Economic pressures

[Danny B]

Armstrong and Pi

Martin Armstrong has been in the forecasting business for a long time. He discovered that MANY cycles were tied to Pi.
"I have written many times before that this has been my privilege to discover the incredible order hidden behind the mask of randomness and chaos. I did not begin this pursuit as some theory to prove. "
"From this turn in the model, it is like a Financial Panic. Everything is collapsing so rapidly it is mind-blowing. People are now starting to see that report"
Princeton Economics International | United States 224 Year Cycle of Political Change
The Decline & Fall of the United States on Schedule | Armstrong EconomicsMeasles & 51.6 Year Cycle? | Armstrong Economics

Armstrong predicted the 1987 crash to the exact DAY. He also predicted the Russian meltdown.
The Forecaster

[Danny B]

crash in public debt

The credit supply is crashing because applicants are being turned down.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2015/04/20150413_NACM2_0.jpg

http://www.zerohedge.com/news/2015-04-13/unseen-recession-shocker-crushing-economy-revealed-credit-rejections-soar-most-ever

OK, so, the money supply is crashing. BUT, the coming crash will be in public debt. There are a lot of private holders of public debt;

http://i1.wp.com/armstrongeconomics.com/wp-content/uploads/2015/03/Debt-US-Holdings-2014.jpg

When default of GOV becomes more obvious, everyone will run to the exits. They will look for alternative places to park their money. This will cause price inflation in many sectors even though the general economy will be in deflation.
The Coming Public Debt Crisis | Armstrong Economics
Most sectors of the economy are already inflated and not likely to support even higher prices. Since consumption is down, there is no point in investing in things that depend on the consumer. Bonds are just representative claims on future labor and goods.

"Money is simply CONFIDENCE that two tangible products can be exchange be it food and labor or whatever. Boil it down to the basic element, you are money for it is your productive capacity that is the real value. If that statement were not true they how did China and Japan rise without gold?

Therefore, inflation will rise up in the form of asset inflation as money tries to get out of PUBLIC debt fearing default. This will not be consumer spending from a party time. "
If speculators are allowed to cause general price inflation, there will be that many more poor people who can't afford the basics for living. The safest thing is to let gold absorb all the loose money in danger of evaporating. This may be in the cards. http://www.gata.org/node/15259

Here are a few headlines from around the net;
PoK Government employees not paid for last 18 months
Honduras can't pay its bills, government employees not paid in 5 months
Zambia Post Employees Go Three Months Without Pay
Just imagine what would happen if the Government goons in Amerika didn't get paid.

[Danny B]

The IMF claims that employment is rising.What crunch would that be?I was just getting used to trillion when they start throwing around quadrillion.What happened in 1789???

Credit is a method to buy time,,, bring consumption forward. What happens when you arrive at the "time bloc" that you already consumed?
Central Banks Made The Whole World ?Buy Time?... There Are Signs We?re Beginning To Sell It | Zero HedgeThe Pitchforks Are Coming… For Us Plutocrats - Nick Hanauer - POLITICO Magazine

Millions are going hungry and the politicians know that they and the bankers are responsible. The troika condemns Greece for not paying loans. Since only 7% is the original principle, the politicians know that fairness is not at all present. They know that Italy is next in line. They know that they better figure out something for Greece REAL soon. They tried massive printing. Of course it didn't work.
The Eurocrats in Brussels aren't worried about poverty. Let's see how they like revolution?
The Weak Suffer What They Must: Yanis and the End of Europe - The Automatic Earth

[Danny B]

Getting ready to rumble

Interesting news from Wal Mart;
Are the Nationwide Walmart Closures Connected to Detention Centers for American Citizens? | The Daily SheepleSigns That 'The Elites' Are Feverishly Preparing For Something Big | Zero Hedge

So, the Feds are talking EMP or tsunami. El Hierro is capable of generating a tsunami 1/2 kilometer high that would reach N.Y. at about 40 ft.
300 Foot Tsunami and East Coast Destruction
Who knows about an EMP? A CME is likely considering the sun's recent activity. We'll just have to wait and see.

Here is a good article explaining that the rich don't carry near as much as the tax burden as they would like us to believe.
The greatest trick the rich ever pulled was making us believe they pay all the taxes - Vox

[Ruphus]

I've been reading zerohedge.com recently.

It's pretty good stuff there, so thanks for the links.

Plus a bonus, fight club is one of my all time favorite movies ever and Tyler Durden has a lot of articles there .

[Danny B]

The end of credit,,, the beginning of default

Yeah, Tyler lives 2 lives. Who would have known? The VERY important thing to remember is that the writers of Zero Hedge are freely giving out phenomenally accurate financial advice. All this info destroys the narrative from those who would fleece us.
This is a graph showing that banks are cutting off credit; http://www.zerohedge.com/sites/defau...13_NACM2_0.jpg
So, what is the result? Bankruptcies Suddenly Soar Across Corporate America, Worst First Quarter Since 2009 | Wolf Street
GOV is now pumping a bubble in student loans that is even bigger than the housing bubble. The default rate is way up there.
Gordon T Long : Global Macro Economic Research : Macro Insights
In a general sense, lending is coming to an end. A banker must believe that bubbles can go on forever for him to continue to loan. As credit shuts down, defaults go up. The central banks drove interest rates down to get people to borrow. This is / was VERY appealing to irresponsible people who had no hope of repaying the loans. Since all this credit creation is highly leveraged, it doesn't take a very high default rate to wipe out all reserves and collateral.
Evidently, the banks have had enough of liar loans to insolvent people and companies.

Edit, I want to add more links on illiquidity. after illiquidity comes insolvency. this is important to understand. It is an indicator that there just isn't enough money circulation in the productive loop of the economy.
IMF tells regulators to brace for global 'liquidity shock' - Telegraph
The Global Liquidity Squeeze Has Begun

http://www.firstrebuttal.com/2015/04/17/this-technical-signaled-the-last-two-market-crashes-and-it-just-happened/

Zero Hedge; http://www.zerohedge.com/news/2015-0...ened-exhibit-1

The money is circulating in the financial loop of the economy, NOT in the productive loop. The productive sector of the economy is slave to the financial sector. This reversal makes for happy times for the bankers. They don't want it to end.

[Danny B]

Deflation and defaults

Half the pundits claim that the FED MUST raise interest rates. Millions are losing money that they NEED,, from ZIRP. Hedge funds, insurance funds, pension funds,, they are all losing big time. ZIRP was supposed to last for only 6 months. BUT, the bankers wrote derivative contracts that would be triggered if interest rates rose. They essentially locked the FED into perpetual ZIRP.
BUT, Fed Will Be Forced Not to Raise Interest Rates-Reggie Middleton | Greg Hunter’s USAWatchdog

A rise in interest rates is expected to cause major losses.
Over $100 Trillion in Wealth Will Disappear-Harry Dent | Greg Hunter’s USAWatchdoghttp://www.zerohedge.com/news/2015-0...n-call-historyFall 2015 Turning Point-Civil Unrest and Riots-Martin Armstrong | Greg Hunter’s USAWatchdog

As GOV / banking sucks more and more out of the economy, there is more deflation in the money supply. 50% of Americans rely on a check from GOV of one sort or another. Should those checks stop, this too will cause less money to be in circulation. This will cause a cascade of defaults with no end insight. Whole sectors of the economy will become non-viable.
When the bond market crashed in Russia, most of the housing was GOV owned. Nobody got kicked out. Many people had gardens.

[Danny B]

Where the money comes from,,, where it went

Repost; Over $100 Trillion in Wealth Will Disappear-Harry Dent | Greg Hunter’s USAWatchdog
OK, so $ 100 trillion is going to disappear. Who now holds it? Where will it come from and go to?
Martin Armstrong is adamant that sovereign bonds will collapse. We see a preview of that with Greece.
Here is a good article comparing the 2008 crash with conditions today. The article clearly shows that; in times of economic stress, investors move out of stocks and into Government bonds.

http://www.zerohedge.com/news/2015-04-21/guess-what-happened-last-time-bond-yields-crashed

Everyone and his brother is writing that stocks are WAY overvalued and certain to crash. A suspicious person might think that investors are being herded out of stocks and into the bond market. Corporate bonds are starting to crash because profits are crashing. As the Zero Hedge article points out, GOV bonds have traditionally been seen as risk-free.

This is true in the short term but, never in the long term. ALL GOV eventually defaults. GOV bonds have different maturity rates and must be held to the end of the time period. You can ? always ? sell your bonds to a third party. Should there be a collapse in sovereign debt, you won't be able to find a buyer for your bonds at face value. The latest bond collapse in Austria resulted in a 50% haircut. Now you see it,,, now, you don't.

The $ 100 trillion loss would be the difference between,,, what you paid and what you can sell them for. A healthy economy is a balance of production and consumption. A healthy credit system is a balance between credit creation and consumption. Wages fell, consumption fell. Credit went into hyperdrive to compensate for falling purchasing power and maintain consumption.
Since the private sector couldn't maintain the consumption necessary to support the credit system, GOV took over consumption creating serial wars.

Somebody has to pay for these wars. A sovereign bond collapse will zero-out your investment in GOV.

[Ruphus]

I have always been told that unions fought for forty hour work weeks. I am beginning to think their victory had more to do with a weak economy than good faith of corporations and politicians. If memory serves me correct, the 40 hour week really took hold after WWII. The US and other countries had a surplus of men that returned home to basically no jobs. Some that were "filling in" during their absents probably did not want to give up their jobs to the veterans. However if the GOV limits the amount of work required to earn a "living wage" then jobs could be created to pick up the slack. The same could be done today. Increase minimum wage while also reducing the work week to 30 hours. This would add an additional shift to 24 hour operations for example, increasing employment by 25%. Now I am really wondering if this sort of thing was the reason for our 40 hour work week. Is this the reason for the 30 hour per week provision that WAS in the affordable care act but has since been removed. Were the PTB planning to shorten the work week again in the near future? Probably not.

[Danny B]

Ultimate efficiency

Raising the minimum wage is a force to cause more outsourcing. They now have robots for fast food joints. Even the Chinese can't compete.
Robots leave behind Chinese factory workers | The Japan Times
There is NO cure for efficiency.

[Ruphus]

The problem with efficiency

Efficiency is a problem for the working man.

But isn't the "cure" inefficiency? Is that not why there is a 40 hour work week? Is it why we have so much government, 3 people to watch one person work, to make inefficiencies in the system. This creates work where normally it would not be.

Its interesting to think about.

[wayne.ct]

Efficiency

Efficiency is what thinking people think about and what unthinking people do automatically. It is efficient to buy 2 pounds of carrots for a dollar from a street vendor when the grocery store only gives you 1 pound of carrots for a buck.

Stupid lawmakers pass unenforceable laws, etc. etc. and don't account for human nature. The gig is up. If you aren't willing or able to be productive, you will become a thief or crook or riot in the streets. Good luck with inefficiency. Perhaps you will be Robin Hood.

[Danny B]

Lawyers, the uber-parasites

Whadadoyou mean, STUPID LAWYERS???
France has 84 lawyers per 100,000 population. America has 396. The only country more accursed with lawyers is israel with 585.

https://pbs.twimg.com/media/B_0i433XAAApuW3.png:large

Inequality of Wealth | Armstrong Economics
Lawyers suck up about 1.6% of the GDP.

http://i8.photobucket.com/albums/a28/DannnyB/graphs/lawyers_zps0a4cda16.png

America has the "American rule" which allows American lawyers to suck up WAY more than in other countries.
The English vs. The American Rule on Attorneys Fees: An Empirical Study of Attorney Fee Clauses in Publicly-Held Companies? Contracts by Theodore Eisenberg, Geoffrey P. Miller :: SSRN

Because of all this, every company has to pay for an expensive legal dept. Ever wonder why GOV produces so much volume of new law? A lawyer's stock-in-trade is his advice. If the law were obvious and direct, there would be far less need for lawyers. I sat in a Mexican police station and was instructed to read the law book. It was a marvel of clarity.

There is much debate about the 13th amendment that it would forbid titles and affect lawyers. "The Missing 13th Amendment "TITLES OF NOBILITY" AND "HONOR" [14] - SIGNIFICANCE OF REMOVAL To create the present oligarchy (rule by lawyers) which we now endure, the lawyers first had to remove the 13th "titles of nobility" Amendment that might...."
Since most lawyers are part of the parasitic sector, it is no wonder that GOV is a parasite at it's base. GOV is an ever-growing body of people who know that their income is extorted by taxes at the point of a gun.
"I mentioned how the income tax was applied in the form of payroll taxes since 1935, and the net result was that the government was borrowing from the lower classes and handing them a refund check at the end of the year, but was cheating them out of any interest. Then Social Security only buys government bonds and PREVENTS the lower classes from rising in wealth since they are denied the right to participate in the creation of wealth."

Not only were we denied the interest on our savings forcibly invested in GOV coffers, the principle is now gone. GOV sees a tax revolt in the future when everybody learns that their pensions, both public and private are gone. They bought lots of guns.

"The idea on taxation or a compulsory levy on savings and assets to solve the debt problem, the bail-ins, has infected all governments. They see a massive compulsory levy on property and bank assets as the silver bullet to solve the debt crisis. This is in part the drive to eliminate cash and force people into electronic money."

"The IMF report notes with disarming frankness that the expansion in the money supply by central banks has had no impact upon inflation. They fail to comprehend that inflation is set off not by an increase in the money supply, but a collapse in confidence of government and thereby the value of money. That is when people switch and buy assets."
We are currently in deflation with a touch of price deflation. Should the bond market collapse as projected by Armstrong, those with money will rush into tangible stuff. We already see this in the record prices paid at auction houses.
If the rich pile into products of consumer necessity, we will see horrendous price inflation at the same time that wages are slipping and employment is crashing.
Greenspan blew a bubble in housing for 2 reasons. Domestic housebuilding could not be outsourced so, it provided jobs. 2. GOV wanted to insure that there was plenty of housing when the bubble crashed. The size of the average house doubled since the war years. As we revert to much lower wages, we will get much smaller houses. The McMansions are energy hogs but, that is another problem.

[Danny B]

FDIC Bail-in Plan Will Take YOUR Life Savings Without Notice! | Market Daily News - Part 3
"Poland quickly followed, stealing not bank accounts but private pension funds. Authorities took 50% of Polish retirement funds overnight with the click of a mouse. "
Don't think that you are going to do something cute and hold cash to avoid confiscation.

http://marketdailynews.com/2015/04/21/the-war-on-cash-jpmorgan-chase-to-prohibit-the-storage-of-cash-in-safety-deposit-boxes/

The obvious solution is to spend all your money NOW,, on beer.

[Danny B]

now, Puerto Rico

It is undeniable that Greece is fast running out of cash. The troika wanted Greece to sell off parts of the country for cheap and then, crash. Yanis is going to spend every euro and them say,,, "sorry Charlie". If there is no money (Euros) left in the country, the bankers can't very well march in and take possession of the good stuff. Wouldn't that be something to watch.
So, Greece will soon be insolvent. They aren't alone.
"Puerto Rico's top finance officials said the government of the U.S. territory will likely shutdown in three months because of a looming liquidity crisis and warned of a devastating impact on the island's economy."
Puerto Rico Warns Of Imminent Government Shutdown Due To "Liquidity Crisis" | Zero Hedge
The hedge funds that bought so much of Puerto Rico's debt are demanding that lots more taxes be laid o the people. Wouldn't it be funny if P.R. told them to go "get stuffed".
Actually, most GOVs are illiquid and just waiting to be insolvent.
The world has NEVER had a crash of the reserve currency. There was always some secondary currency that could be substituted.
What Will Happen to You When the Dollar Collapses? | International Man
Doug Casey thinks that this collapse will be used to eliminate currency altogether. Jim Willie told me that it won't happen for several years because GOV is too inept. The acceptance of fiat money by NON-issuers is dependent on trust. Foreign States may very well refuse to accept U.S. dollars after it collapses. The oil frackers are crashing badly. If the dollar is NOT accepted for oil imports, it is going to get very cold here.

It seems that even the bankers have the blues, "Saxobank CIO Sees: "Zero Growth, Zero Inflation, & Zero Hope""

http://www.zerohedge.com/news/2015-04-23/saxobank-cio-sees-zero-growth-zero-inflation-zero-hope

Yep, illiquidity will do that.Yep, right on scheduleYep, get in line