Any of the 34 respondents who voted for this option were ... wrong. And I say this not to be narky - in fact I'm very glad last months events did not pan out the way I described in my WTFUC definition. The entire point of the original article (and the 20-year poll) was to help bring discussion to the mental models we carry around with us i.e. an examination of our expectations and time-frames for all things financial. Depending on the settings on your computer the poll will allow you to change your vote.
Regarding the date expressed in Armstrong's economic confidence model (ECM), I'm not entirely sure what to make of it (or his renewed focus on Real Estate for that matter), I always thought the ECM was referring to confidence in government/public sector. I get the impression the turning point will be the focus of quite a good many follow-up articles in the years to come with the benefit of hindsight. In fairness it is not realistic to expect certain events on a very specific slice of time, but this gets us back to the discussion on time frames and relativity. My overall point is that predictions are useless without tests and context for those models. I cringe every time I read a call for COMEX DEFAULT, DERIVATIVES COLLAPSE or Bullion Bank IMPLOSION. The big problem is none of these events have transpired on the purported time frame and that should be a red flag for any continued predictions from the same folk. From a book recently read - I love this paragraph because the author could easily be talking about most precious metals blogs.
"... This desire for complete seamless explanation infests most examples of crank science. When somebody mails me their explanation of the architecture of the Universe derived from the geometry of the Great Pyramid, or the cipher of the Kabbalah, it will usually display a number of features: it will be entirely a work of explanation; there will be no predictions, no tests of its correctness; and nothing lies beyond its encompass. It is not the beginning of any research programme. Beyond refutation, it is always the last word."
The world is an incredibly complex place and it is beneath us to describe it in simple terms. Together, let's keep searching for the right model of gold and international finance. But let's judge and discard models which don't give specific predictions and which fail to explain the significance of the events in the context of their readership.
Next checkpoint is at the end of 2019, let's see what happens over the next 3 years. --Warren
29 comments:
Like you I'm not sure what to make of Armstrong.
I find his commentary interesting (he has amazing knowledge of history) and agree with some of it, e.g. Armstrong has said for a long time that Gold doesn't respond to inflation, but rather lack of confidence in government. With that I agree, but then he writes some really off the wall posts.
He clarified re 2015.75 in a new post just now. So the sovereign debt 'big bang' may just be off to a rolling start :)
I put "sometime before 2025" for a couple of reasons.
1) It will take time for the OECD nations to go bankrupt. We know of the PIIGS and some Latin American countries, but we still have economic basket cases to go - Japan, France and finally the US. These countries have more time to blow up. They will suffer permanent low growth due to high debt ratios but to blow up requires a collapse in the Yen, Euro and Dollar and that is down the road.
2) Jeff Saut of Raymond James turned bullish back in 2009 and has remained bullish. Recently he said that secular bull markets last 14 to 15 years. If, so that takes us from 3/2009 to 3/2023 to 3/2024 and that is a rough idea.
3) The bull market in gold is exactly 2.6 to 2.7 times as long as the 1971 to 1980 bull market. That takes us to late 2024 or so with one big assumption - that we are within months, not a years of a bottom. Personally, I believe we are within a few months of a bottom - no later than mid 2016
4) So, that takes us to 2023/2024 in rough numbers on equiteis and gold and sounds about right. That would make (2) presidential elections for the US and perhaps (3).
5) One non-economic point to make. The 3rd world has figured out that the Western World has lost its nerve and will not do anything to secure its own borders. All we hear are the poor refuges and how many to take. When you don't have borders you do not have a country. As the Austrian economists among others have often said "You can have a welfare state or an immigration state but you can not have both."
The influx of millions of economic migrants may tug at the Western World's heartstrings but in practical terms it is impossible to continue generous handouts to everyone who can get across a border. You can take 100,000 but you can't take 100,000,000. This opening of borders whatever else you think in a humanitarian aspect, will only accelerate the economic collapse of Europe and North America.
6) Last point - the Central banks of the world are the enablers of idiotic, failed fiscal policies of the OECD countries. Notice that not one advanced Western nation and that includes Japan has done one thing to reign in the transfer payment promises. In fact as the world has slowed down the excuses for expanding transfer payments have increased. In the US, we have a record number on food stamps and record 'disabled' workers. The latter is largely a scam. Just find a doctor who says you can't work and you are on permanent social security for life way before you are in your 60's.
Everything is pointing to a huge economic collapse and loss in faith of governments and hence currencies. I just think it will be in the 2023/2025 time period.
Cone on, Warren! Give Armstrong a little wiggle room.
His faux 'precision' date of 15.75 could charitably be stretched to encompass September 15 through October 15, or even to refer to the whole fourth quarter of 2015.
Not that I actually give any credence to his calendric numerology. However he might arrive at his figures, they are merely 'Just So' proclamations because he fails to explain WHY his predictions are so inevitable, and what mysterious causal mechanisms will unfailingly produce those somehow necessary outcomes.
Interesting first WTFUC benchmark, in any event.
Keep up the exemplary work!
Slow Loris Larry
Hey Warren.
Armstrong is an odd one.
I think he has explained the turn date (Big Bang) as the start of a cycle of collapse in confidence in government pretty well. I see a few signs that is starting to happen, protests here and there, nothing much on the markets yet. Of more interest to me is where do we go next, further left into communist/totalitarianism, or sharply the other way? Or do we just go through hell for a couple of decades as various factions fight it out? Mini ice ages are known to produce revolutionary times (1700s), and we're headed into one in the 2030s.
Sell some gold in 2020, buy a farm somewhere warm and secluded, and relax. If only it were that simple.
He did give away the gold price bottom in post a while back, but I'm keeping that in my back pocket until nearer the time.
Thanks all, for your comments. These are good discussion points. If anyone made any financial decisions based on the 2015.75 date, possibly they may also be wondering whether they were a few weeks too early, or months or years. We could easily extend the same courtesy to the 'derivatives failure' crowd but it gets into interesting territory - once the precision of their model becomes variable we have to ask how (and where) do the authors define that limit-of-reading-error? If this stuff plays out over decades then perhaps there is room to live our (short) lives in the moment. Just a thought. btw, I don't think government debt is at its peak - although it would be nice if we've just passed 'peak insanity'.
Hi everybody,
as much as I also like to read Armstrong to get new perspective on issues sometimes overseen:
That ECM/confidence stuff is just pure crap. Why? Anglosaxians should study what happend in former East Germany / the communist block. I am happy that I was arround, in the 80ies and 90ies and also met lots of people from east Germany, Polen, Hungary, Russia, before, during and after the transformations.
Ask those people about "ECM" or "confidence" in their currency or in their government at that time.... WTF?
Still, no abondoning of their currencies, almost no hyperinflation, no collapse (whatever you define that at all anyway).
People only abandon their currency, when they change their unit of account. e.g. at the market they price their stuff fixed to a different unit of account. Well, will that happen?
Propably quite some of you are employed (or on some benefits). What will happen if you go to your money "giver" (today probably a big corporation or government) and tell them, "no sir, the price is different, it is calculated by a different unit of account"?
Greets, AD
Hello AD.
Maybe this time we will have almost no hyperinflation. Just the Yen and US dollar? Sterling?
At least the euro will be stable.
Good morning Gary,
The euro will be stable, just like the aluminium DDR-Mark was stable: No hyperinflation, just total government control.
I just wonder why you have the strange idea, that Yen, dollar or sterling might hyperinflate?
Again, can we agree that hyperinflation is not printing, it is the abondoning of a currency by the (local) market place (and the knee jerk reaction of governments is typically printing)?
Just think of Mises regression theorem, roughly: "Money is valued because the day before it was also valued." Now, today it is not about that it is being valued, it is simply dictated, because almost all market participants are deeply depending on the state and corporations that belong to nobody.
And now to the Euro vs. the rest: Do you seriously think that somehow, the dollar market places will be completely abondoned in favor of some euro cash (gold whatever) black underground market? Seriously?
And about the Euro itself: Whenever somebody might abondon the euro market place or the euro banking place, viola: capital controls, and taxation to the moon for the slavetards. Yep, I also dont see any hyperinflation for the euro.
That's why I choose "never" in 20years STFU poll.
Greets, AD
Well, we know the euro is free of government control, it's the central banks making all of the decisions.
If one has an open mind, it becomes crystal clear that the Euro was (partly) designed to bring govt under market control, so sovereign bankruptcies can and will happen. Time will show this, soon.
As for hyperinflation, it is possible in many countries, including Japan, UK and US, but only possible, not for sure. It depends on how the govts/CBs react to events, and confidence can be lost very easily.
Ultimately, politicians in those countries are likely to make poor decisions, as in dozens of other sovereign currency issuing countries.
Perhaps you have more faith in politicians than me AD? ;)
PS, I can't be assed to write a post, but a stock market crash (c.20%) is likely to begin within days, maybe starting Monday. Good luck.
Good morning Gary,
"Well, we know the euro is free of government control,"
okay, Gary, in that case, so tell me, in whose favor or according to whom is the ECB acting? And please, dont gimme that crappy W.D. speach from 2000.
"Euro was (partly) designed to bring govt under market control,"
Gary, show me any numbers or decisions that underlines this statement, you know, facts not talk. If you dont I say you are... dont know, tell me.
Now, let me give you the real numbers, hard facts:
The ECB is purchasing any gov. bonds it can possibly buy, 60 billions per month, regardless of quality.
2yrs gov. bonds: Germany -0,24%; Finnland -0,22%; Netherlands -0,23%; Austria -0,17%; Belgium -0,17%; Irland -0,12% AND NOW...*DRUMROLLS*: FRANCE -0,18%
Tell me Gary, how comes, that somebody wakes up in the morning and says, "I have a great idea, I gonna buy me some negative bonds of a really crappy completely broke dieing country with 51month unemployment record highs, still rising and with a communist moron as chief of command, yeah that's great, that's what I always wanted to own"?
Tell me Gary.
Greeets, AD
AD, you forget to mention that the risk of buying those bonds lies with the national central banks.
When it all goes bust, what asset will be used for settlement.
One needs to have just a tiny bit of imagination to see the inevitable end game here.
Debts to be cleared on gold.
When goats have gone bust, the EU budget will shrink considerably.
Read Mundells thoughts on why the Euro was so designed.
Time will show you anyway. Shame your bias doesn't allow you to see around the corner.
Govts rather than goats. Goats a far better bet.
Bloody IPad.
"When it all goes bust, what asset will be used for settlement."
why should it go bust? BTW, could you precicely define the word "bust" you are using?
Gary, with some lifetime experience you should easily see, that infront of the choice to let somebody go bust, they will print, or just simply break their own rules. (BTW like they are doing it today already: capital controls are designed to be an temporary exception, but now the permanent rule)
This is just typical bureaucratic/political opportunistic reaction. We see what happend in Greece: The EU/EZB/greece government were laughing their ass of and just simply shut down the accounts of every slavetards, regardless if his bank in particular was "broke" or not.
See, the ECB/EU would not even let one single bank in the eurozone go bust. And you talk about letting the national banks go bust? In what parallel universe do you live?
How do you get to that strange idea that this time it is different?
I find it really amazing that you talk about my "bias" compared of your storries.
Greets, AD
P.S.
Mundell just cared about his italian toilette, tells his interlect.
P.P.S.
I got an even better idea: Instead of lowering the minimum reserve from 2% to 1%, why not even chancel it at all? Just write a law and here we go again...
'How do you get to that strange idea that this time it is different?'
Based on everything I read and see, this time will be very different.
I saw Greece restructure (partial default), I saw Cypriot banks resolved. The pattern is very clear.
We will see in due course won't we.
Deutsche bank first?
Good morning Gary,
"Deutsche bank first?"
and what do you mean by that in particular?
BTW "I saw Cypriot banks resolved." they still do exist, funny european form of capitalism yeah?
Oh talking about european banks, take a look at Dexia, Commerzbank, Hypro Real Estate, WestLB, Hypo Alpe Adria, Monte dei Paschi... is that what you call "go bust"? Because it looks like you refuse to give a clear definition.
Greets, AD
I think the news resolution laws that come into effect in 2016 will produce much havoc for banks. The ECB has been biding its time.
Banks don't necessarily need to fail, if haircuts of liabilities produces solvency, that is still a better result than blanket taxpayer-funded bailouts.
But we'll hear the cries about the 'theft of deposits' no doubt. BS from closet socialists.
Not long to wait.
Gary,
yes count me to the, what you call, "closet socialists", I know, because I do see a difference between a bond holder and a depositor, obviously you dont.
All that talk is just smoke and mirrors anyway: The governments need the banks and the banks need the government. So either they take it via a bail in on depositors, or a haircut on bondholders or just simply take 50% of your fruits of your labor and call that fair tax on contribution to society, at the end it doesnt make a difference.
Make your choice and call whomever you please a closet socialist. That's what I am saying from the beginning: it does not matter, since the slavetards will simply comply to eternity.
Greets, AD
The governments do need the banks and vice versa, and the populations feed from them both.
But the BIS and now the ECB and its banking laws need none of them.
They will attempt to right the ship.
They may fail, due to revolution or similar.
But I prefer bank failures to socialisation of losses. Sheeple will learn a lesson, the stupid will suffer losses.
Tough luck, should have paid a little more attention.
Please note, it's only the big sheeple that will be shorn, not the little lambs, they will be saved, along with their 100,000 euros.
Sad to see you AD on the socialising side of the fence, but thanks for your honesty.
Hello Gary,
obviously you ignore the facts of the past and present and just talk about some fictional future, hmmm, hard to debate that one.
Anyway, may I ask a question for your crystal ball, you claim to have working so well:
"Sheeple will learn a lesson,"
in case that happend and everyone has learnt and will from now on only hoard their money at home or buy $-bonds in save harbours, how will your adorable institutions act in that case?
a.) desperately and blindly jack up interest to >10%, while nationalizing all banks?
b.) darkonian totalitarian capital controls with punishment?
c.) impose unlimited wealth tax?
d.) outlaw cash?
e.) just finance the governments directly with CAC bonds being rolled over by the ECB?
f.) solve the (liquidity?) crisis by buying gold?
Hint: More than one measure might be applied (working more or less), but one will definitely not be done and wont work at all.
Greets, AD
P.S.
I dont really consider myself a "big sheeple", but almost running out of bank accounts...
I ignore nothing AD, I just realise the ECB is walking a tightrope, and that it needs to get to 2016 before the next stage of the plan is carried out, breaking that nexus.
As for lessons to be learned, I think big savers will simply learn to spread their risks, as you say you do. You're wise, others less so.
That could mean a variety of assets, or simply a number of banks. Eventually banks will be pre funding the deposit compensation scheme of course.
Is it not clear by now that the ECB really isn't bothered by economic motivations, other than providing a stable currency, and helping to break socialism into pieces. That'll do for me. We'll have ein bier when France goes bankrupt, in celebration of their success.
Good morning Gary,
I was asking a question, but somehow you could not or missed the answer. Anyway, about the not so distant future:
"to get to 2016 before the next stage of the plan is carried out, breaking that nexus."
hmmmm, let me check what's on the agenda:
http://srb.europa.eu/
http://europa.eu/rapid/press-release_MEMO-14-295_de.htm?locale=en
hmmm, let's see what we got here, or let's say what will be the consequences? Every solvent bank (with its owners&customers) in Europe will pay for every bankrupt bank (with its owners&customers) in Europe, so that nobody on the banking level will fail. As a side consequence every depositor with more than 100K€ will potentially get a haircut, since this fond is explicitely NOT for refunding the depositors.
That, Gary, has nothing to do with a stable currency, that has nothing to do with breaking socialism, Gary, THAT IS SOCIALISM IN ITS PUREST FORM: saving the institutions while making everybody else equally piss poor.
Greets, AD
P.S.
Talking about "stable currency", like I said, in the communist east block (GDR, UdSSR, Hungary, China....) they also had a stable currency, as long as they had a controlled closed system. Now this system is basically the same, but stretches across the whole EU (if not across the whole globe).
P.P.S.
Too bad but it looks we'll never have a beer, since France will never go bankrupt, due to the ESM (that also holds a banking licence...).
Socialism was what the UK and US did with their banks in 2008/09, foisted the problem onto the taxpayer.
Failing or resolving banks via creditor write offs is the opposite of that.
You remind me of another fool who couldn't see that.
That's as close to a market response as you're ever going to see on this planet.
You may still not like it, but let's at least be honest about the two different approaches.
To call the Cypriot approach socialism just makes you appear totally biased and blind.
Which of course you are where the European project is concerned.
No more comments from me.
"Socialism was what the UK and US did with their banks in 2008/09, foisted the problem onto the taxpayer."
and in this context why does the ECB buy government bonds, driving e.g. France yields into negative territory? So you tell me, if we got a "lender of last resort" that is socialism, but if a central bank finances deficit countries that's not? Strange ideas you got there.
"To call the Cypriot approach socialism just makes you appear totally biased and blind."
if you do a bail in on a hard default (due to defaulting government bonds!!!, remember?), but only "eat-the-rich" or "eat-the-prudent", why isnt that socialism? Because: In the aftermath, in total, it is basically as if the governments would have taken that money directly.
Personally I say to Cyress: Yeah, give them a real rule-of-law bail in, give everybody exactly the same percentage, regardless of amount. You say no-no-no? Then why? Only pure socialists, liars and bankers favor this aproach, because people would exactly do what YOU suggest them to do: Take their money out of the bank and/or flee the Euro-zone and then your favoured Euro-crap will be history.
Sigh.
I don't say no AD, I would haircut everyone the same, equity, as in taxes.
But there was a public outcry in Cyprus when they suggested hitting those under the insured limit.
So, we move on, and now banks will soon fund the compensation fund. If society desires such a scheme, banks should fund it.
Nothing is perfect in life, your ideals will never be realised. Let it go, I can feel your anger.
At least the Euro set up is trying to do things our way, I can't fathom how you can't see that.
In democracies, there will always be compromise, but taking the control of money away from politicians is a move in the right direction.
You mention repeatedly QE in Europe, but seem unable to look ahead. Like many you are stuck in the current paradigm.
Look ahead, try to use your imagination, see what the end game is. Read a bit more, rely less on your bias. Think.
Why no risk sharing on QE in Europe? It's obvious.
"but taking the control of money away from politicians is a move in the right direction."
No need for that and that has nothing to do with ideals: In Germany we had a prudent Deutsche Bundesbank (with the EMU as a compromise). We pissed it away to get in bed with the PIGS freaks that already blew the latin monetary union and had been famous for devaluations, trade deficits and collapsing currencies. Any further questions about my anger?
And what I can not understand: Why combine nations that never ever wanted to change their economy in order to comply to certain rules in the first place? This is either some kind of fascist doctrine or outright stupid. If italians want to print toilette paper, let them print. If germans want to consolitate their budget, so let them. If chinese want to stack green paper, let them do it, but let Germany get out of this madhouse. But obviously the german left green government insist on it's selfdestructive way to "save the world", just like currently our chief bitch in command enjoy flooding our country with worlwide freeloaders, parasites and criminals.
At least I now see what truly vexes you AD.
I empathise to a certain degree, but Germany has exported plenty of stuff via the single market, stuff that probably would have been unaffordable if southern Europe had continued devaluing.
Silly Germany, lending its surpluses to the South, always a bad risk.
Defaults will teach everyone a nice lesson.
Good morning Gary,
well, the decision to give up the D-Mark is history, so why bother about things that can not be changed. Gary, dont take that personally!!!, but what truly vexes me, is when people spread such garbage und urban legends like you do with your euro storries.
Your argument "the euro to end governments financing...." like described, italians&french dont want to (governments as well as the populace), Germany had an independent central bank and a fiscal policy and mentality they lived happily with, they did not need and want the euro. So that's not an argument for the euro.
the argument "germany has benefited exporting to southern europe" is also not viable. Germany had an almost continous surplus already before the euro. I cant remember that Germany gained in competition compared to Greece, Italy or France. We dont manufacture goat cheese, cotton, shoes or champagne, so no market to be destroyed or to benefit from. And if german submarines are unaffortable to Greece, dont worry, dont buy them, instead germans could work less, focus on other innovations or lie around in the sunshine on a greek beach.
And your cynical argument "Silly Germany, lending its surpluses to the South, always a bad risk." is also not valid. Because that's the whole idea of the euro setup, otherwise it would not work in the first place. German financial institutions dont have another choice. Just look at the TargetII setup, or the capital regulations for the capital life insurance agencies.
And your argument "in the future it all will be different, they have a master plan to pull the plug, I saw the sign...". hmmm, hard to argue, but do you have better insides than e.g. Jürgen Stark or Axel Weber? The hawks of prudent money that had the balls to say, NOT IN MY NAME. These people being replaced by somebody like the MIT roommate of Krugman&Bernanke, Mr. Super Mario Draghi?
Gary, it is your screwed up argumentation that vexes me seriously.
Greets, AD
I adhere to the 'banks not tanks' modern theory of conquest.
Random other news to add some more color to this discussion thread - a soothsayer informs me I'm going to live until I'm 93 years old (long story, that one). So looks like I'll be able to close off the 20-year poll with commentary when that happens, and possibly some of the other milestones as well. Peace out, Warren
Warren,
any chance you can give us an update on the recent 100+ tonnes addition to the GLD inventory? New bars or known old bars?
Victor
Post a Comment