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A Total Eclipse of the Economy and Good Old Fashion US Witch Hunt 12-22-2010

A Total Eclipse of the Economy and Good Old Fashion US Witch Hunt 12-22-2010

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Unformatted text preview: ' ' " L “forecasting the World _& Good Old Fashion - ‘ US Witcthun-t rFormer Chairman of Princeton Eeonomitswlnternational;‘Ltd;v. Martin A. Armstrong ‘.B§: Martin A. Armstrong Gopyfight All Rights Reserved December 22nd, 2011 Please Register For Special Updates At ArmstrongEcoanAQS.COM Please send comments by mail to: Please REGISTER for Special Updates Martin A. Armstrong FCP Fort Dix Camp #12518-050 ArmstrongEconomics.COM PO Box 2000 Fort Dix, NJ 08640 . , ' Copyright Martin A. Armstrong All Rights Reserved This Report may be.formarded as you like without charge to indiUidUals_or governments around the world. It is provided as a Public_5ervice at this time without cost because oF-the critical-facts E that we now faced economically. The contents and designs of the systems are in fact copyrighted. , . L.- CKNOWLEDGEMENTS AM I would like to thank all the former employees, associates, sources, and contacts for their ongoing support and efforts to contribute to the writings I have been able to continue through their great efforts. I would also like.to thank those who have looked after'not just myself, but my family, and shown them support and kindness. The purpose of these reports is to broden the understanding that is so vital to our personal survival. Government cannot save us, and will only assist the very economic disaster we face. This is a Sovereign Debt Crisis that threatens our core survival. There is no plan to ever pay off debts. The majority of debt increase is paying interest perpetually to roll over without any long-term plan. What you See in Greece and in the States, we have run out of other people's money. The socialists keep pointing to the rich. But to fund the deficits, We need to borrow now from foreign lands. We ran out of money domestically and to support the current system like Greece, We need foreign capital. But all governments are facing the same crisis and we are on the verge of another widespread government default. Adam Smith warned in his Wealth of Nations that in 1776, no government paid off their debt and had always defaulted. We will have no choice either. There is no hope that politicians will save us, for they only form committees to investigat after the shit-hits-the—fan. They will NOT risk their career for a future problem that may hit on someone else's watch. There was a politician and a average man standing on top of the Sears' Tower when a gust of wind blew them off. The average man being a realistic—pessimist, immediately sees he is about to die and begins praying. The politicians, the ultimate optimist, can be heard saying "Well so far so good!" as he passes the 4th floor. At Princeton Economics, our mission was simply to gather global data and to bring that together to create the world's largest and most comprehensive computer system and model that would monitor the world capital flows. By creating that model, all the fallaCies of market and economic theories were revealed. The world is far more dynamic and every change even in a distant land can alter the course of the globale economy. Just as has been shown with the turmoil in Greece, a CONTAGION takes place and now capital begins to look around at all countries. We can no more comprehend the future but looking only at domestic issues today than we can do so in every other area, such as disease and the spread of flus. We live in a NEW DYNAMIC GLOBAL ECONOMY where capital rushes around fleeing political changes and taxes just as it is attracted by prosperity. All the people who migrated to the United States in the 19th and 20th Centuries. came for the same reasons as those still coming from Mexico - jobs and prosperity. In the 19th Century, America was said to have so much wealth, its streets were paved in gold. We must now look to both the past and the entire world to understand where we now are today, A Total Eclipse ‘~of the Economy' By: Martin A. Armstrong & Good Old Fashion US Witchcflunt' Former Chairman of Princeton Economics International, Ltd. and Foundation For The Study Of Cycles S WE APPROACH 2011, the world ec0nomy is in the worse possible shape it could he in. Everything is posturing for a very major turn that is of such a rarity, the total eclipse of the Moon .is about on par for the cyclical change we now face. This IS ‘THE COLLAPSE OF SOCIALISM/MARXISM and anyone who thinks this is just a plain old recession, had better look behind the very thickcurtain.We have gold reaching the top of that channel in the mid 1400 range, the Dow Jones rallying instead of declining, interest rates rising after the launching of QEZ, and we have student uprisings throughout both Eastern and Western Europe, some over unemployment as in Tunisa, others rioting about cuts in social benefits as in London and Rome, as Hungary passes legislation to silence the press that is no different than-in the USA that does the same thing quietly with phone calls. Yet, as we watch the rare event of a TOTAL ECLIPSE of the Moon, in ancient times, this would be an omen of bad things to come just as the comet that light the sky foretold of the death of Julius Caesar in 44BC. By the augurs of Ancient or Middle Ages, we should have a good old fashion witch-hunt by now. Oh that's right! The SEC and Justice Department are doing that. They are charging everyone they can that had nothing to do with the economic decline so they can pretend to be prosecuting somebody. But that is what witch—hunts are all about. It is not about God, Justice, and the American Way with a side—dish of apple pie. It'sjustabout bullshiting the people to take their attention off the real culprits. Yet no matter what they do or say, the FREE MARKETS will still tell the truth and are warning that we are facing a TOTAL ECLI?SE OF THE GLOBAL ECONOMY! Meanwhile, riots are appearing in just about everywhere in Europe where socialism is trying to be cut back w Italy, Spain, UK — Greece * France - and Ireland. Soon it will be in the USA as well once the first blood is drawn in cuts. Obama has put in_to freeze all government wages for 2 years. The taxcut issue is meant to prevent riots, for theyare going to unfold. Even Portugal is claiming its reforms will succeed. Hasnft anybody just bothered to notice, its the DEBT STUPID! The whole idea of borrowing to fund socialism is bringing Margart Thatcher's words alive - SOCIALISM WORKS UNTIL YOU RUN OUT OF OTHER PEOPLE'S MONEY! China is doing EVERYTHING RIGHT so far. They are internationalizing the renminbi and consuming gold at staggering levels. Their inflation rate of 5.1% illustrates that they are the new financial capital of the world for prices are rising as CAPITAL CONCENTRATES in the East. Gold will be traded in renminbi and that opens the door for arbitrage with the dollar via gold. China is attacking the RESERVE DOLLAR status, and rightly so. There can be no individual currency that represents THE reserve currency, for its domestic policy- is then exported to the rest of the world. We do live in INTERESTING TIMES. China is starting a fund of fund and the biggest Gold Rush in history may be unfolding in China. Gold was the traditional investment in China before the Communists. It was the traditional payment for a dowry before 1949. Gold went underground in China as it did in the USA after 1934. Gold is resurfacing in China and is returning even in the payment of dowry or a gift for the new couple. Retail consump* tion of gold in China is up over 70% accord- ing to the World Gold Council, reaching 15312 tonnes. Gold imports by China for just the first 10 months of this year were up smnpdy to 209 tonnes, or a 500% increase from 2009. China has soared to the second largest conw summer of gold just behind India. US stocks have rallied instead of going down the toilet. Bond yields went UP after the Fed's QE2 buywback showing that the very idea of how to conduct a stimulus is DEAD WRONG! Everything we look at is showing that this is the MELTDOWN of Socialism. Political interests are directly against those of our people and this is that MOMENT in time when the 1 year office of Roman Dictator is so critical. We are in desperate need of our modern CINCINNATUS (570—451BC) to come in, revise the world economy, and retire. We so desperately need someone with experience and the understanding of how the international .economy: even functions to save the day. It will never happen. But this is why political reform is so crutially needed to provide for such an option. The solutions are easy. The world could be saved NOT in 100 daysz but in just 30 days! Taking just a few steps would reverse EVERYTHING and save the Day After Tomorrow! Meanwhile, the SEC & Justice Department are chasing everybody BUT those responsible for the economic crisis. Insider—trading is being expanded to absurd levels and not any charges against a single firm that was in any way involved. This shows, the NY Banks still control the courts, SEC, and capital hill. The Democrats may want to blame Wall Street, but they take no action for it is all talk as they hold their hand out for money. This further ensures that there will be no such solution ahead when those who sell the debt keep it flowing. ENOUGH is ENOUGH! There will be no tomorrow without reform now! The governments around the world have last their way. They are suppose to HELP SOCIETY, not send it into oblivion! How can a drug addict ask advice from the drug dealer if he should stop taking drugs? Yet we run to the NY Bankers soliciting their advice to manage the.economy when in fact all they care about is selling the next issue of debt and collect their fees, while .shorting against them as was just shown how rates when UP w NOT DOWN _ with QE2. Goldman hired David Markowitz,.deputy NY Attorney General. This is Goldman's main strategy to keep government officials on the pay to buy immunity. This strategy helped Goldman keep the spoils of war and kept the prosecutors at bay. But governments will jail Julian Assange of WikiLeaks for exposing the truth, but they will not investigate any NY Bankers unless the firm they worked at went bankrupt. As long as government refuses to be i honest, we do not stand a chance in whell of reaching any kind of solution to our economic implosion. Goldman and others in New York are traders. How can you ask them what to do when you know they are trading against you? Isn't that giving them insider information? Goldman is not the only firm, for the government neahsthem to sell their junk bonds to the public to ensure your pension is also wiped out. Anyone who retains a FREE AND INDEPENDENT MIND, knows we are in serious trouble. They also know that the markets are the REAL forecaster of the future. They tell you what is going on once you understand. SOMETIMES UP IS REALLY DOWN There are far too many so called analysts who do not understand of what they are writing about. They see the end of the world and then assume that means stocks down. They have been calling for the end of the world, new lows in the Dow, and sell everything before it is too late. Far too many people are losing their shirts because they have listened to this non- sense. WHEN IT IS GOVERENMENT COLLAPSING, YOU SELL THE'BONDS & BUY PRIVATE SECTOR ASSETS! Why would anyone buy government bonds in times like this? You have to be nuts!!!!!!!!!!!!!!! This is a collapse of PUBLIC assets & sector against the rise of PRIVATE assets & sector. This is a global MEETDOWN in sovereign and public debt at the municipal, state, and federal levels. UNDER NO CIRCUMSTANCES BUY LONGrTERM DEBT FROM ANY OF THESE PUBLIC LEVELS OF GOVERNMENT! You WILL lose everything you invest PERIOD! This has been the course of public debt since the FIRST default in 1788BC. There is no government that has ever paid off its debt and stopped borrowing EVER! It was the city of Detroit that suspended all debt payments in 1932 and resumed in 1063. Yet, the course of inflation devalued the original debt and made it only then possible to pay the nominal amounts owed about 30 years unbre; DO NOT TRUST THE REPORTS OF BIDS FOR THE PUBLIC DEBT AUCTIONS. They reported that Smnn was more than twice the bid for the amount of debt being offered. If anyone wants to play with the numbers, if the issue is 1 billion euros, you can enter a bid to buy 2 billion at 5% when the rates are 2%. That will make it look like there are still a lot of people willing to buy giving confidence to keep the rates still down. PUBLISH the bids and then let us see who is real and who is not. It is far too easy to play games with that sunimjc. The problem, that will never happen for it would expose the thin bidding that could be the first step toward a PANIC. As we head into 2011, we are merely just descending into a deep and dark debt crisis from which there is just no escape without major reform. Of course, that major reform necessitates a reduction in political eumunfic control. The SEC is going after hedge funds to make up for the fact that they cannot touch the NY Bankers. During the Great Depression, dun summoned everyone before the Senate and subjected them to public inquisition as to whether they were short stocks. The result of those public trials I covered in the _ Great Bull Market In Hiatory, was they indeed frightened just about everyone from going short again. This contributed to the colhnsé in the Dow Jones Industrials from 386 to 42. The SHORT PLAYER is the ONLY person who has courage to buy in the middle of a panic. If you outlaw short—selling, you outlaw those who provide support in a panic decline. Of course, those in government are too stupid to figure this out. So the SEC is now going after hedge funds trying to somehow pretend prosecuting insider trading makes up for the economic decline. What this BRAIN~DEAD strategy is doing is repeating history. Attacking the hedge funds and trying to prosecute everyone on this flawed theory of INSIDER—TRADING, will make things much worse! Why? Destroying the hedge funds will wipe out systematically the very largest market for buying debt/equity. It makes absolute sense that in the middle of a debt crisis, we prosecute those we need the most, to pretend to be doing something because of the HANDS—OFF—NEW YORK policy that has plagued the markets for decades? The'Insideerrading of today is by no means ADVERSE to the markets, harms NOBODY, and is precisely opposite of what it was originally. Ever since the Mike Milkin prosecution of the late 19803, the government, with the aid of the courts in New York, flipped the idea of insideretrading on its head in order to intentionally destroy Drexel Burnham Lambert that was a Philadelphia firm that created the junk bond market and stole the thunder from the NY Bankers. New York would never allow competition by another city. This is why the prosecutions in New York were always firms of other cities until Madoff. Drexel, was Philadelphia, the Frank Quatrone Case was First Boston, and then there was REFCO the Chicago firm just to mention a few. ALL were major players in competition with New York. If they did something wrong, why were they NOT prosecuted where the firm resided? The NY Courts have routinely been used to thin_the herd of competitors for the NYboys. INSIDER-TRADING use to be a director of a company_knew it was broke and sold his shares_first, then announced the company was 'bankrupt. To destroy Drexel and Milkin and allow NY to grab the junk*bond market, they claimed that if Milkin and another were going to buy a company, they were defrauding the public out of MAKING the same profit that they did. The SEC idea now is anyone who has any info whatsoever is guilty of insider~trading giving them the right to fine them and now destroy their fund. This type of theory for insidermtrading is itself a denial of EQUAL PROTECTION OF THE LAE_because it is not a crime in currency, debt, or any other economic number~driven mar- ket. It is UNIQUE to the SEC and it is a very serious ABUSE of prosecution that the courts allow because most judges are former prosecu- tors. This will destroy the economy even more just as they did in the'1930s. 2007.15 2008.225 THE ECONOMIC—CONFIDENCE MODEL Cepyright by Martin A. Armstrong The SEC and the Justice Department will try to make up for their profound policy of HANDS-OFF~NEW YORK by attacking everyone but those who really manipulate markets and government for their personal interests. If we even look at the Maddff_ case, his son now 5 committed suicide leaving a message that they; did not know half the truth. Indeed, I was asked by a journalist' Did you think that Re- public Bank was illegally tradinginymn‘acCH cunts for the Russian Mafia and Columbian Drug Cartel aS‘they were doing in Madoff?1'l was taken by surprise. I had stood up in NY court and informed them that I went to my lawyer Richard Altman who sent a email to Dov Schlien President of Republic demanding all missing funds be returned from their mzdf who were illegally trading in the accounts. There were some trades that were huge in the bond market and then were backed out. Even the forensic accountant noticed that about l/3rd of the trades were being backed out as error by Republic's staff. How could they be making so mmw'errOns? That question posed to me by a journalist from the NY Post was in fact shocking. I had read nothing about the Madoff case that raised such a issue. Sudden" 1y, it became clear. Madoff pleading cut off the trial or investigation and that meant we would never know what really took place. The whole thing may be covering up conduct that nobody wants to admit. . 6 7 5' As we now approach the bottom of this current BUSINESS CYCLE in June 2011, this parallel with the 1930s is getting scary. The degree of bullshit may be so bad, the ' desperate attempt to charge insiderwtrading to divert the public from what really has been going on may backfire into fueling the g collapse in our debt structure even more. There are those still putting out the i nonsense that gold will collapse because the ; ecOnomy will turn-around. Do they have any self—respect at all? It is not the ECONOMY : stupid ~ its the DEBT? Just how are we going 1 to get_out of this? Those who were insuring : municipal debts are folding. States are in trouble. They FROZE government salaries for j 2 years. Are they paying attention to what ; is really-going on, or are they mouth pieces for the government? Gold should back off and retest the 1 support. If the Dow Jones does the same into June, this will set the stage for the next 4.3 year wave into 2015~1016 where we should 'see the decoupling of debt and equity so that we will see the stocks take off and public debt decline. Interest rates will rise as they always do in a bull market and it will be the statethatcrdhnhes like you will think was simply impossible. We should see gold at $5,000+ by the end of 2015. The Witch-Hunt is more likely to set in motion serious shifts in capital flows. If the United States is going to prosecute the hedge funds for insane insiderrtrading that is not a crime in any other investment, as a fund manager, you have to start making a rational judgment and weigh the risks of doing business in the USA. It is far less risky to deal in foreign shares and index ETFs than tangle with the SEC who is now desperate to pretend it has teeth it never showed against anyone in New York. The long-term capital flows appear to be setting up for a massive capital-flight from the USA after the crisis boils to the surface in Europe. That will at first drive capital into the USA. That will push the US$ up, and then it will crash and burn looking at a massive capital flight. The EURO is still a key to watch for year-end. The sell signal would be the 123 level, but that does not seem likely without a immediate crisis in debt. Support lies at 129, and that will be the key area to watch not just for yearuend 2010, but throughout 2011. The pivot p...
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