Martin Armstrong continues writing his typewritten letters (from a detention center in New Jersey) regarding ongoing economic and political events. I’m no expert on Armstrong though if you’ve not heard of him, he was detained (imprisoned) for some seven years for contempt of court and only went to trial when the judge who had been detaining him was removed from the case by the NY Court of Appeals (source: wiki). There’s a pretty reasonable chance that Armstrong did nothing wrong other than crossing the State.
Oh and Armstrong had a number of models and forecasts he used to predict the market, some of which were apparently amazingly accurate. Who knows.
Armstrong’s latest letter is available on ZeroHedge, a finance-centered blog that has quickly become one of the most cited and popular finance blogs out there. Interestingly, the ZH writers are anonymous, taking on the names of various characters in Chuck Palahniuk’s Fight Club. Recently, ZH took their site off of blogspot.com and moved it to offshore servers to further protect their anonymity and the site’s often whistleblowing content.
Getting to the point. The letter is about Goldman Sachs and what Martin calls the “club” on Wall Street. The “club” is a group of extremely powerful individuals who are out to make massive amounts of money via the financial system. Importantly, the “club” attempts to do this not by making better bets (as in, speculating), but essentially by rigging the system and creating the perfect trades. The “club” accomplishes this goal by controlling inside information.
The letter is pretty lucid and provides an interesting glimpse into what goes on behind-the-curtains of Wall Street. What struck me most about the letter is that Armstrong works to dispel the notion that there is some conspiracy theory across all central banks to control the world. What’s really going on is that the central bankers are trying to do their jobs and maintain economic and monetary order. Unfortunately, they are clueless academics. Martin realized just how impotent and lost the powers-that-be were back during the 1989 crash:
It had dawned on me perhaps when there was the 19889 Crash. I had carried two cell phones many times when the model was reaching critical turning points as it did in 1989. The markets were going nuts, and my one cell phone ran[g] that was used primarily for very special clients. it was one of the G5 Central Banks asking me outright what the model was showing and did I think they needed to intervene? As I was explaining the focus was in Japan and that there would not be any abnormal correction and thus there should not be concern about intervention, my regular cell phone rang. It was another G5 member asking the same questions.
What became very clear to me, was they truly had no idea what was taking place any more than the rest of the world. Everyone was struggling to comprehend the new world that was emerging. Communism seemed defeated, markets were crashing, and the general expectation was – Should we be rejoicing?
Most of the central banks have a lot of PHDs, with no real world experience. They have read books, but have not been in the trench to “feel” what it is truly like. This is why government employees rarely have anything worthwhile that will ever contribute to society. …
Armstrong has seen behind the curtain and knows that the authorities (in this case the central banks) are clueless, self-interested, and incapable of working together to effect change. Often, outsiders see these authorities and point out their ineptitude, understanding they are clueless academics. And that’s where outsiders go from insightful to crazy — they go on to conjure up theories of impossibly coordinated efforts by the same incompetent authorities.
In other words, it’s just like the South Park episode — Mystery of the Urinal Deuce.
So what is going on when we see Goldman Sachs making money hand over fist? Simple: they’re doing what they do best, exploiting their inside information, political connections, and their current monopolistic status on Wall Street. Is it all that surprising?