Crisis Ahead

www.armstrongeconomics.com

The world is in a complete midlife crisis or some may say an end of life crisis. I am overseas as the world is simply going nuts. At times, I feel more like a shrink having to reassure people that it will all be OK. Both Europe and Asia are having a very bad string of days.

Asia is concerned that China will intervene in Hong Kong. Protesters in Hong Kong seem undeterred by China’s thinly veiled threat of sending in the armed forces. But Beijing would pay a steep price if it were to send in troops politically. Trump has stated that he regards it as an internal matter for China, while even Mitch McConnell said sanctions would be appropriate. Footage has surfaced on the Chinese internet showing columns of armored vehicles heading south and converging on the city of Shenzhen. The videos seem to suggest that the Chinese People’s Armed Police Force, a heavily armed paramilitary unit, is gathering on the Hong Kong border.

Meanwhile, back in the old world, the EU seems more intent on preserving their power than any rational review of economics. They seem to be doing whatever they can to bury the European economy under this crazy idea of federalizing Europe in a half-ass way that still leaves the individual states in an impossible position to ever reach a unified agreement about anything.

Meanwhile, the former Chancellor Philip Hammond has accused the PM of trying to wreck the chance of a new Brexit deal, by making demands the EU could never accept. He seems to be more on Brussel’s side than his own country. Mr. Hammond said a no-deal Brexit would be “a betrayal” of the 2016 referendum result and that he vowed that Parliament would “make its voice heard,” adding that a no-deal “must not happen.” There is no question that Germany will be the biggest loser and then there is Ireland who does not want an EU version of the Berlin Wall. More than 50% of trade for Britain lies outside of the EU, but a no-deal is far better for it will be able to negotiate trade with the rest of the world not subject to French supervision.

Additionally, with the chaos in Asia and in Europe, the US is still the safe-haven. This could push the dollar into record highs by creating a panic of vertigo that may force the world to sit back down and renegotiate how the world monetary system will survive. Alternatively, we all just all shoot it out and build walls to retain domestic absolute control.

The problem with the collapse of socialism is that the promises made to retain power cannot be supported. The Pension Crisis will explode and at the currency projection, by 2032, we will be looking at a $400 trillion unfunded catastrophic liability. There is no way we could even make it that far. We will be looking at this during the WEC in October (tickets are still available).