Argentina is moving into default and they could trigger bondholder claims between $25 to $30 billion. This is an amount equal to all its foreign-currency reserves. True, if overdue interest on Argentina’s dollar-denominated debt due 2033 is not paid by July 30, then provisions in bonds known as cross-default clauses would allow the nation’s other debt holders to also demand their money back immediately.
So why has the Argentine stock market been blasting upward for the last 25 months? This is a classic capital response that is precisely the same that is argued for a hyperinflation. If a country defaults, its currency declines. However, domestically, tangible assets rise for everything advances under such a scenario. Those who think capital is wrong just do not understand capital flows. This is the eternal battle between PUBLIC and PRIVATE assets being displayed for all to see.
Here too we are seeing November as a very critical turning point. This is showing up in absolutely every market around the world. This is how money really moves. If you think this is dumb, well you better go back to school.
The entire devaluation of the dollar by FDR in 1933 produced the same result. As the currency declined assets rise. FDR’s Brains Trust disagreed. FDR listened to George Warren and noticed that Britain recovered when then defaulted on their debt in 1931. So pay attention. International law may mean nothing at the end of the day because Argentina will not be alone.
This is that international value that comes into play how everyone vies assets in terms of their own sense of values expressed in their home currency. I will try to put books to together on how capital really moves under these various conditions. Just have to find someone interested in this subject and a good editor to put help bring this all together. I have so many projects and limited amount of time. But yes – this is something on my wish list to get accomplished.
The Hungarian Prime Minister Viktor Orban believe it or job is actually being more honest that his EU counterparts. He has proposed outright to end the free democracy in Hungary. At a seminar in Romanian Transylvania, Orban has announced he wants to construct “an illiberal state on a national basis”. He argues that the financial crisis has shown “that liberal democratic states are not globally competitive.”
“Today the world is trying to understand systems that are not Western, not liberal, perhaps not even democracies – but they are still successful.” Orban in his speech proclaimed that the new political models are China, Turkey and Russia.
The term illiberal democracy refers to a system in which the political leadership had democratic elections, but then make policy decisions at will, change constitutions and can restrict political rights. In Parliament can Orban’s conservative National Party controls two-thirds of the seats forming the majority. Consequently, Orban takes more and more power, while freedom of expression and political opposition in Hungary is increasingly suppressed and civil rights restricted.
Orban states bluntly the truth from the political point of view any EU membership is “no obstacle” since this is what the EU Commission really is and more. A totally unelected dictatorship.
This is the natural progression of our situation. Politicians will NEVER concede it is them or the over-Marxist state that is causing the problem even though Marxism collapsed in the communist state. This problem is always we the people – the great unwashed.
The latest headline to appear in the German Press – “Putin confidant: There will be war in Europe” Indeed, our own back-door channels are red hot. It seems many people are well aware of our model on the Cycle of War and have been lighting up my phone. I knew people always wanted to know what Socrates had to say on the economy. They even wanted to know geopolitical after Socrates correctly forecast the collapse of Russia. But the Cycle of War seems to have added another dimension.
Obama is playing a very dangerous card. He seems to be speculating that sanctions could lead to a coup against Putin. However, he can also put Putin in a position where to personally survive, he needs war in Europe. But the West is in the same boat. The entire social network is collapsing. While the gold promoters predict hyperinflation, they fail to understand history. They will NOT print to meet obligations, they will (1) default, and (2) create war as a last resort.
The London Financial Times reported:
“A confidant of Putin said that the Yukos judgment is irrelevant in light of the geopolitical struggle for the Ukraine:” It will be a war in Europe. Do you really believe that then play a role? “
It is noteworthy that the FT brings this quote in direct speech. Because it can be concluded that Putin sets out that an understanding between Russia and the West is no longer possible. From the rumblings I hear, I have to agree with him. The powers that be know that the socialistic-economy is collapsing. There is no way to pay the pensions and survive without revolutions and massive civil unrest. The ONLY way to mitigate that cycle is to find an external enemy. This is in the political handbook handed down over the centuries.
It is obvious that our model on the Cycle of War has been amazingly spot on. What was said at that conference is relevant right now. Even the number of inquiries from Behind-the-Curtain on this one are off the charts. I will prepare an update the report with more specific forecasts per region since this is everywhere. This seems to be absolutely paramount at this point.
COMMENT: Mr. Armstrong; I really have to congratulate you. Your work is astonishing. I see why they accused you of manipulating the world. You simply do what others cannot do. You put your opinion aside and focus purely on the facts. If we can somehow bring this approach to government, it would be a complete new future that lies ahead.
Thanks for all you do to help us see what is right before our eyes.
REPLY: Thank you. But I have been trained by my clients. Because I was international and not domestic, everyone forced me to see the world through their eyes. It is really Adam Smith just up a notch. Roman Emperor Marcus Aurelius was truly a brilliant man. His writings have survived and what he teaches is the key to everything. I have been fortunate to learn and absorb what I have been shown by others. This has been my discovery – not my invention. Just follow the capital flows and the answer will be there. We end up in the wrong direction when to begin with a preconceived idea that limits our perspective so that everything we see is only within that concept. We cannot reach the truth with such a bias. Always reduce whatever subject matter to its seed and proceed from there. We cannot understand how things function without investigation. When we try to manipulate the way the economy functions, then all the problems start. Even Joseph from the Bible told the Pharoah his dream meant that there will be 7 years of plenty and 7 years of drought so prepare and survive. Government today tries to change the weather instead of living within the cycle. Our arrogance knows no limit.
The European Central Bank is so out of touch with the economy it is frieghtening. They see that they have a range of options to consider including negative interest rates. What they do not grasp is that people will not invest and start businesses simply because interest rates are too high. The people must see an opportunity to make a profit. Politicians never see that all their manipulations of the people exclude themselves from the process. They want to retain all their draconian regulation, extract more taxes to secure their future, and federalize Europe to permanently established their job security.
Forcing the euro lower to make European goods cheaper is not reforming the system. They are too BYZANTINE in regulating everything right down to coloring eggs. The complexity is mind boggling. Start with reforming the system and then you may actually create an economy instead of killing it. Even in Germany, the regulation is way too much people would rather work for a major company than start anything on their own. This is the real destruction of economic growth.
Even the Romans learned that taxes were a burden. The problem with socialism has been the pretense that they are doing this for you – not them. In reality, it becomes no different from handing money to a charity and you find out 3% makes it to the actual people and the rest lines their pockets for administrative costs.
The premier of the Turks and Caicos says he’s “not closing the door completely” on the idea of his island nation becoming Canada’s 11th province, but says such a move would only happen if it is the will of his country’s residents. The entire move has been set in motion because of the USA and EU attacks upon tax havens along with the IMF. This is actually a forward-looking view, but other than adding a vacation spot for Canadians, it is hard to say what Turks and Caicos brings to the table.
: Marty, You wrote can we trust elections anymore
. Same happened last year during the national elections in Germany where the eurosceptical party AFD did not make the 5% hurdle – despite all immediate forecasts gave them much more. All statisticians I know told me such a drop seem to be almost impossible from a statistical point of view. Who knows who was counting behind the curtain – on the internet there are since time suspicions about both German leaders once spying for the Stasi, chancellor Merkel as well as President Gauck, both from East Germany..
REPLY: When governments decline economically as they are doing right now, in any elected process the people are ignored or marginalized. We cannot expect honest elections from here on out anywhere. Look at Thailand. Merkel has refused to allow the German people to vote on any issue regarding the EU. This seems to contradict the claimed low turnout for the euroskeptic in Germany compared to both France and UK. I agree, the trend does not match the elections results in Germany.
As far as the Stasi, what I do know is that once people could get their files, they were shocked how people they believed were friends were not. If any politician did work for the Stasi, you can bet those records have been destroyed.