Austerity: Good or Bad?



The ‘Austerity’ argument seems a bit confusing.

Surely,  “Austerity” means reducing the size of Government and is an understanding that we can’t keep funding zillions of civil/public servants and on the other is a reduction of the Social Security Bill – healthcare, social benefits, the cost of the un and underemployed etc – both of which seem to be excellent objectives unless you are in one of the groups affected. Isn’t it impossible to return to or have a vibrant economy unless and until these objectives are achieved?


ANSWER: The problem with austerity carried out in this fashion is that they are turning off the spigot and it is ending in Marxism/socialism. To continue to service the debt, governments hunt the rich and raise taxes then agree to exchange all info. In the process, they cause capital to hoard and not invest. So you are not really ending socialism, rather you are moving more toward totalitarianism.

We will see riots for they are not just people who receive; these are the people who cannot find a job because nobody is creating them with deflation. We have to look at both sides and this is why our proposal is to eliminate taxation at the federal level to unwind this mess from both directions.

So there is more to this than just reducing social programs. Doing that and raising taxes to continue to service debts will result in taxation without representation as the current workforce must then pay for spending without receiving anything in return.

U.S. Shares & Slingshot Move

DOWIND-D 10-12-2015

The potential for a slingshot move has not been negated. To negate a slingshot, we need a daily closing in the Dow above 17735. If we have the slingshot and trap the majority, then we should see this rally fail and new lows by the first quarter.

Can we merely go into a Phase Transition without the slingshot? Yes. That would require a key annual closing and consolidation into the first quarter before electing the Weekly Bullish Reversals.

Either way, it still appears that we will have that shift from public to private assets and the quantitative easing has shortened the duration of the debt so the slightest uptick in rates will have devastating effects. Even in Britain, Osbourne has doubled the national debt at these low levels of rates. Can you imagine what will happen when rates are forced to rise? The exit from public assets will become a huge one-way street. This is how empires fail and die. We deserve what we get by filling government with lawyers who assume the answer is more laws to dictate to society.

Malaysia, Goldman Sachs, and the ECM Turning Point


Malaysia is becoming the poster-child for the crisis in emerging markets. The rising tensions between the people and government are clearly demonstrated by this story developing within the emerging markets. In Malaysia, we hear the central bank is recommending criminal prosecution in connection with the controversial investment fund 1MDB, the BBC reported. 1MDB was a sovereign wealth fund that was set up by Malaysian Prime Minister Najib Razak. The fund invested nearly $1.83bn abroad without using proper procedures. The investment bank Goldman Sachs is at the center of the criminal investigation in Malaysia since it organized 1MDB to raise U.S. dollar debt to finance acquisitions of power plants. Goldman Sachs also did the currency swap from dollars.

Goldman Sachs’ role has been highly criticized in the Malaysian media and political circles after it emerged that 1MDB paid hundreds of millions of dollars to the bank for helping it raise $6.5 billion in three bond deals in 2012 and 2013. Goldman Sachs earned around $590 million in fees plus commissions and expenses from underwriting the bonds, according to Reuters. The reported fees are highly excessive, nearing 10%, when such fees are typically only 1% in bond underwriting. The Wall Street Journal reported last July that investigators looking into 1MDB had discovered nearly $700 million transferred to Najib’s bank accounts. Malaysian Prime Minister Najib Razak also acts as finance minister in Malaysia and on top of that chairs 1MDB’s advisory board. Malaysia’s anti-corruption commission said the funds deposited in Najib’s accounts were from a donation, not from 1MDB. However, they declined to reveal who the donor was and for what reason they donated.

Then this financial mess gets even more convoluted. Abu Dhabi is in the mix through IPIC established in the 1980s to focus on energy investments. For some strange reason, they have been a supporter of Malaysia as part of its expansion to developing countries and have already offered financial support. An Abu Dhabi government-owned investment firm revealed that it would pay $102.7 million (U.S. dollars) in interest payments due this month, in addition to paying for two $1.75 billion bonds next month that were issued by 1MDB units and are co-guaranteed by IPIC.

Growing pressures of this corruption scandal are clearly demonstrated in the depreciation of the Malaysian Ringgit over the past few months, as illustrated above. However, this is at the heart of emerging market debt that is going to explode with a rising dollar. The total debt, which rose after 2007 in dollars, is nearly 50% of the total U.S. national debt without the economic infrastructure to support it.

This corruption scandal is starting to make worldwide press with the turn in the ECM on 2015.75.