Monday, June 21, 2010

Martin Armstrong – Can the Euro Survive a Sovereign Debt Crisis?

Here Martin starts off with a forecast for the DOW. Before you read it, I will remind you of his prior forecast from August 2009, “Will the DOW Reach 30,000 by 2015?” This is where he said, “The main resistance area is 11,000 on the DOW. We need a monthly closing above that level to signal that the March 2009 low will hold. Otherwise, we should expect a retest of the lows or still even perhaps new lows going into 31.4 months down from the October 2007 high with a rally into the next target 2015.75 reaching 30,000+.” We did not receive that close, so keep his prior work in mind when reading his latest update – there are inconsistencies here.

In the rest of the paper Martin tries to explain MONEY. He fails miserably in my opinion, but does have some good points. He talks about velocity and he talks a little about DEBT, but he still fails to see how the central bankers are using debt for profit, power, and control. He is failing to see how debt saturation is responsible for killing velocity, and he clings to the idea that the gold standard is what caused the Great Depression and that therefore it’s not going to happen again – yet the world economies are in severe danger! LOL, well which is it?

Thus, we are getting closer to drivel in terms of forecasting the FUTURE which he also talks about as a focus of money. What he doesn’t mention about the future is how the central bankers have worked tirelessly to pull forward in time people’s FUTURE incomes! When income cannot support debt you have a mechanical problem in terms of velocity. He also fails to account for the accounting fraud and the leverage effects that derivatives are playing. M3 is negative, he does not talk about that.

So, I continue to post his work because there are valuable nuggets of information to consider – pieces of history and concepts about capital flow that are important. I think Bob Prechter puts together a more coherent overall thought process and ultimately what neither discusses is how the mechanics of DEBT affect both psychology and velocity. There is an underlying problem with the math that is at the root of it all.