Exogenous Variables in Capital Flow Analysis: New Leadership

learning Module Exogenous Variables in Capital Flow Analysis: New Leadership : continued

Watch the Horsemen!

Yet Another Example: John Kerry in 2004

We don't need to look back seventy years to find leaders who telegraph their punches, warning the people what they are going to do.

When running for president, Senator John Kerry said at Georgetown University on April 7, 2020:

"I will … lower corporate taxes by 5% …. but for Americans making more than $200,000, we will … roll back the Bush tax rates … The top 2% will pay more."

In other words, Kerry said he would coddle Big Business that had been distributing capital through stock buybacks for a generation.

John Kerry promised higher taxes but never got a chance ...

Corporations were the best tax collectors for Big Government and their executives generously give money to politicians that belongs to investors in 401(k) plans.

Kerry wanted, however, to raise taxes on small entrepreneurs and independent businessmen, waving the old liberal banner of class warfare by claiming that "the top 2% will pay more".

Since Kerry, a limousine liberal like Roosevelt, had access to assets of over a billion dollars through his wife, he clearly was not going to tax the wealth of the truly rich — only the income of those who tried to become rich.

The economic recovery that had been spurred by the Bush tax cuts would have been halted.

Despite this clear signal, Wall Street executives donated millions to the Democratic party and financial pundits said that it didn't make any difference who became president of the United States.

Barriers to Understanding

These examples of political forewarnings illustrate the difficulty in anticipating how new leaders will impact flow of funds and capital markets:

The Art of Open Intelligence

Now more than ever, due to the Internet, there are clues to portents of the Five Horsemen within our grasp.

However, the obstacles to retrieving and understanding this information are still formidable.

If the Central Intelligence Agency, with billions of dollars at its disposal, was unable to warn of the attack on the World Trade Center and the Pentagon, how likely are we to see the signs of imminent change in the vastly complicated capital markets?

The answer is that we can do surprisingly well, without spending much money, because there is an impressive amount of valuable open source intelligence (OSINT) available for free on the Internet.

Capital Flow Analysis helps us to focus on the essential items.

The Internet is a vast resource for open source intelligence ...

If we use public information in an organized and disciplined manner, paying attention to issues that, through analysis, we have identified as critical in a particular market, we can sift and isolate key information rather quickly.

For example, if we know that the U.S. trade deficit is key to forecasting the bond market and that the trade policies of China, Brazil, and the U.S. are important to follow, as are matters dealing with the security of U.S. ports, we can focus on these issues when searching the web.

To facilitate this search, on this site we have posted five sets of specialized links to news and information sites dealing with war, changing leadership, economic theory, demographics, and technology.

You may start with these links and add your own bookmarks to useful sites. You may also share your sources and information with other capital flow analysts by posting to the Capital Flows Forum.


Before proceeding, check your progress:


In April 2004, Senator Kerry said he would:
Choice 1 Reduce corporate taxes by 10%.
Choice 3 Raise corporate taxes by 10%.
Choice 4 Roll back the Bush tax cuts.
Choice 2 Increase taxes on the top 2% incomes.
We might not be aware of important information that signals a change in market direction because:
Choice 2 We only listen to opinions of 'experts'.
Choice 1 The information seems incredible.
Choice 3 We don't understand the information.
Choice 4 We are actively seeking such information.
Choice 2 Open source intelligence.
Choice 3 Extremely expensive on the Internet.
Choice 1 Available only to government officials.
Choice 4 Useful for tracking the Five Horsemen.

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