VACACIONES OCTUBRE 2016 ( CLICK ON LINK)
The Islamic Hatred of Modernity
However, ISIS and radical Islam are at war with the entire modern world, not just Christianity. They are True Believers and are simply not interested in negotiating.
John Mauldin, Editor
Outside the Box
The Islamic Hatred of Modernity
Strategic Economic Decisions, Inc.
The Trumpian threat to the global order
The liberal rules-based system established after 1945 is under unprecedented strain
Perhaps Mr Trump has the better understanding of Russian psychology. He never ceases to praise Mr Putin as a strong and decisive leader.
The Republican party’s contender for the White House is not alone in cosying up to the Kremlin.
Populists across Europe — Marine Le Pen’s National Front in France, Nigel Farage’s UK Independence party and the fascist Jobbik and Golden Dawn in Hungary and Greece respectively — have tipped their hats to Moscow. Mr Putin also has sympathisers on the left. Britain’s Labour leader Jeremy Corbyn is more comfortable denouncing US “imperialism” than challenging Russian revanchism.
The mood has changed. As the polls have tightened, Republicans and Democrats have begun to imagine Mr Trump as commander-in-chief. A dark quip among US generals — that they would remove the circuit boards before handing over the so-called nuclear football — no longer seems quite so amusing.
The fears are that “shy” Trump supporters may not be showing up in the polls, that antipathy to Mrs Clinton could see centrists stay at home, and that the resolve of white working class voters to punish the elites could overwhelm Mr Obama’s winning coalition of educated whites, Hispanics and African Americans. Faced with compelling evidence of Mr Trump’s mendacity, misogyny and racism, too many people reply that “he doesn’t really mean all that stuff”.
The organising fact for the rest of the world is that the US is the only nation that matters just about everywhere. It is no longer the hyperpuissance of the 1990s, but the capacity of a thin-skinned, shoot-from-the-hip president to wreak havoc is chilling. A lot of people in Washington are trying to persuade themselves that the checks and balances in the system would restrain him. Judging from my conversations this week, they are not succeeding in the task.
The obvious fear is that a temperamentally unstable president Trump would lash out in a crisis.
Robert Gates, the Republican former US defence secretary, says simply that he is “unfit to be commander-in-chief”. Mr Trump’s reaction to the latest bomb outrage in New York fitted the pattern.
The US had to “knock the hell out of them … do something serious over there” — “them” being indeterminate and “over there” being the Middle East.
The bigger danger lies in Mr Trump’s promise to withdraw — to tear up trade deals, throw up trade barriers against China, repudiate the Paris climate change agreement and the nuclear deal with Iran, and abdicate responsibility for the security of east Asia and Europe. Mr Trump’s policies are shot through with contradictions but one constant is his belligerent isolationism. America will go it alone.
Hyper-realism, some call it. Dangerous is a better Word.
The present global order — the liberal, rules-based system established in 1945 and expanded after the end of the cold war — is under unprecedented strain. Globalisation is in retreat. At a conference in New York organised by the US branch of the Ditchley Foundation I heard a distinguished American elder statesman remark that he has never known a period when the world had been simultaneously buffeted by so many upheavals and crises.
The list is a familiar one. Mr Putin is trying to redraw borders in Europe, the Middle East is in flames, European unity is fracturing, jihadi terrorism is spreading, pluralism is challenged by authoritarianism, China is contesting the status quo in the South China Sea and its neighbours are rearming in response, populists are storming the citadels across advanced democracies.
To Mr Trump, the answer is American retreat. He wants to build walls. He questions the US security umbrella in the Pacific — maybe Japan and South Korea should get their own nuclear weapons? He undercuts the credibility of Nato’s defence of Europe — the US might stand by if Russian troops marched into the Baltic states. There is no sense in any of this that American national security is safeguarded by alliances and international order.
If the polls are to be believed, Mr Trump has wrested momentum from Mrs Clinton in the presidential race. This does not mean he will win on November 8. The structure of the electoral college gives him only a narrow path to the White House. And there are three debates ahead. But the unthinkable has become the plausible. We should be more than worried. Neither America nor the world can afford a lurch into Trumpian isolationism.
You Better Get Used to Negative Interest Rates
Negative interest rates are here to stay.
As you probably know, negative rates are the latest and most radical government “stimulus” measure.
They basically turn your bank account upside down. Instead of earning interest on your money in the bank, you pay the bank to look after your money.
Central banks in Europe and Japan introduced negative rates to stimulate their economies. The idea is that people will borrow and spend more money if they have to pay a “tax” to save money.
But that's not happening, according to a recent report by JPMorgan Chase (JPM). CNBC reported two weeks ago:
Europe has seen a balance sheet recession since the economic crisis of 2008, it said, highlighting that a 10.9 percent increase in reserves at these banks has failed to increase lending to the wider economy.
Instead, people are hoarding money. According to Business Insider, safe sales have shot up through the roof in Europe. In Japan, people are buying safes at the quickest pace since the financial crisis.
• Negative rates have failed miserably…
Yet, they’re spreading like a virus.
More than $13 trillion worth of government bonds have negative rates. Keep in mind, negative rates were just an idea a couple years ago.
And this is likely just the beginning.
Two weeks ago, the head of global banking giant JPMorgan Chase (JPM) told CNBC that European investors should “expect negative lending rates until 2021.”
This is a serious problem for everyday Europeans. It’s also a major threat to Europe’s banking system.
• Negative rates are already eating European banks alive…
You see, banks make money by charging interest on loans. They’ve been doing this for centuries.
But, thanks to central bankers, global interest rates are at their lowest level in 5,000 years.
Many major European banks are now struggling to make money.
Second-quarter profits at HSBC, Europe’s biggest lender, fell 45% from a year ago. Spanish banking giant Banco Santander’s second-quarter profits fell 50%. And Deutsche Bank's profits plunged 98%.
• Europe’s banking system now looks like it’s about to collapse…
The chart below shows the EURO STOXX Banks Index, which tracks 26 major European bank stocks.
You can see that European bank stocks have plunged 42% since the European Central Bank (ECB) adopted negative rates in June 2014.
• The longer negative rates are in place, the more damage they’ll do…
Two weeks ago, JPMorgan said European bank profits will stay weak as long as negative rates are in effect:
[M]argins will not improve. Sixty percent of revenues is net interest income and as long as that's the case earnings will not improve. So return on equity is very low.
JPMorgan isn’t the only major bank to issue this kind of warning:
➢ Bank of America (BAC) estimates that negative rates could cost European banks as much as €20 billion a year by 2018.
➢ Last week, the CEO of Swiss banking giant Credit Suisse (CS) warned that negative rates could lead to instability for Swiss lenders.
➢ Two weeks ago, the CEO of Saxo Bank, a Danish investment bank, called negative rates a “Ponzi scheme.”
➢ Last month, the CEO of Deutsche Bank (DB), Germany’s latest bank, called negative rates “fatal.”
➢ In May, BaFin, a German financial services watchdog, said negative rates are a “poison.”
In an effort to fix Europe’s economy, the ECB could end up destroying Europe’s banking system.
• You might not think negative rates are anything to worry about if you live in the United States…
After all, the U.S. doesn’t have negative rates yet. Plus, the Federal Reserve is talking about raising rates right now…not dropping them below zero.
But here’s the thing: the Fed isn’t serious about raising rates.
As we explained last week, it chickens out every time it’s close to raising rates.
In March, it didn’t raise rates because of a bad jobs report. In June, it held off due to concerns about the global economy and “market volatility.” Last week, it didn’t raise rates because it’s waiting for the job market to improve.
• Whether it admits it or not, the Fed is worried about the economy…
And you can bet it will “do something” if the economy runs into serious problems.
There’s just one problem. The Fed is running out of ammo.
You see, the Fed has already pumped $3.5 trillion into the financial system since 2008. It’s also held its key interest rate near zero for the past eight years.
This means it will likely have to do something even more radical than zero-percent rates when the next crisis arrives.
• Last week, Ben Bernanke said the Fed shouldn’t rule out negative rates…
As you probably know, Bernanke ran the Fed from 2006 to 2014. Today, he works for the Brookings Institution, a government think tank.
Last week, Bernanke wrote an essay explaining why the government should consider negative rates:
[S]ince the current low-interest-rate environment may persist, there are good reasons for the Fed and other central bankers to consider changes in their policy frameworks.
[I]t is premature to rule out alternative or potentially complementary approaches, including the possibility of using negative interest rates.
• Current Fed chair Janet Yellen is entertaining this radical idea, too…
In February, Yellen said negative rates aren’t “off the table” if the U.S. economy runs into trouble.
More importantly, the Fed has already been quietly laying the groundwork for negative rates.
In February, it asked major U.S. banks to “stress test” their balance sheets for negative rates.
This tells us something is very wrong with the U.S. economy.
• Negative rates could show up in America sooner than you think…
To see why, watch this eye-opening presentation.
In it, E.B. Tucker, editor of The Casey Report, explains why a major financial crisis is already well underway. By the end of this video, you’ll see why the U.S. economy simply can’t stomach higher rates.
You’ll also learn why this coming crisis is a threat to your wealth—even if you don’t own a single stock or bond.
The good news is that there’s still time to prepare…
You can get started by holding more cash than usual. This simple step will help you avoid major losses if stocks crash like they did in 2008. It will also put you in a position to buy stocks when they get cheaper.
We also encourage you to own physical gold. As we often point out, gold is the ultimate safe haven asset. It’s survived every financial crisis in history, and its value often spikes when governments do reckless things like print money or cut interest rates.
Chart of the Day
Deutsche Bank’s stock is in free fall.
Today’s chart shows the performance of Deutsche Bank since the ECB introduced negative rates in 2014. You can see that the stock is down 70% over the past two years. On Monday, shares plunged 7% to a new all-time low.
The stock is now trading for less than $12. According to Jeffrey Gundlach, the global economy could have serious problems if Deutsche Bank continues to nosedive. Gundlach, who manages more than $100 billion at DoubleLine Capital, warned in July:
Banks are dying and policymakers don’t know what to do…
Watch Deutsche Bank shares go to single digits and people will start to panic… you'll see someone say, “Someone is going to have to do something.”
Gundlach’s advice to investors is simple: own gold. According to Gundlach, “gold remains the best investment amid fears of instability in the European Union and prolonged global stagnation.”
European Defense Integration Now
Where to Buy Property Without Paying Property Tax
by Nick Giambruno
Do you really own something if the government forces you to make never-ending payments on it?
I think the answer is “no.”
You possess such an item, but you don’t own it outright. It’s an important distinction.
A ridiculous threat to property rights has infected most of the world like a virus. Most people unquestioningly accept it as a normal part of life—like gravity or the sun setting in the west.
The threat I’m talking about is property tax: that annual tax you pay whether or not your property generates any income. Instead, the government bases the tax on the underlying value of real estate you supposedly own. There is no way to pay off this obligation in one fell swoop. It hangs over your head as long as you hold title to the property.
For practical purposes, you don’t really own anything you have to pay an annual property tax to keep. You are merely renting from the government.
Suppose you bought a sofa set and coffee table for your living room for $5,000 cash and then had to pay a $100 tax each year for as long as you “owned” the furniture. Then suppose, for whatever reason, you’re unable or unwilling to pay the furniture tax. It wouldn’t take long for the government to swoop in and confiscate your furniture.
In this case, you “own” the furniture as long as you pay the never-ending annual fee—stop paying and you’ll find out who really owns it.
While many people would find an annual furniture tax absurd, they somehow think it’s acceptable for the government to levy an annual tax on homes, offices, and raw land.
Respect for property rights and annual property taxes are mutually exclusive concepts. What’s yours is yours, and you shouldn’t need to pay the government for permission to keep it.
It’s not uncommon for people in North America and Europe to pay tens of thousands of dollars in property tax every year… just to live in their own homes. And the burden will almost certainly continue to increase. Most governments continually raise property tax rates, especially governments in bad fiscal health.
It’s very possible that, over a lifetime, the government could take more in property taxes than the underlying value of the property being taxed.
And, just like the furniture example above, if you don’t pay property tax (AKA government rent) on the home you thought you owned, the government will confiscate it. This is not as uncommon as you might think. It’s estimated that thousands of people in Pennsylvania alone lose their homes annually because they can’t or won’t pay.
Expect Boobus Americanus to say things like, “How would we pay for local services like public schools without property taxes?”
Of course, there are many different ways to fund those services. Or, even better, we could leave them to the free market. But don’t expect that to happen. In fact, given the social, political, and economic dynamics in the U.S. and most of the West, I expect the opposite. Property taxes have nowhere to go but up.
It doesn’t have to be this way. You can own real estate in several countries and avoid the annual property-tax harvest. Here’s a list of countries without property tax:
If you want to escape rapacious and ridiculous property taxes, those are your options.
Ireland would have been on the list, but it recently adopted a property tax. This does not bode well for other financially troubled EU countries that could turn to property taxes as a solution—like Malta and Croatia.
Colombia, Costa Rica, Ecuador, and Nicaragua have property taxes, but the obligations are generally negligible. Of course, the risk is that, since these countries already have property taxes in place, they could easily increase them whenever the government wants more revenue.
Case in point: Greece, where a bankrupt government has made owning property a burden. The following excerpt from The Guardian shows just how far Greece’s government has gone (emphasis mine):
The joke now doing the rounds is: if you want to punish your child, you threaten to pass on property to them… Greeks traditionally have always regarded property as a secure investment.
But now it has become a huge millstone, given that the tax burden has increased sevenfold in the past two years alone.
For my money, the Cayman Islands is the most appealing country on the no property tax list. It has never had any form of direct taxation, and most Caymanians are vehemently opposed to the idea. That history and attitude is a good sign the Cayman government is very unlikely to ever impose a property tax.
As you likely know, owning foreign real estate gives you huge diversification benefits. However, deciding when and where to buy foreign real estate is a complex and highly individualized choice. Property taxes are just one part of the equation.
When you’re weighing your options, don’t think of foreign real estate as a vehicle for a quick return. Think of it as a diversified long-term store of wealth—one the government in your home country can never confiscate.
Wherever you decide to buy should also be in a place you would actually want to spend a significant amount of time. That way, the property will always be valuable to you, regardless of whatever else happens.
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
No soy alguien que sabe, sino alguien que busca.
Only Gold is money. Everything else is debt.
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Quien no lo ha dado todo no ha dado nada.
History repeats itself, first as tragedy, second as farce.
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
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