Click here for a great interview with Martin Armstrong dated May 11, 2014. H/T to SW.
May 14, 2014
April 30, 2014
groovygirl has been pre-occupied with another investment activity. See previous blog post for the details. Groovygirl will still continue to post about economics, gold and silver, and global debt.
groovygirl has been paying very close attention to the new Cold War with Russia and the crisis in Ukraine.
Russia is making friends in the mist of this crisis.
Groovygirl is very concerned about the global economic consequences from this situation regardless of the end result in Ukraine. At the very least, this will speed up the economic alliances and economic separation of the BRICs. The direct trading of currency, energy, and commodities that started in 2010 is accelerating. At the worst, all global trade, which has helped and driven all growth (including the US) in the last 20 years will slow dramatically or stop all together. Iraq is now back in Iran’s influence, Russia and China are in direct currency trading and strengthening every day. GG has heard some commentators say that Russia doesn’t have the money, technology, or labor to expand its commodity reserves. But China does. In fact, China is doing that very thing already in Africa. India may be on the fence, but they know their geographical location and they have billions to feed. They have to be on the fence.
To sum up: too much is global debt will slow trade and change currency power. The unanswered question is: will political conflicts accelerate us all toward that decline.
March 31, 2014
Click here for Martin Armstrong’s latest blog post entitled Is Obama Just Outclassed by Putin? dated March 31, 2014.
gg says: groovygirl isn’t sure if Obama is outclassed by Putin, but he is certainly out-statemened. Is that a word? What gg means is that, say what you will about Russia/communism/etc, Putin is one of the best statesmen and politicians ever seen of late. He is strategic. And you can bet he doesn’t do anything without exploring and anticipating all the possibilities and consequences ahead of time. He is well-prepared, and his actions are well-thought out. That’s something the US seems to have fallen short on.
Putin also has something on his global side that the US doesn’t seem to consider, growing hatred of America’s butting into everyone’s business under the guise of the “war on terror”. (He also has Russian nationaliam from within.) There was a time, when the USSR was seen as a force to be protected from. Now, that may or may not be true, but it is not Russia that is getting bad global press about eavesdropping on Merkel’s phone calls, it is the US. This hypocrisy is not lost on the rest of the world, and it is and will be used by Putin to his every advantage. And being the “underdog” is also in Putin’s favor.
This little spat with Putin is very concerning to groovygirl. It is big. At best, it will bring together the alternative trading currency and SWIFT systems that have started in Asia much quicker than thought. At the worst, it will start a regional war that the US is sure to lose and will not be backed by the people of the US. If Obama does not handle this Putin thing well and start aggressively rebuilding relations with Europe, Asia, and South America (instead of running to Saudi Arabia), this will be the middle of the big wave that changes global power not by war, but by currency and capital. gg doesn’t know who is advising Obama on foreign relations, but he is ill-advised. Putin is using the exact same tactic that the US used prior to the fall of Russia: protecting the little guy/country from the big, bad empire. And it will work for him just as it worked for the US.
The US can not continue sanctions, it will just drive the BRICS and their new trading system closer to a global alternative and cause even more global capital to go into hiding. The US can not use military action, the world and the US people are weary of long invasions. The US must take drastic and targeted actions to restore trust that it is a world leader by example, not a tsar and tyrant. The eroding of trust and confidence is at the core of this decentralizing cycle, causing all sorts of issues from global currency to capital flow to riots and revolutions to stock markets to NSA to government coups. It is a lack of confidence that is causing all the long time systems and institutions to be questioned, and in some cases, challenged.
This will be very interesting to watch.
The big question is will these systems be torn down and rebuilt into something balanced and fair and really better, or will that be in name only and be tyranny under a more peaceful and tranquil guise? Once people get power, no matter how noble the original thought, they tend to try and keep that power no matter what. Even if they have abandoned the noble thoughts long ago. Power comes and goes. But character, the essence of man/woman when money, power and status are stripped away. Things like the search for truth, continuing education, openness, empathy; these things should not be changeable or put away when one’s power is threatened. These things are stoic, intertwined with the character, unwavering.
meekness is not weakness or powerlessness, but power under control.
March 28, 2014
Click here for the full free summary. This was published March 16, 2014. FYI: this is from an European slant. Always know who the audience is, it helps decipher truth.
Layout of the full article:
1. BUILD A TRAP TO DIVERT EUROPE AWAY FROM IT’S OWN DESTINY
2. MASS ATTACKS ON EUROPE
3. CAUSE A NEW IRON CURTAIN TO FALL ON EUROPE
4. FORCE EUROPE TO CHOOSE SIDES
5. FIND THE INTRINSIC RESOURCES IN EUROPE TO FREE ITSELF FROM THE TRAP – Eight strategic recommendations
March 14, 2014
New interview with Catherine Austin Fitts with Sound Money via zerohedge. Click here. Good one!! Worth a listen. About 24 min. Catherine has a very good understanding about how governments work and how they centralize economics and money and that impact on you and me.
March 11, 2014
February 24, 2014
Click here. A two-part interview, about 25 min total.
Martin brings up a good point. When current political governments are overturned, debt payments may not get paid. New governments want to give cash to the people, not overseas bank creditors or internal corrupt government/systems.
January 22, 2014
Much more interesting than the departure of El-Erian is two other little tidbits in this article that you may or may not be aware of. Click here.
Over all, investors pulled $47 billion from Pimco funds last year. It
was the first year on record that Pimco had net annual outflows.
This confirms Martin Armstrong’s prediction of capital flight from bonds to something else.
A statement from the company said that Mr. El-Erian would leave Pimco in
March but keep some leadership roles with Pimco’s parent company, the
German insurer Allianz.
Pimco is not about bonds, it is about insurance. The insurance industry is losing money. The insurance industry is one of the many familiar institutions that will have to figure out another way to make money or make much less money in this Great Reset.
Banking, insurance, and global government debt are closely intertwined. A crack in one affects all others.
Business models that worked for the last 50-75 years will not work as they did moving forward. Those that adapt will survive, those that don’t, will not. Bail-outs and bail-ins only buy time, they are not new business models (contrary to what CEOs may think).
January 17, 2014
Dodd Frank is slowing changing the housing and commercial real estate market. So far, gg’s research on Dodd Frank and its long-term impact confirms Martin Armstrong’s Real Estate Cycle conclusion that there will be a long-term decline in US real estate from 2015 thru 2032.
Click here for a summary of the latest Dodd Frank rules that took effect January 10, 2014.
This most recent rule is a modification of how balloon or interest only loans are designed and qualified will have the most impact on commercial lending. Commercial lending has been slowly moving to private lenders (ie. hedge funds, private equity trusts, individual accredited investors) for the last few years. This new rule will just continue to push that trend. A couple of things about that trend: private investors want higher rates/returns than the bank and commercial real estate has been built on balloon loan structures. The cashflow, revenue returns and business expenses are based on this underlying development budget: interest only loans and renewal of those “balloon loans” every 5-7 years (thus never really paying down the principal). During the last crisis, commercial real estate balloon loans got renewed by that flood of money from the Fed and influence from the gov in order keep the system afloat for a while. In other words, cans kicked down the road. Thoss loans will need private money or new loans structured or lot of cash or all of the above between 2015-2020. This will be a big impact. Private investor lending is in control of the real estate market now. Cash is king.
For residential lending, the impact will be a continued squeeze on prices. If you can’t get a mortgage, you can’t buy a house. And we have alot of foreclosures still sitting on the banks’ balance sheets that need to be sold. Foreclosures that can’t be refinanced because of continued unemployment or the new loan rules. You might note that student loans must be included in the debt-income ratio (which was lowered on 1-10-14). Young people will not be able to buy a house with a traditional mortgage without lower debt-to income ratio, a job, higher credit score, cash in the bank if they want a balloon mortgage, higher down payment, and cash for closing costs. Low mortgage interest rates from commerical banks doesn’t mean a thing if applicants can’t meet these new rules. Young people will rent when they move out of their parents’ house.
These rules are changing the real estate lending system in the US. Private lending is taking over: from hedge funds to crowdfunding. gg sees a few things happening from this change. Lots of cash/capital stuck in these funds until people realize that the system has changed and understand/learn how they can navigate/make a profit the new system. Real estate prices continuing to fall coupled with private lending will mean capital/cash will be lost in the coming years. (Some hedge funds and crowd-funding entities may become Ponzi schemes.) Private investors require higher rates, negating any impact “lower rate” moves from the Fed on the real estate market
If you are going to use cash to invest in private lending funds or other entities, do your due diligence. If you own your house outright, you could owner-finance and actually sell your home. But do your due diligence.
These new rules are designed to buffer non-performing loans from the secondary market impact (derivatives, etc.), like we had in 2007-2009 that banks use to hedge their loans and make their fees. It is designed to keep downturns in the residential and commercial real estate within that market to not move into insurance, stock, and bank markets. There will be unintended consequences to these changes. Lending moves to private capital (which may or may not be transparent), interest rates go up, and money will be lost as investors figure out how this new system works.
Be very careful, do your due diligence!! Young people especially seem to be geared toward trusting crowdfunding systems and use word of month as their due diligence. Learn to read a balance sheet and an income statement and ask for them from any investment you get involved with. And always have a exit strategy!! Think of this change like the tech boom of the end of the last century. Everyone got very excited, everyone eventually got in, and lots of people lost money, but a few got very rich.
The most important impact on the market will be the continued long-term contraction of the real estate market. gg highly doubts that the new lending investors and funds will take that into consideration for their ROI formulas. Bad info in, bad info out.
Cash is king and more people will rent. If you going to get in this system change in the next 15 years , the rewards will be great for the right deal structure. But, do your research and have a couple of exit strategies.
This is part of the over-all paradigm shift during this winter season of the longer-term 80-100 year cycle.