Dangers in 2020

At this time of the new year one can read countless pieces on the stocks to buy for 2020 and beyond. The names are mostly high tech and they are probably right. With that said there are a few serious dangers on the horizon. The chief one is not what you think. Take a moment to consider what you think?                                                                                                     It is...

Demographics

There has been a trend in world migration. It is more massive than is being exposed in the press. The reasons are many like civil unrest, war, famine and the future which is effected by those disruptions along with a few others like religion or political beliefs. This trend is going to get worse. Keep in mind the scientific truth, "For every action, there is a reaction." This dictum can be applied to our human nature. What I am implying is that there will be a negative reaction to the influx of immigrants. It has happened many times throughout history. It is already surfacing as you read. This massive migration event happens every so often in history due to serious disruptions in a region. This time it will be more massive like world wars, it will effect the entire planet.

Middle East and Africa

There has been conflict taking place in the Middle East since history has been recorded, even before. These conflicts caused migration within the two continents. Today, with the enormous power of modern weapons, the migration will be equally massive. Africans, by the tens of thousands are engaging in flotillas to migrate to Europe. A continent of people both black and white are leaving. In the South African region it is due to a lack of water, famine and poverty for blacks. For whites it is the reprisal by blacks in power to take back their continent, even if they do it illegally. This has occurred off and on again for 50 years. People are tired of conflict. They are looking for a new future.

Further up the continent there is religious conflict along with political corruption. The losers are tired. They seek a change. The internet showed them the better standard of living in Europe. The early exiles have successfully transplanted. This encourages the larger population back in their homeland. They are journeying to the flotilla to Europe. The numbers are too long to be counted. This onslaught to the European continent has already caused a backlash. The tremors will get stronger has the European natives will have the tax burden of these immigrants. Then, there will be the job competition along with housing. West Side Story is coming to the EU.

At the same time the Middle East is walking to Turkey and into Europe. This has been going on since the US began war in Iraq in 2003. The numbers get greater has the conflict has spread. Consider all the nations involved: Lebanon, Libya, Iraq, Afghanistan, Syria and Yemen. Of course, the Iranian situation clouds the picture even more. Then, you add the various tribes like the Kurds or the differences in the Muslim religion. The conflict between Sunni and Shite dates back to Mohammed. You combine all the above with a few other reasons like refugee centers that warehouse millions of displaced citizens. What do they have to go back to? The internet and relatives who made the early journey to Europe point out the better lifestyle. They will be coming in mass. They have one leg up on the Africans. They are better educated and their skin color. However, Europeans will only see that these immigrants are destroying their way of life. They are joining or listening to anti-immigration political parties as you read. The media will pick up on it as conflict erupts. This is an evasion that will take at least one generation to calm. Nations will build walls. Austria has started one. Others will follow. It will only get worse before this wave is assimilated.

One other aspect to this situation. The UK approved a Brexit plan. The timeline suggests the preliminary date is January 31st. Hold the press! Even if the plan passes the upper parliament house, there is a transition period which lasts until December 31st. As it stands, there is little or no economic change. We, at Evolution see another extension going into 2021. However, the UK is already putting up barriers to immigration. The train from Paris to London will be packed. Sebastian sees more outbursts in the UK against immigration. This will cause a backlash from the EU which will have its own immigration problem. The eventual split won't be pretty and it will lead to other problems.

US

We already have two million El Salvadorians. There are countless millions of Hondurans, Mexicans and soon, Venezuelans. The US has always took in immigrants, however we have put caps on their numbers in the past. We will do it again. One truth is the whole world cannot move to the US. If Trump wins, the wall will be completed. One mystery to me is why don't these Hispanic immigrants migrate to another Spanish speaking nation? Uruguay, Paraguay and Chile are prosperous. Colombia is growing and the immigrants would share language and customs.

Anyway, I sympathize with immigrants as everyone in the US have immigrant roots. With that said one must understand the negative effects of immigrants. They are a tax burden. They are an education burden. They need shelter at a time when many Americans are facing homelessness. They need jobs, but the entry level is where they work. We already have 44% of workers in unskilled labor. There is only so many low wage jobs and more competition will only cause upheaval, backlash and conflict. I, now believe that we need the wall to help limit the influx of immigrants. It will also help to deter illegal drugs. Bottom line: The whole world cannot live here.  

Asia

The region has its own cultural problems. We cannot tell the difference between Chinese and Korean. They can. It is why there is less inter-nation migration. They have their own prejudices. Their problem will be the ego of China as the elephant on the continent. Economic competition will cause conflict in the region. The US has a tendency of picking the wrong side. We should stick by Japan and play Switzerland to the rest. We won't and that could lead to trouble.

Dollar and Gold

The other big problem will be debt. Too many nations are printing without knowing the consequences. All fiat currencies in the past have collapsed. Japan is over 100% debt to GDP. China is 60% or worse. The EU constitution limits debt to 3% of GDP. That is fantasy. Greece, Italy, Spain and France are all over their reported limit. The real danger is off the books. The US is the worse in the world and our sin is doubly bad. We have the privilege of being the world's currency. We have abused this position. Even though all nations are fiat and hate gold, many are buying gold to hedge the change that they seek. For one reason or another they want a change to the world's reserve currency. The IMF already has a currency in mind. It will be a basket with the US dollar the most heavily weighted. This is the reason why central banks are purchasing gold. They are vying for position in this new formula with a basket of currencies. Keep in mind that fiat hates gold and they are already in bed with fiat.
Anyway, if this change happens, the world will go into a very deep depression. Gold should rise in 2020. Even if that outcome is delayed, corporate debt could cause an economic crisis. All it takes is one derivative to start a domino chain reaction. These derivatives are truly weapons of mass financial destruction. JFL believes the recent turmoil in the repo market has its roots in a derivative problem. This could be on the 6:00 o'clock news one evening. This too will help gold.