A lot of emails have been coming in with regard to the Panama Papers. Let me say this from the outset — Panama has been the key place to establish offshore accounts for decades. This was not a government hack. The German daily Suddeutsche Zeitung obtained the stash of records from an anonymous source and shared their findings with more than 100 media groups through the International Consortium of Investigative Journalists (ICIJ). The documents show links to 72 current or former heads of state including dictators. The ICIJ is hell bent on attacking the rich, not politicians. So are they protecting fellow Socialists? The press has not made all the documents available and that is curious, for they too can be protecting favored people.

This is the biggest document leak in history and it is exposing world leaders and their secretive, offshore financial dealings. Some 11.5 million documents have been leaked from the Panama-based law firm Mossack Fonseca, which has offices in 35 countries. This leak has exposed a trove of confidential financial dealings by the elites and spans to aides of Russian President Vladimir Putin all the way to relatives of Chinese President Xi Jinping. Naturally, the press likes to focus on Putin. There is much more hidden behind the press curtain.

While the elite seek to hunt people for taxes, they often live separate financial lives. This tremendous conflict of interest has now been revealed. Iceland’s Prime Minister Sigmundur David Gunnlaugsson secretly owned millions of dollars in bank bonds during his country’s financial crisis when the country’s financial system collapsed and banks had to be bailed-out. Thousands are now demanding Iceland’s Prime Minister to resign over Panama Papers revelations.

This is just the tip of the iceberg. I would suspect that the Clinton’s might have some exposure here as well, but time will tell. When Obama came to office, he and Hillary immediately pushed through Congress a free trade deal for Panama that enabled money laundering to move into high gear. Hillary is worth $45 million, which is more than any other presidential hopeful besides Trump. How has she earned so much while working in government? For years, all my sources have warned of the Clintons being available to the highest bidder. Hillary and Panama go much deeper. If you open a corporation in Nevada, you do not have to declare who the actual owner is. That company can then engage in Panama and such names will never show up in the leak. Hillary is notorious for such backdoor schemes; donations to her money laundering charity were made to Canada, as a front, and then to the U.S. to clean the money from foreign governments. She forgot to declare that one. The shady mining deal in Russia that resulted in Hillary earning a few million is typical business. Hillary also obtained a mining contract in Haiti for her brother while serving as Secretary of State. She knows it creates a shit-storm, but she waits a week and everyone cheers her again.

David Cameron’s father, who died in 2010, reportedly used Mossack Fonseca to shield his investment fund, ­Blairmore Holdings Inc., from UK taxes. Cameron has come under pressure to take real steps to end tax evasion. This will probably cause some to distrust Cameron given his father’s involvement in the Panama Papers.

The question that needs to be answered is how extensive is this leak? An intelligent person would have set up a corporation in another jurisdiction, such as Nevada, and that would have been the entity Mossack Fonseca dealt with without ever knowing the true identity of the person behind the mask. I have personal experience in this matter because many offers to manage money often traced back to Panama. There were only about 213 Americans in these documents because Americans can use this structure to hide their names even more than others can.

I personally gave up managing money for individuals for this reason. In fact, I discovered I was managing money for Libya’s former leader Muammar Gaddafi, not once, but TWICE. The back office of Rudolf Wolf in London, where clients opened accounts, was diligent in checking who was behind the companies I managed. It was not illegal back in the mid-1980s to deal with such accounts. Nonetheless, we traced shell company to shell company, and after about six months they informed me they established the real owner of the funds. It was Muammar Gaddafi and it was through Panama. I had thought I was dealing with a royal family member from Saudi Arabia. I closed the account. Within months, I found myself managing money for Gaddafi, once again unknowingly, and it traced to Panama.

In Geneva, the Gaon family threw a big party for me and offered me $5 million to create Armstrong Brokerage using my name. I did not have to do anything aside from providing my name. The family originated in Turkey but moved to Egypt, and the family business was established in Sudan. In 1957, David Gaon moved to Geneva where he built a worldwide business corporation in import-export investment and real estate including one of Geneva’s biggest hotels, the Noga (GAON) Hilton. The Gaons invited me to the grand opening of Herald Center in New York City, which they constructed on the old E.J. Korvette site. This turned out to be one of four prominent Manhattan buildings secretly owned by Philippine’s head of state, Ferdinand Marcos. The press claimed New York brothers Joseph and Ralph Bernstein fronted it. However, there was a lot more behind that. Silent partners also included Gaddafi and the notorious alleged arms dealer and Saudi Arabian businessman Adnan Khashoggi. At the peak of his net worth during the 1980s, he was said to have been worth up to $10 billion and was considered one of the richest men in the world. The FBI even visited my office when Marcos fled the Philippines to ask me where to find the gold he stole from the country’s reserves. They would not believe me when I said that I did not personally advise Marcos.

What I can say is that for decades everything has seemed to trace back to Panama. It became one giant masquerade party, as you really do not know whom you are dealing with. This is what really led me to turn only to institutions back in 1985.

This leak will prove to be devastating. France’s Hollande cannot wait to get his hands on whatever money he can grab from this, but let us make no mistake; there are 72 current or former heads of state, including dictators, involved in these documents. Will the ICIJ really release everything? Or will they protect some politicians because they are Socialists who are out to get the rich? Above all, how can you trust such firms anymore?

QUESTION: Marty, I think your recent gold call has made me understand your model much better. Your timing is the key. You gave the weekly Bullish at 1287.50 in your report and the timing. You said that 1309 is possible if we elect that weekly bullish prior to March 14th week. Gold rallied and stopped 30 cents from your number and precisely the week of the 14th. So it is time first, price second. Correct? And you can be long on one level yet short on another. Correct?

pkg

ANSWER: Absolutely. The market is fractal. The reason I have said gold will eventually make new highs is due to the fact we have NEVER elected a yearly bearish even after 1980.  So yes, you can be long on the long-term and short of the near-term. They are different objectives entirely.

Time is always the most important component. There is a time and place for everything. The price typically lines up with a reversal be it weekly to yearly. Just step in and out and let the market do its thing. Why press a trend when the timing is then met? Now we focus on 1202 and need to start electing bearish reversals to confirm a retest of support. Just go with the timing and the numbers.

Fridays NFP in the US did not help support the Nikkei despite the DOW’s strong closing rally. We did see a bounce off of the 16k figure but given that the Chinese markets were closed, holding any gains on the day proved just too lonesome. Late news on Friday about oil production continues to haunt the market in the Asian session. However, once trading from the Middle East had drifted into the European session, the price had recovered and along with it – so had equity markets.
DAX, CAC, FTSE and IBEX all opened small down but by mid-morning were close to +0.75% better. The market is still debating the likelihood of a FED rate increase in April but then, judging by this afternoon’s comments (Rosengren’s quote) so is the FED! On the data front, Factory orders were as expected (-1.7%) with slightly lower than expected Durable Goods but a notoriously volatile number anyway. late in the day we saw Asian stocks futures decline along with the weaker US market. The Nikkei was almost unchanged from its earlier cash close but that gave the China 300 and the HSI futures the opportunity to play catch-up and both were down around 1% (making-up for today’s closed cash market). US eventually closed just off the days lows but we do have numbers tomorrow followed by the FED on Wednesday.

Fixed-Income T-curve saw the return of the flattener today with 2’s closing 0.735% whilst 10’s closed 1.76 (+102.5bp). In Europe the bid continues with the main buyer supporting the market again. 10yr Bund closed 0.13% which closes the US/Bund spread at +163bp. Italy 10’s closed 1.23% (+2bp), Greece 8.62% (+28bp), Turkey 9.60% (-13bp) and 10yr Gilt closed 1.43% (+2bp).

Treasuries have not really known which way to play for the best part of a week. Having seen Fridays numbers the market had expected a return of the sellers but a less than convincing performance by Equity Indices are keeping many Fund Managers guessing. On Wednesday we will have FED Minutes which a few dealers are eagerly awaiting. However, ahead of that tomorrow we see German Industrial Orders (est 0.2%), UK Halifax House Pricing (estimated 9.5%) and then Euro-land Retail Sales where the forecast is 1.9%.

Trump’s latest comments over the weekend regarding the economy are interesting but still fall short of reality. He argues the unemployment number is really in the 20%+ zone, and the number that was provided was deliberately contrived to make politicians look good. That is basically true, but his number is a bit high. He says the stock market is overvalued, which is clearly the traditional view since whenever you say “economic downturn” they assume bonds up and stocks down. That will not hold true when people realize the bubble is in bonds; not stocks.

Then Trump vowed to pay off the national debt be renegotiating trade deals within eight years. Sorry, that is just impossible. He also vows to break NATO if other countries do not pay. That, at least, is long overdue. So Trump grabbed the headlines by predicting a massive recession ahead. There he is correct, but he is off the mark in comprehending its cause and outcomes.

Part of the crisis in the EU is the fact that there is an inherent anti-democratic foundation because Brussels has been attempting to force uniformity upon all of Europe which cannot possibly work. To the shock of some, I have stated many times that what made America function was DISCRIMINATION. Every group coming to America — German, Italian, French, or whatever — were forced to learn to speak English to get a job. This was not a law, but a cultural assimilation. If you ask an American what they are, they will respond with their ethnic background (half Irish and half German or whatever). You do not find such combinations in Europe beyond the rare encounter because language has kept European nations intact.

Consequently, the creation of a unified EU is unrealistic with language differences. From that basic fact emerges everything else. Since we have a single language in the USA, there is a national debate as to national security, etc. In Europe, there is no such debate. In fact, one could be criminally prosecuted for speaking an opinion against any other group. After a terrorist attack, they show people crying and lighting candles. The manhunt that resulted in finding the suspect, Salah Abdeslam, just 450 meters from where he officially lived demonstrates something that they will not express on TV: he cannot hide within the community without support from the community. The above photo showing locals gesturing angrily at the police who sealed off a Molenbeek neighborhood where Abdeslam was arrested is very disturbing for the implications suggest that Abdeslam had community support. Their language and cultural differences prevent many from assimilating within society. Any group that seeks to retain wholly distinct cultural differences cannot become part of a society. This really does not limit itself to Muslims, but any foreign group that resists becoming part of the country to which they moved. That would be as if I went to Rome, demanded everyone speak English, and then complained that they do not because that is where I moved. The old saying that stems from the migration in ancient times: “

Any group that seeks to retain wholly distinct cultural differences cannot become part of a society. This does not limit itself to Muslims, but any foreign group that resists becoming part of the country to which they moved. That would be as if I went to Rome, demanded everyone speak English, and then complained that they do not because that is where I moved. The old saying that stems from the migration in ancient times: “When in Rome, do as the Romans do.”

The fact that the EU member states retained their own cultures and languages simply means the idea of the EU cannot function. It should have remained as an economic union. Hollande explained that the purpose of the EU was to prevent another European war, but he completely misunderstands that an economy unites but a forced assimilation without a common language only highlights the differences. His policy on asylum was very clear on July 10, 2015. Everything the EU was supposed to promote has failed. The idea that a single federal government would provide economic prosperity has proven false, as is the fact that they would provide greater security together.

The Greens’ deputy prime minister, Åsa Romson, broke down in tears when she announced measures to deter asylum seekers in a reversal of Sweden’s open-door policy towards people fleeing war and persecution. “This is a terrible decision,” she later said.

Europe could not become a United States with different languages and cultures. Why attempt to federalize Europe in such a manner under the theory that it will prevent Germany and France from going to war with each other? It ignores the fact that there are external enemies as well. Forcing a one-size-fits-all policy is anti-democratic and anti-cultural. The strength of Europe cannot be boosted with federalization, but only with an economic union. Crossing over and demanding other countries accept refugees against their own cultural policies will break the very union the EU sought to create.

Each member state has cultural differences that extend beyond language. The cultural ideas of Eastern Europeans are not even understood by Western Europeans. I have personal friends from Eastern Europe and the foundation of their belief system after growing up under communism is to distrust government. Western Europeans embrace government and see it as a parent who is there to protect and provide for them. An economic union works, a forced assimilation does not.

I have been asked to explain the differences between socialism, fascism, and communism for some people seem to mix them all up.

A “socialist” is akin to a fascist for there governments seeks to dictate control. They do not pretend to own private property. Communists seize all private property and place it in the hands of the state. There is no freedom whatsoever.

Fascists view the world as a military state and see a liberal democracy as totally obsolete. In this context, they see the goal as the total mobilization of society, and as such, the state becomes a dictator. This is closer to socialists who view private property as subject to the permission of the state and as a national resource to redistribute to those who do not earn what they receive.

Under socialism, the state assumes the capability to manage the economy, but if they do not understand how it functions, they are incapable of managing the outcome. So socialists and fascists have a lot in common whereas communism just robs everyone and deprives the individual of the freedom to even choose their own career path.

The pension crisis is brewing and the one state that appears to be heading toward a complete bankruptcy is Illinois. Clients should not own ANY debt from Illinois, be it city, municipal, or state. Just get out before the curtain falls. The Illinois Constitution plainly states that pension benefits, once granted, “shall not be diminished or impaired.” Thus, taxpayers are absolutely screwed and this is not a place you want to own property. Governments cannot negotiate to reduce pensions so state workers will be pitted against taxpayers. The Supreme Court has struck down any attempt to reduce liabilities based upon this clause in the Illinois Constitution.

QUESTION: 

Dear Marty,

We are heading straight into the hurricane, and as you correctly say, there is no way of reversing the trend.

At this point, should Hillary (or Cruz for that matter) win the elections, she would have to face and preside over the coming inevitable crash and burn. This would be the only way for the silent majority to ultimately put a de facto blame on the establishment. The house of cards comes down all at once.

Wouldn’t at this point, from a timing perspective, be more logical that the 2020 elections (also ECM turning point) will be the right time and place for a third party candidate to emerge as we raise up from the ashes? Of course, since the Great Depression produced FDR, there is clearly a risk of a total opposite outcome: more establishment.

—
SB

ANSWER: I think the 2020 target is too late. Keep in mind this was NOT me making a forecast. The computer projected a huge third party (anti-establishment) vote beginning in 2016. By the time we get to 2020, we may be looking at a complete revamp of the monetary system. On January 1, 2017, G20 begins sharing all info on everyone. They are collapsing the world economy and it really looks like things will go nuts in 2018.

Keep in mind that if the Republicans nominate anyone BUT Trump, it will prove that there is no right to vote. We may see a backlash begin and a sharp rise in third party candidates in Congress. By 2018, that looks revolutionary at the Congressional level. So it appears that Trump has the majority of delegates, but if they give it to Cruz or Romney holy hell will be unleashed for it will prove the system is corrupt.

Our computer models clearly favor a Republican victory this year. However, assuming the Republican Party self-destructs, they may very well hand this to Hillary. Trump would not really want to be president during this crash and burn. It is better that the establishment will not get to blame him for what they have caused.

By 2020, it just looks completely nuts. Here is our chart on this from 1995. We can see that the spike in the third party is rising. This is in line with the War Model that is projecting a rise in civil unrest. By 2032, the West should capitulate and the financial capitol of the world will move to Asia. China should bottom in 2020, so the other side of that target will be the rise of Asia. The damage we are looking at here is the collapse of socialism from Social Security to pensions.

Ironically, those in former communist regions are in better shape because they are far more self-sufficient than those in the West who still believe in government. From that perspective alone, those populations are not dependent upon government, which replaced the family structure in the West. What children today save to take care of their parents? That’s government’s job.

“The Associated Press Stylebook” lists all the “politically correct” terms you should use. The term “Islamist” is now defined as “An advocate or supporter of a political movement that favors reordering government and society in accordance with laws prescribed by Islam.” They go on to explain you should not use the term Islamic “fighters, militants, extremists, or radicals” and instead state “al-Qaida-linked, Hezbollah, Taliban, etc.”

The number of Americans resigning their citizenship has reached record highs. Americans were thrown out of everywhere after FATCA was enacted. Due to FATCA, foreign institutions must report anything an American is doing outside the country or that institution’s assets will be confiscated. I myself find it impossible to do business internationally as I used to, for no foreign bank will allow an American to open an account. FATCA just assumes anything anyone does outside the country is to hide money. Even entering a partnership overseas does not help for any American involvement triggers their reporting requirements to the USA. So while there may be a threshold of $50,000, the net impact is that no foreign institution is willing to take the risk so they simply refuse to allow Americans to open an account.