The ingredients for civil war

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Donald Trump’s unexpected victory in the US Presidential Election and the Brexit win here in 2016 brought the social divisions of both countries to the fore.

James Bartholomew was quick to highlight the dangers of Britain’s new great divide. In a Spectator article after the EU referendum result, he showed how it had exposed a split Britain – geographically between city and country, and socio-economically between the haves and the have-nots; and one overarching divide: between the metropolitan elite and the rest.

Changes brought about by globalisation and large-scale immigration had affected different classes in contrasting ways. Continue reading

Signs Point to a Global Slowdown

Signs Point to a Global Slowdown

 

As gold has struggled through 2018, (down over 10% from $1,363/oz. on January 25 to $1,215/oz. today), my forecast for a strong year-end for gold has remained unchanged.

This forecast is based on a better-late-than-never realization by the Fed that they are overtightening into fundamental economic weakness, followed quickly by a full-reversal flip to easing in the form of pauses on rate hikes in September and December.

Those pauses will be an admission the Fed sees no way out of its multiple rounds of QE and extended zero interest rate policy from 2008 to 2013 without causing a new recession. Once that occurs, inflation is just a matter of time. Gold will respond accordingly. Continue reading

Maduro admits failure: ‘No more whining . . . We need to make Venezuela’ (great again)

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During a speech in which the power went out while he was on live television, Venezuela’s socialist president admitted his economic model has “failed.”

“The production models we’ve tried so far have failed and the responsibility is ours, mine and yours,” President Nicolas Maduro told his ruling PSUV party congress on July 30. Continue reading

Is CNN Creating a Civil War?

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COMMENT: From Europe, we are looking at your CNN and it really has become just propaganda and fake news. I was not a fan of Trump, but I have to say, he has done a great job probably better than any world leader. He has revised trade and has turned North Korea while your unemployment is now below 4% at 1960s level and you have a GDP growth of 4% while we have unemployment still in the 60% level among the youth and economic growth is at best 2.4%. It is hard to see why CNN turns everything negative. Continue reading

The Road to War: China vs the US

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In 2016 Steve Bannon, President Donald Trump’s former chief strategist, declared that there was no doubt, in his mind, that the US would go to war with China in the South China Sea in the next five to 10 years.

A US-Chinese military conflict would be on top of a vow by Trump in his inaugural presidential address, to not only take on radical Islamic terrorism but to “eradicate it from the face of the Earth.” This would be done by building up America’s already supreme military. “Our military dominance must be unquestioned,” the billionaire businessman, who now controlled the most powerful political office in the world, declared in his first address to the nation.

A year and a half after that speech, the United States is not at war with China, but its economic saber-rattling is arguably the beginning of a confrontation between the world’s largest and second-largest economies. Trump’s tariff threats against not only China but Europe, Canada, Mexico and its other trade partners, are also symbolic of a shift in US foreign policy towards a more isolationist stance – one that may not strictly be due to Trump’s belligerent personality. This article will get into the antecedents of this economic and military showdown and point the way to some possible future scenarios, including a war in space. Continue reading

President Trump Sends NATO Into Meltdown

Note: Please see the video at the source.

 

After threatening to walk away from the alliance over spending issues, he claims the other members have agreed to his demand during an emergency meeting.

After hinting that the U.S. might withdraw from the alliance if NATO’s members won’t adhere to their commitment to spending requirements, President Donald Trump sent the heads of state from all 29 member countries scrambling into emergency session—after which he emerged claiming a new victory.

The president got the ball rolling on the final day of the NATO summit in Brussels by tweeting:

“What good is NATO if Germany is paying Russia billions of dollars for gas and energy? Why are there only 5 out of 29 countries that have met their commitment? The U.S. is paying for Europe’s protection, then loses billions on Trade. Must pay 2% of GDP IMMEDIATELY, not by 2025.” Continue reading

Russell Napier: “Trade War Is The Beginning Of A New Global Monetary System”

A Country Matures, An Exchange Rate Declines

After two weeks on the road visiting clients your analyst returns with a better view of the consensus outlook. There is, though, much in the consensus to disagree with. In particular it seems peculiar that the consensus believes the democratically elected government of Italy, with policies entirely contrary to EU membership, will be put through the bureaucratic meat grinder in Rome and Brussels and turned into EU sausage, in a similar process that minced the political representatives of Greece.

While this might well be the case, it is hard to understand that the grinding destruction of this democracy, even if it is only moderate compared to the Greek experience, can be anything but bad for growth and asset prices in the EU. Disciplining these politicians to abandon their manifesto promises and follow the ways of the EU is highly unlikely to be a painless experience, either for Italy or the rest of the EU. Nonetheless, investors are content to believe that a painless disciplining of Italy’s elected representatives is all but inevitable. We shall see.

Perhaps the most prevailing consensus view is that the recent weakness of the RMB represents a Chinese counter-punch in the trade war with the US. Coming when it does, it is easy to see the accelerated decline of the RMB as a tactical and not a strategic move. Comments by the PBOC on July 3rd have probably reassured many investors that the managed exchange rate regime is not at risk and that the RMB will continue to be managed against a basket of currencies. Your analyst does not agree. Continue reading

Why Italians are fed up with Europe

Joep Bertrams

 

The rise to government of Eurosceptic parties is the consequence of austerity policies made in the name of cleaner public finances and of the euro convergence criteria.

Two Eurosceptic forces are now governing Italy. On one hand the 5-Star Movement, the anti-system party of Luigi de Maio founded by the humorist Beppe Grillo. On the other, far-right xenophobic Liga led by Matteo Salvini. How could this have happened? How did one of the European Union’s six founding members, host of Treaty of Rome in 1957, and for a long time the EU’s most Europhile country, give a parliamentary majority to groups so hostile to European integration? Continue reading

Recession Alert: World Headed for Cyclical Slowdown

Note: Please see the source for the rest of the charts.

 

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Despite the U.S. leading economic indicators appearing healthy, the global economy appears to be headed for a slowdown, with only 34% of the 40 countries we track having leading economic indicators (LEI’s) signalling growth ahead, and the actual GDP-weighted Global LEI growth now below zero (click any image to enlarge): Continue reading

Cologne Institute of German Business Warns of Deposit Protection May Not Survive in Europe

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The Cologne Institute of German Business sees in the planned European deposit insurance is simply incapable of proving protection against a bank crash in Europe. The EU deposit guarantee is simply not practical under any concept of austerity. The Eurozone still has inherent significant risks in the balance sheets of European financial institutions. This is primarily because where the USA took the bad loans from the banks and stuffed them into Freddie and Fanny, in Europe, the bad loans are still on the books of the banks. Systemically, this has been the leading problem why Europe has been unable to recover and Quantitative Easing merely robber savers of their income and it failed completely to stimulate the economy. Banks were still reluctant to lend and people would not borrow if they did not have confidence in the future. Continue reading

America’s “Actual” GDP: The Shocking Truth

 

Saturday last we offended the pieties.

We reckoned that democracies — being shortsighted — tend toward vast accumulations of debt.

In response, reader Tom B. dealt with us as follows:

The committed ignorance of pseudointellectual arrogance and their refusal to take an economics class on the uses of the FIAT dollar is stunning! It’s the reason Warren Buffet [sic] smiles every time “financial experts” demagogue debt!

Congrats, Daily Reckoning, you’re consistently ignorant!

It is with high honor that we accept Tom’s congratulations.

True consistency is a rare feat in this world… even if consistently ignorant. Continue reading

The U.S. Should Be Reaching out to Russia — Not Risking War

 

There’s no greater villain in the world today than Vladimir Putin. He stands accused in the media and global public opinion of rigging his recent reelection, imprisoning his political enemies, murdering Russian spies turned double-agent, meddling in Western elections, seizing Crimea, destabilizing Ukraine, supporting a murderous dictator in Syria and exporting arms to terrorist nations like Iran.

The list of bad acts laid at Putin’s feet is much longer than the one just recited, but you get the idea. He’s no Mr. Nice Guy. Continue reading

Why A Dollar Collapse Is Inevitable

 

“Naturally, the smooth termination of the gold-exchange standard, the restoration of the gold standard, and supplemental and interim measures that might be called for, in particular with a view to organizing international credit on this new basis, will have to be deliberately agreed upon between countries, in particular those on which there devolves special responsibility by virtue of their economic and financial capabilities.” 

General Charles de Gaulle, February 1965

We have been here before – twice. The first time was in the late 1920s, which led to the dollar’s devaluation in 1934. And the second was 1966-68, which led to the collapse of the Bretton Woods System. Even though gold is now officially excluded from the monetary system, it does not save the dollar from a third collapse and will still be its yardstick.

This article explains why another collapse is due for the dollar. It describes the errors that led to the two previous episodes, and the lessons from them relevant to understanding the position today. And just because gold is no longer officially money, it will not stop the collapse of the dollar, measured in gold, again. Continue reading

Make-Believe America

Americans live a never-never-land existance. The politicians and presstitutes make sure of that.

Consider something as simple as the unemployment rate. The US is said to have full employment with a January 2018 unemployment rate of 4.1 percent, down from 9.8 percent in January 2010. https://data.bls.gov/timeseries/LNS14000000

However, the low rate of unemployment is contradicted by the long-term decline in the labor force participation rate. After a long rise during the Reagan 1980s, the labor force participation rate peaked in January 1990 at 66.8 percent, more or less holding to that rate for another decade until 2001 when decline set in accelerating in September 2008. https://fred.stlouisfed.org/series/CIVPART/

Today the labor force participation rate is the lowest since February 1978, reversing all of the gains of the Reagan years. Continue reading

Turkey Will Be Ground Zero in the Next Global Debt Crisis

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Turkey is a beautiful country with a rich history including Greek, Roman and Muslim influences that make it one of the most fascinating places on Earth. It is literally a bridge between East and West: The mile-long Bosporus Bridge just north of Istanbul connects Europe and Asia across the Bosporus Strait.

Turkey has been a magnet for direct foreign investment from abroad and dollar-denominated loans by international banks to local enterprises. This investment enthusiasm is understandable given Turkey’s well-educated population of 83 million and its rank as the 17th-largest economy in the world, with a GDP of just under $1 trillion. Continue reading