Economic Outlook

Canada’s Hunt for Taxes – Trudeau’s Destruction of the Canadian Economy

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Posted by Martin Armstrong - Armstrong Economics

on Friday, 15 September 2017 06:48

Trudeau-JustinThe Canadian Prime Minister Justin Trudeau is doing his best to send Canada into the Dark Age. He is clearly a Marxist and has targeted small business which creates 70% of all employment. He said “I want to be clear,” at the Liberal party’s recent caucus gathering in Kelowna. “People who make $50,000 a year should not pay higher taxes than people who make $250,000 a year.”

These people who always seek to run governments have ZERO real world experience and totally fail to understand the economy no less how society functions. They believe that they can just decree some law and everything will function to the desires.

Trudeau has been defending the his outrageous tax increase on small business that will impose double taxation as owners will no longer be able to pay themselves dividends, neither will they be able to sprinkle income among family members, or holding certain investments — such as real estate — through a corporation.

The Hunt for Taxes in Canada is in full swing. This is only part of the economic decline we see coming into play starting in 2018.

....also from Martin:

Trying to Save the Euro from Total Disaster


Economic Outlook

The Future of the Global Economy

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Posted by John Mauldin - Mauldin Economics

on Monday, 11 September 2017 06:39

Just Get the Direction Right -
The Future of the Global Economy -
The Bubble of Government Promises -
It’s All About Supply, Not Demand -
Boston, Chicago, Lisbon, Denver, and Lugano -

If you establish a democracy, you must in due time reap the fruits of a democracy. You will in due season have great impatience of public burdens, combined in due season with great increase of public expenditure. You will in due season have wars entered into from passion and not from reason…

– Benjamin Disraeli, prime minister of England, novelist

In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control, and those dedicated to the goals the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely.... In any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work for the organization itself. Examples in education would be teachers who work and sacrifice to teach children, vs. union representatives who work to protect any teacher including the most incompetent. The Iron Law states that in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions. [Pournelle's law of Bureaucracy]

– Jerry Pournelle, prolific science-fiction writer, August 7, 1933 – September 8, 2017

This letter will be the first of a series in which I outline my vision for the next 5–10–15–20 years of global economics. I understand that there is a substantial amount of hubris involved in such an undertaking, so I will approach the topic gingerly.

Why even risk such prognosticating? As longtime readers know, I am actually writing a book on what I think the next 20 years will look like, technologically, geopolitically, sociologically, and economically. The book is called The Age of Transformation. The basic thesis is that we are going to see more change in the next 20 years than we’ve seen over the past century. Consider how much different the world will be if a century’s worth of change is compressed into the next 20 years.

If you do not resolve to adapt to that level of change in your life and in the lives of your loved ones, you will not be ready to fully participate in the society of 2038. You’ll also fail to reap the full rewards of all the years of hard work and dedication you have put in, preparing for your retirement.

This series on the future of the global economy will shape my outline for the last 25% of the book. The book will expand greatly on this series. I feel comfortable opening up my thought process to you, and I welcome the feedback I’m going to get, because it will only improve the book. Thoughtful comments from friends are always welcome.

The first 40–50% of the book will focus on the technological and biological transformations that will happen in the next 20 years. In general, that is the rainbows and puppies section of the book. There are any number of books out there that deal with this broad topic in different ways, but nearly all of them have a somewhat techno-utopian slant. And for good reason. Living longer and healthier in a world of greater abundance, where the things we want cost less? What’s not to like?

The next 25–30% of the book will deal with the geopolitical/sociological/demographic changes that will inexorably force themselves on us in conjunction with this technological revolution. Some of those changes will be a reaction to the very technological forces that are driving the change. This section will conclude with the most difficult chapter of the book, the one that I have wrestled with the longest over the last two years, the chapter on the future of work. For some of us that will be quite a bright future; for others who are unable to adapt, not so much. Globally, hundreds of millions of jobs that are currently filled by humans will simply not require humans in the future. We will have to move on to other occupations.

This level of labor transformation is nothing that we haven’t done in the past. Many of you will recall that 80% of Americans toiled on farms in 1800. Today that number is less than 2%, who produce massively more per capita in much better conditions. But that change played out over more than 10 full generations. The changes I am talking about are going to happen in less than one generation. The transformation of employment will be one of the most difficult social and political problems that societies all over the developed world will face. It’s not just that there won’t be jobs, but that many of the new jobs will require different sets of skills and be in a different locations from where many of us live today. And while our ancestors may have set out boldly from other corners of the world to give America a try, never to see their home-countries and loved ones again, that propensity for relocation seems to have diminished in present-day culture. How many Americans relish the notion of moving from region to region anymore?

The last section of the book will deal with the future of the global economy. And there we have some issues, as my kids would say. I don’t think we end up in some techno-dystopian, cyberpunk Blade Runner-type world, but the tools we use to measure the economy and the things we are measuring are going to experience a great deal of volatility. Depending on which side of the volatility you find yourself on, it may be either extraordinarily beneficial or harmful. The purpose of my book will be to help you see the general direction and power of the unfolding transformations, so that you can adapt your strategies for the benefit of your family, friends, and businesses.

The massive amount of research that I’ve had to work through has forced me to change my opinions more than a few times as I’ve waded through material and prepared to put words on the screen. I’m deeply grateful to the 120 volunteer researchers who gave me literally tens of thousands of pages of material to read and sort through on an extraordinarily wide variety of topics.

I am ultimately optimistic, and the book itself will be optimistic about the future, but there are difficulties that we as a society will face. We will have to devise different, and in some cases heretical, ways of operating in order to bring the benefits of transformation to as many people as possible in our global society. Make no mistake, political turmoil lies ahead. The current dysfunction in Washington will seem almost quaint, by comparison, as the country and the world lurch from one vision of the future to the next.

Just Get the Direction Right

In trying to predict the future, I feel like a Daniel Boone sort of explorer, leading a band of compatriots through the wilderness; and we come to the top of a new pass and peer into the distance. Way off, 50 miles away, there appears to be another pass in the direction we want to go. The problem is that, between here and there lie more mountains, valleys, rivers, and potentially hostile natives. It’s not clear how we get there from where we’re standing. So our intrepid team plunges on, trusting that our instincts and skills will take us to that far-off pass, and then to the next one beyond that.  

Now we’ve just reached the top of that pass, and we’re peering far into the blue distance. I’m just trying to get the direction right. The actual path we’ll take is still a great unknown.

With that thought in mind, let’s survey the main forces that will drive the future of the economy, and in the coming weeks we will dive more deeply into each of those forces. What we learn will serve as the backbone for the final section of the book, which I will write in the coming weeks.

The Future of the Global Economy

Right up front, I’m going to utter the four most dangerous words in economics: This time is different. Oh, I admit a lot of things will be the same, but anyone who expects the future to look like the past is in for a rude awakening.

There are three main economic forces that are imposing themselves upon the world, whether we like it or not. Two of them are the largest bubbles in the history of man.

1. The bubble of global debt
2. The bubble of government promises
3. The shifting of the supply curve

I know longtime readers will be familiar with the first two, but the last one is going to have a few of you scratching your heads. Let’s take up each briefly.

There is considerable debate over the exact amount of global debt. You first have to find it, and parts of it get hidden in many out-of-the-way pockets. But broadly speaking, global debt is about 325% of GDP, and likely over $225 trillion as I write. (I am assuming that over the last nine months debt grew at roughly the same rate as in the preceding nine months, even though we know the growth of debt has been accelerating.)

This chart from McKinsey is almost three years old, but it does show the growth of debt over time, and we know that global debt has grown by about $26 trillion in the last two years.


The above chart requires a few observations. First, notice that the growth of household and financial debt has decelerated. Corporate debt continues to grow at roughly the same pace as before. The real acceleration of growth in debt is coming from government borrowing. Second, we are on a pace to grow the debt by significantly more between 2014 and 2021 than we did in the previous seven years. Last, global debt is growing faster than global GDP. We are borrowing money faster than we are creating wealth.



Economic Outlook

Got a Bully Problem? Send in a Bully

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Posted by Frank Holmes - US Global Investors

on Thursday, 31 August 2017 06:06

1Here’s a news flash for you: Donald Trump is controversial and caustic. He says exactly what’s on his mind, no matter how incendiary, and he’s not afraid to make enemies, even with members of his party. “Bully” is a word many people use to describe the 45th U.S. president.

The thing is, no one who voted for Trump—I think it’s safe to say—didn’t already know this about him. His being a bully is baked right into his DNA, and he expertly honed this persona during his stint as the tough-as-nails host of NBC’s The Apprentice.

Remember when Trump received flak a few weeks back for retweeting a gif of himself 



Economic Outlook

U.S. economic growth hits 3% rate in second quarter

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Posted by MarketWatch

on Wednesday, 30 August 2017 07:43

MW-FG274 nerd o 20170221133048 MGWASHINGTON (MarketWatch) — The U.S. economic rebound in the second quarter was stronger than initially reported, as a lift to consumer spending and business investment led to the strongest growth in more than two years.

Gross domestic product rose at 3% rate from April to June, up from an initial 2.6% reading, the Commerce Department said Wednesday.

Economists surveyed by MarketWatch expected a smaller upward revision in second-quarter GDP to a 2.8% rate.

The economy picked up from a 1.2% rate in the first quarter. A slow first quarter followed by an improved second quarter also occurred in two of the past three years. Economists say that the most recent data suggest the U.S. is on track to maintain a 3%-plus clip in the third quarter.

The last time the U.S. economy had two quarters above 3% was in 2014.

President Donald Trump is relying on growth above 3% to generate enough revenue for the government to pay for tax cuts and more infrastructure spending.

....also analysis and charts from ZeroHedge:

US Second Quarter GDP Revised Sharply Higher To 3.0%, Best In Two Years


Economic Outlook

Here’s how the next recession begins

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Posted by Simon Black - Sovereign Man

on Tuesday, 22 August 2017 12:24

7b33d51709dbedc590c38fc9cb37fe98In 1886 there were only 38 states in the United States. 

Electric power was still cutting edge technology that few people had ever seen. 

The Statue of Liberty hadn’t even been dedicated yet. 

But it was that year that a man named Richard Sears founded a small retail company in Minneapolis, Minnesota that would grow into a retail juggernaut. 

Sears was truly the Amazon of its day. 

Even in the late 1800s the company was able to deliver just about any product you wanted right to your doorstep. 

This was no small feat considering the first delivery truck wouldn’t be invented until 1895. There was no transportation infrastructure. And two-thirds of the population lived in remote rural areas. 

Yet despite those challenges, Sears was still able to put any product you wanted in your hands. 



Economic Outlook

Obamacare Finally Repealed

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Posted by Martin Armstrong - Armstrong Economicsn

on Thursday, 10 August 2017 07:26

TAX-CUTThe American Health Care Act (HR 1628) finally passed by the House yesterday reducing taxes on the American people by over $1 trillion. The bill abolishes the most abusive taxes imposed by Obama and the Democrat party back in 2010 known as Obamacare. The Democrats helped the insurance companies and burdened the youth trying to force them to pay for insurance they did not need to get insurance companies to cover people they would not.

Obama as a presidential candidate back in 2008, had promised repeatedly that he would NOT raise any tax on any American earning less than $250,000 per year. That was an outright lie. As always, they claim they will only tax the rich, but it never ends up that way.

In KING v. BURWELL, 576 US –  (2015), the Supreme Court upheld Obamacare claiming it was a tax. There was no constitutional power for Congress to punish someone who did not buy health insurance. The only way to uphold such a power was under the taxing powers. Justice Scalia wrote in his dessenting opinion:

The Act that Congresspassed provides that every individual “shall” maintain insurance or else pay a “penalty.” 26 U. S. C. §5000A. This Court, however, saw that the Commerce Clause does not authorize a federal mandate to buy health insurance. So it rewrote the mandate-cum-penalty as a tax. 

With the repeal of Obamacare, tens of millions of middle income Americans will get tax relief from Obamacare’s long list of tax hikes that have oppressed so many. The taxes that will be abolished are:

  1. The Obamacare Individual Mandate Tax which hits 8 million Americans each year.
  2. The Obamacare Employer Mandate Tax Together with repeal of the Individual Mandate Tax repeal this is a $270 billion tax cut.
  3. Obamacare’s HSA withdrawal tax. This is a $100 million tax cut.
  4. Obamacare’s 10% excise tax on small businesses with indoor tanning services. This is a $600 million tax cut.
  5. The Obamacare health insurance tax. This is a $145 billion tax cut.
  6. The Obamacare 3.8% surtax on investment income. This is a $172 billion tax cut.
  7. The Obamacare medical device tax. This is a $20 billion tax cut.
  8. The Obamacare tax on prescription medicine. This is a $28 billion tax cut.
  9. Obamacare’s Medicine Cabinet Tax which hits 20 million Americans with Health Savings Accounts and 30 million Americans with Flexible Spending Accounts. This is a $6 billion tax cut.
  10. Obamacare’s Flexible Spending Account tax on 30 million Americans. This is a $20 billion tax cut.
  11. Obamacare’s Chronic Care Tax on 10 million Americans with high out of pocket medical expenses. This is a $126 billion tax cut.
  12. The Obamacare tax on retiree prescription drug coverage. This is a $2 billion tax cut.

...also from Martin:

French Elections – A Sell Signal Long-term for the EU Regardless of Who Wins


Economic Outlook

Car Sales Have A Long Way To Fall

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Posted by John Rubino - DollarCollapse.com

on Wednesday, 05 July 2017 05:26

The past decade’s historically low interest rates convinced millions of Americans to buy cars they could only afford with hyper-cheap credit. This made auto sales one of the drivers of the recovery, but it also left far too many people with underwater “car mortgages” that will limit their spending on other things and prevent them from buying their next car until sometime in the 2020s. 

Like all artificial (that is, credit-driven) booms, this had to end eventually, and it’s looking like now is the time: 

U.S. Auto Makers Post Sharp Sales Decline in June

(Wall Street Journal) – Detroit’s car companies reported steep sales declines in June, capping a bumpy first half of the year for the U.S. auto industry and setting a bleak tone for the summer selling season.

The reports, released Monday, come as analysts expect overall auto sales to have fallen more than 2% in June compared with the prior year, according to JD Power. The firm said the industry’s selling pace hit its lowest point since 2014 over the first six months of 2017, and traffic at dealerships—measured by retail sales—fell to a five-year nadir in June.

Edmunds.com, a consumer-research company, said buyers are stretching more than ever to afford cars and trucks that are growing increasingly more expensive due to a barrage of safety gear and connectivity options. The firm estimates the average auto-loan length reached a high of 69.3 months in June, with the average amount of financing reaching $30,945, up $631 from May.

General Motors Co. GM +2.91% said U.S. sales fell 5% to 243,155 vehicles, while Ford Motor Co. F +4.07% said sales totaled 227,979 vehicles, down 5.1% from a year earlier, and Fiat Chrysler Automobiles N.V. posted a 7% decline to 187,348 vehicles.

The following charts show a steady rise in car sales and inventories from their 2009 low to a 2015-2016 peak. If they’ve shifted into a cyclical decline the bottom, based on history, is a long way down. 




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