour.com/ItsJustTimeMartinArmstrong.pdf
The above link has the latest 77 page article written on a typewriter in prison by Martin Armstrong who in this writer's opinion should get the Nobel Prize in Economics for his brilliant work.
This article details alleged corruption by the top Wall Street firms and also the Justice Department of the United States.
President Elect Obama and his Economic team should be investigating this information and looking into pardoning Martin Armstrong.
Mr. Armstrong predicted this financial crisis we are in over two decades ago! Martin Armstrong has solid advice on what the government should do now to overcome this crisis and save the United States of America from further disintegration!
Unfortunately things are going to get worse in this part of the cycle which Martin is warning about in this latest report, there are several important cycles that are converging in mid 2011 when the Pi cycle will reach its next major low according to Martin, and this is promising to be a Grand Convergence of these major cycles which means we can expect something likely much worse than has already happened with the banks and financial institutions, perhaps a different sector of the economy will become a problem or it could be a major currency crisis which affects the confidence in the bond markets.
http://princetoneconomics.blogspot.com/
Decline & Fall of the United States 
The article that follows is a review of an article that Martin Armstrong wrote in 1999 just before his arrest. In Mr. Armstrong's latest 77 page article writen in prison and released in October 2008 he appears to have softened his position as to the USA having a civil war and breaking up, he now thinks the USA will survive but not in the form we know now...
The United States of America hit the end of the 224 year political cycle in 1999 from its revolutionary beginning in 1775.29863. Martin Armstrong predicted in Oct.1999 that Sept/Oct 2001 would see an attack on the USA! He in effect predicted the 9/11 disaster and also predicted the reaction to it further on, which would be a new war. "The turning points following 1999 now appear to be Sept/Oct 2001 on the quarter cycle and late 2003. These targets often work in an attack followed by a response."
It is a very strange world. As he wrote in the past the same thing happened to Rome, as their power declined they became vulnerable to outside attack and also got embroiled in wars with Persia. History is repeating now and America is bogged down in a quagmire in the ancient Persian Empire - which encompassed Iraq and Iran. Iraqi dictator Sadam Hussein warned when the USA first invaded Iraq that the Americans would end up stuck in a quagmire that was unwinnable.
Martin Armstrong revealed the existence of a political cycle that is 224 years in length and gives massive amounts of evidence of how this cycle has been dominant for thousands of years all over the world. He developed the Economic Confidence Model during the 1970s which is related to the 224 political cycle. "Aside from the importance of the number of days of the 8.6 year cycle constituting 3141 days or roughly Pi, the data that this cycle emerged from was a period of 224 years spanning between 1683 and 1907. There were 26 financial panics during this 224 year period that produced the actual time frame of 8.61538 years." While he found that this cycle moved in waves of intensity that built up into 6 groups of waves forming a major wave of 51.6923 years, this is not the only timing interval that is important for understanding of the business cycle he said.
Mr. Armstrong went on to say that Americans could expect to see their liberties being stripped away from them after 1999 as the government would attempt to shore up its waning power and war would increase. He said the the power of the USA peaked in 1999, just as it did for the Roman Empire after the death of one of Rome's most brilliant Emperors Marcus Aurelius in 180 AD. The consequences from what President Dwight Eisenhowser warned of, by letting the Militry Industrial Complex become too dominant are now starting to be realized, a civilization that became a worldwide military empire is now starting to crumble from the burden of supporting the military machine. On top of all this US corporations systematically tranferred manufacturing overseas into Asia thereby destroying the industrial manufacturing wealth that Americans have previously prospered from. Of course from a cyclical perspective Armstrong would argue that is was all inevitable, human nature being what it is.
We can see now that the power of the Chinese is surging forward and that as another financial advisor James Dines predicted in the late 1970's - the 21 Century would be the Chinese century. In Marco Polo's time China was the weathiest nation on earth, they are now in the process of getting back that status. Will the new China Era last 224 years or will it move to a greater Europe before then?
At a lecture that Martin Armstrong gave in the early 1990's I approached him and stated: Don't you think that the Chinese will dominate the world's economy going forward now? He said to me that they would at first, but he believed that a greater Europe including Russia would eventually be the largest economy in the world. I don't know if he still thinks the latter to be the case but he wrote in late 1999 "We see the economic power shifting toward Asia and believe the United States has peaked here in 1999". He went on to say that to prove that the USA has peaked in its power may require another 8.6 years (pi cycle - Feb 2007)and may not be verifiable until Martin's death which would likely be in the 2030 time frame. (2032 is the end of Martin's 51.6 year 'confidence in private markets cycle' - so after 2032 we can expect something like 1929 again where there is a massive collapse of the debt markets and then a new confidence in government cycle appears again with another Franklin Delanor Roosevelt style 'new deal' perhaps, except this time China will be the leading economy and the USA will be Britain or Italy as in a fallen Rome.
Martin wrote: "The entire period of rising political chaos appears to begin with 1999 going into at least 2011 but more likely late 2012. The 224 year cycle that began with the start of the American Revolution will reach its end of the most chaotic period 2012.471 which is 224 years from the last state of Nine required to ratify the constitution, which was New Hampshire on June 21, 1788. President George Washington was elected in 1789 and thus this formally began the United States. It does not appear that 1999 will become noticeable as a major turning point until at least one 8.615 year interval takes place. Thus by late 2007, dissatisfaction will become self-evident. Of course, between 2012 and 2020, the real problems will unfold regarding social security, healthcare, and a host of government benefits. Funding such programs will lead to major economic short-falls."
"Cyclically, if the United States were to survive in the form as we know it today (a big if), recovery is not likely before 2103 to 2111 with the extreme projections into 2223. Historically, nations that have had civil wars in the past, breakup along the same lines of political differences even though the issues will have changed. We thus may see a division between north and south taking the issues of religion this time rather than slavery. One must keep in mind that the religious differences have survived the Civil War."
"The Middle East is universally believed to be the source of future problems. Looking at the 224 year cycle of political change provides an eye-opener to say the least. It was the year 1095 that the Byzantine Emperor Alexius Comnenus asked Pope Urban II for help infighting the Turks. If we look at the 224 year cycle between the West and the Muslim World we see the dates 1095, 1319, 1543, 1767 and 1991. Iraq invaded Kuwait in August 1990 and the West invaded Iraq in February 1991. The invasion stopped short of Baghdad leaving Saddam Hussein in power only because he may be the lessor of two evils - keeping the religious extremists under his control. Often overlooked is the conflict between the two prime divisions in Islam the Sunni, who followed Abu Bakr as the successor to Muhammad (570-6432AD) and the Shites, who followed the son-in-law and first cousin. While the Sunni constitute about 85% of Islam, it is the Shites that largely believe that there should be no separation between church and state. Thus, the Shites would overthrow the monarchy of Saudi Arabia if they could and would rejoice had Hussein been removed from power. This would have allowed Iran to expand its power taking Iraq which is believed to be about 40% Shite. This would then put Saudi Arabia at risk not to mention Syria
and Turkey. In other words, if Iran could expand its religious control over the states in the Middle East, it would most likely result in a civil war similar to that of England between the Protestants and the Catholics. It is disturbing that the West invaded precisely on the 224 year cycle target of 1991."
Its all in the cycles, it appears that nothing can be done to stop the cycles from manifesting their effects. As Martin has stated before the whole Universe is cyclical, galaxies, stars, planets are all subject to cyclical laws (our Sun he wrote has a 300 year cycle which causes its output to vary by 15% and the Sun could not even shine if it did not have cycles) it is therefore logical that humans and their societies are also subject to these cyclical energies - 'as above so below'.
If we are to believe in the greater purpose of human society then perhaps the USA has fullfilled its purpose in the 20th Century, showing the world that relative democracy and free markets are the right way for societies to go. Just as Rome led to Great Britain which in a way united the whole world with the English language, then the United States maintained and strengthened the structure. The question is, which country is going to take over from the USA?
Martin seemed to be suggesting that the Earth's climate is likely to start cooling down now based on the Sun's 300 year cycle and it appears that 2007 saw some records being made for cold and snow. There is some evidence now that the sun's output is starting to fall, the sunspots are not being created at this point. Over the past year, anecdotal evidence for a cooling planet has exploded. China has its coldest winter in 100 years. Baghdad sees its first snow in all recorded history. North America has the most snowcover in 50 years, with places like Wisconsin the highest since record-keeping began. Record levels of Antarctic sea ice, record cold in Minnesota, Texas, Florida, Mexico, Australia, Iran, Greece, South Africa, Greenland, Argentina, Chile — the list goes on and on.
Anecdotal evidence, but now, that evidence has been supplanted by hard scientific fact. All four major global temperature tracking outlets (Hadley, NASA's GISS, UAH, RSS) have released updated data. All show that over the past year, global temperatures have dropped precipitously.
http://www.well.com/user/pdeep/pages/warm0...02/stat02.shtml This link purports to show evidence that we can expect temperatures to fall for the next 20-25 years.
Could it be that human produced Co2 has created a blanket that will protect our societies from a future ice age or will any cooling now be just a temporary lull in an ongoing warming?
http://princetoneconomics.blogspot.com/
The article that follows is a review of an article that Martin Armstrong wrote in 1999 just before his arrest. In Mr. Armstrong's latest 77 page article writen in prison and released in October 2008 he appears to have softened his position as to the USA having a civil war and breaking up, he now thinks the USA will survive but not in the form we know now...
The United States of America hit the end of the 224 year political cycle in 1999 from its revolutionary beginning in 1775.29863. Martin Armstrong predicted in Oct.1999 that Sept/Oct 2001 would see an attack on the USA! He in effect predicted the 9/11 disaster and also predicted the reaction to it further on, which would be a new war. "The turning points following 1999 now appear to be Sept/Oct 2001 on the quarter cycle and late 2003. These targets often work in an attack followed by a response."
It is a very strange world. As he wrote in the past the same thing happened to Rome, as their power declined they became vulnerable to outside attack and also got embroiled in wars with Persia. History is repeating now and America is bogged down in a quagmire in the ancient Persian Empire - which encompassed Iraq and Iran. Iraqi dictator Sadam Hussein warned when the USA first invaded Iraq that the Americans would end up stuck in a quagmire that was unwinnable.
Martin Armstrong revealed the existence of a political cycle that is 224 years in length and gives massive amounts of evidence of how this cycle has been dominant for thousands of years all over the world. He developed the Economic Confidence Model during the 1970s which is related to the 224 political cycle. "Aside from the importance of the number of days of the 8.6 year cycle constituting 3141 days or roughly Pi, the data that this cycle emerged from was a period of 224 years spanning between 1683 and 1907. There were 26 financial panics during this 224 year period that produced the actual time frame of 8.61538 years." While he found that this cycle moved in waves of intensity that built up into 6 groups of waves forming a major wave of 51.6923 years, this is not the only timing interval that is important for understanding of the business cycle he said.
Mr. Armstrong went on to say that Americans could expect to see their liberties being stripped away from them after 1999 as the government would attempt to shore up its waning power and war would increase. He said the the power of the USA peaked in 1999, just as it did for the Roman Empire after the death of one of Rome's most brilliant Emperors Marcus Aurelius in 180 AD. The consequences from what President Dwight Eisenhowser warned of, by letting the Militry Industrial Complex become too dominant are now starting to be realized, a civilization that became a worldwide military empire is now starting to crumble from the burden of supporting the military machine. On top of all this US corporations systematically tranferred manufacturing overseas into Asia thereby destroying the industrial manufacturing wealth that Americans have previously prospered from. Of course from a cyclical perspective Armstrong would argue that is was all inevitable, human nature being what it is.
We can see now that the power of the Chinese is surging forward and that as another financial advisor James Dines predicted in the late 1970's - the 21 Century would be the Chinese century. In Marco Polo's time China was the weathiest nation on earth, they are now in the process of getting back that status. Will the new China Era last 224 years or will it move to a greater Europe before then?
At a lecture that Martin Armstrong gave in the early 1990's I approached him and stated: Don't you think that the Chinese will dominate the world's economy going forward now? He said to me that they would at first, but he believed that a greater Europe including Russia would eventually be the largest economy in the world. I don't know if he still thinks the latter to be the case but he wrote in late 1999 "We see the economic power shifting toward Asia and believe the United States has peaked here in 1999". He went on to say that to prove that the USA has peaked in its power may require another 8.6 years (pi cycle - Feb 2007)and may not be verifiable until Martin's death which would likely be in the 2030 time frame. (2032 is the end of Martin's 51.6 year 'confidence in private markets cycle' - so after 2032 we can expect something like 1929 again where there is a massive collapse of the debt markets and then a new confidence in government cycle appears again with another Franklin Delanor Roosevelt style 'new deal' perhaps, except this time China will be the leading economy and the USA will be Britain or Italy as in a fallen Rome.
Martin wrote: "The entire period of rising political chaos appears to begin with 1999 going into at least 2011 but more likely late 2012. The 224 year cycle that began with the start of the American Revolution will reach its end of the most chaotic period 2012.471 which is 224 years from the last state of Nine required to ratify the constitution, which was New Hampshire on June 21, 1788. President George Washington was elected in 1789 and thus this formally began the United States. It does not appear that 1999 will become noticeable as a major turning point until at least one 8.615 year interval takes place. Thus by late 2007, dissatisfaction will become self-evident. Of course, between 2012 and 2020, the real problems will unfold regarding social security, healthcare, and a host of government benefits. Funding such programs will lead to major economic short-falls."
"Cyclically, if the United States were to survive in the form as we know it today (a big if), recovery is not likely before 2103 to 2111 with the extreme projections into 2223. Historically, nations that have had civil wars in the past, breakup along the same lines of political differences even though the issues will have changed. We thus may see a division between north and south taking the issues of religion this time rather than slavery. One must keep in mind that the religious differences have survived the Civil War."
"The Middle East is universally believed to be the source of future problems. Looking at the 224 year cycle of political change provides an eye-opener to say the least. It was the year 1095 that the Byzantine Emperor Alexius Comnenus asked Pope Urban II for help infighting the Turks. If we look at the 224 year cycle between the West and the Muslim World we see the dates 1095, 1319, 1543, 1767 and 1991. Iraq invaded Kuwait in August 1990 and the West invaded Iraq in February 1991. The invasion stopped short of Baghdad leaving Saddam Hussein in power only because he may be the lessor of two evils - keeping the religious extremists under his control. Often overlooked is the conflict between the two prime divisions in Islam the Sunni, who followed Abu Bakr as the successor to Muhammad (570-6432AD) and the Shites, who followed the son-in-law and first cousin. While the Sunni constitute about 85% of Islam, it is the Shites that largely believe that there should be no separation between church and state. Thus, the Shites would overthrow the monarchy of Saudi Arabia if they could and would rejoice had Hussein been removed from power. This would have allowed Iran to expand its power taking Iraq which is believed to be about 40% Shite. This would then put Saudi Arabia at risk not to mention Syria
and Turkey. In other words, if Iran could expand its religious control over the states in the Middle East, it would most likely result in a civil war similar to that of England between the Protestants and the Catholics. It is disturbing that the West invaded precisely on the 224 year cycle target of 1991."
Its all in the cycles, it appears that nothing can be done to stop the cycles from manifesting their effects. As Martin has stated before the whole Universe is cyclical, galaxies, stars, planets are all subject to cyclical laws (our Sun he wrote has a 300 year cycle which causes its output to vary by 15% and the Sun could not even shine if it did not have cycles) it is therefore logical that humans and their societies are also subject to these cyclical energies - 'as above so below'.
If we are to believe in the greater purpose of human society then perhaps the USA has fullfilled its purpose in the 20th Century, showing the world that relative democracy and free markets are the right way for societies to go. Just as Rome led to Great Britain which in a way united the whole world with the English language, then the United States maintained and strengthened the structure. The question is, which country is going to take over from the USA?
Martin seemed to be suggesting that the Earth's climate is likely to start cooling down now based on the Sun's 300 year cycle and it appears that 2007 saw some records being made for cold and snow. There is some evidence now that the sun's output is starting to fall, the sunspots are not being created at this point. Over the past year, anecdotal evidence for a cooling planet has exploded. China has its coldest winter in 100 years. Baghdad sees its first snow in all recorded history. North America has the most snowcover in 50 years, with places like Wisconsin the highest since record-keeping began. Record levels of Antarctic sea ice, record cold in Minnesota, Texas, Florida, Mexico, Australia, Iran, Greece, South Africa, Greenland, Argentina, Chile — the list goes on and on.
Anecdotal evidence, but now, that evidence has been supplanted by hard scientific fact. All four major global temperature tracking outlets (Hadley, NASA's GISS, UAH, RSS) have released updated data. All show that over the past year, global temperatures have dropped precipitously.
http://www.well.com/user/pdeep/pages/warm0...02/stat02.shtml This link purports to show evidence that we can expect temperatures to fall for the next 20-25 years.
Could it be that human produced Co2 has created a blanket that will protect our societies from a future ice age or will any cooling now be just a temporary lull in an ongoing warming?
http://princetoneconomics.blogspot.com/
Witness of CIA remark should be subpoenaed to testisfy.
Eric Von Baronov who owns the Kondratyev economic site on Yahoo Groups stated in his forum several years ago that a CIA aquaintance of his told him that Martin Armstrong "had to be stopped".
Exactly what was meant by this statement should have been probed. It was this author's understanding that what was meant was that the CIA does not want people with extremely sophisticated computer analysis (which the CIA tried to aquire unsucessfully from Mr. Armstrong), controlling billions of dollars in the futures markets. A proper trial would have dealt with these issues, instead Martin got years of deprivation and even torture from solitary confinement before he was more or less forced into a plea.
According to some comentators Martin got some commodity traders angry by saying that they were manipulating markets and so when he needed to get out of his Yen trade which was going against him those traders made it impossible for him to find a buyer. Martin was also said to have had a position in another commodity that was going well for him but when he was arrested the reciever is said to have liquidated those positions, which meant that future profits from them were cut off. Again all of these issues should have been explored in a court of law with premium legal representaion, which Martin was denied when the courts took away his original lawyer's monies. Martin eventually got a lawyer that his 80 something year old mother scraped some money together to pay for.
Mr.Von Baranov should have been subpoenaed to testify at Martin Armstrong's 'trial'.
Eric Von Baronov who owns the Kondratyev economic site on Yahoo Groups stated in his forum several years ago that a CIA aquaintance of his told him that Martin Armstrong "had to be stopped".
Exactly what was meant by this statement should have been probed. It was this author's understanding that what was meant was that the CIA does not want people with extremely sophisticated computer analysis (which the CIA tried to aquire unsucessfully from Mr. Armstrong), controlling billions of dollars in the futures markets. A proper trial would have dealt with these issues, instead Martin got years of deprivation and even torture from solitary confinement before he was more or less forced into a plea.
According to some comentators Martin got some commodity traders angry by saying that they were manipulating markets and so when he needed to get out of his Yen trade which was going against him those traders made it impossible for him to find a buyer. Martin was also said to have had a position in another commodity that was going well for him but when he was arrested the reciever is said to have liquidated those positions, which meant that future profits from them were cut off. Again all of these issues should have been explored in a court of law with premium legal representaion, which Martin was denied when the courts took away his original lawyer's monies. Martin eventually got a lawyer that his 80 something year old mother scraped some money together to pay for.
Mr.Von Baranov should have been subpoenaed to testify at Martin Armstrong's 'trial'.
n Fraud Case, 7 Years in Jail for Contempt
By GRETCHEN MORGENSON
Published: February 16, 2007
The New York Times
On Jan. 14, 2000, Martin A. Armstrong, a globe-trotting investment manager, was told to produce $15 million in gold and antiquities, as well as documents, in response to a civil suit by the government accusing him of securities fraud involving hundreds of millions of dollars.
When he said that he did not have the items and could not produce them, a federal judge ordered him jailed for contempt of court.
Seven years later, Mr. Armstrong sits in the Metropolitan Correctional Center in Lower Manhattan.
Imprisoned two years before Enron and WorldCom brought corporate crime to center stage, Mr. Armstrong, 57, is the white-collar defendant whom time forgot. Over the years, the losses of his former clients have been repaid by a bank involved in his trades.
Still, he remains jailed on one of the longest-running charges of contempt. In many cases, a federal law limits to 18 months how long someone can be held under civil contempt while the court tries to coerce compliance with an order. Even in cases of criminal contempt, whose goal is punishment rather than coercion, an individual is entitled to the full protections of due process after six months.
“A legal proceeding is supposed to be the quest for truth,” Mr. Armstrong said in a phone interview last week from the 12-story building, which is used mostly as a temporary holding site for prisoners. “But this contempt was used to stop me from going to trial, and it’s been nothing but bad faith from the government ever since.”
How Mr. Armstrong has been held for so many years without a trial is a tangled and bizarre tale. Mr. Armstrong, his lawyers say, has been stuck in a surreal situation in which criminal prosecutors have never had to prove their 24-count indictment at trial while the civil case tied him up. Nevertheless, they have gotten their desired result — a lengthy prison term for Mr. Armstrong.
Last August, he pleaded guilty to one count of conspiracy in the criminal case. He struck that deal with federal prosecutors after he was moved from the 75-square-foot cell he shared with another prisoner into solitary confinement and had not slept for days, his lawyer said. Over the years, prosecutors have said that they were ready to proceed to trial and that civil contempt had nothing to do with their case. Mr. Armstrong countered that his detainment impeded his efforts to mount a proper defense, blocking his access to essential documents and computers as well as the assets to pay counsel.
Because there has been no jury trial in the case, it is impossible to say which side is right: the government, whose indictment in September 1999 contended that Mr. Armstrong misappropriated hundreds of millions in client funds; or Mr. Armstrong, who said that officials at the bank executing his trades generated temporary losses that could have been recovered in the market. (Two of those officials later pleaded guilty to fraud in a related case involving the bank.)
Rick Maiman/Bloomberg News
Martin A. Armstrong, pictured in jail in February 2000, has almost served more jail time for civil contempt than he would have if he had been sentenced to the likely 6.5 to 8 years on conviction of 24 criminal counts of securities fraud, commodities fraud and wire fraud.
Exceeding a Sentence
But this much is certain: Mr. Armstrong’s years in jail for civil contempt will soon exceed the sentence of 6.5 to 8 years that he would have received if he had been convicted of all 24 criminal counts of securities fraud, commodities fraud and wire fraud. “The case sends a very bad signal,” said Bernard V. Kleinman, a criminal lawyer in White Plains who represented Mr. Armstrong until 2004 and argued twice for his release before the United States Court of Appeals for the Second Circuit, in Lower Manhattan. “I think it bodes very ill for anybody held in civil contempt. District court judges can look at this case and feel that the likelihood of the circuit reversing them is small and that time is, in and of itself, no factor in determining whether civil contempt has lost its coercive effect and has become punitive.”
John F. Keenan, the Federal District Court judge overseeing the criminal case, has not yet sentenced Mr. Armstrong. It is unclear whether the judge will give Mr. Armstrong credit for the time he has served. Under federal sentencing guidelines, his lawyers expect a sentence of about five years.
A spokeswoman for the United States attorney in Manhattan said that the office did not comment on open cases.
Judge Richard Owen, the senior district judge who ordered Mr. Armstrong held in contempt, still sits on the bench in the Southern District of New York, where he has been for 34 years. When he ordered Mr. Armstrong taken away by federal marshals, he declared, “Mr. Armstrong has the keys to the jail cell in his pocket by production and telling people where to go to get it and dig it up and turn it over.”
Over the years, Judge Owen would revisit the contempt order every 18 months, guided by the federal statute. He repeatedly said that Mr. Armstrong was motivated by greed and was awaiting his release from jail to retrieve the $15 million that the government said was missing. According to lawyers who worked on the case in the early days, the financier’s headstrong manner irritated Judge Owen almost immediately.
But Judge Owen was moved off the case in November by a panel in the Second Circuit Court hearing Mr. Armstrong’s third appeal on the contempt charge.
The three judges unanimously rejected the appeal to free Mr. Armstrong but found that on the seventh anniversary of his confinement, “his case deserves a fresh look by a different pair of eyes.”
It was the second time in less than a year that the Second Circuit had ordered Judge Owen replaced on a high-profile case. In March, a panel overturned the 2004 conviction of Frank P. Quattrone, the former investment banker at Credit Suisse, because Judge Owen failed to instruct the jury properly; the panel assigned the case to a new judge in the “interest of justice.” Later, the government decided not to retry Mr. Quattrone.
Judge P. Kevin Castel has taken over the Armstrong civil case. A hearing is scheduled on the contempt matter for March 15. A request to interview Mr. Armstrong in person was denied by corrections officials, and Judge Owen did not return a call seeking comment.
A Budding Businessman
At the peak of his career in the mid-90s, Mr. Armstrong oversaw $3 billion in client assets. He was widely quoted in the financial news media, including The New York Times, on interest rate and currency movements. He began working at a coin and stamp dealership when he was 13 and opened a collectors’ store when he was 21. He founded Princeton Economics International, based in Princeton, N.J., in 1981.
Mr. Armstrong, an intelligent and imperious man who claimed to have made his first million by age 15, seems to have begun having trouble in 1999 when trading losses turned up in accounts that were held for the firm at Republic Bank. The problems appeared as the HSBC Group conducted a financial review before acquiring Republic.
The government said that Mr. Armstrong had improperly commingled accounts and overstated the value of the account’s securities in client statements.
Mr. Armstrong said that he did not authorize the transactions that produced losses and that he was not involved with commingling of the accounts. He was indicted in September and released on $5 million bond.
In January 2000, the receiver appointed by the court in the civil case said that Mr. Armstrong had purchased gold coins and other assets with his firm’s money. His lawyers argued that the assets might have been purchased before the suspected wrongdoing.
When Judge Owen ordered the assets returned, Mr. Armstrong delivered 4 of the 5 computers sought, 8 of the 11 requested boxes of documents and gold coins worth $1.1 million. He said that was all he had. The receiver said assets worth about $15 million were missing. Mr. Armstrong’s odyssey in the judicial system began.
His assets frozen, Mr. Armstrong has been unable to pay lawyers. He now relies upon David Cooper and Steven Z. Legon, two lawyers from the Criminal Justice Act panel, set up to help indigent defendants, and Thomas V. Sjoblom, a lawyer at Proskauer Rose, who has received nominal compensation.
“On what grounds can you tie up the system of criminal procedure and civil procedure and hold everything in abeyance during contempt?” Mr. Sjoblom asked. “What about your speedy trial rights? What about the government’s need to move forward in the civil case? You’re using the contempt process to wring a settlement or a plea out of the person. That, to me, is abuse of the process.”
Over the years, more than half a dozen government lawyers have cycled through the case. In 2003, Mr. Armstrong changed his legal approach in challenging the contempt charge, saying that he did not have to produce the assets and citing his Fifth Amendment right.
The receiver, meanwhile, has recovered the vast majority of money said to have been lost by investors in the case. In January 2002, Republic New York Securities, a brokerage firm that housed Princeton Economics’ accounts, pleaded guilty to conspiracy and securities fraud charges. Republic Bank paid $606 million to victims, all Japanese companies. It was “full restitution,” the assistant United States attorney said at the time.
Alan M. Cohen, then a lawyer at O’Melveny & Myers and now executive vice president and global head of compliance at Goldman Sachs, is the court-appointed receiver.
His former colleague, Tancred V. Schiavoni, a lawyer at O’Melveny, said that all the victims had been satisfied. “We tried to do the right thing, and we’ve gotten nothing but grief,” he said. “What this guy wants is to be given credit for time served on the contempt and leave with the money.”
O’Melveny & Myers has received at least $3.9 million to cover its fees and disbursement over the years, according to court filings.
The discovery process was protracted partly because of the complexity — hundreds of boxes of materials had to be examined and data transcribed into digital format — and because Mr. Armstrong was in jail and relying on lawyers working pro bono.
In January 2006, criminal prosecutors said they were eager to put Mr. Armstrong on trial in October. Then in early August, federal prosecutors appeared at the correctional center to strike a plea deal. The visit, Mr. Sjoblom said, came a week after Mr. Armstrong had been ordered into solitary confinement — known as “the hole” — for damaging a vent in a common area.
Mr. Armstrong pleaded guilty to one count of conspiracy to commit securities fraud for failing to keep his investors informed about losses and for agreeing to make investor funds available to Republic to cover Princeton Economics’ unrelated trading losses.
“I think the government just wore Marty out,” Mr. Sjoblom said.
On Dec. 7, Stephen J. Obie, regional counsel for the Commodity Futures Trading Commission, visited Mr. Armstrong, with a settlement offer in which he would sign over some $30 million as a penalty. Mr. Armstrong declined.
The Securities and Exchange Commission and the C.F.T.C. declined to comment on the case.
The government has said that $21 million is still owed. Even if that must be paid by Mr. Armstrong’s firm and not Republic Bank, an estimated $40 million is left in what was once Princeton Economics: $30 million in the United States and $10 million in a British entity. Mr. Armstrong and his lawyers learned of the $10 million three weeks ago.
Fred R. Conrad/The New York Times
Victoria Armstrong visits her father most Wednesdays at the Metropolitan Correctional Center in Manhattan, where he has been held for contempt for seven years.
Weekly Visits
Mr. Armstrong, who is divorced, has two children and an elderly mother who await his release. His daughter, Victoria Armstrong, 30, visits most Wednesdays, spending about one hour with him in a common room with other visitors and prisoners.
“You never stop thinking about where he is and what he goes through,” Ms. Armstrong said in an interview last week.
Her brother, Martin, 31, said he was bewildered at what he sees as the breakdown of due process in his father’s case. “That you can keep someone in contempt for such a long time with so many unanswered questions — that part of it has been a real eye-opener,” he said.
Sonia Sotomayor, a judge on the Second Circuit panel that heard Mr. Armstrong’s appeal last year, seemed to echo this point. “The district court’s finding that Armstrong is motivated solely by greed is not enough to justify disregard for due process,” she wrote. “Courts must exercise caution in their use of the contempt power and must recognize when it has reached the limits of its utility.”
http://www.nytimes.com/2007/02/16/business...amp;oref=slogin
By GRETCHEN MORGENSON
Published: February 16, 2007
The New York Times
On Jan. 14, 2000, Martin A. Armstrong, a globe-trotting investment manager, was told to produce $15 million in gold and antiquities, as well as documents, in response to a civil suit by the government accusing him of securities fraud involving hundreds of millions of dollars.
When he said that he did not have the items and could not produce them, a federal judge ordered him jailed for contempt of court.
Seven years later, Mr. Armstrong sits in the Metropolitan Correctional Center in Lower Manhattan.
Imprisoned two years before Enron and WorldCom brought corporate crime to center stage, Mr. Armstrong, 57, is the white-collar defendant whom time forgot. Over the years, the losses of his former clients have been repaid by a bank involved in his trades.
Still, he remains jailed on one of the longest-running charges of contempt. In many cases, a federal law limits to 18 months how long someone can be held under civil contempt while the court tries to coerce compliance with an order. Even in cases of criminal contempt, whose goal is punishment rather than coercion, an individual is entitled to the full protections of due process after six months.
“A legal proceeding is supposed to be the quest for truth,” Mr. Armstrong said in a phone interview last week from the 12-story building, which is used mostly as a temporary holding site for prisoners. “But this contempt was used to stop me from going to trial, and it’s been nothing but bad faith from the government ever since.”
How Mr. Armstrong has been held for so many years without a trial is a tangled and bizarre tale. Mr. Armstrong, his lawyers say, has been stuck in a surreal situation in which criminal prosecutors have never had to prove their 24-count indictment at trial while the civil case tied him up. Nevertheless, they have gotten their desired result — a lengthy prison term for Mr. Armstrong.
Last August, he pleaded guilty to one count of conspiracy in the criminal case. He struck that deal with federal prosecutors after he was moved from the 75-square-foot cell he shared with another prisoner into solitary confinement and had not slept for days, his lawyer said. Over the years, prosecutors have said that they were ready to proceed to trial and that civil contempt had nothing to do with their case. Mr. Armstrong countered that his detainment impeded his efforts to mount a proper defense, blocking his access to essential documents and computers as well as the assets to pay counsel.
Because there has been no jury trial in the case, it is impossible to say which side is right: the government, whose indictment in September 1999 contended that Mr. Armstrong misappropriated hundreds of millions in client funds; or Mr. Armstrong, who said that officials at the bank executing his trades generated temporary losses that could have been recovered in the market. (Two of those officials later pleaded guilty to fraud in a related case involving the bank.)
Rick Maiman/Bloomberg News
Martin A. Armstrong, pictured in jail in February 2000, has almost served more jail time for civil contempt than he would have if he had been sentenced to the likely 6.5 to 8 years on conviction of 24 criminal counts of securities fraud, commodities fraud and wire fraud.
Exceeding a Sentence
But this much is certain: Mr. Armstrong’s years in jail for civil contempt will soon exceed the sentence of 6.5 to 8 years that he would have received if he had been convicted of all 24 criminal counts of securities fraud, commodities fraud and wire fraud. “The case sends a very bad signal,” said Bernard V. Kleinman, a criminal lawyer in White Plains who represented Mr. Armstrong until 2004 and argued twice for his release before the United States Court of Appeals for the Second Circuit, in Lower Manhattan. “I think it bodes very ill for anybody held in civil contempt. District court judges can look at this case and feel that the likelihood of the circuit reversing them is small and that time is, in and of itself, no factor in determining whether civil contempt has lost its coercive effect and has become punitive.”
John F. Keenan, the Federal District Court judge overseeing the criminal case, has not yet sentenced Mr. Armstrong. It is unclear whether the judge will give Mr. Armstrong credit for the time he has served. Under federal sentencing guidelines, his lawyers expect a sentence of about five years.
A spokeswoman for the United States attorney in Manhattan said that the office did not comment on open cases.
Judge Richard Owen, the senior district judge who ordered Mr. Armstrong held in contempt, still sits on the bench in the Southern District of New York, where he has been for 34 years. When he ordered Mr. Armstrong taken away by federal marshals, he declared, “Mr. Armstrong has the keys to the jail cell in his pocket by production and telling people where to go to get it and dig it up and turn it over.”
Over the years, Judge Owen would revisit the contempt order every 18 months, guided by the federal statute. He repeatedly said that Mr. Armstrong was motivated by greed and was awaiting his release from jail to retrieve the $15 million that the government said was missing. According to lawyers who worked on the case in the early days, the financier’s headstrong manner irritated Judge Owen almost immediately.
But Judge Owen was moved off the case in November by a panel in the Second Circuit Court hearing Mr. Armstrong’s third appeal on the contempt charge.
The three judges unanimously rejected the appeal to free Mr. Armstrong but found that on the seventh anniversary of his confinement, “his case deserves a fresh look by a different pair of eyes.”
It was the second time in less than a year that the Second Circuit had ordered Judge Owen replaced on a high-profile case. In March, a panel overturned the 2004 conviction of Frank P. Quattrone, the former investment banker at Credit Suisse, because Judge Owen failed to instruct the jury properly; the panel assigned the case to a new judge in the “interest of justice.” Later, the government decided not to retry Mr. Quattrone.
Judge P. Kevin Castel has taken over the Armstrong civil case. A hearing is scheduled on the contempt matter for March 15. A request to interview Mr. Armstrong in person was denied by corrections officials, and Judge Owen did not return a call seeking comment.
A Budding Businessman
At the peak of his career in the mid-90s, Mr. Armstrong oversaw $3 billion in client assets. He was widely quoted in the financial news media, including The New York Times, on interest rate and currency movements. He began working at a coin and stamp dealership when he was 13 and opened a collectors’ store when he was 21. He founded Princeton Economics International, based in Princeton, N.J., in 1981.
Mr. Armstrong, an intelligent and imperious man who claimed to have made his first million by age 15, seems to have begun having trouble in 1999 when trading losses turned up in accounts that were held for the firm at Republic Bank. The problems appeared as the HSBC Group conducted a financial review before acquiring Republic.
The government said that Mr. Armstrong had improperly commingled accounts and overstated the value of the account’s securities in client statements.
Mr. Armstrong said that he did not authorize the transactions that produced losses and that he was not involved with commingling of the accounts. He was indicted in September and released on $5 million bond.
In January 2000, the receiver appointed by the court in the civil case said that Mr. Armstrong had purchased gold coins and other assets with his firm’s money. His lawyers argued that the assets might have been purchased before the suspected wrongdoing.
When Judge Owen ordered the assets returned, Mr. Armstrong delivered 4 of the 5 computers sought, 8 of the 11 requested boxes of documents and gold coins worth $1.1 million. He said that was all he had. The receiver said assets worth about $15 million were missing. Mr. Armstrong’s odyssey in the judicial system began.
His assets frozen, Mr. Armstrong has been unable to pay lawyers. He now relies upon David Cooper and Steven Z. Legon, two lawyers from the Criminal Justice Act panel, set up to help indigent defendants, and Thomas V. Sjoblom, a lawyer at Proskauer Rose, who has received nominal compensation.
“On what grounds can you tie up the system of criminal procedure and civil procedure and hold everything in abeyance during contempt?” Mr. Sjoblom asked. “What about your speedy trial rights? What about the government’s need to move forward in the civil case? You’re using the contempt process to wring a settlement or a plea out of the person. That, to me, is abuse of the process.”
Over the years, more than half a dozen government lawyers have cycled through the case. In 2003, Mr. Armstrong changed his legal approach in challenging the contempt charge, saying that he did not have to produce the assets and citing his Fifth Amendment right.
The receiver, meanwhile, has recovered the vast majority of money said to have been lost by investors in the case. In January 2002, Republic New York Securities, a brokerage firm that housed Princeton Economics’ accounts, pleaded guilty to conspiracy and securities fraud charges. Republic Bank paid $606 million to victims, all Japanese companies. It was “full restitution,” the assistant United States attorney said at the time.
Alan M. Cohen, then a lawyer at O’Melveny & Myers and now executive vice president and global head of compliance at Goldman Sachs, is the court-appointed receiver.
His former colleague, Tancred V. Schiavoni, a lawyer at O’Melveny, said that all the victims had been satisfied. “We tried to do the right thing, and we’ve gotten nothing but grief,” he said. “What this guy wants is to be given credit for time served on the contempt and leave with the money.”
O’Melveny & Myers has received at least $3.9 million to cover its fees and disbursement over the years, according to court filings.
The discovery process was protracted partly because of the complexity — hundreds of boxes of materials had to be examined and data transcribed into digital format — and because Mr. Armstrong was in jail and relying on lawyers working pro bono.
In January 2006, criminal prosecutors said they were eager to put Mr. Armstrong on trial in October. Then in early August, federal prosecutors appeared at the correctional center to strike a plea deal. The visit, Mr. Sjoblom said, came a week after Mr. Armstrong had been ordered into solitary confinement — known as “the hole” — for damaging a vent in a common area.
Mr. Armstrong pleaded guilty to one count of conspiracy to commit securities fraud for failing to keep his investors informed about losses and for agreeing to make investor funds available to Republic to cover Princeton Economics’ unrelated trading losses.
“I think the government just wore Marty out,” Mr. Sjoblom said.
On Dec. 7, Stephen J. Obie, regional counsel for the Commodity Futures Trading Commission, visited Mr. Armstrong, with a settlement offer in which he would sign over some $30 million as a penalty. Mr. Armstrong declined.
The Securities and Exchange Commission and the C.F.T.C. declined to comment on the case.
The government has said that $21 million is still owed. Even if that must be paid by Mr. Armstrong’s firm and not Republic Bank, an estimated $40 million is left in what was once Princeton Economics: $30 million in the United States and $10 million in a British entity. Mr. Armstrong and his lawyers learned of the $10 million three weeks ago.
Fred R. Conrad/The New York Times
Victoria Armstrong visits her father most Wednesdays at the Metropolitan Correctional Center in Manhattan, where he has been held for contempt for seven years.
Weekly Visits
Mr. Armstrong, who is divorced, has two children and an elderly mother who await his release. His daughter, Victoria Armstrong, 30, visits most Wednesdays, spending about one hour with him in a common room with other visitors and prisoners.
“You never stop thinking about where he is and what he goes through,” Ms. Armstrong said in an interview last week.
Her brother, Martin, 31, said he was bewildered at what he sees as the breakdown of due process in his father’s case. “That you can keep someone in contempt for such a long time with so many unanswered questions — that part of it has been a real eye-opener,” he said.
Sonia Sotomayor, a judge on the Second Circuit panel that heard Mr. Armstrong’s appeal last year, seemed to echo this point. “The district court’s finding that Armstrong is motivated solely by greed is not enough to justify disregard for due process,” she wrote. “Courts must exercise caution in their use of the contempt power and must recognize when it has reached the limits of its utility.”
http://www.nytimes.com/2007/02/16/business...amp;oref=slogin
Discovery of the 8.6 yr cycle NORTH AMERICA'S TOP ECONOMIST - EQUITY MAGAZINE - 1990
Discovered in the 1970's by dividing the number of major panics into a given time frame Armstrong's 8.6 year pi cycle (piX1000=3141 days or 8.6 years) has had many direct hits on various market indexes, commodities and currencies producing billions to one odds against it being just a meaningless coincidence.Similar to Benner's Cycle which is based around a 9 year cycle, Armstrong's cycle gives dates down to the day years and decades ahead of time, not just a yearly date as Benner's shows. Armstrong's is much more precise. So much so that the CIA and Chinese government tried to aquire his super-computer model after his amazing prediction of the crash of 1998 to the day. Mr. Armstrong has had his constitutional rights stripped from him, his Constitutional right to a speedy trial was taken away from him. Did the founding fathers of America want future judges and politicians to ignore the Constitution? What would the founding fathers do to officials who ignored the Constitution?
Recent events in the world's stock markets show the accuracy of his model, the markets sold off right on his forcasted date of Feb 27, 2007. He said in effect that everything would rise up into 2007 -including the stockmarkets, housing and especially hard assets like commodities. The fact that the hard assets peaked last spring (gold copper etc) shows that capital flows are currently focused on the stock markets world-wide, it is likely that they will continue up and commodities should resume their bull market for the next major leg up - $100+ a barrel oil and Gold well over $2000 - even 3 or $4000 according to some estimates.
According to Timer's Digest top market timer Don Wolanchuk we will be entering into 'Primary Wave 3' that is going to take the Dow to 20,000 in the coming years, gold and commodities should keep moving up too.
[Update as of Oct.16, 2008: Well now that all hell has broken lose in the markets, being one of 5 major crashes over the past 200 years, and coming down with a velocity only exceeded on two other instances in history, we can see much more clearly now. The housing and mortgage issue that I was concerned about in early 2007 certainly turned out to be a very unpleasant event with the US government having to step in with a 700 Billion bail-out package for the financial institutions that used leverage and derivatives to speculate in unsound mortgages. In retrospect Martin Armstrong's pi cycle showed the high in the US financial indices back in February of 2007 which produced a mini-crash, that turned out to be the warning shot fired which has now led to about a 50% loss in the stock markets in one year. As noted elsewhere in my articles, Mr. Armstrong wrote in 1999 that by late 2007 it would be obvious that there was serious problems with the economy. Don Wolanchuk still thinks that the Dow Jones Industrials can have his huge rally, I presume approaching 20,000 before 2011 and while I did think that was a possiblity before, I now think that is pretty unlikey.
After viewing a live webinar put on by GannGlobal.com today, I think it worth noting that a market that declines with this much velocity and by so much is likely to take out the initial panic low that we saw on Oct.10, 2008. It seems like it would be a miracle now for the markets to resume a major bull market. Mid 2011 is the next pi cycle low, so I think the markets are likely to keep going down into that time now, although there can always be strong retracement rallies within any bear market.
I pray that this is not going to get too ugly but I think we can expect to see unemployment rates move up agressively over the next couple of years. As I have explained on a public forum to Mr. Wolanchuk, I do not have the advantage of Martin's 32,000 variables super computer model but I will continue to interpret his model using just my brain, lol.]
Below written in early 2007.
My concern here is housing - if it keeps breaking down into mid 2009 as my own work is suggesting - things may get a little rough, and the next major trough for the economy should be Martin's mid 2011 date. I think it possible that gold and commodities will go up into 2009, which would then lead to the 2011.45 trough, just as the year 2000 was the peak in the markets and led to the low a couple of years later.
The Business Cycle And The Future
By Martin A. Armstrong
September 26,1999
For many years, I have pursued a field of study that is at best non-traditional. My discovery of a global business cycle during the early 1970's was by no means intentional. As a youth growing up in the 1960's, the atmosphere was anything but stable. I don't really know if it was Hollywood that captivated my interest in history with an endless series of movies about Roman and Greek history, but whatever it was that drove me, I can only attest to what resulted.
My father had always wanted to return to Europe after serving under General Patton during the war. My mother insisted that she would go only when he could afford to take the whole family. That day finally came and something inside me insisted upon being able to earn my own spending money. I applied for a job despite my age of only 14. It wasn't much, but on weekends I worked with a coin/bullion dealer. In those days, gold was illegal to buy or sell in bullion form so the industry centered on gold coins issued by Mexico, Hungary and Austria. I soon became familiar with the financial markets as they were starting to emerge. It was this experience that began to conflict with the formal training of school.
One day in a history class, the teacher brought in an old black and white film entitled "Toast of the Town." This film was about Jim Fisk and his attempt to corner the gold market in 1869 that created a major financial panic in which the term "Black Friday" was first coined. In the film was a very young support actor named Cary Grant who stood by the ticker tape machine reading off the latest gold prices. He read the tape and exclaimed that gold had just reached $162 an ounce. I knew from my job that gold was currently selling for $35. At first I thought that the price quote of $162 in the movie must be wrong. After all, Hollywood wasn't known for truthfulness. Nonetheless, I was compelled to go to the library to check the newspapers of 1869 for myself. This first step in research left me stunned – the New York Times verified $162 was correct.
For the first time in my life, I was faced with a paradox that seemed to conflict with traditional concepts. How could gold be $162 in 1869 and yet be worth only $35 in the 1960's? Surely, inflation was supposed to be linear. If a dollar was a lot of money in 1869, this meant that adjusted for inflation gold must have been the equivalent of several thousand dollars. If value was not linear, then was anything linear?
I began exploring the field of economics on my own and reading the various debates over the existance of a business cycle. Kondratieff was interesting for his vision of great waves of economic activity. Of course, others argued that such oscillations were purely random. Over the years that followed, this nagging question still bothered me. I had poured my heart and soul into history, quickly learning that all civilizations rose and fell and there seemed to be no exception.
I was still not yet convinced that a business cycle was actually definable. Kondratieff's work was indeed interesting, but there was not enough data to say that it was in fact correct. On the other hand, it seemed that the random theory crowd was somehow threatened by the notion that the business cycle might be definable. After all, if the business cycle could be defined, then perhaps man's intervention would not be successful. Clearly, there was a large degree of self-interest in discouraging any attempt to define the business cycle. I knew from my study of history that a non-professional German industrialist took Homer and set out to disprove the academics who argued that Homer was merely a story for children. In the end, that untrained believer in Homer discovered Troy and just about every other famous Greek city that was not supposed to have existed beyond fable.
I didn't know how to go about such a quest to find if the business cycle was definable. Admittedly, I began with the very basic naive approach of simply adding up all the financial panics between 1683 and 1907 and dividing 224 years by the number of panics being 26 yielding 8.6 years. Well, this didn't seem to be very valid at first, but it did allow for a greater amount of data to be tested compared to merely 3 waves described by Kondratieff.
The more I began to back test this 8.6-year average, the more accurate it seemed to be. I spent countless hours in libraries reading contemporary accounts of events around these dates. It soon became clear that there were issues of intensity and shifts in public confidence. During some periods, society seemed to distrust government and after a good boom bust cycle, sentiment shifted as people ran into the arms of government for solutions. Politics seemed to ebb and flow in harmony with the business cycle. Destroy an economy and someone like Hitler can rise to power very easily. If everyone is fat and happy, they will elect to ignore drastic change preferring not to rock the boat.
The issue of intensity seemed to revolve around periods of 51.6 years, which was in reality a group of 6 individual business cycles of 8.6 years in length. Back testing into ancient history seemed to reveal that the business cycle concept was alive and well during the Greek Empire as well as Rome and all others that followed. It was a natural step to see if one could project into the future and determine if its validity would still hold up. Using 1929.75 as a reference point, major and minor turning points could then be projected forward in time. For the most part, I merely observed and kept to myself this strange way of thinking. In 1976, one of these 8.6-year turning points was quickly approaching (1977.05). For the first time, I began to use this model expecting a significant turn in the economy back toward inflation. My friends thought I was mad. Everyone was talking about how another Great Depression was coming. The stock market had crashed by 50% and OPEC seemed to be undermining everything. I rolled the dice and stuck to it and to my amazement, inflation exploded right on cue as gold rallied from $103 to $875 by January 1980.
As my confidence in this model increased, I began to expand my research testing it against everything I could find. It became clear, that turning points were definable, but the wildcard would always remain as a combination of volatility and intensity. To solve that problem, much more sophisticated modeling became necessary.
As the 51.6-year turning point approached (1981.35), there was no doubt in my mind that the intensity would be monumental. Indeed, interest rates went crazy with prime reaching 22% and the discount rate being pushed up to 17%. The government was attacking inflation so hard, they moved into overkill causing a massive recession into the next half-cycle date of 1985.65. It was at this point in time that the Plaza Accord gave birth of the G5. I tried to warn the US government that manipulating the currency would set in motion a progressive trend toward higher volatility within the capital markets and the global business cycle as a whole. They ignored me and claimed that until someone else had such a model, they did not believe that volatility would be a concern.
The next quarter cycle turning point was arriving 1987.8 and the Crash of 1987 unfolded right on cue. It was at this time that a truly amazing development took place. The target date of 1987.8 was precisely October 19th, 1987 the day of the low. While individual models specifically based upon the stock market were successful in pinpointing the high and low days, I did not think for one moment that a business cycle that was derived from an average could pinpoint a precise day; it simply did not seem logical.
After 1987, I began to explore the possibility that coincidence should not be just assumed. I began researching this model even more with the possibility that precision, no matter how illogical, might possibly exist. I began viewing this business cycle not from a mere economic perspective, but from physics and math. If this business cycle were indeed real, then perhaps other fields of science would hold a clue to this mystery. Physics helped me understand the mechanism that would drive the business cycle but mathematics would perhaps answer the quantitative mystery. I soon began to understand that the circle is a perfect order. Clearly, major historical events that took place in conjunction with this model involved the forces of nature as well. If this business cycle was significant, surely it must encompass something more than the mere economic footprints of mankind throughout the ages.
The Mystery of 8.6
At first, 8.6 seemed to be a rather odd number that just didn't fit mathematically. In trying to test the validity of October 19th, 1987 being precise or coincidence, I stumbled upon something I never expected. This is the first time I will reveal something that I discovered and kept secret for the last 13 years. The total number of days within an 8.6-year business cycle was 3141. In reality, the 8.6-year cycle was equal to p (Pi) * 1000. Suddenly, there was clearly more at work than mere coincidence. Through extending my studies into physics, it became obvious that randomness was not a possibility. The number of variables involved in projecting the future course of the business cycle was massive, but not completely impossible given sufficient computer power and a truly comprehensive database. The relationship of 8.6 to p (Pi) confirmed that indeed the business cycle was in fact a perfect natural cyclical phenomenon that warranted further investigation. Indeed, the precision to a day appeared numerous times around the world in different markets. Both the 1994.25 and the 1998.55 turning points also produced clear events precisely to the day. The probability of coincidence of so many targets being that precise to the day was well into the billions. Indeed, the relationship of p to the business cycle demonstrated the existence of a perfect cycle that returned to its point of origin where once again it would start anew. The complexity that arose was that while the cycle could be measured and predicted, precisely which sector of the global economy would become the focal point emerged as the new research challenge.
It was also clear that the driving forces behind the business cycle had shifted and intensified due to the introduction of the floating exchange rate system back in 1971. My study into intensity and volatility revealed that whenever the value of money became uncertain, inflation would rise dramatically as money ceased to be a store of wealth. Numerous periods of debasements and floating exchange rate systems had taken place throughout recorded history. The data available from Rome itself was a spectacular resource for determining hard rules as to how capital responded to standard economic events of debasement and inflation. The concept of Adam Smith's Invisible Hand was valid, but even on a much grander scale involving capital flow movement between competing economies. The overall intensity of the cycle was decisively enhanced creating greater waves as measured by amplitude by the floating exchange system. As currency values began to swing by 40% in 4-year intervals, the cycle intensified even further causing currency swings of 40% within 2-year intervals and finally down to a matter of months following the July 20th, 1998 turning point.
The Domino Effect
The events that followed 1987 were all too easy to foresee. The G5 talked the dollar down by 40% between 1985 and 1987 essentially telling foreign capital to get out. The Japanese obliged and their own capital contraction led to the next bubble top at the peak of the 8.6-year cycle that was now due 1989.95. As the Japanese took their money home for investment, the value of their currency rose as did their assets thereby attracting global investment as well. Everyone was there in Tokyo in late 1989. Just about every investment fund manager globally was touting the virtues of Japan. As the Japanese bubble peaked, capital had acquired a taste for foreign investment. That now savvy pool of international investment capital turned with an eye towards South East Asia. Right on cue, the capital shifted moving into South East Asia for the duration of the next half-cycle of 4.3 years until it too reached its point of maximum intensity going into 1994.25. At this point, international capital began to shift again turning back to the United States and Europe, thus causing the beginning of a new bull market in a similar manner to what had happened in Japan. In fact, 1994.25 was once again the precise day of the low on the S&P 500 for that year. As American and European investment returned home, the steady outflow of capital from South East Asia finally led to the Asian Crisis in 1997. In both cases, Japan and South East Asia blamed outsiders and sought to impose punitive measures to artificially support their markets. In Japan, these interventions have left the Postal Savings Fund insolvent as public money was used to support the JGB market. Financial institutions were encouraged to hide their losses and even employees from the Minister of Finance were installed in some cases engaging in loss postponing transactions of every kind. Major life companies were told not to hedge their risks for fear that this would make the markets decline even further. Thus, the demise of Japan that would have been complete by 1994 was extended by government intervention that has most likely resulted in a lengthening of the business cycle decline into 2002.85.
The next peak on the 8.6-year business cycle came in at 1998.55, which was precisely July 20th, 1998. While the intensity was defined rather well by the model's forecast of 6,000 on the Dow by the quarter-cycle target of 1996.4 followed by 10,000 for 1998, the development of highly leveraged hedge funds created a trap that was not fully anticipated. It was clear that the European markets had captured the greatest intensity between 1996 and 1998 and that Russia too had reached our target for maximum intensity. However, the excessive leveraging of funds like Long-Term Capital Management had significantly created the peak in volume as well. Thus, the spread trades were so excessive, that the collapse that was to be expected, took on a virus type of affect. As Russia moved into default, and LTCM moved into default, the degree of leverage caused a cascade of liquidation that was spread around the world. Everything became affected causing the collapse in liquidity and credit to further undermine the global economy as a whole. Despite the new highs in US indices into 1999, the broader market has failed to keep pace and the peak in both liquidity and volume remains clearly that of 1998.55.
The Future
While this business cycle can be calculated on quarter-cycle intervals of 2.15 years into the final peak for this major wave formation of December 24th, 2032. Though this is long beyond my life expectancy, there is so much more behind the true understanding of the driving forces within the business cycle. I have learned that it is easy to claim coincidence and ignore the telltale signs of a hidden order. It is easy to argue that there is no basis for such a model without ever making an effort to test results. If everyone stopped with such criticism, most of ancient Greece would still be buried and Homer would still be considered a book for children. Man would not fly or travel to the moon. A cure for cancer would not be sought and progress would simply not exist. But furthering our understanding is part of humanity. Like law, that when strictly enforced deprives society of justice when circumstances are ignored, it is also the sin of ignorance toward new concepts that deprives mankind of progress and ultimately our posterity.
The Economic Confidence Model in 2.15-year intervals
1998.55... 07/20/98
2000.7.... 09/13/00
2002.85... 11/08/02
2005.... 01/02/05
2007.15... 02/27/07
2009.3... 04/23/09
2011.45... 06/18/11
2013.6... 08/12/13
2015.75... 10/07/15
2017.9... 12/01/17
2020.05... 01/26/20
2022.2... 03/22/22
2024.35... 05/16/24
2026.5... 07/11/26
2028.65... 09/04/28
2030.8... 10/30/30
2032.95... 12/24/32
In the next issue of the WCMR, the details of this business cycle will be expanded to provide a list of turning points down to the 8.6-month interval. There is a wealth of knowledge that lies ahead if we are not afraid to explore. Regularity of the business cycle does not mean that we lack free will. For it has taken me 30 years of observation to get this far. The peak for one nation may be the low for another. For within the scheme of global capital flows, not everyone can enjoy a boom simultaneously. For every gain in trade, there must be someone who loses. This is simply the nature of the global economy. The greatest booms unfold when capital concentrates in one sector. When that capital shifts, you also find the result of the greatest financial panics in history. An individual will always possess the free will to follow the crowd or strike out with his own independence to buck the trend. There will be those who believe in the business cycle and use it to their advantage just as there will be those who refuse to acknowledge its existence. As long as not everyone believes, the cycle will exist forever. The regularity of the business cycle is not determined by man alone; for within its deep calculations resides the very heart of nature itself. Like the Biblical forecast of Joseph that seven years of plenty will be followed by seven years of famine, understanding the nature of the business cycle can certainly enhance our ability to better manage our affairs rather than constantly add to the intensity of the cycle through our own error of intervention. For now, it is more likely that the politics will continue to act in the opposite direction of the cycle adding to its intensity and enhancing its volatility. Perhaps I have been an evangelist seeking to point out that the economy is like a rain forest – destroy one species and it will ripple through the entire system. The global economy to me is the same delicate system that cannot be viewed in isolation, but only through its collective integration. The failed labor policies of Europe have created perpetually high unemployment and the worst record of economic growth for the past 30 years. Instead of objectively reviewing what has happened, Europe seeks to federalize and strengthen the very controls that already exist. Communism and socialism are all political byproducts of our failure to understand the business cycle. Blaming the rich, your neighbor or a particular race are all vain quests to explain the cause of a cycle that has moved through the boom bust phase. Who knows, perhaps it is possible that if for one moment we truly understood the business cycle and worked in harmony with it, the possibility of reducing the amplitude just might result in a more stable political-economy for all mankind.
NORTH AMERICA'S TOP ECONOMIST - EQUITY MAGAZINE - 1990Discovered in the 1970's by dividing the number of major panics into a given time frame Armstrong's 8.6 year pi cycle (piX1000=3141 days or 8.6 years) has had many direct hits on various market indexes, commodities and currencies producing billions to one odds against it being just a meaningless coincidence.Similar to Benner's Cycle which is based around a 9 year cycle, Armstrong's cycle gives dates down to the day years and decades ahead of time, not just a yearly date as Benner's shows. Armstrong's is much more precise. So much so that the CIA and Chinese government tried to aquire his super-computer model after his amazing prediction of the crash of 1998 to the day. Mr. Armstrong has had his constitutional rights stripped from him, his Constitutional right to a speedy trial was taken away from him. Did the founding fathers of America want future judges and politicians to ignore the Constitution? What would the founding fathers do to officials who ignored the Constitution?
Recent events in the world's stock markets show the accuracy of his model, the markets sold off right on his forcasted date of Feb 27, 2007. He said in effect that everything would rise up into 2007 -including the stockmarkets, housing and especially hard assets like commodities. The fact that the hard assets peaked last spring (gold copper etc) shows that capital flows are currently focused on the stock markets world-wide, it is likely that they will continue up and commodities should resume their bull market for the next major leg up - $100+ a barrel oil and Gold well over $2000 - even 3 or $4000 according to some estimates.
According to Timer's Digest top market timer Don Wolanchuk we will be entering into 'Primary Wave 3' that is going to take the Dow to 20,000 in the coming years, gold and commodities should keep moving up too.
[Update as of Oct.16, 2008: Well now that all hell has broken lose in the markets, being one of 5 major crashes over the past 200 years, and coming down with a velocity only exceeded on two other instances in history, we can see much more clearly now. The housing and mortgage issue that I was concerned about in early 2007 certainly turned out to be a very unpleasant event with the US government having to step in with a 700 Billion bail-out package for the financial institutions that used leverage and derivatives to speculate in unsound mortgages. In retrospect Martin Armstrong's pi cycle showed the high in the US financial indices back in February of 2007 which produced a mini-crash, that turned out to be the warning shot fired which has now led to about a 50% loss in the stock markets in one year. As noted elsewhere in my articles, Mr. Armstrong wrote in 1999 that by late 2007 it would be obvious that there was serious problems with the economy. Don Wolanchuk still thinks that the Dow Jones Industrials can have his huge rally, I presume approaching 20,000 before 2011 and while I did think that was a possiblity before, I now think that is pretty unlikey.
After viewing a live webinar put on by GannGlobal.com today, I think it worth noting that a market that declines with this much velocity and by so much is likely to take out the initial panic low that we saw on Oct.10, 2008. It seems like it would be a miracle now for the markets to resume a major bull market. Mid 2011 is the next pi cycle low, so I think the markets are likely to keep going down into that time now, although there can always be strong retracement rallies within any bear market.
I pray that this is not going to get too ugly but I think we can expect to see unemployment rates move up agressively over the next couple of years. As I have explained on a public forum to Mr. Wolanchuk, I do not have the advantage of Martin's 32,000 variables super computer model but I will continue to interpret his model using just my brain, lol.]
Below written in early 2007.
My concern here is housing - if it keeps breaking down into mid 2009 as my own work is suggesting - things may get a little rough, and the next major trough for the economy should be Martin's mid 2011 date. I think it possible that gold and commodities will go up into 2009, which would then lead to the 2011.45 trough, just as the year 2000 was the peak in the markets and led to the low a couple of years later.
The Business Cycle And The Future
By Martin A. Armstrong
September 26,1999
For many years, I have pursued a field of study that is at best non-traditional. My discovery of a global business cycle during the early 1970's was by no means intentional. As a youth growing up in the 1960's, the atmosphere was anything but stable. I don't really know if it was Hollywood that captivated my interest in history with an endless series of movies about Roman and Greek history, but whatever it was that drove me, I can only attest to what resulted.
My father had always wanted to return to Europe after serving under General Patton during the war. My mother insisted that she would go only when he could afford to take the whole family. That day finally came and something inside me insisted upon being able to earn my own spending money. I applied for a job despite my age of only 14. It wasn't much, but on weekends I worked with a coin/bullion dealer. In those days, gold was illegal to buy or sell in bullion form so the industry centered on gold coins issued by Mexico, Hungary and Austria. I soon became familiar with the financial markets as they were starting to emerge. It was this experience that began to conflict with the formal training of school.
One day in a history class, the teacher brought in an old black and white film entitled "Toast of the Town." This film was about Jim Fisk and his attempt to corner the gold market in 1869 that created a major financial panic in which the term "Black Friday" was first coined. In the film was a very young support actor named Cary Grant who stood by the ticker tape machine reading off the latest gold prices. He read the tape and exclaimed that gold had just reached $162 an ounce. I knew from my job that gold was currently selling for $35. At first I thought that the price quote of $162 in the movie must be wrong. After all, Hollywood wasn't known for truthfulness. Nonetheless, I was compelled to go to the library to check the newspapers of 1869 for myself. This first step in research left me stunned – the New York Times verified $162 was correct.
For the first time in my life, I was faced with a paradox that seemed to conflict with traditional concepts. How could gold be $162 in 1869 and yet be worth only $35 in the 1960's? Surely, inflation was supposed to be linear. If a dollar was a lot of money in 1869, this meant that adjusted for inflation gold must have been the equivalent of several thousand dollars. If value was not linear, then was anything linear?
I began exploring the field of economics on my own and reading the various debates over the existance of a business cycle. Kondratieff was interesting for his vision of great waves of economic activity. Of course, others argued that such oscillations were purely random. Over the years that followed, this nagging question still bothered me. I had poured my heart and soul into history, quickly learning that all civilizations rose and fell and there seemed to be no exception.
I was still not yet convinced that a business cycle was actually definable. Kondratieff's work was indeed interesting, but there was not enough data to say that it was in fact correct. On the other hand, it seemed that the random theory crowd was somehow threatened by the notion that the business cycle might be definable. After all, if the business cycle could be defined, then perhaps man's intervention would not be successful. Clearly, there was a large degree of self-interest in discouraging any attempt to define the business cycle. I knew from my study of history that a non-professional German industrialist took Homer and set out to disprove the academics who argued that Homer was merely a story for children. In the end, that untrained believer in Homer discovered Troy and just about every other famous Greek city that was not supposed to have existed beyond fable.
I didn't know how to go about such a quest to find if the business cycle was definable. Admittedly, I began with the very basic naive approach of simply adding up all the financial panics between 1683 and 1907 and dividing 224 years by the number of panics being 26 yielding 8.6 years. Well, this didn't seem to be very valid at first, but it did allow for a greater amount of data to be tested compared to merely 3 waves described by Kondratieff.
The more I began to back test this 8.6-year average, the more accurate it seemed to be. I spent countless hours in libraries reading contemporary accounts of events around these dates. It soon became clear that there were issues of intensity and shifts in public confidence. During some periods, society seemed to distrust government and after a good boom bust cycle, sentiment shifted as people ran into the arms of government for solutions. Politics seemed to ebb and flow in harmony with the business cycle. Destroy an economy and someone like Hitler can rise to power very easily. If everyone is fat and happy, they will elect to ignore drastic change preferring not to rock the boat.
The issue of intensity seemed to revolve around periods of 51.6 years, which was in reality a group of 6 individual business cycles of 8.6 years in length. Back testing into ancient history seemed to reveal that the business cycle concept was alive and well during the Greek Empire as well as Rome and all others that followed. It was a natural step to see if one could project into the future and determine if its validity would still hold up. Using 1929.75 as a reference point, major and minor turning points could then be projected forward in time. For the most part, I merely observed and kept to myself this strange way of thinking. In 1976, one of these 8.6-year turning points was quickly approaching (1977.05). For the first time, I began to use this model expecting a significant turn in the economy back toward inflation. My friends thought I was mad. Everyone was talking about how another Great Depression was coming. The stock market had crashed by 50% and OPEC seemed to be undermining everything. I rolled the dice and stuck to it and to my amazement, inflation exploded right on cue as gold rallied from $103 to $875 by January 1980.
As my confidence in this model increased, I began to expand my research testing it against everything I could find. It became clear, that turning points were definable, but the wildcard would always remain as a combination of volatility and intensity. To solve that problem, much more sophisticated modeling became necessary.
As the 51.6-year turning point approached (1981.35), there was no doubt in my mind that the intensity would be monumental. Indeed, interest rates went crazy with prime reaching 22% and the discount rate being pushed up to 17%. The government was attacking inflation so hard, they moved into overkill causing a massive recession into the next half-cycle date of 1985.65. It was at this point in time that the Plaza Accord gave birth of the G5. I tried to warn the US government that manipulating the currency would set in motion a progressive trend toward higher volatility within the capital markets and the global business cycle as a whole. They ignored me and claimed that until someone else had such a model, they did not believe that volatility would be a concern.
The next quarter cycle turning point was arriving 1987.8 and the Crash of 1987 unfolded right on cue. It was at this time that a truly amazing development took place. The target date of 1987.8 was precisely October 19th, 1987 the day of the low. While individual models specifically based upon the stock market were successful in pinpointing the high and low days, I did not think for one moment that a business cycle that was derived from an average could pinpoint a precise day; it simply did not seem logical.
After 1987, I began to explore the possibility that coincidence should not be just assumed. I began researching this model even more with the possibility that precision, no matter how illogical, might possibly exist. I began viewing this business cycle not from a mere economic perspective, but from physics and math. If this business cycle were indeed real, then perhaps other fields of science would hold a clue to this mystery. Physics helped me understand the mechanism that would drive the business cycle but mathematics would perhaps answer the quantitative mystery. I soon began to understand that the circle is a perfect order. Clearly, major historical events that took place in conjunction with this model involved the forces of nature as well. If this business cycle was significant, surely it must encompass something more than the mere economic footprints of mankind throughout the ages.
The Mystery of 8.6
At first, 8.6 seemed to be a rather odd number that just didn't fit mathematically. In trying to test the validity of October 19th, 1987 being precise or coincidence, I stumbled upon something I never expected. This is the first time I will reveal something that I discovered and kept secret for the last 13 years. The total number of days within an 8.6-year business cycle was 3141. In reality, the 8.6-year cycle was equal to p (Pi) * 1000. Suddenly, there was clearly more at work than mere coincidence. Through extending my studies into physics, it became obvious that randomness was not a possibility. The number of variables involved in projecting the future course of the business cycle was massive, but not completely impossible given sufficient computer power and a truly comprehensive database. The relationship of 8.6 to p (Pi) confirmed that indeed the business cycle was in fact a perfect natural cyclical phenomenon that warranted further investigation. Indeed, the precision to a day appeared numerous times around the world in different markets. Both the 1994.25 and the 1998.55 turning points also produced clear events precisely to the day. The probability of coincidence of so many targets being that precise to the day was well into the billions. Indeed, the relationship of p to the business cycle demonstrated the existence of a perfect cycle that returned to its point of origin where once again it would start anew. The complexity that arose was that while the cycle could be measured and predicted, precisely which sector of the global economy would become the focal point emerged as the new research challenge.
It was also clear that the driving forces behind the business cycle had shifted and intensified due to the introduction of the floating exchange rate system back in 1971. My study into intensity and volatility revealed that whenever the value of money became uncertain, inflation would rise dramatically as money ceased to be a store of wealth. Numerous periods of debasements and floating exchange rate systems had taken place throughout recorded history. The data available from Rome itself was a spectacular resource for determining hard rules as to how capital responded to standard economic events of debasement and inflation. The concept of Adam Smith's Invisible Hand was valid, but even on a much grander scale involving capital flow movement between competing economies. The overall intensity of the cycle was decisively enhanced creating greater waves as measured by amplitude by the floating exchange system. As currency values began to swing by 40% in 4-year intervals, the cycle intensified even further causing currency swings of 40% within 2-year intervals and finally down to a matter of months following the July 20th, 1998 turning point.
The Domino Effect
The events that followed 1987 were all too easy to foresee. The G5 talked the dollar down by 40% between 1985 and 1987 essentially telling foreign capital to get out. The Japanese obliged and their own capital contraction led to the next bubble top at the peak of the 8.6-year cycle that was now due 1989.95. As the Japanese took their money home for investment, the value of their currency rose as did their assets thereby attracting global investment as well. Everyone was there in Tokyo in late 1989. Just about every investment fund manager globally was touting the virtues of Japan. As the Japanese bubble peaked, capital had acquired a taste for foreign investment. That now savvy pool of international investment capital turned with an eye towards South East Asia. Right on cue, the capital shifted moving into South East Asia for the duration of the next half-cycle of 4.3 years until it too reached its point of maximum intensity going into 1994.25. At this point, international capital began to shift again turning back to the United States and Europe, thus causing the beginning of a new bull market in a similar manner to what had happened in Japan. In fact, 1994.25 was once again the precise day of the low on the S&P 500 for that year. As American and European investment returned home, the steady outflow of capital from South East Asia finally led to the Asian Crisis in 1997. In both cases, Japan and South East Asia blamed outsiders and sought to impose punitive measures to artificially support their markets. In Japan, these interventions have left the Postal Savings Fund insolvent as public money was used to support the JGB market. Financial institutions were encouraged to hide their losses and even employees from the Minister of Finance were installed in some cases engaging in loss postponing transactions of every kind. Major life companies were told not to hedge their risks for fear that this would make the markets decline even further. Thus, the demise of Japan that would have been complete by 1994 was extended by government intervention that has most likely resulted in a lengthening of the business cycle decline into 2002.85.
The next peak on the 8.6-year business cycle came in at 1998.55, which was precisely July 20th, 1998. While the intensity was defined rather well by the model's forecast of 6,000 on the Dow by the quarter-cycle target of 1996.4 followed by 10,000 for 1998, the development of highly leveraged hedge funds created a trap that was not fully anticipated. It was clear that the European markets had captured the greatest intensity between 1996 and 1998 and that Russia too had reached our target for maximum intensity. However, the excessive leveraging of funds like Long-Term Capital Management had significantly created the peak in volume as well. Thus, the spread trades were so excessive, that the collapse that was to be expected, took on a virus type of affect. As Russia moved into default, and LTCM moved into default, the degree of leverage caused a cascade of liquidation that was spread around the world. Everything became affected causing the collapse in liquidity and credit to further undermine the global economy as a whole. Despite the new highs in US indices into 1999, the broader market has failed to keep pace and the peak in both liquidity and volume remains clearly that of 1998.55.
The Future
While this business cycle can be calculated on quarter-cycle intervals of 2.15 years into the final peak for this major wave formation of December 24th, 2032. Though this is long beyond my life expectancy, there is so much more behind the true understanding of the driving forces within the business cycle. I have learned that it is easy to claim coincidence and ignore the telltale signs of a hidden order. It is easy to argue that there is no basis for such a model without ever making an effort to test results. If everyone stopped with such criticism, most of ancient Greece would still be buried and Homer would still be considered a book for children. Man would not fly or travel to the moon. A cure for cancer would not be sought and progress would simply not exist. But furthering our understanding is part of humanity. Like law, that when strictly enforced deprives society of justice when circumstances are ignored, it is also the sin of ignorance toward new concepts that deprives mankind of progress and ultimately our posterity.
The Economic Confidence Model in 2.15-year intervals
1998.55... 07/20/98
2000.7.... 09/13/00
2002.85... 11/08/02
2005.... 01/02/05
2007.15... 02/27/07
2009.3... 04/23/09
2011.45... 06/18/11
2013.6... 08/12/13
2015.75... 10/07/15
2017.9... 12/01/17
2020.05... 01/26/20
2022.2... 03/22/22
2024.35... 05/16/24
2026.5... 07/11/26
2028.65... 09/04/28
2030.8... 10/30/30
2032.95... 12/24/32
In the next issue of the WCMR, the details of this business cycle will be expanded to provide a list of turning points down to the 8.6-month interval. There is a wealth of knowledge that lies ahead if we are not afraid to explore. Regularity of the business cycle does not mean that we lack free will. For it has taken me 30 years of observation to get this far. The peak for one nation may be the low for another. For within the scheme of global capital flows, not everyone can enjoy a boom simultaneously. For every gain in trade, there must be someone who loses. This is simply the nature of the global economy. The greatest booms unfold when capital concentrates in one sector. When that capital shifts, you also find the result of the greatest financial panics in history. An individual will always possess the free will to follow the crowd or strike out with his own independence to buck the trend. There will be those who believe in the business cycle and use it to their advantage just as there will be those who refuse to acknowledge its existence. As long as not everyone believes, the cycle will exist forever. The regularity of the business cycle is not determined by man alone; for within its deep calculations resides the very heart of nature itself. Like the Biblical forecast of Joseph that seven years of plenty will be followed by seven years of famine, understanding the nature of the business cycle can certainly enhance our ability to better manage our affairs rather than constantly add to the intensity of the cycle through our own error of intervention. For now, it is more likely that the politics will continue to act in the opposite direction of the cycle adding to its intensity and enhancing its volatility. Perhaps I have been an evangelist seeking to point out that the economy is like a rain forest – destroy one species and it will ripple through the entire system. The global economy to me is the same delicate system that cannot be viewed in isolation, but only through its collective integration. The failed labor policies of Europe have created perpetually high unemployment and the worst record of economic growth for the past 30 years. Instead of objectively reviewing what has happened, Europe seeks to federalize and strengthen the very controls that already exist. Communism and socialism are all political byproducts of our failure to understand the business cycle. Blaming the rich, your neighbor or a particular race are all vain quests to explain the cause of a cycle that has moved through the boom bust phase. Who knows, perhaps it is possible that if for one moment we truly understood the business cycle and worked in harmony with it, the possibility of reducing the amplitude just might result in a more stable political-economy for all mankind.
UN Economic Team Warns of a Dollar Crash
We have an hypothesis that what is learned from this series of financial crises, from 2000 to 2012, and the failure of the dollar reserve currency experiment, is going give rise to a new school of economics as the Great Depression lifted Keynesianism over classical economics, and the bear market and stagflation of the 1970's sparked the ascendancy of monetarism.
2009 is going to be a pivotal, volatile year, and most likely, interesting.
The Financial Times
UN team warns of hard landing for dollar
By Harvey Morris in New York
December 1 2008 08:48
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.
In their annual report on the world economy published on Monday, the economists said the dollar's sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.
The overall trend remained a downward one, however, reflecting perceptions that the US debt position was approaching unsustainable levels. An accelerated fall of the dollar could bring new turmoil to financial markets.
"Investors might renew their flight to safety, though this time away from dollar-denominated assets, thereby forcing the US economy into a hard landing and pulling the global economy into a deeper recession," the report said.
Publication of the annual survey by the UN's Department of Economic and Social Affairs, its trade organisation Unctad and UN regional bodies, was brought forward by a month in the light of the financial crisis. It was launched in Doha to coincide with the UN-sponsored development financing conference in the Qatari capital.
The UN team said that, as the financial crisis spread beyond the US, there had been a massive shift of global financial assets into US Treasury bills, driving their yields almost to zero and pushing the dollar sharply higher. At the same time, however, the US's external debt had risen to new heights that could provoke a dollar collapse.
The report recommends reform of the international reserve system away from almost exclusive reliance on the dollar and towards a globally backed multi-currency system.
Rob Vos, a Dutch economist who heads the UN's policy and analysis division and who is responsible for the annual economic review, said the global economic pain could be eased if governments co-ordinated a spate of stimulus packages that were already under way.
"There has been a sea change in attitudes in favour of intervention and concerted action," he told the Financial Times. He welcomed statements from US president-elect Barack Obama's transition team in support of spending on infrastructure.
"Denial is the most predictable of all human responses. But, rest assured, this will be the sixth time we have destroyed it, and we have become exceedingly efficient at it."
The Architect of the Matrix
We have an hypothesis that what is learned from this series of financial crises, from 2000 to 2012, and the failure of the dollar reserve currency experiment, is going give rise to a new school of economics as the Great Depression lifted Keynesianism over classical economics, and the bear market and stagflation of the 1970's sparked the ascendancy of monetarism.
2009 is going to be a pivotal, volatile year, and most likely, interesting.
The Financial Times
UN team warns of hard landing for dollar
By Harvey Morris in New York
December 1 2008 08:48
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.
In their annual report on the world economy published on Monday, the economists said the dollar's sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.
The overall trend remained a downward one, however, reflecting perceptions that the US debt position was approaching unsustainable levels. An accelerated fall of the dollar could bring new turmoil to financial markets.
"Investors might renew their flight to safety, though this time away from dollar-denominated assets, thereby forcing the US economy into a hard landing and pulling the global economy into a deeper recession," the report said.
Publication of the annual survey by the UN's Department of Economic and Social Affairs, its trade organisation Unctad and UN regional bodies, was brought forward by a month in the light of the financial crisis. It was launched in Doha to coincide with the UN-sponsored development financing conference in the Qatari capital.
The UN team said that, as the financial crisis spread beyond the US, there had been a massive shift of global financial assets into US Treasury bills, driving their yields almost to zero and pushing the dollar sharply higher. At the same time, however, the US's external debt had risen to new heights that could provoke a dollar collapse. The report recommends reform of the international reserve system away from almost exclusive reliance on the dollar and towards a globally backed multi-currency system.
Rob Vos, a Dutch economist who heads the UN's policy and analysis division and who is responsible for the annual economic review, said the global economic pain could be eased if governments co-ordinated a spate of stimulus packages that were already under way.
"There has been a sea change in attitudes in favour of intervention and concerted action," he told the Financial Times. He welcomed statements from US president-elect Barack Obama's transition team in support of spending on infrastructure.
Recession in U.S. Started in December 2007, NBER Says
By Timothy R. Homan and Steve Matthews
Dec. 1 (Bloomberg) -- The U.S. economy entered a recession in December 2007, the panel that dates American business cycles said today.
The declaration was made by the National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts. The last time the U.S. was in a recession was from March through November 2001, according to NBER.
We feel vindicated in our prediction of this in February of this year.
Here is the chart we used at the time to mark the top, and to forecast the coming decline.
Here is a chart with the monthly actuals added to it. The decline has progressed more quickly than anticipated.
If you start reading the blog entries in 2007, one can see how the case for recession was carefully built up based on the indicators, and the probability steadily increased from an estimate of 65% in early December.
Although fundamentals don't work in the short term, in the longer term the markets work, and the fundamentals count, probabilities pay off, and there is a reversion to the means. The trick in trading is not to be trapped by leverage, timeframes and capital risk.
Once again a special thanks to our friend Elvis_Knows for his excellent graphics.
By Timothy R. Homan and Steve Matthews
Dec. 1 (Bloomberg) -- The U.S. economy entered a recession in December 2007, the panel that dates American business cycles said today.
The declaration was made by the National Bureau of Economic Research, a private, nonprofit group of economists based in Cambridge, Massachusetts. The last time the U.S. was in a recession was from March through November 2001, according to NBER.
We feel vindicated in our prediction of this in February of this year.
Here is the chart we used at the time to mark the top, and to forecast the coming decline.
Here is a chart with the monthly actuals added to it. The decline has progressed more quickly than anticipated.
If you start reading the blog entries in 2007, one can see how the case for recession was carefully built up based on the indicators, and the probability steadily increased from an estimate of 65% in early December.
Although fundamentals don't work in the short term, in the longer term the markets work, and the fundamentals count, probabilities pay off, and there is a reversion to the means. The trick in trading is not to be trapped by leverage, timeframes and capital risk.
Once again a special thanks to our friend Elvis_Knows for his excellent graphics.
Every Trick in the Book
by Mike Whitney / December 2nd, 2008 (10)
Conditions have deteriorated on a scale and with a speed that no one could have predicted just a few months ago. Market conditions of unprecedented strength are roiling the world’s financial markets. The global economy is either in, or close to, recession and 2009 is not likely to be a year of great recovery.
– Brett White, chief executive officer of CB Richard Ellis, [i]LA Times[/i]
Without any public debate or authorization from Congress, the Federal Reserve has embarked on the most expensive and radical financial intervention in history. Fed chairman Ben Bernanke is trying to avert another Great Depression …
(Full article …)
December 2008
The treasury market reaches breaking point
by Helen Avery
As credit and equity markets crashed again in November, mounting problems in the US government bond markets went almost unnoticed. There are worrying signs that the treasury market itself, the last haven for risk-averse investors, is breaking down. Deliveries of treasuries failed at an all-time high of $2 trillion, and over periods lasting weeks, starting in October. Helen Avery reports.
(snip)
The naked truth
THE US TREASURY market, the foundation of government bond and corporate bond markets worldwide, is suffering a crisis of confidence at the worst possible moment. Investors in treasuries are the lenders enabling the US government bail-out of the country’s broken financial institutions. That leaves them financing purchases of equity of volatile and highly questionable worth and backing a ragbag of distressed assets. There are more, presumably, to come. For now, treasury yields are at record lows across the term structure as investors with cash to invest conclude that they can trust no one else with their money. But investors must wonder at what point the expanded supply of government debt and its use will make the borrower inherently less creditworthy.
Holders of US treasuries are now scared to lend into the repo market in case their bonds are not returned, and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, and at worst might go under.
(snip)
Why the Federal Reserve is not urgently considering regulation is bewildering. As yet, the US Treasury has merely asked for market participants to sort out the situation themselves. That might help reduce fails but it will not eliminate them, and in panic periods they will simply creep back up. The global economy has significantly contracted since the collapse of Lehman Brothers, which spurred the fails to deliver. More market-shocking events are certain to lie ahead. The solution is simple – delivery needs to be enforced, and liquidity returned. If not, confidence in the US treasury markets will be lost. Loans made using treasuries as collateral will be reconsidered, bond markets priced off treasuries will further dry up and, with equity markets so volatile, central banks and investors will not know where to turn.
Back then, though, there would be $50 billion of fails in a whole year, she says. That figure has grown enormously. Failures in US treasuries were 8.6% of all treasuries outstanding in the first five months of this year, compared with 1.2% in the first five months of 2007. That has ballooned further over the past three months, hitting more than $2 trillion for almost the entire month of October – more than 20% of the daily trading volume in treasuries.
What the treasuries market faces now, at this critical moment, is the consequence of long neglect of some murky aspects of short-term tactical trading in government bonds.
For years, efforts by the US Treasury itself formally to resolve the growing fails issue have been brushed aside by market participants as unnecessary. Jeff Huther, the former director of the Office of Debt Management at the Treasury, had battled for several years for a solution, getting as far as a White Paper produced in April 2006 suggesting stricter enforcement of delivery and penalties.
This is a four page article:
Much more on link:
http://www.euromoney.com/Article/2060042/C...king-point.html
The treasury market reaches breaking point
by Helen Avery
As credit and equity markets crashed again in November, mounting problems in the US government bond markets went almost unnoticed. There are worrying signs that the treasury market itself, the last haven for risk-averse investors, is breaking down. Deliveries of treasuries failed at an all-time high of $2 trillion, and over periods lasting weeks, starting in October. Helen Avery reports.
(snip)
The naked truth
THE US TREASURY market, the foundation of government bond and corporate bond markets worldwide, is suffering a crisis of confidence at the worst possible moment. Investors in treasuries are the lenders enabling the US government bail-out of the country’s broken financial institutions. That leaves them financing purchases of equity of volatile and highly questionable worth and backing a ragbag of distressed assets. There are more, presumably, to come. For now, treasury yields are at record lows across the term structure as investors with cash to invest conclude that they can trust no one else with their money. But investors must wonder at what point the expanded supply of government debt and its use will make the borrower inherently less creditworthy.
Holders of US treasuries are now scared to lend into the repo market in case their bonds are not returned, and potential buyers sit on the sidelines fearful of handing over their money to a counterparty that at best might not deliver a bond on time, and at worst might go under.
(snip)
Why the Federal Reserve is not urgently considering regulation is bewildering. As yet, the US Treasury has merely asked for market participants to sort out the situation themselves. That might help reduce fails but it will not eliminate them, and in panic periods they will simply creep back up. The global economy has significantly contracted since the collapse of Lehman Brothers, which spurred the fails to deliver. More market-shocking events are certain to lie ahead. The solution is simple – delivery needs to be enforced, and liquidity returned. If not, confidence in the US treasury markets will be lost. Loans made using treasuries as collateral will be reconsidered, bond markets priced off treasuries will further dry up and, with equity markets so volatile, central banks and investors will not know where to turn.
Back then, though, there would be $50 billion of fails in a whole year, she says. That figure has grown enormously. Failures in US treasuries were 8.6% of all treasuries outstanding in the first five months of this year, compared with 1.2% in the first five months of 2007. That has ballooned further over the past three months, hitting more than $2 trillion for almost the entire month of October – more than 20% of the daily trading volume in treasuries.
What the treasuries market faces now, at this critical moment, is the consequence of long neglect of some murky aspects of short-term tactical trading in government bonds.
For years, efforts by the US Treasury itself formally to resolve the growing fails issue have been brushed aside by market participants as unnecessary. Jeff Huther, the former director of the Office of Debt Management at the Treasury, had battled for several years for a solution, getting as far as a White Paper produced in April 2006 suggesting stricter enforcement of delivery and penalties.
This is a four page article:
Much more on link:
http://www.euromoney.com/Article/2060042/C...king-point.html
From The “Panic” Of 2008 To The “Collapse” Of 2009 Top trends forecaster gives chilling prediction for next year Paul Joseph Watson, December 2, 2008 
The country’s top trends forecaster, who accurately predicted the “panic” of 2008 nearly a year before it unfolded, is now ominously suggesting that next year will come to be known as “the collapse of 2009″.
The country’s top trends forecaster, who accurately predicted the “panic” of 2008 nearly a year before it unfolded, is now ominously suggesting that next year will come to be known as “the collapse of 2009″.
Gerald Celente, CEO of Trends Research Institute, sent out a letter to his subscribers announcing that he had purchased a domain name called “Collapseof09.com”.
Around this time last year, Celente sent the following message to his subscribers;
In 2008, Americans will wake up to the worst economic times that anyone alive has ever seen. And they won’t know what hit them. Just as they were in a state of shock on 9/11, they’ll be frozen in fear when the Economic 9/11 strikes at the heart of Wall Street.
Dismiss this trend forecast at your own peril. If you believe everything will be all right, and that the ship of state is sailing along just fine, toss this out and go about your business.
Having correctly forecast the “Economic 9/11″, Celente is warning that people should prepare for something much worse in 2009.
As we reported last month, Celente recently told CNN that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.
Celente’s accuracy is widely heralded since he correctly predicted the 1997 Asian Currency Crisis, the subprime mortgage collapse and the massive devaluation of the U.S. dollar.
In 2007, Celente forewarned that “giants (would) tumble to their deaths,” which is exactly what we have witnessed with the collapse of Lehman Brothers, Bear Stearns and others.
Celente has stated that the current financial downturn will ultimately lead to nothing less than revolution.
“There will be a revolution in this country,” he said. “It’s not going to come yet, but it’s going to come down the line and we’re going to see a third party and this was the catalyst for it: the takeover of Washington, D. C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen.”
Ruble Trouble & Where's Them Jobs?
Stirring the economic cauldron as we do, there is plenty of grist for the mill this morning, so rather than focus on just one aspect of things, we'll apply a leaf blower to the headlines this morning.
First up[ is word that the "Golden State" ain't really so golden. Seems that "California may pay vendors with IOU's for Second Time Since Depression."
OMG - there's that damn "D" word again. However, if you're still in "D" nial, how about the CNBC closing bell comments on CNBC last night. "You've got a (whispered) Depression"
Yup - a guest on CNBC saying pretty much what we've held around here - the market on an inflation-adjusted basis peaked in Q1 2000 and has been sliding ever since.
The currency mess threatens today on a couple of fronts: Not the lead of which is the pending decline of the Russian Ruble. "Bankers posed for a weaker Ruble" says the Moscow News. What's driving it is the downward oil shock: Ruble to plunge like Mexican Peso on 'oil shock' says a Bloomberg story.
Not just 'ruble trouble' though. The hedge funds continue to implode. Although in fairness, 'restricting withdrawals doesn't necessarily mean implosion...but it's often a precursor. "Hedge funds chalk up more losses, big names suffer" says Reuters. Oh wipe that feigned look of surprise off your mug.
As the global demand for 'thins' is going off to the morgue, we can't help but mention that Australian Iron ore minder Fortescue has suspended some ore shipping contracts. Unforeseen circumstances cited, but we don't see what those are, curiously.
We do know that China is not going to save Western banksters according to headlines out of the UK Telegraph.
Did I mention hedge funds in trouble? Like the report that Citadel out of Chicago has lost 47%?
---
"Ponzi Scheme at CITI" headlines the NY Post this week. Lawsuits in Bankster Land - who would have thought?
Say: Did I mention hedge funds in trouble? "D.E. Shaw, Farallon Restrict Withdrawals as Fund Freeze Deepens" headlines a Bloomberg report.
But wait, there's got to be good news somewhere...
Stirring the economic cauldron as we do, there is plenty of grist for the mill this morning, so rather than focus on just one aspect of things, we'll apply a leaf blower to the headlines this morning.
First up[ is word that the "Golden State" ain't really so golden. Seems that "California may pay vendors with IOU's for Second Time Since Depression."
OMG - there's that damn "D" word again. However, if you're still in "D" nial, how about the CNBC closing bell comments on CNBC last night. "You've got a (whispered) Depression"
Yup - a guest on CNBC saying pretty much what we've held around here - the market on an inflation-adjusted basis peaked in Q1 2000 and has been sliding ever since.
The currency mess threatens today on a couple of fronts: Not the lead of which is the pending decline of the Russian Ruble. "Bankers posed for a weaker Ruble" says the Moscow News. What's driving it is the downward oil shock: Ruble to plunge like Mexican Peso on 'oil shock' says a Bloomberg story.
Not just 'ruble trouble' though. The hedge funds continue to implode. Although in fairness, 'restricting withdrawals doesn't necessarily mean implosion...but it's often a precursor. "Hedge funds chalk up more losses, big names suffer" says Reuters. Oh wipe that feigned look of surprise off your mug.
As the global demand for 'thins' is going off to the morgue, we can't help but mention that Australian Iron ore minder Fortescue has suspended some ore shipping contracts. Unforeseen circumstances cited, but we don't see what those are, curiously.
We do know that China is not going to save Western banksters according to headlines out of the UK Telegraph.
Did I mention hedge funds in trouble? Like the report that Citadel out of Chicago has lost 47%?
---
"Ponzi Scheme at CITI" headlines the NY Post this week. Lawsuits in Bankster Land - who would have thought?
Say: Did I mention hedge funds in trouble? "D.E. Shaw, Farallon Restrict Withdrawals as Fund Freeze Deepens" headlines a Bloomberg report.
But wait, there's got to be good news somewhere...
The Jobs Report: Half-Million+ Axed in November
Not going to find much joy in Mudville over this one:
Here we see that the "Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers" was up a full 1.1% in the latest reporting month.
Another great place to look for content (as a fiction writer should) is the CES Birth-Death Model which asks us to believe that a total of 30-thosuand new jobs were 'created' on a statistical basis over the past month.
Even more fictionesque? About 1.1 million jobs have been created since February. Cool, huh?
Personally, I expect to see a major revision to the 'created via statistics' shock when the January numbers come out - just before the inauguration. Last January, 3-million jobs went poof from the created jobs model. I can hardly wait, huh?
Not going to find much joy in Mudville over this one:
"Nonfarm payroll employment fell sharply (-533,000) in November, and the unemployment rate rose from 6.5 to 6.7 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. November's drop in payroll employment followed declines of 403,000 in September and 320,000 in October, as revised. Job losses were large and widespread across the major industry sectors in November.Since I want to grow up and write serious fiction some day (like Clive Cussler or Alistair McLean) my favorite part of the employment report is the "Alternative Measures of Labor Under-utilization, Table-12, U-6"
Unemployment (Household Survey Data)
Both the number of unemployed persons (10.3 million) and the unemploy- ment rate (6.7 percent) continued to increase in November. Since the start of the recession in December 2007, as recently announced by the National Bureau of Economic Research, the number of unemployed persons increased by 2.7 million, and the unemployment rate rose by 1.7 percentage points. (See table A-1.)
The unemployment rates for adult men (6.5 percent) and adult women (5.5 percent) continued to trend up in November. The unemployment rates for teenagers (20.4 percent), whites (6.1 percent), blacks (11.2 percent), and Hispanics (8.6 percent) showed little change over the month. The jobless rate for Asians was 4.8 percent in November, not seasonally adjusted. (See tables A-1, A-2, and A-3.)
Among the unemployed, the number of persons who lost their job and did not expect to be recalled to work increased by 298,000 to 4.7 million in November. Over the past 12 months, the size of this group has increased by 2.0 million. "
Here we see that the "Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers" was up a full 1.1% in the latest reporting month.
Another great place to look for content (as a fiction writer should) is the CES Birth-Death Model which asks us to believe that a total of 30-thosuand new jobs were 'created' on a statistical basis over the past month.
Even more fictionesque? About 1.1 million jobs have been created since February. Cool, huh?
Personally, I expect to see a major revision to the 'created via statistics' shock when the January numbers come out - just before the inauguration. Last January, 3-million jobs went poof from the created jobs model. I can hardly wait, huh?
Currencies: Getting ready for the mid-2009 global monetary system crash
If LEAP/E2020 was able to anticipate properly the start and course of the current crisis, it is because since the beginning of 2006 we came to the conclusion that it was first and foremost a global systemic crisis, calling into question the global financial and economic order born in the aftermath of WWII. In this regard it is quite ironical that the near totality of leaders, experts and media worldwide are now overbidding on the necessity of a new Bretton Woods, i.e. clearly a reappraisal of the Western order built in 1945, when in February 2006 (GEAB N°2) they found ridiculous our perspective of a crisis putting an “end to the Western world as we knew it since 1945”. That says a lot about their capacity to understand what is going on today and to anticipate the months and years to come. In this 29th edition of the GEAB, we already explained that global leaders’ reaction, G20 in the lead, are inefficient and running after the events. According to our team, it therefore belongs to you, individual player (person, company or municipality), to get ready for what we think will be a breakdown of the global monetary system by mid-2009. GEAB N°29 Quote (November 2008)
If LEAP/E2020 was able to anticipate properly the start and course of the current crisis, it is because since the beginning of 2006 we came to the conclusion that it was first and foremost a global systemic crisis, calling into question the global financial and economic order born in the aftermath of WWII. In this regard it is quite ironical that the near totality of leaders, experts and media worldwide are now overbidding on the necessity of a new Bretton Woods, i.e. clearly a reappraisal of the Western order built in 1945, when in February 2006 (GEAB N°2) they found ridiculous our perspective of a crisis putting an “end to the Western world as we knew it since 1945”. That says a lot about their capacity to understand what is going on today and to anticipate the months and years to come. In this 29th edition of the GEAB, we already explained that global leaders’ reaction, G20 in the lead, are inefficient and running after the events. According to our team, it therefore belongs to you, individual player (person, company or municipality), to get ready for what we think will be a breakdown of the global monetary system by mid-2009. GEAB N°29 Quote (November 2008)
UN team warns of hard landing for dollar
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill. In their annual report on the world economy published on Monday, the economists said the dollar's sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US... Financial Times
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill. In their annual report on the world economy published on Monday, the economists said the dollar's sharp rebound this autumn had been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US... Financial Times
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