Wednesday, April 5, 2017

Why Amish do not Pay Social Security Taxes │ Martin Armstrong

Martin Armstrong (Apr 5, 2017) -  In 1935, Roosevelt introduced “The Social Security Act” which passed Congress. However, the act was described “Old Age, Survivors, and Disability Insurance.” At first, the Act covered only industry and commerce. It was later extended to include farm operators in 1955. The SS tax was to be at the rate of 3% of income up to an established limit.

The Amish pay taxes because the Bible said: “paying unto Caesar what is Caesar’s.” It was in 1956 that the IRS went to tell the Amish they were now under Social Security and they would have to pay. One Amishman was quoted in a November 1962 Reader’s Digest article: “Allowing our members to shift their interdependence on each other to dependence upon any outside source would inevitably lead to the breakup of our order.” The constitutional question that has never been decided, what happens when the taxing power of government violates the First Amendment and Freedom of Religion? It clearly states: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof …” 

Then Jefferson wrote in 1802 to the Baptists of Danbury, Connecticut, that there should be “a wall of separation between church and state.” They feared that a minority religion could be subjugated by the Federal Government acknowledging a national religion. The Johnson Amendment, named for Lyndon Johnson, is a provision in the U.S. tax code that prohibits all 501(c)(3) non-profit organizations from endorsing or opposing political candidates. If churches involve themselves in politics, then indeed that creates a reverse problem where the state can be taken over by one religion and oppress all others; so it can go both ways. Historically, religions have often seized governments and outlawed all other religions.In this instance concerning taxation in direct conflict with religion, a group of Amish presented a petition to Congress, with 14,000 signatures. Naturally, Congress ignored them. The Amish reasonably questioned what possible harm they could do by not paying into Social Security. “We do not want to be burdensome, but we do not want to lose our birthright to everlasting glory, therefore we must do all we can to live our faith!” 

The IRS moved to go after the Amish and seize their bank accounts. The problem was – they had none! The IRS then sought to go after anyone buying milk from the Amish and attach their payments to divert them to the IRS. Most simply refused for such a scheme would happen just once and end the business. The IRS, refusing to consider any religious principle, moved in to seize property. In this case of the Amish, that meant cows and horses. They would rather have the Amish die than respect anyone’s rights to religion. Valentine Byler of the Amish community in Pennsylvania, owed four years of IRS taxes. The IRS, of course, tacked on interest and penalties to raise it up to $308.96. Byler argued his religion forbid paying insurance. The IRS said that was a “technicality” and that it was really just a tax. Vyler has no bank account to seize so they issued a summons to appear in court for a charge of contempt. The judge in Federal District Court in Pittsburgh, Pennsylvania, according to a Reader’s Digest article, “angrily demanded of the IRS agents, ‘Don’t you have anything better to do than to take a peaceful man off his farm and drag him into court?’” The Judge then dismissed the case. The IRS never gives up. The IRS had to issue a statement on April 18, 1961 in which they said: Since Mr. Byler had no bank account against which to levy for the tax due, it was decided as a last desperate measure to resort to seizure and sale of personal property. The IRS seized three of Byler’s six horses while he was actually plowing the ground for the spring planting. The IRS then sold the three horses at auction on May 1, 1961 getting $460. They then used this to satisfy the $308.96 and then charged him $113.15 in expenses and graciously returned $37.89. The incident made national news and was being used by the Communists to show how capitalism was ruthless. The New York Herald Tribune, reported the story with the bold headline: “Welfarism Gone Mad.”

The IRS Chief of Collections was forced to respond claiming he was unaware of the plowing situation. “Plowing never occurred to me. I live in an apartment.” To show the mentality of those who are bureaucrats, he then said: “We don’t ask people their race or religion when we administer the tax laws. People have no right to use their religion as an excuse not to pay taxes.” The IRS was then compelled to issue a press release in 1961, stating the Amish stance that “Social Security payments, in their opinion, are insurance premiums and not taxes. They, therefore, will not pay the ‘premium’ nor accept any of the benefits.” The Amish met with the IRS Commissioner in September, 1961 in Washington, DC, They cited several Bible passages, including I Timothy 5:8, which says, “But if any provide not for his own, and especially for those of his own house, he hath denied the faith and is worse than an infidel.” 

The public outrage at the conduct of the IRS was international. The Amish argued they were entitled to an exemption based on the First Amendment. The IRS agreed it would stop further seizures until the case was settled. Now, senators promised to try to pass a bill in Congress and everything stopped. The Amish hired a lawyer to challenge this conflict between the taxing power and the First Amendment. However, as the court date approached, they realized if they lost in court, it was over. They then looked to Congress to pursue a legislative exemption. Finally, in 1965, the Medicare bill was passed by Congress. Congress realized that if the Amish went to court and won, then others could challenge the right to tax conflicting with the First Amendment. Congress quietly put in on page 138 a clause exempting the Old Order Amish, and any other religious sect who conscientiously objected to insurance, from paying Social Security payments, providing that sect had been in existence since December 31, 1950. The Senate approved in July, and President Lyndon B. Johnson signed it into law on August 13, 1965.

The open question remains simply this; the first explicit references to the tithe appear in Genesis 14, where Abraham tithes to Melchizedek, and in Genesis 28, where Jacob promises to give God “a full tenth.” But where did the idea to tithe come from? Many argue Abraham and Jacob were simply following the customs of the surrounding nations. But Scripture points in a different direction. In Genesis26:5, God says, “Abraham obeyed my voice and kept my charge, my commandments, my statutes, and my laws.” In the New Testament, Jesus upholds the tithe in Matthew 23:23 (cf. Luke11:42). He condemns the Pharisees for their tedious commitment to one part of God’s law, the tithe, while neglecting “the weightier matters of justice, mercy, and faithfulness.” Then he states, “These you ought to have done, without neglecting the others.

One of the Five Pillars of Islam, zakat is a religious obligation for all Muslims who meet the necessary criteria of wealth. This too is not a charitable contribution, but is considered to be an obligatory tax or  alms. The payment and disputes on zakat have also been controversial in the history of Islam. The zakat is based on income and the value of all of one’s possessions or property. It has been traditionally set at 2.5% above a minimum amount known as nisab, which has also been greatly debated.

In Judaeo-Christianity, the “tithe” was a one tenth of annual produce or earnings, formerly taken as a tax for the support of the church and clergy in Christianity. The question is, does exceeding the level prescribed as a “tithe” violate the First Amendment? If true, then any income tax imposed beyond 10% would violate the First Amendment. Since the Ten Commandments also prohibits coveting anything that belonged to a neighbor including his wife or property, it would appear that Socialism championed by Karl Marx violates the First Amendment and any tax should not exceed 10%. Hence, progressive taxation would be unconstitutional if not a flat tax. Some argue it also violates Equal Protection of the laws. The Tax at the time of Jesus’s statement of give to Caesar what is Caesar’s, was less than 5%. Historically during the Roman Republic, the tax imposed was 1%. During time of war, the taxes would rise to 3%. Ever since Karl Marx, who said religion is the opium of the masses, politicians have loved Marxism and used it to exploit the people to the point governments are averaging now 40% of the entire economy. They have outpaced all other businesses beating the bankers and multinational corporations. They have become the 800 pound gorilla in the corner of the room nobody notices is even there. Politicians always preach against the “rich” which increases the wealth of government [...]

Tuesday, April 4, 2017

SPX vs 4.5 Degree Steps of Uranus from 2009 Low

On April 5, 2017 (Wed) Uranus will have moved 31.5 degrees of heliocentric longitude
since the major low in the SPX on March 6, 2009 (Fri).


Sunday, April 2, 2017

The Sun’s Wobbles and the Earth’s Spiral Path

Figure 1 and Figure 2 (Enlarge)
Will J.R. Alexander et al. (2007) - Conventional illustrations show the Earth orbiting around a static Sun. This is misleading. First, the Sun wobbles through a tube of space and not along a smooth path at a constant velocity. Second, the Earth orbits the Solar System’s Center of Mass (SSCM) and not the Sun’s Center of Mass. The Earth therefore follows a spiral path as it moves through space. This is illustrated in Figure 1. (It is important to note that the scales in the figures 1 and 2 are highly compressed so that they can fit.)

The tube in the middle represents the volume of space that the Sun revolves in and is about 3.7 * 10^6 km in diameter. The ecliptic plane is at a 45° angle to the line of movement. The Earth to Sun distance (the chord length) varies, depending on where the Sun is located in the tube. While the paths of the Sun and the Earth are closely linked as they move through space, the changing relative positions result in corresponding changes in the distance between them.

Figure 2 shows the path of the combined Center of Mass of the four major planets, Jupiter, Saturn, Uranus and Neptune, relative to the SSCM for the period 1978–2006. Visualize the three-dimensional view of this figure with the orbit path spiraling towards the viewer. Starting in 1978, the orbit maintains a nearly constant distance from the SSCM. In 1985 the orbit starts moving closer to the central point occupied by the SSCM. It swings around the SSCM, reaching its closest position in 1990. It then spirals away from the SSCM until 1994. From 1995 through to 2000 there is little change in the displacement from the SSCM. From 2001 through to 2006 it makes another approach to the SSCM. As can be seen, these changes are not regular in time. They were relatively unchanged from 1979 to 1985, and again from 1995 to 2000. They changed rapidly from 1986 through to 1994, when they closely orbited the SSCM.


The Sun follows a weighted reciprocal path but its Center of Mass is much closer to the SSCM. It also accelerates and decelerates synchronously but moves in the opposite direction in order to maintain the system in equilibrium. The Sunspot minima occurred in 1986, 1996 and 2006. The compass points on the figure are for reference purposes only. Note that the Sunspot minima of 1986 and 1996 both occurred in the SW quadrant of the figure, and that of 2006 in the NW quadrant when viewed from a position ahead of the approaching Solar System. This is in an anticlockwise direction relative to the forward clockwise movement of the spiral paths about the SSCM followed by the orbiting components of the Solar System. The angular distance followed by the orbit from 1986 to 1996 was 360° when it returned to the same quadrant. It was only 270° from 1996 to 2006 when it did not complete a full 360° rotation around the SSCM. The angles are approximate but are amenable to calculation.

Table 1 and Figure 3 (Enlarge)
Influence of the Planets: Table 1 shows the positions of the Planetary System’s Center of Mass (PCM) at the time of the Sunspot minima during the period 1902–2006. The information in this table provides the first positive linkage between solar activity and the hydro meteorological time series. There is a statistically significant linkage with the double Sunspot cycle. He found no statistically significant linkage with the single, 11-year cycle. His analyses showed that these alternating cycles are associated with different hydro meteorological characteristics. The periodic behavior of the Solar System has a duration of 21 years (actually 20.8 years during the past century), not 11 years. This explains why scientists have been unable to find a linkage with the 11-year cycle, from which they erroneously concluded that there is no linkage with solar activity. While the relative positions of the planets are closely grouped in space at 21-year intervals, they are not precise in either time or space. This is the reason for longer period cyclicity including 178 years and longer cycles.

Sunspot Production: The plane of the path of the orbiting planets and the Sun must be at 45° to the line of motion of the Solar System. This is in order to balance the gravitational forces of a three-dimensionally balanced group of objects travelling at constant forward speed relative to that of the SSCM. Each body in the Solar System will follow a three-dimensional spiral track around the SSCM thus maintaining the group’s constant forward speed. This path will also be influenced by the changing positions of the major planets relative to one another and the Sun’s reciprocal movement.

All bodies of the Solar System therefore have a combination of two velocities. The dominant velocity component is the constant galactic velocity that is followed by the SSCM. The orbital velocities of the individual bodies around the SSCM are super- imposed on the galactic velocity. As they orbit the SSCM their net forward velocity will be the galactic velocity plus the orbital velocity (corrected for the 45° slope of the solar orbits) as they move forward in their orbits around the SSCM, and the galactic velocity minus the orbital velocity as they move backwards in their orbits around the SSCM. The net result is that the galactic velocities equal that of the SSCM when the bodies directly trail or lie directly ahead of the SSCM. The galactic velocities increase as they move forward around the SSCM, and they decrease as they move backwards about the SSCM. The galactic velocity of each body in the Solar System, including the Sun, therefore alternately accelerates and decelerates within the galactic plane as it orbits the SSCM. This is the crux of the issue. Once it is appreciated that the reference system is the galactic plane and not the plane of the Solar System, then everything else falls into place.

Sunspot production is a direct function of the Sun’s galactic acceleration and deceleration, with Sunspot minima occurring when the Sun is directly ahead or trailing the SSCM. There can be no doubt that it is the influence of the changing relative positions of the major planets that is the direct cause of Sunspot activity. The actual mechanism for Sunspot production as a result of galactic velocity changes has yet to be determined, although several theories exist.


The Sun’s Wobble: The distance of the Sun from the SSCM is the weighted reciprocal of the distance of the combined Center of Mass of the orbiting planets. Consequently, both the Sun’s distance from the SSCM and its galactic velocity are continually changing. This creates a wobble in its path through space. This can be calculated given the knowledge of the masses and orbits of the four major planets. Figure 3 shows the Sun’s wobble as it moved through galactic space during the period 1944 to 1958. During most of this time its orbit was below that of the SSCM in this view. While the SSCM lies within the body of the Sun most of the time, there are occasions when the Sun wobbles outside the SSCM. This figure provides an indication of the extent of its wobble as the Sun moves through space.

Earth to Sun Chord Distance: As a result of the Sun’s wobble, the chord length between the Earth and the Sun and the amount of energy received by the Earth will change accordingly. The next exercise is therefore to determine the corresponding changes in the distance between the Earth and the Sun and thereby the changes in the rate of solar energy reaching the Earth. This is amenable to precise calculation. The calculation of the chord length between the Earth and the Sun at any particular time has two components. The first is the position of the Sun relative to the SSCM at that time. The second is the elliptical path of the Earth about the SSCM. The Sun’s displacement from the SSCM changes relatively slowly but the ecliptic direction of the Earth about the Sun changes with the seasons. Figure 10 shows the dis- placement of the position of the Sun from the SSCM during 1993 and its effect on variations in solar energy received on Earth during that year.

S&P 500 Index vs Market Momentum │ Greed


On March 31, 2017 (Fri) the daily price bar's Range of the SPX was less than the previous 13 bars, and the narrowest since the last short term change in the daily trend on March 27 (Mon). This makes it a Narrow Range 4 Day (NR4).

Saturday, April 1, 2017

S&P 500 Index vs Mercury Speed | April 2017

Upcoming Turn-Days: Apr 02 (Tue), Apr 07 (Fri), Apr 10 (Mon), Apr 19 (Wed), Apr 21 (Fri), May 06 (Sat).

S&P 500 Index vs Mercury – Mars Speed Differential | April 2017

Upcoming Turn-Days: Apr 02 (Tue), Apr 13 (Thu), Apr 21 (Fri), Apr 20 (Sun).

S&P 500 Index vs Declination of Mercury and Venus | April 2017

Upcoming Turn-Days: Apr 10 (Mon), Apr 28 (Fri).

S&P 500 Index vs Mercury – Venus Cycle | April 2017

Upcoming Turn-Days: Apr 07 (Fri), Apr 11 (Tue), Apr 16 (Sun), May 02 (Tue).

S&P 500 Index vs 24th Harmonic of Mercury's Right Ascension | April 2017

Upcoming Turn-Days: Apr 05 (Wed), Apr 10 (Mon), Apr 16 (Sun), Apr 23 (Sun), May 03 (Wed).

S&P 500 Index vs AstroMetric Indicator | April 2017


Upcoming Turn-Days: Apr 01 (Sat), Apr 07 (Fri), Apr 13 (Thu), Apr 14 (Fri), Apr 16 (Sun), Apr 17 (Mon), Apr 19 (Wed), Apr 21 (Fri), Apr 26 (Fri), May 01 (Mon).

S&P 500 Index vs True Lunar Node Speed | April 2017

Upcoming Turn-Days: Apr 03 (Mon), Apr 06 (Thu), Apr 10 (Mon), Apr 13 (Thu), Apr 18 (Tue), Apr 21 (Fri), Apr 24 (Mon), Apr 27 (Thu), May 02 (Tue), May 04 (Thu).

SPX vs Jupiter – Saturn Cycle | April 2017

Upcoming Turn-Days: Apr 03 (Mon), Apr 07 (Fri), Apr 10 (Mon), Apr 20 (Thu), Apr 27 (Thu), May 03 (Wed).

Cosmic Cluster Days | April — May 2017


The basic assumption here is that heliocentric and geocentric angles between planets are related to financial market movements. A signal is triggered when the composite line of all aspects breaks above or below the Average Cosmic Noise Channel. Upcoming Cosmic Cluster Days (CCDs) are: Apr 06 (Thu), Apr 07 (Fri), Apr 08 (Sat), Apr 12 (Wed), Apr 13 (Thu), Apr 19 (Wed), Apr 28 (Fri), Apr 30 (Sun), May 02 (Tue), May 08 (Mon), May 12 (Fri), May 16 (Tue), May 25 (Thu), Jun 01 (Thu). Previous CCDs are HERE

SPX vs Cosmic Cluster Days | March - April 2017 | Review & Preview

SoLunar Map | April — May 2017


These charts depict the SoLunar bias for short-term movements of stock indices two months ahead. The markets are certainly influenced also by other planetary forces - especially longer-term - but a 3-5 day short-term rhythm and pattern is governed by the SoLunar forces (= 4 highs and 4 lows per lunar month). 

The SoLunar forces are a composite of Sun-Moon angles, orbital eccentricities, declinations and some long-term cycles. A Low in the SoLunar Map frequently is a High in the stock market and vice versa. Inversions occur, and if so, they should occur only once every 4 lunar months around a New Moon (max +/- 7 days). 

The SoLunar Rhythm is frequently disturbed by (1.) the FED, and (2.) by sudden solar activity, altering the geomagnetic field, and hence the mass mood. This can result in the skip and/or inversion of pivots in the SoLunar Map. An increasing number of sunspots and flares have usually a negative influence on the stock market some 48 hours later, and vice versa (Ap values > 10 are usually short-term negative). A rising blue line in the SoLunar Map means the bias for the market is side-ways-to-up, and vice versa. Highs and lows in the SoLunar Map also may coincide with the start and termination of complex, side-ways correction patterns like zig-zags, triangles or flags. 
 
Upcoming SoLunar Turn-Days are: Apr 03-04 (Mon-Tue), Apr 07 (Fri), Apr 11 (Tue), Apr 14 (Fri), Apr 18 (Tue), Apr 22 (Sat), May 03 (Wed), May 07 (Sun), May 11 (Thu), May 14 (Sun), May 17 (Wed), May 21 (Sun), May 25 (Thu), May 29 (Mon), Jun 01 (Thu), Jun 05 (Mon). Previous SoLunar Maps HERE

SPX vs SoLunar Map | March 2017 | Review & Preview

SPX vs CBOE Equity Put / Call Ratio | Overbought

The 3-Day Moving Average of the CBOE Equity Put/Call Ratio at 0.57
and turning higher, signals the S&P 500 is overbought.
An insider is any officer, director or owner of 10% or more of a class of a company's securities.
In most cases, an insider must report any trade to the SEC within two business days.
The tables highlight companies that filed with the SEC through last Wednesday. More HERE


CNN's Fear & Greed Index is Neutral.
Source
: CNN Fear & Greed Index

Sunday, March 26, 2017

The Developed World Populism Index │ Ray Dalio

* The latest point includes cases like Trump, UKIP in the UK, AfD in Germany, National Front in France,
Podemos in Spain, and Five Star Movement in Italy. It doesn’t include major emerging country populists,
like Erdogan in Turkey or Duterte in the Philippines.

On March 22, 2017 Ray Dalio published "Populism: The Phenomenon", a paper that analyzes the role of populism in today’s world and in history. Ray Dalio runs the $150 billion dollar hedge fund Bridgewater Associates, the world’s largest. The paper introduces a "Developed World Populism Index", which Dalio says measures the strength of populism over time. It’s a weighted index of the vote share of anti-establishment parties or candidates in national elections for major developed countries since 1900. The index shows that populism is now at its highest level since the early 1930s. Contemporary populism includes supporters of Donald Trump, UKIP in the UK, AfD in Germany, National Front in France, Podemos in Spain and Five Star Movement in Italy. "Populism is not well understood because, over the past several decades, it has been infrequent in emerging countries (e.g., Chávez’s Venezuela, Duterte’s Philippines, etc.) and virtually nonexistent in developed countries. It is one of those phenomena that comes along in a big way about once a lifetime — like pandemics, depressions, or wars. The last time that it existed as a major force in the world was in the 1930s, when most countries became populist. Over the last year, it has again emerged as a major force."
 

A portrait of President Andrew Jackson (1829-1837) hangs on the wall behind President Trump in the
Oval Office of the White House. Jackson was a rich, bragging populist, who said: "I was born for a
storm and a calm doesn’t suit me
." Also: "Peace, above all things, is to be desired, but blood must
sometimes be spilled to obtain it on equable and lasting terms.
" Trump like Jackson is a rich, bragging
businessman, a
narcissist and reality TV star, who never held any public office before. Calm doesn’t
suit him either, and millions at the U.S. home front are prepared for storm and blood
(
see also HERE + HERE).

"We believe that populism’s role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies (as well as a big influence on fiscal policies)," writes Dalio and three Bridgewater colleagues. Populism is a political and social phenomenon that arises from the common man, typically not well-educated, being fed up with 1) wealth and opportunity gaps, 2) perceived cultural threats from those with different values in the country and from outsiders, the “establishment elites” in positions of power, and 4) government not working effectively for them, according to Dalio. In other words, populism is a rebellion of the common man against the elites and, to some extend, against the system. In summary, populism is:
  • power to the common man.
  • through the tactic of attacking the establishment, the elites, and the powerful.
  • brought about by wealth and opportunity gaps, xenophobia, and people being fed up with government not working effectively, which leads to the emergence of the strong leader to serve the common man and make the system run more efficiently.
  • protectionism.
  • nationalism.
  • militarism.
  • greater conflict, and greater attempts to influence or control the media.

Friday, March 24, 2017

SPX vs 93 Trading Day Cycle

More on the nominal 20 Week Cycle HERE + HERE

SPX vs Mercury 180° Saturn (heliocentric)

Today Mercury opposes Saturn (heliocentric).
March 24, 2017 is also a Sensitive Degree of the Sun (HERE),
a turn-day in the Jupiter-Saturn Cycle (HERE),
and a SoLunar turn-day (HERE).
Martin Armstrong expects a consolidation of US-stock indices into May (HERE).

Wednesday, March 22, 2017

SPX vs CBOE Equity Put / Call Ratio | Moderate Fear

At 0.79 the CBOE Equity Put/Call Ratio signals moderate fear.
However, this could be a corrective pattern in the SPX, and some sort of a market low close-by.
March 23 (Thu) is a Cosmic Cluster Day (HERE); March 24 (Fri) a SoLunar turn-day (HERE).
CNN's Fear & Greed Index signals moderate Fear.
Source
: CNN Fear & Greed Index

SPX vs CBOE SKEW Index (10 DMA) │ All-Time-High


On March 20 the 10 Day Moving Average of the CBOE SKEW Index reached a historical high at 145.49. The CBOE SKEW Index ("SKEW") is an index derived from the price of S&P 500 tail risk. Similar to CBOE VIX, the price of S&P 500 tail risk is calculated from the prices of S&P 500 out-of-the-money options. SKEW typically ranges from 100 to 150. A SKEW value of 100 means that the perceived distribution of S&P 500 log-returns is normal, and the probability of outlier returns is therefore negligible. As SKEW rises above 100, the left tail of the S&P 500 distribution acquires more weight, and the probabilities of outlier returns become more significant. One can estimate these probabilities from the value of SKEW. Since an increase in perceived tail risk increases the relative demand for low strike puts, increases in SKEW also correspond to an overall steepening of the curve of implied volatilities, familiar to option traders as the "skew".

Tuesday, March 21, 2017

Denmark Free of Foreign-Currency Debt for the First Time in 183 Years

Eshe Nelson (Mar 20, 2017) - Today marks a milestone for Denmark, centuries in the making. The Danish government will repay a $1.5 billion loan (pdf), freeing it from foreign-currency debt for the first time in at least 183 years. This record probably stretches back even further, since Denmark first raised a loan in a foreign currency back in 1757, when it borrowed in Hamburg and Amsterdam, the central bank said. (The records are spotty, so it is unclear whether the country was ever foreign debt-free before 1834, when data collection became more robust.)

The last time Denmark was this close to ridding itself of foreign debt was the late 1890s, when these obligations were worth less than 1% of GDP. But low European interest rates at the time made financing projects like new railways more attractive with foreign debt, so the borrowing restarted. In recent history, issuing external debt has been a means to ensure sufficient foreign-exchange reserves. After Denmark pegged the krone to the deutsche mark, and later the euro, starting in the late 1970s, market interventions have been used to adjust the krone’s value, which require reserves of foreign currencies to buy and sell. 


Joining Norway and Germany in the ranks of
foreign-currency debt free nations.
Now, Denmark joins neighbors Norway and Germany in the ranks of countries with no foreign-currency government debt. Fellow Scandinavian nation Sweden, meanwhile, maintains about 30% of its government debt (pdf) in foreign currencies. It’s not unusual, nor undesirable, for countries to issue some foreign debt to build currency reserves; the US treasury owes about $1 trillion in foreign currency debt. Issuing debt in dollars will become less attractive as US interest rates rise, but many countries—especially in emerging markets—still find it more affordable than borrowing in local currency subject to much higher rates.

For its part, Denmark’s government still has some 465 billion kroner ($67 billion) in debt, which amounted to 23% of GDP at the end of last year, low by international standards. Around 40% of this debt is held by foreigners, who from now on will only get paid back in krone
r.

Monday, March 20, 2017

Politics, Climate, and the Economy │ Peter Temple


Peter Temple (Mar 19, 2017) - Above is a chart of the US Presidents from 1913 through 2016. You can see the politicians who were liked and are considered “good leaders” by historians (green circles and check marks). The there are those we dislike (red circles and x’s) and threw out of office because “they destroyed the economy.”

Dr. Wheeler spent his entire life analyzing weather cycles back over 20 centuries to 600 BC. He found that major climate cycles changed every 25, 100, 500, and 1000 years and that they’re fractal, which means there are smaller cycles within larger cycles. During his life, he put together an archive of world events relative to changes in climate that was some 2000 pages in length, and when open, spanned a length of some 7 feet. To the left is the only shot I’ve found of him working on “The Big Book.” Here are the four twenty-five year cycles:

Spring: warm and wet
Summer, warm and dry
Fall: cool and wet
Winter: cold and dry.
The roaring ’20s (yellow) were mostly wet and warm, but in 1929 (red arrow), it got very cold – the mercury plunged. Cold and dry has always led to tough economic times. The stock market crashed. Then the next year, 1930 (green arrow points to temperature drop), was the driest year in over 150 years. It ushered in ten straight years of dry and hot (red)—about the hottest on record over the past couple of hundred years: The Great Depression. Hot and dry weather in history has led to a major war, despotism, dictators, socialism, communism, world wars, and other atrocities.

In the mid 40s (purple), it turned cool and wet … the economy picked up and the war ended. It lasted through to the ’60s—we had the Beatles, love and flowers … great times! Cool climate means energy–humans become much more active. Wet means prosperity in terms of food.

But in the late ’60s (green), we turned cold and dry … and that led to a deep recession that lasted through the late 70s. In fact there were articles in all the major newspapers predicting a mini ice age. Well, you’re likely to see those again.

But then it turned warm again in the ’80s (blue), the stock market turned up, and business started to boom! It was a warm-wet spring cycle once again—that means prosperity … and that lasted through the 90s, when it also started to get dry and cool again (after 1998).

These climate cycles happen so regularly, that in the 1940s Dr. Wheeler predicted the current change in climate with his drought clock. And sure enough, in 1998, the temperature started to cool and we’ve been getting cooler and dyer ever since. He also predicted extreme weather in the early twenty first century because we’re at the end of an even larger five hundred year cycle. Two major climate cycles are transitioning right now. That’s why we have such extreme weather (see also HERE).

Saturday, March 18, 2017

Thursday, March 16, 2017

Largest U.S. Onshore Conventional Hydrocarbons Discovery in 30 Years

Spanish oil major and North Slope explorer Repsol and privately held Denver based Armstrong Energy announced the discovery of the massive Horseshoe oil field in Alaska. The contingent resources currently identified in the Nanushuk play amount to approximately 1.2 billion barrels of recoverable light oil. This is the largest U.S. onshore conventional hydrocarbons discovery in the last 30 years. The Horseshoe-1 and Horseshoe-1A wells drilled in the 2016-2017 winter campaign confirm Nanushuk as a significant emerging play in Alaska’s North Slope. The discovery is 20 miles south of where the two companies have already found oil in a project known as Pikka. Preliminary development concepts for Pikka anticipate first production there from 2021, with a potential rate approaching 120,000 barrels of oil per day. The new massive find of conventional oil on state land could bring relief to budget pains in Alaska brought on by slumping production in the state and the crash in oil prices. Source: Repsol.

Monday, March 13, 2017

Effective Corporate Tax Rates in G20 Countries │ 2003 and 2012

It is common to think of the US as the rip-roaring home of market capitalism, at least as compared to most other high-income countries round the world. But this belief sits uncomfortably with the fact that US corporate tax rates are among the highest in the world. The Congressional Budget Office has published "International Comparisons of Corporate Income Tax Rates" (March 2017). It's a short just-the-facts report, with lots of tables and figures.

In most G20 countries, effective corporate tax rates declined from 2003 to 2012 — mainly because of reductions in top statutory rates. The decline in the U.S. rate was relatively small. As a result of small reductions, on average, in state tax rates, it dropped by less than half a percentage point between 2003 and 2012. By 2012, the U.S. rate was the fourthhighest among G20 countries. The largest declines were driven by a combination of changes. Italy’s rate dropped by 36 percentage points because of a reduction in the top statutory rate and the introduction of a tax allowance for corporate equity. In Canada, the 12 percentage-point decline was caused by a reduction in the top statutory rate and an acceleration of cost recovery allowances for equipment. Reductions in four countries’ top statutory corporate tax rates were accompanied by a deceleration of cost recovery allowances. In Germany and Turkey, the effect of the reduction in the statutory rate was greater than the effect of the change in the allowances, leading to reductions in the effective corporate tax rates. The opposite was true in India and the United Kingdom, where effective corporate tax rates rose.

In Argentina and Brazil, two of the three countries whose top statutory tax rates were unchanged from 2003 to 2012, effective corporate tax rates remained the same. Australia’s effective corporate tax rate declined because of an acceleration of its cost recovery allowances.

Sunday, March 12, 2017

Where did Steve Bannon get his Worldview? From my Book. │ Neil Howe

Steve Bannon - Trump’s chief strategist.

Neil Howe (Feb 24, 2017) - The headlines this month have been alarming. “Steve Bannon’s obsession with a dark theory of history should be worrisome” (Business Insider). “Steve Bannon Believes The Apocalypse Is Coming And War Is Inevitable” (Huffington Post). “Steve Bannon Wants To Start World War III” (The Nation). A common thread in these media reports is that President Trump’s chief strategist is an avid reader and that the book that most inspires his worldview is “The Fourth Turning: An American Prophecy.

I wrote that book with William Strauss back in 1997. It is true that Bannon is enthralled by it. In 2010, he released a documentary, “Generation Zero”, that is structured around our theory that history in America (and by extension, most other modern societies) unfolds in a recurring cycle of four-generation long eras. While this cycle does include a time of civic and political crisis — a Fourth Turning, in our parlance — the reporting on the book has been absurdly apocalyptic.

I don’t know Bannon well. I have worked with him on several film projects, including “Generation Zero,” over the years. I’ve been impressed by his cultural savvy. His politics, while unusual, never struck me as offensive. I was surprised when he took over the leadership of Breitbart and promoted the views espoused on that site. Like many people, I first learned about the alt-right (a far-right movement with links to Breitbart and a loosely defined white-nationalist agenda) from the mainstream media. Strauss, who died in 2007, and I never told Bannon what to say or think. But we did perhaps provide him with an insight — that populism, nationalism and state-run authoritarianism would soon be on the rise, not just in America but around the world.

Because we never attempted to write a political manifesto, we were surprised by the book’s popularity among certain crusaders on both the left and the right. When “The Fourth Turning” came out, our biggest partisan fans were Democrats, who saw in our description of an emerging “Millennial Generation” (a term we coined) the sort of community-minded optimists who would pull America toward progressive ideals. Yet we’ve also had conservative fans, who were drawn to another lesson: that the new era would probably see the successful joining of left-wing economics with right-wing social values. Beyond ideology, I think there’s another reason for the rising interest in our book. We reject the deep premise of modern Western historians that social time is either linear (continuous progress or decline) or chaotic (too complex to reveal any direction). Instead we adopt the insight of nearly all traditional societies: that social time is a recurring cycle in which events become meaningful only to the extent that they are what philosopher Mircea Eliade calls “reenactments.” In cyclical space, once you strip away the extraneous accidents and technology, you are left with only a limited number of social moods, which tend to recur in a fixed order.

Along this cycle, we can identify four “turnings” that each last about 20 years — the length of a generation. Think of these as recurring seasons, starting with spring and ending with winter. In every turning, a new generation is born and each older generation ages into its next phase of life.
The cycle begins with the First Turning, a “High” which comes after a crisis era. In a High, institutions are strong and individualism is weak. Society is confident about where it wants to go collectively, even if many feel stifled by the prevailing conformity. Many Americans alive today can recall the post-World War II American High (historian William O’Neill’s term), coinciding with the Truman, Eisenhower and Kennedy presidencies. Earlier examples are the post-Civil War Victorian High of industrial growth and stable families, and the post-Constitution High of Democratic Republicanism and Era of Good Feelings.

The Second Turning is an “Awakening”, when institutions are attacked in the name of higher principles and deeper values. Just when society is hitting its high tide of public progress, people suddenly tire of all the social discipline and want to recapture a sense of personal authenticity. Salvation by faith, not works, is the youth rallying cry. One such era was the Consciousness Revolution of the late 1960s and 1970s. Some historians call this America’s Fourth or Fifth Great Awakening, depending on whether they start the count in the 17th century with John Winthrop or the 18th century with Jonathan Edwards.

The Third Turning is an “Unraveling”, in many ways the opposite of the High. Institutions are weak and distrusted, while individualism is strong and flourishing. Third Turning decades such as the 1990s, the 1920s and the 1850s are notorious for their cynicism, bad manners and weak civic authority. Government typically shrinks, and speculative manias, when they occur, are delirious.

Finally, the Fourth Turning is a “Crisis” period. This is when our institutional life is reconstructed from the ground up, always in response to a perceived threat to the nation’s very survival. If history does not produce such an urgent threat, Fourth Turning leaders will invariably find one — and may even fabricate one — to mobilize collective action. Civic authority revives, and people and groups begin to pitch in as participants in a larger community. As these Promethean bursts of civic effort reach their resolution, Fourth Turnings refresh and redefine our national identity. The years 1945, 1865 and 1794 all capped eras constituting new “founding moments” in American history.
Just as a Second Turning reshapes our inner world (of values, culture and religion), a Fourth Turning reshapes our outer world (of politics, economy and empire).

September 11, 2001: The sinister Neocon Project for a New American Century, engineering "some
catastrophic and catalyzing event – like a new Pearl Harbor
" — one generation ahead of time
(HERE).

In our paradigm, one can look ahead and suggest that a coming time period — say, a certain decade — will resemble, in its essential human dynamic, a time period in the past. In “The Fourth Turning,” we predicted that, starting around 2005, America would probably experience a “Great Devaluation” in financial markets, a catalyst that would mark America’s entry into an era whose first decade would likely parallel the 1930s. Reflecting on the decade we’ve just lived through, we can probably agree that the 1930s parallel works well. In the economy, both decades played out in the shadow of a global financial crash, and were characterized by slow and disappointing economic growth and chronic underemployment of labor and capital. Both saw tepid investment, deflation fears, growing inequality and the inability of central bankers to rekindle consumption.

In geopolitics, we’ve witnessed the rise of isolationism, nationalism and right-wing populism across the globe. Geostrategist Ian Bremmer says we now live in a “G-Zero” world, where it’s every nation for itself. This story echoes the 1930s, which witnessed the waning authority of great-power alliances and a new willingness by authoritarian regimes to act with terrifying impunity. In social trends, the two decades also show parallels: falling rates of fertility and home-ownership, the rise of multi-generational households, the spread of localism and community identification, a dramatic decline in youth violence (a fact that apparently has eluded the president), and a blanding of pop youth culture. Above all, we sense a growing desire among voters around the world for leaders to assert greater authority and deliver deeds rather than process, results rather than abstractions.

September 1, 2005: FEMA-camp, New Orleans, in the aftermath of Hurricane Katrina (HERE).

We live in an increasingly volatile and primal era, in which history is speeding up and liberal democracy is weakening. As Vladimir Lenin wrote, “In some decades, nothing happens; in some weeks, decades happen. Get ready for the creative destruction of public institutions, something every society periodically requires to clear out what is obsolete, ossified and dysfunctional — and to tilt the playing field of wealth and power away from the old and back to the young. Forests need periodic fires; rivers need periodic floods. Societies, too. That’s the price we must pay for a new golden age. If we look at the broader rhythms of history, we have reason to be heartened, not discouraged, by these trends. Anglo-American history over the past several centuries has experienced civic crises in a fairly regular cycle, about every 80 or 90 years, or roughly the length of a long human life. This pattern reveals itself in the intervals separating the colonial Glorious Revolution, the American Revolution, the Civil War, and the Great Depression and World War II. Fast-forward the length of a long human life from the 1930s, and we end up where we are today. 

America entered a new Fourth Turning in 2008. It is likely to last until around 2030. Our paradigm suggests that current trends will deepen as we move toward the halfway point. Further adverse events, possibly another financial crisis or a major armed conflict, will galvanize public opinion and mobilize leaders to take more decisive action. Rising regionalism and nationalism around the world could lead to the fragmentation of major political entities (perhaps the European Union) and the outbreak of hostilities (perhaps in the South China Sea, the Korean Peninsula, the Baltic states or the Persian Gulf).  

September 18, 2008: Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke met with key
legislators to propose a $700 billion emergency bailout. Bernanke reportedly told them: "If we
don't do this, we may not have an economy on Monday.
" (HERE)

Despite a new tilt toward isolationism, the United States could find itself at war. I certainly do not hope for war. I simply make a sobering observation: Every total war in U.S. history has occurred during a Fourth Turning, and no Fourth Turning has yet unfolded without one. America’s objectives in such a war are likely to be defined very broadly. At the end of the 2020s, the Fourth Turning crisis era will climax and draw to a close. Settlements will be negotiated, treaties will be signed, new borders will be drawn, and perhaps (as in the late 1940s) a new durable world order will be created. Perhaps as well, by the early 2030s, we will enter a new First Turning: Young families will rejoice, fertility will rebound, economic equality will rise, a new middle class will emerge, public investment will grow into a new 21st-century infrastructure, and ordered prosperity will recommence.

"Prestige lasts at best four generations in one lineage."
Muqaddimah (1377), Ibn Khaldun.

During the next First Turning, potentially the next “American High,” millennials will move into national leadership and showcase their optimism, smarts, credentials and confidence. Sometime in the late 2030s, the first millennial will be voted into the White House, prompting talk of a new Camelot moment. Let a few more years pass, and those organization-minded millennials may face a passionate and utterly unexpected onslaught from a new crop of youth. Welcome to the next Awakening. The cycle of history keeps turning, inexorably (see also HERE).

The Global Financial Crisis catalyzed by the 2008 financial meltdown in the US was the most severe
economic downturn since the Great Depression in the 1930s. With public trust continuing to ebb, the
regeneracy phase of this crisis still seems years away. Most likely, this Fourth Turning will come
to an end in the late 2020s, just as the Generation Zero/Millennials will embark on careers
 
(HERE).