Martin Armstrong’s Latest Letter Dated February 15, 2010

Martin Armstrong has just released his latest public letter entitled Behind the Curtain II: The Full Monty dated February 15, 2010. It is 69 pages long. Click here to read.

Since this is a long paper, I will comment in stages, check back for updates. There is a table of contents, so skip to your favorite section and start reading.

This is, of course, a continuation of his Full Monty letter revealing that “The Club” engineered this financial crisis.

At first glance, Martin gives vivid detail of how Goldman Sachs engineered the implosion and government rescue of AIG. From what I have been reading at zerohedge.com the last few weeks, Goldman is doing the exact same thing in Greece.

Is a higher education worth it?

Groovygirl is against 401ks, owning a home, and now higher education?

Yes, yes she is.

What a radical.

Start your own business, it’s cheaper. (Or go work in a business you would like to own one day. Learn the business and then start your own or partner up. This is known as apprenticeship. It’s the way millions of people throughout history have learned everything beyond reading and writing. Or depending on your interests, a trade school. It’s a focused education, but much cheaper than regular college.)

Groovygirl thought college was a waste of money when she went. She still thinks it is a waste of money. Especially in this current unemployment environment that is not getting any better. 

Until the internet and public libraries disappear, don’t waste money on college, especially now that you can’t include student loans in a bankruptcy filing. (In fact you really can’t include any big-ticket loan in bankruptcy anymore.) Or another option..you could go to work in Asia with your new degree, I hear their economy is booming, but you still have that student loan to pay off.

Here is an excellent article stating the math behind these thoughts.

Relax, I am not saying don’t ever go to college. Groovygirl is saying that the things we automatically did in the autumn cycle of the K-wave, like, get an advanced degree, buy a home, and save for retirement through a 401k; these ideas need to be re-examined and addressed for your individual situation and future. They are not blanket statements anymore to be followed blindly. Think!

Following these same ideas after this shift from the autumn cycle to winter cycle may cause a huge setback in your life, if you are not paying attention.

More important than an advanced college education is the ability to research, comprehend, and evaluate information for any situation you encounter. Most colleges are focused on a specialized higher education, not teaching you how to learn. (Secondary schools have completely lost the ability to teach you how to learn.)

Learn how to learn, then you will never be limited.

In times of change, learners inherit the earth, while the learned find themselves beautifully equipped to deal with a world that no longer exists.
–Eric Hoffer – Longshoreman, Philosopher

Study of Cycles

“George Washington” has a post from the Foundation of the Study of Cycles. Click here.

A convergence of cycles will make 2012 a total train wreck. For example, the 500 geopolitical cycle will shift, with power and wealth heading from West to East. Other cycles will bottom during the period from late 2011 to late 2012, so things will get really ugly. The 4th quarter in 2012 will be a horrible time for America.

I think the link in George’s blog post goes to the wrong place. Try this. Not sure if that info was subscribe only.

Totallygroovygirl likes cycles.

Here is a groovygirl past post pretty much saying the same thing…major convergence of cycles, but closer to 2014.

Anyway you dice it, it is not pretty from now until 2015.

Side musing: for the past 3 weeks, gold has broken its tether to the USDollar. Click here.

The Fuller Model

William Pollock has an excellent video out on the Fuller Model. I highly recommend it, listen twice. It’s about 21 minutes long. Click here.

Buckminster “Bucky” Fuller rocks. I highly recommend Bucky’s Critical Path.

In the near future, Bucky Fuller’s ideas will blossom in response to this shift after all the others have failed. Frank Capra’s movies will be considered the embodiment of the highest morals and quoted often. (Especially the tax man scene from You Can’t Take It With You)

Bucky’s ideas and similar thinking are not about political parties, new or old; it is about the fundamental cultural shift that is happening right now in response to the crisis upon us as a civilization.

These are big ideas, new to most, but you will hear more and more about them. These are the ideas that came about in the last winter cycle, they are not new. Hopefully, we can improve on them, make them work well in a system, and move on to the spring cycle as quickly as possible.

Real Estate Market

The real estate market is on a slow downward slope. If you need the equity in your house, consider modifying your plan.

As Martin Armstrong says we are in a 26-year decline in real estate that started in 2007. Understand this shift.

When groovygirl talks about the middle class losing 50-70% of their savings……the real estate market is where this black hole will appear and suck it away.

The majority of the net worth of the older middle class is in the equity of their home not in the stock market.

Be aware of this fundamental shift, your house is not an investment anymore. It will not go up in value. It is a place to live. If it’s paid off….it’s a permanent place to live (if you can afford the property taxes). But do not count on getting the same equity out that you put in.

Click here  for the latest FHA changes in mortgage requirements. This will get worse, not better.

FHA has the loosest requirements as they are the only one really lending right now.

People with good credit can’t get a mortgage or require such a large down-payment that they have to wait to buy. That means no one is buying houses. That means no one is selling houses and getting money back to buy things…like other houses.

Residential real estate credit is frozen solid. (So is commercial credit.)

The government’s great big helping hand for those in foreclosure….is crushing those it is said to help. Click here. (The numbers published in the article are beyond fabricated. F and F are insolvent, why do you think they stopped issuing audited balance sheets in 2004. They were bankrupted then.)

Wasteful. They just should have sent a check for $200,000 to everyone with a foreclosure notice. It would have been cheaper. Actually they could have afford to send a check to everyone over 90-days. This is absurd.

But have no fear, Timmy’s has a plan for Fannie and Freddie…but not until next year. Talk about a day late and a dollar short. Click here.  Groovygirl has looked into her crystal ball and it says the plan will be….bankruptcy.

So, let’s recap:

Fannie and Freddie, the holders of most of the mortgages in this country, are bankrupted.

No bank in their right mind is lending to homeowners. And the FHA has taken the first step to up its requirements.

Current numbers are about 20% of homeowners are upside down in their homes. Some numbers call it at 40%. If we are not at 40% now, we will be soon. The next wave of mortgages are turning over in 2010-2011. 

The USDollar will be devalued in the next few years, taking with it all assets denominated in dollars, including houses.

Interest rates will rise after the credit market is unfrozen.

Hundreds of thousands of houses should be foreclosed on and put up for sale, but they are not. The banks can’t afford the loss on their balance sheet. These houses will have to hit the market at some point. Whether it’s a slow or fast process, the impact on prices will be the same.

Baby boomers will sell their houses and move to smaller houses or retirement communities. More houses on the market.

Here is the latest on new home sales.

All of these elements are causing the 26-year decline in the real estate market. By 2033, as Martin Armstrong says, housing prices will be at 1950’s levels (adjusted for the devalued or probable revalued dollar). Yes, he said 1950’s. That’s what is called a long cycle in real estate. Important to know where you are in the long cycle when you are paying off a house for 30 years.

Think outside the box about how to address this shift for your own individual situation. Especially if you plan on retiring or using the entire equity in your home before 2033.

Your house is not an investment, it is a place to live.

Update: February 25, 2010: more support for these ideas. Click here.  And here.

Confidence Model

Groovygirl hasn’t been writing much this week, well, because there is nothing new going on.

The economic crisis born from too much global debt continues to implode. Gold and silver are holding their own. Governments are like deer caught in the headlights of an on-coming car. Do not rely on them to avert any coming crisis.

But groovygirl has noticed a definite change in the confidence level. Martin Armstrong charts the confidence in the economy in his Economic Confidence Model. Click here. Scroll down for the updated version. You will notice that we are on a downward slide (in confidence) from spring of 2009 to spring of 2011.

More and more think tanks and professionals (like Warren Buffet’s long time business partner) are becoming more and more vocal in their pessimism.

Check out all the popular pessimism on goldsilver.com today.

I suspect that Financial-TV talking heads will not be too far behind as the fall 2010 elections really start rolling. People are pissed…and someone will want to “articulate their anger for them” (to coin a phrase from Network). I am sure all the F-TV pundits will line up to do just that. This will signal a shift in confidence that will gain momentum as the year drags on.

However, for you, dear readers, you already know that the dollar is doomed, the debt implosion will continue racing around the world, and governments don’t have a back-up plan. It will not end well.

So, you have prepared, and protected your savings from the devaluing of the USDollar. Gold and silver are your insurance. But do not trade, expect violent swings as people rush to whatever they think is safety at any given moment.

We are experiencing a complete paradigm shift in every aspect of country, government, culture, and currency.

As Chris Martenson says, “the next twenty years will be completely unlike the last twenty years”.

We are in the middle of a 20-year bull market in precious metals and commodities. We are on our way to a currency crisis in the USDollar as well as other global currencies. Governments will continue to “print money” until it doesn’t work and creates a hyperinflationary depression.

By the end 2010, the US will be in full fear mode. Keep working your plan as others figure out what you already know. Things are not returning to normal, they have changed for good, and most people are not prepared mentally or financially for this change.

Do not be distracted by the anger of those around you. Anger is phase, right after denial. Too much time in anger mode will drain your energy, better spent preparing for the coming currency crisis.

The currency crisis is called for 2015 by Martin Armstrong (Aaron pointed out that Martin has modified the year to 2012, please see the comment section for more detail) and John Williams. But the time leading up to that break will not be easy, lots of mini-disasters before then. Each disaster will make it harder to prepare. So start now, do not wait.

Silver

Although gold is always talked about, silver is a good investment. But watch the timing, that market can be manipulated, too, as Jesse talks about in the link below. But only for the short-term.

Click here  for an excellent article about the current silver market from Jesse’s Cafe Americain.

Do not day-trade silver. Hold only the physical metal.

There is an upside potential of $30. Others claim $500 before it is all over. $500 silver means a currency crisis and high inflation. Use this metal to protect the purchasing power of your savings.

William Black interview

I was sent this chart from chartoftheday.com showing the unbelievable comeback of the inflation-adjusted corporate earnings. Click here.

This chart looks fishy to me.

And it is. Between the direct injection of gov and the change in the accounting rules, it looks like the corporate world is back in 2007….on paper.

This is an accounting trick. The FASB has made Enron, the accounting standard. (You will note that the jump in the chart corresponds to the FASB accounting change in mid-2009.) Amazing….We are doomed.

Do not be fooled by government-mandated accounting sleight of hand. Nothing is fixed. When government can’t fix something, they change the formula to make it appear better than it is.

Here is an excellent interview with William Black explaining that accounting mess and more. Click here.

Financial Crisis in Europe and Gold

Jim Willie, the Golden Jackass from goldseek.com, had a great article out yesterday.

“Crisis is the new norm.”

Click here  for the whole article.

Jim Willie is the only one so far that I have heard predict that Greece will go back to a non-euro currency. We will see what happens. However, I agree that whatever they plan for Greece, will be the plan for the other debt ridden European countries. They will not announce this plan ahead of time. They will announce whatever will keep the markets from panic.

He brings up the explosion of gold in euros. Those holding euros are panicking, because the stability of the euro is in jeopardy. The same thing will happen to the USDollar for the same reason.

Threat of default on debt will take down every fiat currency in the developed world. It is just a matter of time. Expect crisis after crisis, in phases, until all fiat currencies are worthless paper.

This is it. Protect the purchasing power of your savings. Get out of the way of this falling debt.

The Us/Them Mentality

An interesting headline caught my eye today…

The Economic Elite Have Engineered an Extraordinary Coup, Threatening the Very Existence of the Middle Class

From alternet.org. Click here.

The us/them mentality will drain your energy to get through this crisis. This current crisis and its coming aftermath, will be severe, but it is just a cycle in history. Blaming others will not help and certainly will never change what is happening right now. It’s too late. The wave is in motion headed for the beach.

Get out of the way.

This is the winter season of the K-wave cycle. According to Martin Armstrong it is comparable to the fall of Rome. But it is a cycle in history, just the same, only the actors’ names have changed.

So, did the elite take full advantage of this cycle? Did the banks’ greed implode the very system they fed off of….yes. Did the middle class buy the crap of F-TV and gov hook, line, and sinker…yes. Has this same thing happen repeated times in history….yes.

Now you know. Cycles come to an end. Fiat currencies crash. Governments can not create infinite amount of debt.

Since you now know this, don’t blame, prepare. If history has a lesson here, it is Rome will not be there to catch you as you fall. You and your family are on your own as Rome burns.

The Roman government raised taxes so high to cover all their debt for their huge army, that the people raised up against the government or just left. The Roman government continued raising taxes and trying to keep the status quo right up to the time that the barbarians invaded the City. It will be the same now. You don’t have to be a psyche to figure out exactly how the powers that be will react in the continuing crisis phase.

Protect the purchasing power of your savings. Blaming is wasted energy. This is a cycle. There are advantages and disadvantages to each cycle, but you need to make sure you are working the plan for the current cycle and not the last one.