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Serious Political Changes in the Wind for Germany | Armstrong Economics

October 21, 2014

Serious Political Changes in the Wind for Germany | Armstrong Economics.

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I have warned that economics changes everything. When there is a boom, people are fat and happy and war declines. When the economy crashes, you are faced with a serious problem. Either we will move to the extreme left and see a return of authoritarian states as we are moving toward, or we can swing back to freedom and democracy if we truly identify the cause.

Sparta

Governments will seek to blame the rich for then they will get to confiscate all wealth and they will promise security to the mindless masses. History repeats in this manner. Even Sparta v Athens was an ancient virtual communist state v democracy. You cannot even purchase ancient coins from Sparta because they refused to even issue money.

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THE CRASH HAS ALREADY BEGUN « The Burning Platform

October 20, 2014

THE CRASH HAS ALREADY BEGUN « The Burning Platform.

The bulls declared victory on Friday with a large bounce back. But, the chart below from John Hussman will provide you with some perspective. Bull markets are boring and methodical. Volatility is low and the gains are slow and steady. Volatility spikes dramatically during bear markets. It works in both directions. Large down moves are followed by large up moves, but the overall direction is down. We’ve entered a world of pain. The up days will keep people believing, while they get their hearts ripped out and their net worth gets gutted again. Market internals have turned negative, as Dr. Hussman notes:

Abrupt market losses typically reflect compressed risk premiums that are then joined by a shift toward increased risk aversion by investors. In market cycles across history, we find that the distinction between an overvalued market that continues to become more overvalued, and an overvalued market is vulnerable to a crash, often comes down to a subtle but measurable shift in the preference or aversion of investors toward risk – a shift that we infer from the quality of market action across a wide range of internals.

 

Once market internals begin breaking down in the face of prior overvalued, overbought, overbullish conditions, abrupt and severe market losses have often followed in short order. That’s the narrative of the overvalued 1929, 1973, and 1987 market peaks and the plunges that followed; it’s a dynamic that we warned about in real-time in 2000 and 2007; and it’s one that has emerged in recent weeks (see Ingredients of A Market Crash).

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