Archive for February, 2011

Does The Lady Gaga Hit Video Herald The Return Of The Nephilim …. As Well As The End Of This Age?

February 28, 2011

The Lord reveals in bible prophecy of Luke 17:26 that “as it was in the days of Noah, so it shall also be in the days of the Son of Man.”

The emergence of the Nephilim was what brought about the Flood of Noah; these creatures were the offspring of humans and the fallen angels; and today Lady Gaga comes out with a blockbuster hit video in which she gives birth to a new race of beings. Is Hollywood … Hell in the woods?

Idolator relates Lady Gaga Gives Birth To Her “Born This Way” Video  in which she presents  the #1 song in the country. “But like the fact that “Born This Way” isn’t just any chart-topping single (it’s the 1000th #1 on the Hot 100), this isn’t just any music video—it’s a Lady Gaga video. And Mother Monster has given birth to quite a dark epic this time.”

“Born This Way which was co-directed by Nick Knight and Haus Of Gaga (and choreographed by Laurieann Gibson), starts off with a pink triangle, a unicorn and Gaga describing the manifesto of Mother Monster, who we see give birth to a new race of beings without prejudice. She also gives birth to evil. This, of course, leads the pendulum of choice to do its dance. “Born This Way” (the song) finally kicks in as an alien-looking, bra-and-underwear-clad Gaga and her dancers bump and grind around on a blacked-out set.”

Chuck Misler teaches on The Return Of The Aliens.

And Young Brother relates: “Evil gives birth only to more evil. Imagine the earth as a garden, and evil as an out of control weed, that would be the state of our world today, as well as the state of the world in Noah’s days: Gen 6:5-6,8

“And God saw that the wickedness of man was great in the earth, and that every
imagination of his heart was only evil continually. And it repented
the Lord that he had made man on the earth, and it grieved him in his
heart. And the Lord said I will destroy man…But Noah found grace in the
eyes of the Lord.”

There was a direct, demonic influence in the earth because of the Nephilim, as told in depth by Enoch. Man had been enticed to choose self over God and to “eat, drink, and marry!” which refers to the devil’s plan to eradicate the bloodline of the messiah by crossbreeding with all pureblooded decendants of Eve that aren’t put to death. Because of this, God decided to flood the earth. He chose to save Noah and his family because Noah was “perfect in his generations” i.e. a pure human decendant of Eve, and therefore carried the bloodline that would lead to the Messiah, Jesus.

Is FactorShares New ETF The Ultimate ETF

February 28, 2011

A new ETF is available, that being FSG, 2X: Gold Bull/S&P500 Bear, as is seen in this Yahoo Finance Chart.  I will keep my gold bullion Thank You Very Much.

Libertarians Often Relate That Nullification Is Just One More Way For Us To Tell The Federal Government: “That Is Not Right”

February 28, 2011

Libertarians often relate that “Nullification is just one more way for us to tell the federal government: ‘That is not right.” Matt Gouras of the Associated Press relates that the Montana House recently passed a 17-point sovereignty declaration. “States retain the right of protecting all freedoms of individual persons from federal incursion,” the measure in part reads.

Libertarians go on to publish articles such as Why States Must Nullify Unconstitutional Acts of Congress: Instructions from Hamilton, Madison & Jefferson

Unlike libertarians who perceive themselves to be sovereign individuals, I am not a sovereign individual; rather I am a love slave of Jesus Christ, The Sovereign One. He is both King and Lord.

I encourage all to please consider that the bible prophecy of Revelation 13:3-4, which presents that out of Götterdämmerung, that is an investment meltdown and flame out, ten regions of governance will  arise, as called for the Club of Rome in 1974, Revelation 13:1-2.

And to please consider the bible prophecy Revelation 13:5-10 which presents a global chancellor, the sovereign, who will rise to rule mankind. And who, according to Revelation 13:11-18, will be accompanied by a global banker, the seignior who will provide seigniorage, that is moneyness, for all.

Is A Liquidity Crisis In Municipal Bonds Imminent?

February 27, 2011

Facts one needs to know for financial market activity for the week beginning February 28, 2011

1) … The US Federal Reserve has been successful in exporting speculative debt.
Ash writes “George Melloan recently wrote an article entitled “The Federal Reserve is Causing Turmoil Abroad”, in which he stated that the tsunami of debt-dollars unleashed via quantitative easing over the last year has caused food and energy prices to skyrocket in countries around the world … That fact exposes the true nature of the exported “inflation” in these countries – it’s all speculative sizzle and no steak.”

To that, I add,  quantitative easing has decreased demand for the US central bank’s long maturity assets, EDV, held in the public sector, which has increased rates across the board, but especially at the longer end of the yield curve, $TYX; which is seen in the 30 10 leverage curve, $TYX:$TNX, which is the inverse of the 10 30 yield curve, falling in value.

As quantitative easing has continued in duration and accumulated in amount, the central bank’s seigniorage, which is based upon both distressed securities, FAGIX, acquired via the Fed’s TARP and other Facilities, and held at the Federal Reserve, together with the US Treasuries, EDV, and TLT, held in Excess Reserve, finally started to exhaust on February 11, 2011, as some investors sold stocks, and bought bonds, BND, up until February 25, 2011.
 
2) … The US central bank’s seigniorage exhausted on February 22, 2011, commencing a global bear stock market.
The exhaustion of the US Central Bank’s seigniorage came on February 22, 2011, as is seen in distressed securities, FAGIX, and Junk Bonds, JNK, failing to rise higher, which decreased demand for stocks, ACWI.

The  Steel, SLX, Solar, -4.3%, KWT, -4.3%, Homebuilding, ITB, -4.3% and Transportation, IYT -4.2%, defines and establishes that a bear market is now underway.

Aggregate demand for both stocks, ACWI, and bonds, BND, has likely come to an end February 25, 2011, as bonds, BND, has reached strong resistance at 80.24.  

With the failure of the US Central bank’s seigniorage, risk appetite has turned to risk avoidance, and although gold, GLD, may fall lower in value in the short term, falling stock, ACWI, and bond, BND, values, will create an ongoing demand for gold.

Once can see completion of rally in numerous stock charts. For example the world stocks, ACWI, shows a three white soldiers advance running up to an Elliott 5 Wave Up High to 49.24 on February 18, 2011.

The Morgan Stanley Cyclical Index, $CYC, fell lower; its fall communicates an end to the current growth cycle. Given that this growth cycle, and the rise in the Morgan Stanley Cyclical Index, came via the extreme use of the seigniorage of QE, its reasonable to believe that there will be a dramatic fall lower in stock value, and very soon a downturn in economic reports such as Capitol Goods Orders, Industrial Production, Exports, and Bloomberg Financial Conditions Index, as quantitative easing continues to exhaust, effecting deleveraging both in stock market value and in economic activity as well.

The fall lower in the Industrial stocks, IYJ, comes at the same time as the fall lower in the Transportation stocks, IYT, and communicates the Dow Theory principle that a bear market has commenced — as industrial stocks and transportation stocks make market turns together.

This bear market will be the bear market of all bear markets, as the seigniorage of the long-enduring Milton Friedman Free To Choose Currency Regime developed over the last forty years has failed.

The where-with-all since the last financial collapse, that is the subprime collapse, has come via quantitative easing 1 and quantitative easing 2. The seigniorage, that is the moneyness, came via an asset swap, where Ben Bernanke, traded out money good US Treasuries for distressed securities, like those traded by mutual fund FAGIX. For the most part, then the banks placed the US Treasuries into Excess Reserve with the US Federal Reserve.

The distressed investments, and the Excess Reserves, held at the US Federal Reserve, have been the great springboard of investment growth; but now, with an exhaustion of QE, there is no longer any money good Federal Reserve seigniorage, and as a results stocks globally have turned lower in value.    

The snap declines in the 200% ETNs, and ETFs, give clear, cogent, and convincing evidence that a market turn has occurred:  Agriculture, DAG, -3.7%,Russell 2000, URTY, -5.0%, Utilities, UPW, -1.0%, and Semiconductors, USD, -3.7%.

The chart of Base Metals, DBB, clearly shows a turn lower; turning global industrial metal miners, such as Companhia Vale do Rio Doce, VALE.
 
The chart of Sunrise Living, SRZ, gives a finale salute to the Age of Leverage that came through US Central Bank Seigniorage as well as Yen Carry Trade Investing courtesy of the Bank of Japan, as the chart of the optimized carry ETF, ICI, shows a fall lower in an Elliott Wave 3 Decline.

The chart of the S&P Weekly, SPY Weekly, as well as World Stocks Weekly, ACWI Weekly, both show that an Elliott Wave 3 Down has commenced in each; with the S&P, SPY, falling this week to 132.33.

The wave structure of the S&P shows a rally completion with a three white soldiers pattern finale, and the last day manifesting a dragonfly candlestick, to close at 134.53. The dragon-fly doji is one where the open and close price are at the high of the day; like other doji days, this one normally appears at market turning points.  The rise of the S&P to 132.33 on February 25, 2011, presented a short selling entry opportunity, as in a bear market one sells into rises, whereas in a bull market one buys into dips.

Gary of Between the The Hedges reports “Best Performing Style, Small-Cap Value -1.07%, and Worst Performing Style, Mid-Cap Growth -2.08%”. This is significant because with the best, being a fall of 1.07 in Small Cap Value, RZV, means that a major currency event was held in abeyance by the FX currency traders as world government bonds, BWX, rose in value to an Elliott Wave 2 of 2 High.

Global currency debasement, that is global currency deflation, also known as competitive currency devaluation, commenced February 11, 2011, as the value of the major world currencies relative to the emerging market currencies, DBV:CEW, fell, in and Elliott Wave 3 of 3 of 3 Down.

The US Dollar, $USD, fell this week to head and shoulders support at 77.28. Major world currencies, DBV, fell to the middle of a broadening top pattern at 23.78; emerging market currencies, CEW, fell lower in an Elliott Wave 3 of 3 Decline to 22.39; and commodity currencies, CCX, rose to an Elliott Wave 5 High at 26.28.

I do not know if the US Dollar,$USD, is going to plunge through support, beginning the week of February 28, 2011, or if it is going to bounce up, and a large number of these currencies FXY, FXF, SZR, FXE, FXB, FXS ,ICN, FXA, BZF ,BNZ ,FXM ,FXC ,BZF, and CEW, fall lower, as FX currency traders renew their global currency war against the world central bankers, in a new round of competitive currency deflation. One can use this Finviz Screener to create a portfolio of currencies to track currencies.

Tyler Durden reports S&P To Withdraw All US Rating On May 24, Convert Everything To “Unsolicited“. In offering unsolicited ratings, will it release them from any legal liability when currencies collapse?

3) … Is A Liquidity Crisis Imminent In Municipal Bonds Imminent?
Municipal bonds, MUB, crested up into what is likely an Elliott Wave 2 high at 100.67 on February 25, 2011. Are these headed into a dramatic downturn?

Serena NG and Erik Holm of the WSJ in article Bailed-Out Insurer, Planning an IPO in May, Begins Selling Itself to the Street relate that AIG is the insurance company owned by the US Government (I have to ask why, just why didn’t this behemoth get sold during the July through February massive stock market rally?): ”AIG’s next big test will be to convince skeptical investors that it can attain stability and growth in the long run. On Friday, AIG shares slumped $1.89, or 4.6%, to $38.54 and are down more than 30% so far this year.”

“The U.S. government’s bailout left taxpayers with a 92% stake in AIG. A stock offering of possibly more than $20 billion planned for this spring is a big part of the company’s plan to extricate itself from government ownership.”

“After ruling out a March sale, AIG now intends to begin formally marketing shares to investors sometime in May, after reporting first-quarter results, according to a person familiar with the matter. The stock sale would come after marketing efforts that include so-called road shows to potential investors.”

“Launching that sales pitch after first-quarter results are announced will give investors more time to digest AIG performance before being approached about possibly buying shares in the stock sale, dubbed a re-IPO because it will resemble an initial public offering.”

“Chartis is important to the future of scaled-back AIG and the looming stock offering. Asked about the unit’s market position, which one analyst described as an “800-pound gorilla” before the financial crisis, Mr. Benmosche quipped: “I would say we are about 780 pounds and on our way back.”

“We’ve come through a horrible period of time, with questions about the survivability of AIG,” he said. “Client retention was extremely strong,” helping Chartis shift away from less-profitable products such as workers’ compensation and excess casualty insurance. The business continues “to hold the line on pricing,” he said.”

Tyler Durden asks, Will AIG Implosion 2.0 Lead To QE 3.0?  “There was a time when everyone thought CDOs are perfectly safe. That ended up being a tad incorrect. It resulted in AIG blowing up, recording hundreds of billions in losses and almost taking the rest of the financial world with it, leading ultimately to the first iteration of quantitative easing. A few years thereafter, several blogs and fringe elements suggested that munis are the next major cataclysm and will likely require Fed bail outs (some time before Meredith Whitney came on the public scene with her apocalyptic call). It would be only fitting that the same AIG that blew up the world the first time around, end up being the same company that does so in 2011, and with an instrument that just like back then only an occasional voice warned is a weapon of mass destruction: municipal bonds. AIG dropped over 6% today following some very unpleasant disclosures about its muni outlook, and corporate liquidity implications arising therefrom: “American International Group Inc., the bailed-out insurer, said it faces increased risk of losses on its $46.6 billion municipal bond portfolio and that defaults could pressure the company’s liquidity.” We can’t wait until it is confirmed that Zero Hedge readers (or at least 36% of them) were right, and the Fed will have no choice but to bail out AIG (again) this time by buying up muni bonds.”

4) …Who provides seigniorage? and what provides seigniorage?
Saibal Dasgupta of The Times of India reports Banks of India Becomes First To Offer Trade Settlement In Yuan: “Indian buyers are at present making payments in US dollars.” I ask: Is seigniorage, that is moneyness, to be found in the Chinese currency. Can it be found in any currency?  And what constitutes money good?

The chart of gold relative to the Australian Dollar, GLD:FXA, communicates that gold provides good seigniorage.

5) … Irvine Renter relates Banks Extend Limbo For Mortgage Squatters To Manage MLS Inventory
In his article, he communicates the details of how the lending cartel uses FASB 157 and its market seigniorage of marking residential real estate at mark-to-manager’s-best-estimate rather than at mark-to-market, to sustain prices far in excess of than what they would be in a free market place; and how the bank’s, KBE, collective action enables those with mortgages to squat, and live payment-free in shadow inventory.   

Irvine Renter relates: “The number banks carefully watch is the percentage of distressed sales. Numbers over 30% stymie appreciation. Distressed sales over 40% make prices go down. Lenders have collectively decided that massive shadow inventory is superior to prices in free fall.”

“Some of the properties are being held in limbo because servicing agreements provide greater incentive to keep shadow inventory than to process the foreclosure. Also, as i have written about many times, lenders simply are not in a position to write down the loans.”

“In the past, the inefficiencies of the system were part of the carrot and stick approach lenders would use to get delinquent borrowers to pay. The last thing anyone with equity wants to do is let the house go to auction where they may lose everything. In an appreciating market, the threat of foreclosure motivates borrower compliance. Once borrowers go underwater, this threat turns to work against lenders who now face a low capital recovery at foreclosure.”

6) … Keywords and symbols
FASB 157, money good, liquidity crisis, seigniorage, exported inflation, money good seigniorage, EDV, BND, TLT, ACWI, SPY, IYJ, IYT, ICI, RZV, RZG, DBV, CEW, CCX, UUP, SLX, KWT, ITB, IYT, KBE, AIG, MUB

A Framework Agreement … Is A Framework Agreement, Olli Rehn Relates …… Germany Breaks Out In Open Revolt Against The European Bailout …… Canada And US Leaders Announce A Framework Agreement For Perimeter Security And Economic Competitiveness

February 27, 2011

Financial Market Report for February 25, 2011

1) … A Framework Agreement … Is A Framework Agreement, Olli Rehn relates.
Open Europe reports daily briefing Fine Gael Could See First Ever Outright Majority In Irish Elections: “As Irish citizens head to the polls today, the FT notes that the opposition Fine Gael party is set to win its first-ever outright majority, in what would be the first defeat for a eurozone government since the beginning of the debt crisis. The new government is expected to try to re-negotiate the terms of the €85bn EU/IMF bail-out. However, the Irish Times quotes a spokesperson for EU Economic and Monetary Affairs Commissioner Olli Rehn saying, “This agreement, it’s an agreement between the EU and the Republic of Ireland. It’s not an agreement between an institution and a particular government. It’s on the basis of a negotiated programme which was approved with the government of Ireland and which in its main outline has to be applied.”

“An article in the Independent notes, “Worries abound that [Fine Gael leader Enda] Kenny lacks the charisma, economic savvy and plain old guts to dig the nation out from under a mountain of debt and renegotiate the IMF and European Union bail-out.” In the Times, Julian Gough argues, “Fine Gael also mistook the bubble for prosperity, also voted for the disastrous bank guarantee and doesn’t seem to have any idea how to renegotiate the terms of the IMF/EU bailout in any meaningful way.” A leader in the Telegraph argues that a change of government would not be a sufficient solution to Ireland’s problems, noting: “The Irish have preferred to vent their anger at the polls rather than on the streets. But while they remain in the euro, a new government will make little difference to their predicament.” FT Guardian Times: Gough Telegraph: editorial Irish Times: editorial Irish Times Independent Independent 2 EUobserver BBC: Today

Olli Rehn, EU Economic and Monetary Affairs Commissioner, in communicating the week ending February 25, 2011 that “This agreement, it’s an agreement between the EU and the Republic of Ireland. It’s not an agreement between an institution and a particular government. It’s on the basis of a negotiated programme which was approved with the government of Ireland and which in its main outline has to be applied,” announced an important truth: the Irish Bailout Agreement between Ireland, the EU and the UK is a Eurozone Framework Agreement that established European economic governance and provided resolution to Ireland’s debt issues. The leaders in announcing the framework agreement waived national sovereignty, and strengthened a region of global governance, that was established by the previous bailout agreement with Greece. These two framework agreements, plus the one that established vetting of national budgets before they are presented to national legislatures, established the Eurozone as one of ten regions of global governance as called for by the Club of Rome in 1974. The people of Ireland, and the whole world, if they do not know already, will come to know that there will be no voting on the issue of Ireland’s debt. They are going to learn very shortly that there are not sovereign, rather the leaders, their word, will and way are sovereign. Welcome to the age of global governance manifesting in regional economic governance.

Bruno Waterfield in the Telegraph article Ireland’s New Government On A Collision Course With EU
reports: “Enda Kenny, Fine Gael’s leader, will later on Sunday, start to form a new government, almost certainly with Labour, after full election results under Ireland’s complicated PR system come through.”

“Both Mr Kenny and Eamonn Gilmore, Labour’s leader, have promised Irish voters that they will renegotiate the EU-IMF austerity programme to reduce the burden for taxpayers and to force financial investors to shoulder some of the bank debts currently paid out of the public purse.”

“At a summit of centre-right EU leaders in Helsinki next Friday, Mr Kenny will use his position as Ireland’s new Prime Minister to beg the German Chancellor, Angela Merkel, and French President, Nicolas Sarkozy, for concessions ahead of an emergency March 11 Brussels summit to restructure the euro zone.”

“But neither the two European leaders nor the European Central Bank or EU will permit any substantial changes, despite the huge popular Irish revolt against the bailout.”

“Chancellor Merkel will tell Mr Kenny that if he wants to reduce the high, punitive 5.8 per cent interest rate charged on EU loans then Ireland will have to give up its low corporate tax rates – a measure regarded as vital to Ireland’s recovery and one of the few economic policies it has not yet handed over to Brussels or Frankfurt.”

“The new Irish premier will also be warned that there is no question of forcing privately-owned financial institutions to assume Ireland’s £85 billion bank debts because the resulting market panic would spread to Germany and France, tearing the euro single currency apart.”

“As Irish voters headed for the polling booths on Friday, the European Commission bluntly declared that the terms of the EU-IMF bailout “must be applied” whatever the will of Ireland’s people or regardless of any change of government.”

“It’s an agreement between the EU and the Republic of Ireland, it’s not an agreement between an institution and a particular government,” said a Brussels spokesman.”

“A European diplomat, from a large eurozone country, told The Sunday Telegraph that “the more the Irish make a big deal about renegotiation in public, the more attitudes will harden”.

“It is not even take it or leave it. It’s done. Ireland’s only role in this now is to implement the programme agreed with the EU, IMF and European Central Bank. Irish voters are not a party in this process, whatever they have been told,” said the diplomat.”

Shaun Richards writes Election Day In Ireland: “This morning voters in the Irish Republic will take to the ballot box and cast their votes in a general election. After the economic “perfect storm” that has hit their country they do need a change and I hope that it will show that the ballot box as well as the gun and revolution can lead to fundamental change. As we stand in spite of the “rescue” from the EU/ECB/IMF then Ireland looks insolvent as she goes forward. Her government bond market has if anything deteriorated since the date the “rescue” was announced. As I type this her ten-year government bond yield is 9.46% which we can compare with seriously troubled but unrescued Portugal at 7.64% or the UK at 3.72%. If you compare the relative situations then it is plainly unfair that Ireland has a rate 6% higher than that of the UK as there are as many similarities as differences. Regular readers will be aware that I often argue that the shorter end of the maturity spectrum also gives us insight into a country’s finances and here we find a bond maturing in April 2013 which yields 8.03% which to my mind has even worse implications than the ten-year yield. For those to whom this is unfamiliar you can learn a lot from what is called a yield curve but my point here is that the revealing part is the gap between the official central bank rate (1%) and a yield of 8.03%. Thus in two years the gap is over 7%!”

“What does this mean for the Euro zones concept of a rescue? It means that the “rescue” is not far off an utter failure. If we look again we see that to April 2013 investors want a yield of 8.03% when repayment is in effect guaranteed by the rescue plan. Behind the rescue plan we have the European Central Bank, the European Union and the International Monetary Fund. As they are willing to loan money to Ireland at around 6% (it was announced at 5.8% but rates have risen since then) I am surprised that more commentators have not raised this point. If it was perceived to be a success then Irish government bond yields should have headed towards 6%. In fact they have headed away from it!”

“We are back to the theme that you cannot solve a solvency problem with liquidity and until Europe’s leaders cotton onto this point there will be little improvement in Ireland’s fortunes. Also please remember that these higher bond yields for Ireland come in spite of the fact that the European Central Bank has been willing to buy these bonds to support the market and could do so again. Accordingly we do not know what the fair market price is and we can put another chalk mark on the scoreboard of false markets created by central banks. I regularly argue that such intervention is mostly beyond their abilities and skills and yet again we can see that in the words of the song there are “more questions than answers”. Sadly we seem likely to get more of this type of intervention rather than less as many central bankers appear unaware of the damage they are doing. When I read the speech of David Miles who is on the UK Monetary Policy Committee I was struck by the image of a man who felt that events happened to him and yet in terms of UK history the Bank of England has been extraordinarily interventionist. I doubt whether he appreciates the irony of this or the fact that the events he feels he is suffering from may be “feedback” from his wn actions, if we look for a song for central bankers may I suggest the lyric, “Reality was once a friend of mine”.”

Martin Wolf in Financial Times writes in article Ireland Needs Help With Its Debt: This is not one, but three, crises: an economic collapse; a financial implosion; and a fiscal disaster. On the first, given the fall in demand and the need for fiscal contraction, prospects for recovery depend heavily on exports. On the second, the direct costs of recapitalising the system are set to be around 36 per cent of GDP, according to Goodbody stockbrokers. On the last, according to the IMF, general government debt could be 123 per cent of GDP by 2014. A little over a third of this increase in the public debt ratio would then be a direct result of recapitalising the banks.

Such a crisis is beyond the ability of Ireland to manage without financial collapse and sovereign default.

Apart from the Armageddon of a sovereign default, two partial escapes exist. The more torivial would be a reduction in the rate of interest on Ireland’s borrowing: a 1 per cent reduction in the rate of interest would save the state 0.4 per cent of GDP a year. That would be a small help, at least. A more valuable possibility would be a writedown of existing subordinated and senior bank debt, which currently amounts to €21.4bn (14 per cent of GDP).

The ECB and the other members of the European Union have vetoed this idea, fearful of contagion. Indeed, the assistance package was partly to prevent just such an outcome. Yet the idea that taxpayers should bail out senior creditors of massively insolvent banks at such risk to the solvency of their state is both unfair and unreasonable. If the rest of the EU is determined to protect senior creditors, it should surely share in the cost of doing so. Why should the taxpayers of the borrowing country pay all? The new Irish government should make this point firmly.

2) … Germany breaks out in open revolt against the European Bailout    
EuroIntelligence reports subscription article Germany In Open Revolt Against European Bailout.  Academics and businesses are joining Bundestag and Bundestag in protests against proposed extension of the eurozone’s rescue mechanism. This is a very serious situation in our view, on the verge of getting out of control. The conservative establishment is in open rebellion against a weak government about to face a string of electoral defeats. Frankfurter Allgemeine Zeitung, published a Petition of 189 German economists which called on the German government to refuse any extension of the EFSF, and to force highly indebted countries into an insolvency procedure. They include some of the best known German economists – Hans Werner Sinn, Jürgen von Hagen, Manfred Neumann, Michael Burda and Volker Wieland. They make the following points:
1. A permanent credit guarantee for insolvent countries would provide “massive incentives” to repeat the mistakes of the past. The reforms of the stability pact, and the newly discussed pact for competitiveness, are too weak to counteract this.
2. A long-term strategy against debt crises requires the possibility of a sovereign insolvency.
3. Credits to countries should be possible, but only after debt restructuring.
4. The fact of state insolvency should be determined not by the country itself, but by an international institution, such as the IMF.
5. The ECB must not provide unlimited support of insolvent countries through bond purchases.
6. Of the three solutions to a national debt crisis – debt reduction through growth, insolvency, and bailout-the latter would imply higher taxes, and/or higher inflation.

Holger Stelzner, the openly anti-European editorialist of Frankfurter Allgemeine Zeitung, writes that the eurozone is drowning in its debt, which has turned the ECB into a bad bank. The approach of policy makers everywhere is to solve a debt crisis through more debt. The increase in the ECB’s balance sheet from €900bn to €1800bn of mostly low quality debt was immensely risky. The ECB is no longer an independent institution, but an interested party.

Papandreou tells Bild that Greece will not sell its islands. In today’s Bild there is an interview with George Papandreou, who promised to pay back every cent and emphasised that this is a loan, not a transfer: “These are loans and we are paying interest on it, these are not gifts.” When asked about whether Greece would be ready to sell its islands, he responded: “You΄ve simply got to understand how important these islands are for Greece and Greek history. We΄ve spent enormous sums in defence budgets to secure the islands near the Turkish coast.” (Hat tip from “Keep talking Greece”, a Greek blog in English covering the crisis).

3) … The US Dollar reaches a crossroads as world currencies manifest dramatic candlesticks.
The US Dollar, $USD. closed at 77.23. at the edge of support at the edge of a massive head and shoulders pattern.

The US Dollar may continue to bounce up February 28, 2010;  and a large number of the world’s currencies, seen in this chart of FXY, FXF, SZR, FXE, FXB, FXS ,ICN, FXA, BZF, BNZ, FXM, FXC ,BZF, and CEW, may fall lower, as FX currency traders renew their global currency war against the world central bankers, in a new round of competitive currency devaluations, that is competitive currency deflation. One can use this Finviz Screener to create a portfolio of currencies to track currencies.

The other scenario will be for the US Dollar, to collapse through its current base of 77; but I really think the US Dollar will continue to bounce higher before doing so.

The US Dollar, $USD, is traded by the 200% ETF, UUP, which shows a death cross on February 18,  2011, as well as the start of an Elliott Wave 2 Down on January 10, 2011, as FX currency traders have successfully sold off the dollar illustrating the principle that monetization of debt, that came by QE 2, debases the US Currency.

The Australian Dollar, FXA, and the Canadian Dollar, FXC, are most strong currency. Do I foresee a fall? Anywhere close to the June 2010 fall? I have no idea. I do expect a fall in the US Dollar, as monetization of debt eventually leads to currency destruction and debasement.

4) … The bear market of all bear market commenced on February 22, 2011.
Printing of money out of thing air by a central bank for what reason, always results in not only the currency being destroyed but also the stock market assets of that country being destroyed.  Quantitative easing quickly and awesome drove up investment in the Philippines, EPHE, EPHE, China, YAO, India, INP, Indonesia, IDX, Turkey, TUR, Thailand, THD and Brazil, EWZ.  But the first announcement of  QE2 at Jackson Hole, inflation destruction commenced and  destabilized all highly inflationary countries, as is seen in the chart of   EPHE, YAO, INP, IDX, TUR, THD, and EWZ.  According to Urban Dictionary, inflation destruction is the fall in investment value that accompanies derisking and deleveraging out of investments that were formerly inflated by money flows to, and carry trade investing in, high interest paying financial institutions, profitable natural resource companies, and high growth companies.

Coal miners, KOL, have lost more investment value than copper miners, COPX, with  Arch Coal, ACI, and ANR Resources, ANR, being prime examples. Other QE exhausted investments include Pharmaceuticals, XPH, Nasdaq Biotechnology, IBB, S&P Biotechnology, XBI, Las Vegas Sands, LVS,  Brazil Financials, BRAF, Airlines, FAA, Shipping,SEA, and Manufactured Housing, CVCO as is seen in the chart of CVCO, FAA, SEA, XPH, XBI, IBB and KOL.

Risk appetite turned to risk avoidance in the emerging market countries as quantitative easing exhausted and money flowed out of these formerly hot markets.      

Volatility continued to decrease as the value of Ben Bernanke’s seigniorage, that is distressed securities, FAGIX, and junk bonds, JNK, rose in value.

While these early beneficiaries of quantitative easing deflated, the seigniorage of QE2 continued strong in major countries such as the US, IWO, Germany, EWG, South Korea, EWY, and Taiwan, EWT, as is seen in the chart of EEM, IWM, EWG, EWY, and EWT. But recently as the chart shows, the Asian Tigers are starting to experience inflation destruction. And this despite the Chinmei Sung Bloomberg report: “Taiwan’s industrial production rose for a 17th straight month in January, supporting the case for policy makers to raise borrowing costs further next month.  Output advanced 17.19% from a year earlier, after gaining a revised 18.93% in December”.

And while the early beneficiaries of quantitative easing deflated, the moneyness of QE2 continued strong in  the Small Cap Pure Value, RZV, the consumer discretionary, XLYS, the Nasdaq 100, QTEC, the Russell 2000 Growth, IWO, the Internet Retailers, HHH, Semiconductors, XSD, the Metal Manufacturers, XME, the Dow Energy Service, IEZ, and the Small Cap Energy Shares, XLES, as is seen in the chart of EEM,  RZV, XLYS, QTEC, IWO, HHH, XSD, XME, IEZ, XLES.     

But seigniorage failed February 22, 2011 as World Stocks, ACWI, World Currencies, DBV, and Emerging Market Currencies, CEW, turned lower, as quantitative easing exhausted.

Failure of seigniorage comes from the fall lower in distressed investments, like those in mutual fund, FAGIX, which constitute a large part of the US Federal Reserve’s balance sheet, and which trade like Junk Bonds, JNK, served to underwrite the recovery of the last two years.  

Weekly Chart of Junk Bonds, JNK, shows a rise from 22 to 40 since Ben Bernanke established his global seigniorage.

Weekly Chart of distressed investments, FAGIX, shows a rise from 4.5 to 9.5 since Ben Bernanke established QE2. The current monetary order has been built upon one man’s seigniorage of distressed investments.  

Also the turn lower in junk bonds, JNK, from its recent high, and a topping out in world government bonds, BWX, serves as evidence to the end of US central bank seigniorage. Failure of seigniorage is also sen in the ratio of US Stocks, VTI:TLT,  relative to US Government Note, and in the ratio of world stocks relative to world government bonds, VT:BWX, both turning lower. Without seigniorage world stocks, ACWI,  will fall precipitously world wide. And economic expansion will turn to economic contraction.

The Morgan Stanley Cyclical Index, $CYC, fell lower; its fall communicates an end to the current growth cycle. Given that this growth cycle, and the rise in the Morgan Stanley Cyclical Index, came via the extreme use of the seigniorage of QE, its reasonable to believe that there will be a dramatic fall lower in stock value, and very soon a downturn in economic reports such as Capitol Goods Orders, Industrial Production, Exports, and Bloomberg Financial Conditions Index, as quantitative easing continues to exhaust, effecting deleveraging both in stock market value and in economic activity as well.

The fall lower in the Industrial stocks, IYJ, comes at the same time as the fall lower in the Transportation stocks, IYT, and communicates the Dow Theory principle that a bear market has commenced — as industrial stocks and transportation stocks make market turns together.

This bear market will be the bear market of all bear markets, as the seigniorage of the long enduring Milton Friedman Free To Choose Currency Regime developed over the last forty years has failed.

The where-with-all since the last financial collapse, that is the subprime collapse, has come via quantitative easing 1 and quantitative easing 2. The seigniorage, that is the moneyness, came via an asset swap, where Ben Bernanke, traded out money good US Treasuries for distressed securities, like those traded by mutual fund FAGIX. For the most part, then the banks placed the US Treasuries into Excess Reserve with the US Federal Reserve. The distressed investments, and the Excess Reserves have been the great springboard of investment growth, but now stocks globally have failed.   

The snap declines in leading sectors document that a bear market has commenced.

Furthermore, the dynamics in the charts of the 200% ETNs, and ETFs, give clear, cogent, and convincing evidence that a market turn has occurred:  Agriculture, DAG, Russell 2000, URTY, Utilities, UPW, and Semiconductors, USD.

The chart of Base Metals, DBB, clearly shows a turn lower; turning global industrial metal miners, such as Companhia Vale do Rio Doce, VALE,  

The chart of Sunrise Living, SRZ, gives a finale salute to the Age of Leverage that came through US Central Bank Seigniorage as well as Yen Carry Trade Investing courtesy of the Bank of Japan.  

On a day when most stocks rallied, Solar Stocks, KWT, fell lower. All of following solar stocks will be fast fallers in the Age of Deleveraging: Trina Solar, TSL, SunPower Corp, SPWRA, GT Solar, SOLR, LDK Solar, LDK.

The chart of the S&P Weekly, SPY Weekly, as well as World Stocks Weekly, ACWI Weekly, both show that an Elliott Wave 3 Down has commenced in each; with the S&P, SPY, falling to 130.93 and the World Stocks, ACWI, falling to 48.97.

The chart of world stocks daily, ACWI, is most telling; it shows the three white soldiers patten rise to a value of 49.24, suggesting a reversal of rally is at hand.

The chart of world stocks monthly, ACWI, shows February 2011’s 2.3% gain cresting up into an Elliott Wave 2 High and ready to enter into an Elliott Wave 3 Down. The 3 Waves are the most dramatic and sweeping of all; they build the bulk of the wealth on the way up and destroy practically all the wealth on the way down. What is coming is total destruction of all fiat wealth. The world entered into Kondratieff Winter on February 22, 2011.

5) Bonds rose as stocks topped out and turned lower, giving confirmation that a bear market has commenced.
For the last eleven trading days, the notational value of Bonds, BND, rose as world stocks, ACWI, topped out and turned lower.   

This as Sapna Maheshwari and Ashley Lutz of Bloomberg report: “U.S. company bond sales tumbled 74% this week to the lowest in 2011 as growing tensions in the Middle East shook markets.  McKesson … led companies selling $5.69 billion of debt, the least since the week ended Dec. 31 … That compares with $21.8 billion of issuance in the five days ended Feb. 18.”
 
Allan Swanoski writes in Top News: “After mounting for the last four months, the 2-10-year yield curve has been flattening for most of the month. The curve was currently at two hundred and seventy three basis points, the flattest since Jan. 13.”

The chart of Bonds, BND, shows a crest up into an Elliott Wave 2 Completion and ready to commence into an Elliott Wave 3 Down. Similar wave structure is found in most all bonds: BND, LQD, BLV, PICB, BWX, EDV, TLT, IEI, JNK, MUB, CMF, MBB, SHY, BAB, BABS, IEF, TIP, ZROZ, MINT,

Failure of seigniorage means that both bonds, BND, and stocks, ACWI, will be falling lower together. I fully expect the 30 10 Leverage Curve, $TYX:$TNX, which is the inverse of the 10 30 Yield Curve, which has steepened since the beginning of the February 2011, to now begin to flatten once again, deleveraging investments even more out of the longer duration US Government bonds.

The chart of the 30 10 Leverage Curve Monthly, $TYX;$TNX Monthly, shows the dramatic leverage that has come to investors in stock mutual funds and bond mutual funds, like GSUAX, since the War On Terror was declared and since Alan Greenspan, the czar of credit liquidity, lowered interest rates.

It was the HUI Precious Metal, ^HUI, investors who rode the leverage curve up in mutual funds such as USAA Precious Metals, USAGX. But now even the best of breed mutual funds such as TCW Small Cap Growth TGSCX, and Fidelity Select Software and Computer, FSCSX, are coming under inflation destruction as Quantitative Easing has failed as is seen in the USAGX, TGSCX, and FSCSX

The chart of the gold mining stocks relative to gold, GDX:GLD, shows that gold mining stocks disconnected from the price of gold and fell lower with other stocks this week. The age of profitably investing long in gold mining stocks, GDX, and the junior gold mining stocks, GDXJ, as well as exploratory silver mining stocks, such as Silver Standard Mining Resources, SSRI, is done and over. Tremendous amounts of yen carry trade lending, obtained at 0.25% to 0.50% interest from the Bank of Japan and its lending partners on Wall Street and in London’s Financial District drove Silver Standard Mining Resources, seen in this chart, up over the years. But now, the chart of the Optimized Carry Trade ETN, ICI, shows it too has turned lower in an Elliott Wave 3 Down. Lacking support from US Central Bank seigniorage as well as carry trade lending from the bank of japan, the great growth stocks such as Freeport McMoran Copper and Gold, FCX, as well the copper mining stocks, COPX, as well as BHP Billiton, BHP, are doomed to fall lower and lower.  The chart of FCX shows that it has risen to the middle of a broadening top pattern.

The Senators who approved the repeal of the Glass Steagall Act, and The Fed Chief Ben Bernanke remind me so much of The Cat In The Hat, come alive, that is the Dr. Seuss Character who wearing a tall, red and white-striped hat and red bow tie, who led the children in a riotous party. Will the character in today’s real life story, be able to put our economic house in order, as the bond vigilantes and the currency traders make further inroads?  

6) … Canada And US Leaders announce a framework agreement for perimeter security and economic competitiveness.
On February 4, 2011, The Prime Minister of Canada website released the Declaration by the Prime Minister of Canada and the President of the United States of America of a framework agreement for Perimeter Security and Economic Competitiveness.

And also on February 4, 2011, The Prime Minister of Canada website released the the announcement of another framework agreement establishing The Bilateral Regulatory Cooperation Council, RCC.

The Canadian Civil Liberties Association relates that on February 4th, 2011, Canada and the US issued the “Declaration on a Shared Vision for Perimeter Security and Economic Competitiveness”. The Declaration commits both countries to create a North American Security Perimeter – where borders will be kept “open” to legitimate travelers and trade, and “closed” to criminals and “terrorist elements.” Four key areas will be pursued:  (1) addressing threats early, (2) economic growth and jobs, (3) integrated cross-border law enforcement, and (4) critical infrastructure and cyber-security.  Prime Minister Harper stated that “shared information, joint planning, compatible procedures and inspection technology will all be key tools”. Economic gains are supposed to be realized by removing regulatory barriers, harmonizing rules and reducing border congestion for manufacturers.

Luiza Ch. Savage of The Bilateralist provides the Text Of Obama-Harper Border Declaration

The North American Continent was announced as a region of global governance at Baylor Baptist University by the leaders, Vincent Fox, Paul Martin and George Bush, with the Security and Prosperity Partnership of North America on March 23, 2005, with documentation as follows: ..…. Baylor TV Coverage Of The Trilateral Summit News Conference …… President Meets With President Fox and Prime Minister Martin At Baylor University Waco, Texas  …… Baylor Has a Proven Record of Hosting White House Events.

Thus, Baylor served as host for President Bush’s historic “Security and Prosperity Partnership for North America” meeting with Mexican President Vicente Fox and Canadian Prime Minister Paul Martin. The Armstrong Browning Library was the venue for the leaders’ meeting, which was followed by a news conference in the Bill Daniel Student Center’s Barfield Drawing Room.

Andrew Gavin Marshall writes in Global Research.ca article Security and Prosperity Partnership of North America (SPP): Security and prosperity for whom?  “A new task force, called the “Independent Task Force on the Future of North America” in conjunction with the Mexican Council on Foreign Relations and the U.S.’s most powerful think tank, the Council on Foreign Relations (CFR), founded by the Rockefeller and Morgan families in 1921.”

“This task force released a statement on March 14, 2005 entitled, “Trinational call for a North American economic and security community by 2010.” In the Trinational Call, it was recommended that the North America nations create “a community defined by a common external tariff and an outer security perimeter,” and to “harmonize” the areas of energy, security, education, military, immigration, resources, and the economy.”

“Nine days after this recommendation was issued, Bush, Martin, and Fox signed the Security and Prosperity Partnership of North America (SPP), and in the joint statement explained it would, “implement common border security and bioprotection [enhanced surveillance] strategies, enhance critical infrastructure protection, implement a common approach to emergency response, implement improvements in aviation and maritime security, combat transnational threats, enhance intelligence partnerships, promote sectoral collaboration in energy, transportation, financial services, technology, and other areas to facilitate business, [and] reduce the costs of trade.” The SPP agreement oversees the creation of SPP “working groups” in each country, which have a mandate of overseeing “harmonization,” or “integration,” in over 300 policy areas.”

“In January of 2006, the Council of the Americas and the North American Business Council issued a report titled, “Findings of the Public/Private Sector Dialogue on the Security and Prosperity Partnership of North America,” which called for the establishment of a “North American competitiveness council” to advise governments on the implementation of ‘deep integration.’ The press release (which can be found at spp.gov, “Report to Leaders August 2006”) announced the formation of the North American Competitiveness Council (NACC), which “provides a voice and a formal role for the private sector” whose job is to advise the SPP ministers in their respective governments. Current Canadian SPP ministers are Maxime Bernier (Foreign Affairs), Jim Prentice (Industry) and Stockwell Day.”

“The NACC is run out of the U.S. Chamber of Commerce and with the Council of the Americas, and is made up of corporate leaders from each of the three countries. “

“On September 12 to 14, 2006, business and government representatives from the three North American countries met in secret, with no media coverage, at the Banff Springs Hotel and convened the North American Forum. Judicial Watch, a U.S. public watchdog group got declassified government documents through a Freedom of Information Act request and made the documents available on their website. These documents reveal the discussions and membership in the secret meetings. The Canadian co-chair of the meeting was former Alberta premier Peter Lougheed, and Canadian participants included Day, D’Aquino (also a member of the NACC), all NACC corporate representatives, and John Manley.”

“The SPP is not about “security” or “prosperity” (except for the very few over the many), but is rather about forming a North American Union. When Vicente Fox recently appeared on The Daily Show, Jon Stewart asked him about NAFTA, of which Fox stated, “NAFTA’s been good. As a matter of fact we should have a new vision, go further, integrating,” and Fox went on to discuss the “solidarity” of the European Union. When asked if he wanted a North American Union, and if it would include Canada, Fox said, “Long term, yes.” On May 16, 2002 Fox spoke at Club 21 in Madrid, and stated, “Eventually, our long-range objective is to establish with the United States, but also with Canada, our other regional partner, an ensemble of connections and institutions similar to those created by the European Union.””

And now Keith Jones in WSWS.org article Canada And US Launch Continental Security Perimeter Talks documents how Canada’s Prime Minister and the United States’ President have further waived national sovereignty of their respective nations, by announcement of a Framework Agreement, at the North American Security Perimeter talks in early February 2011; and relates they have appointed two bodies of stakeholders, that is task groups, to effect their integration plans, the Beyond the Border Working Group, and the United States Canada Regulatory Cooperation Council.  

Thus, clearly a region of global governance has formed in North America, where state corporatism, that is  statism rules. Here sovereignty is not vested in people, or in sovereign nations, but in a regional collective governed by a President and two Premiers, and overseen by stakeholders out of government, industry, commerce, investment and banking. Global governance, in the form of global corporatism, supersedes and replaces democracy, constitutional law, as well as any and all traditional forms of the rule of law.     

7) … We will see stagflation regardless of oil.
By Jeff Harding, writes in the Daily Capitalist: “We will see stagflation regardless of oil.

“As I pointed out in “A Note on Inflation: It’s Here,” the forces of inflation are already in motion and its effects are starting to show up, one of which is price inflation.”

“Again, we need to be mindful of what is “inflation:” it is always an increase in money supply. One of the effects of inflation is price increases. Other effects, even more serious, include the destruction of real capital (that is, capital saved from production or labor, not from printing fiat money). The destruction of real capital accompanying inflation is the only explanation for stagflation.”

“The result of an oil shock will add to our economic woes, compounding the recessionary side of stagflation.”

“There has been a lot of buzz about stagflation in the mainstream media lately. Most economists pooh-pooh the idea. The reason is that they don’t understand inflation, mostly confusing price increases as a cause of something bad rather than an effect of something bad.”

8) … Some have bet profitably on a rise in inflation.    
I am not a wealthy individual; my limited investment wealth is in gold bullion, as I saw the investment demand for gold coming long ago. There be many who are wealthy, and some have bet that inflation will rise; they have profited from investing in inflation swaps such as 2-year inflation swaps, and 5-year inflation swaps.

Shamim Adam of Bloomberg report:  “Accelerating inflation from Singapore to Vietnam is set to spur higher interest rates and currency gains in Asian economies.  Singapore’s inflation rate rose to a two-year high of 5.5% in January, while prices in Malaysia climbed at the fastest pace since mid-2009 … Vietnam’s consumer prices gained the most in 24 months in February.”

The bond vigilantes seized control of the interest rate on the 30 Year US Government Bond, $TYX, in September 2010, and the rate on the 10 Year US Government Note, $TNX, deleveraging investors out of the 30 year US Government Bond, EDV, and the US Government Note, TLT as Ben Bernanke’s QE 2 constitutes monetization of debt which resulted in the debasement of the US Dollar, $USD which fell from 83 to 81. And then in early January 2011, the currency traders enlarged their global currency war against the world central banks, of competitive currency devaluations, that is competitive currency devaluations, by calling emerging currencies, CEW, lower, which in turn created inflation destruction and debt deflation in the emerging market stocks, EEM.       

9) … The credit crunch continues in Europe
Keith Jenkins of Bloomberg writes:  “The European Central Bank’s efforts to stop banks running short of cash are distorting money-market rates as traders try to anticipate when that flow of emergency liquidity might start to dry up.  The region’s smaller lenders, ostracized in the interbank market, are reliant on the ECB’s open market operations for funds. Bigger financial institutions, meantime, are parking excess funds back with the … central bank.”

10) ….. At market tops exuberant buyers go all in on margin.
Pragmatic Capitalism reports Buyers lever up on margin as short sellers disappear

11) … Doug Noland writes of (Increasingly Unwieldy) Monetary Disorder.
Doug Noland of Prudent Bear writes of (Increasingly Unwieldy) Monetary Disorder: The Federal Reserve’s balance sheet has expanded almost $225bn over the past 16 weeks.  International (global central bank) “reserve assets” have jumped $1.5 TN in 12 months.  In just two years, “reserve assets” have ballooned an incredible $2.6 TN, or about 40%, to $9.3 TN (reserves were about $3.0 TN to begin 2004).  There’s been nothing comparable to this in the history of central banking – in the history of “money.”  The resulting liquidity onslaught has inflated global securities and commodity prices, distorted market perceptions of risk and liquidity, depressed global yields and fomented speculative excess in any market that trades.  I have referred to this backdrop as one of “Monetary Disorder.”

Monetary Disorder can certainly fester for some time under the façade of a seemingly healthy environment.  As we have witnessed, global equities prices have been a prime beneficiary of global reflationary dynamics.  And there is nothing like the tonic of inflating stock prices to bolster confidence and embolden the risk-takers.  Ebullient markets, then, lead economic expansion and provide seeming confirmation of the bullish point of view.  Yet there is no escaping the instability lurking just beneath the fragile surface.

It is said that hedge fund assets (and leverage!) have returned to pre-crisis levels.  Surely, global sovereign wealth funds have grown only more gigantic.  And it is worth noting that China’s “reserve assets” have jumped 46% in only two years to an incredible $2.847 TN.  The world is awash in liquidity/”purchasing power” like never before.  This is all worth keeping in mind as we contemplate the likelihood of ongoing unrest in the Middle East and potential supply and price shocks.  The Goldman Sachs Commodities Index ended the day at the highest level since August 2008.

The global liquidity and speculation backdrop ensures that any important commodity facing potential supply constraint enjoys a propensity for spectacular price inflation – a dynamic now appreciated by companies, speculators and policymakers alike.  This inflationary manifestation was really taking hold back in 2008 before the onset of the global Credit crisis.  Of late, it has returned with a vengeance throughout the agriculture commodities and food complex.  Yet, with stock markets booming and confidence running high, most have been content to disregard this troubling inflation dynamic.  The markets this week abruptly turned somewhat less complacent (at least for a few sessions).

The Middle East crisis took a decided turn for the worst this week with the eruption of violence and chaos throughout Libya.  The markets now confront great uncertainty as to how developments will unfold throughout the region.  Recent events certainly increase the probability for potentially problematic energy supply disruptions and resulting price shocks.  A fragile global recovery and inflated markets create a susceptible backdrop, especially with optimism and speculative zeal having become so prominent throughout global markets.

With crude (West Texas Intermediate) surpassing $100 this week – and with prospects high that Middle East instability won’t be dissipating anytime soon – analysts are scurrying to fashion views as to the impact surging energy prices will have on corporate profits, consumer spending, inflation and global growth.  To say that unfolding circumstances create extreme uncertainty is no overstatement.

This week, Saudi Arabia’s King Abdullah announced plans to increase social spending by $36bn, including a 15% pay increase for government employees and $10bn for low-income housing.  At the top of the list of oil exporters (and with $440bn of international reserves), Saudi Arabia enjoys unusual capacity to ameliorate its underclass.  The markets are watching Saudi Arabia with keen interest, at this point confident that the kingdom has the capacity both to hold social unrest at bay and to pump additional barrels.

To be a fly on the wall in Beijing…  Chinese policymakers must be intensively analyzing developments throughout the Middle East.  I’ll assume they are taking great interest in the House of Saud’s approach to placating the masses.  And while China is definitely no Saudi Arabia or Egypt, there is simmering social tension that provides authorities constant worry.  China may not have a huge unemployed youth problem, yet inflation and Bubble Economy Dynamics have engendered huge wealth disparities and attendant social instability.

To this point, policy making has been straddling a fence.  There has been a certain determination to dampen home price appreciation and other Bubble effects in urban locations, while at the same time moving to significantly increase minimum wages and boost construction of low-income housing.  There has been a focus on addressing real estate excesses, with the expectation that adept economic management will allow this “tightening” to be accomplished without sacrificing ongoing strong growth.  This is the type of complex economic management that nurtures a high risk of monetary mismanagement.

Today from Bloomberg News:  “China may slow the pace of tightening ‘significantly’ in coming months as policy makers are likely to need time to access the impact of the ‘intensive and aggressive tightening’ measures introduced the past five months, Daiwa Securities Capital Markets Co. said… The political turmoil in some African countries and increased uncertainty about the global economy should make China ‘more cautious’ about implementing further tightening measures, according to the report by Mingchun Sun, analyst at Daiwa.”

First of all, the notion of what amounts to “intensive and aggressive tightening” has evolved considerably since Paul Volcker manned the helm of the Federal Reserve.  With borrowing rates about 6% and January bank loan growth of $180bn, China remains some distance away from tight “money.”  At the same time, the view that recent events might provide the impetus for Chinese authorities to take a more cautious approach to further “tightening” does resonate.

From the perspective of my analytical framework, China is in the midst of its “terminal phase” of Credit Bubble excess.  I have posited that China, with the extraordinary dimensions of its population, its underdeveloped north, and the nation’s $2.8 TN hoard of reserves, has perhaps a unique capacity to prolong its historic boom.  I have also noted that it is generally typical for policymakers to turn increasingly timid as the risks of bursting Bubbles compound.  China has reached the point where it must move forcefully in order to rein in excess or risk things running completely out of control.  I have feared that policymakers would along the way find reason to lose their nerve.

The recent surge in food and energy prices comes at a critical juncture for global policymakers.  The inflationary backdrop beckons for meaningful synchronized monetary tightening.  The seriousness of unfolding inflationary risks is becoming difficult to downplay.  Yet the Federal Reserve, the guardian of the world’s reserve currency, won’t even slow its pace of quantitative easing, let alone reverse course and tighten.  Incredibly, global inflationary dynamics do not factor into the Fed’s policy framework.  The Europeans have begun to prepare the markets for an increase in rates, although when this does occur it will hardly qualify as monetary restraint.  The Bank of Japan won’t be raising rates anytime soon, and I wouldn’t be surprised if other Asian central banks actually step back a bit from their baby-step approach to rate hikes.

The People’s Bank of China – “guardian” of the world’s largest population, most robust economy, most imposing Credit Bubble and most gluttonous appetite for all things food, energy and commodities – was poised to play a pivotal role in global finance; it appeared on the brink of providing a source of monetary restraint.  Recent developments could change everything.  Instead of potential restraint, China might adjust course and become an even greater source of global demand.

First, if China turns cautious on its tightening program, this will most likely lead to another year of stronger-than-expected economic growth (how long until China reaches 25 million annual vehicle sales?).  Second, surging food and energy prices may induce the Chinese (along with others) to move more aggressively toward building “strategic stockpiles” of everything necessary to sustain strong growth and buoy social spirits.  Third, the authorities may view the popularity of global protests and the Facebook phenomenon as cause to approach their objective of bolstering incomes and consumption for its enormous poor underclass even more aggressively.  The potential to unleash additional purchasing power is enormous.

In a world with some semblance of normality, one would look at surging energy prices as portending restraints on growth.  Global bond markets would fret at breathtaking surges in commodities prices – along with the specter of hoarding and inflation psychology becoming firmly entrenched.  But these are the most abnormal of times.  It is not beyond the realm of possibility that a booming Asia might actually relax and further monetize higher food and energy prices.  Global bond markets – that in the past could be counted on to help dampen incipient inflation through the imposition of higher yields – remain these days fixated on the likelihood that the Fed and global central bankers will for an extended period ignore inflation and stick with ultra-loose money.

The current backdrop creates extraordinary uncertainty.

From an analytical perspective, things can go in many different directions from here.

There is no alternative than to follow developments diligently, keeping an open mind and re-evaluating often.  But the makings for a serious inflation problem seem to become more cohesive by the week.  Global central bankers are determined to bring new meaning to the term “behind the curve,” which connotes eventual “hard landings.”  To be sure, US “CPI” these days provides an especially poor gauge of monetary conditions and the appropriateness of policy.  

And when writing of an “inflation problem,” I am thinking more in terms of the global market, economic, social and political havoc fomented from an extended period of (increasingly unwieldy) Monetary Disorder.  

12) The Automatic Earth reports on exporting speculative debt.
The Automatic Earth relates: The connection between the Fed, commodity price increases and social turmoil may have entered the mainstream dialogue, but it is exactly when the mainstream recognizes a financial trend that it soon reverses. Investors amassed on one side of a trade will be forced to quickly shift to the other side, and the “inflation” exported by the Fed will be revealed to be just another speculative romp crafted for the benefit of those who made out like bandits during the last one. As The Automatic Earth has repeatedly stressed, however, a deflationary price collapse will make necessary commodities even less affordable for the average person, due to a dramatic reduction in private revenues and public benefits. So while the superficial financial trend may change, the social turmoil will continue on, and next time Egypt’s revolution may not be so “peaceful.

13) A Chancellor and a Banker will arise out of crisis to provide order and a new seigniorage.
Given the extent of and unwieldy character of the current monetary disorder, gotterdammerung, an investment flameout, is inevitable. Soon out of the ensuing chaos a global Chancellor, that is a Sovereign, and a global Banker, that is a Seignior, will arise to establish a new global order, a new and universal seigniorage, with austerity for all.

14)  … Keywords and symbols
The Sovereign, The Seignior, inflation destruction, monetization of debt, currency debasement, debases currency, monetizes debt, Ireland Bailout Agreement, Irish Bailout Agreement, national sovereignty, economic governance, global governance, Club of Rome, state corporatism, statism, EFSF, default mechanism, eurozone default mechanism, SPP, Security and Prosperity Partnership, Perimeter Security, Perimeter Security and Economic Competitiveness, framework agreements, inflation swaps, investment demand for gold, European Bailout, Ireland Bailout, Stagflation, Monetary Disorder, Inflation Swaps, Morgan Stanley Cyclical Index, Leverage Curve

FXE, UUP, FXC, FXA, SPY, ACWI, EEM, BND, LQD, BLV, PICB, BWX, EDV, TLT, IEI, JNK, MUB, CMF, MBB, SHY, BAB, BABS, IEF, TIP, ZROZ, MINT, GDX, GLD, KWT, SSRI, FCX, VALE, DBB, DAG, URTY, UPW, COPX, USD, EWY, EWT, ICI, SRZ, BHP, SPWRA, TSL, SOLR, LDK,

Nullification Is Not About Splitting Up The USA, Rather Its A Way Of Asserting States’ Rights, Libertarians Say

February 25, 2011

Joe Daddy writes Montana Governor: ‘Tea Party’ Leading USA Into Civil War: Montana’s Governor’s is concerned that the Tea Party is leading the USA into civil war. But, a tea party lawmaker said raising the specter of a civil war is plain old malarkey. “Nullification is not about splitting this union apart,” freshman Rep. Derek Skees said. “Nullification is just one more way for us to tell the federal government: ‘That is not right.” The nullification debate reached a fever pitch this week when Montana tea party conservatives mustered enough votes in the House to pass a 17-point sovereignty declaration. “States retain the right of protecting all freedoms of individual persons from federal incursion,” the measure in part reads. Now, it heads to the Senate, where ardent states’ rights conservatives have less influence and its fate is less certain. Governor Schweitzer, meanwhile, is getting ready for the bills that may arrive on his desk. On Wednesday, he got a new cattle brand from the state livestock agency that reads “VETO.” A branding iron is being made for the sovereignty resolution. “Ain’t nobody in the history of Montana has had so many danged ornery critters that needed branding,” he said.

Leon Moe writes the article Why States Must Nullify Unconstitutional Acts of Congress: Instructions from Hamilton, Madison & Jefferson

In response to these authors, I offer bible prophecy of Revelation 13:3-4, which presents that out of Götterdämmerung, that is an investment meltdown and flame out, ten regions of governance will  arise, as called for the Club of Rome in 1974, Revelation 13:1-2

And Revelation 13:5-10 presents a global Chancellor, The Sovereign, who will rise to rule mankind. And who, according to Revelation 13:11-18, will be accompanied by a global Banker, The Seignior.

February 22, 2011 Marked The End Of The Age Of Freedom … And Commenced The Beginning Of The Age Of Global Governance With Austerity For All

February 24, 2011

Introduction
February 22, 1011 was a transitional day, a pivotal day where the world passed from the Age of Freedom into the age of Global Governance with the passing of a smoking ban and the exhaustion of quantitative easing.

A smoking ban was signed by the mayor of New York terminating one’s freedom to smoke in public; and the seigniorage of the US Central bank failed as stocks turned lower on exhaustion of Ben Bernanke’s QE 2.

Both events evidence are precursors commencing the Age of Global Governance.

1) … Smoking will be banned beginning May 23, 2011 in New York City and seigniorage failed Fberuary 22, 2011.
Michael Howard Saul of the New York Times reports smoking in parks, beaches, boardwalks, pedestrian plazas and other public spaces will be banned beginning May 23, 2011 in NYC as Mayor Michael Bloomberg signed anti smoking legislation on February 22, 2011.

Such a smoking ban will be very hard on the people who smoke.

Most who smoke have a mental illness. Smoking is a marker of a mental health problem. It usually goes hand in hand with alcohol consumption. That is to say, those who smoke, also consume alcohol. I encourage anyone who smokes to go for psychiatric counseling and/or a medical doctor visit, to get medications to help quit smoking.

The mayor’s edict could be a good thing as it gives a sobering wake up call to those with a smoking habit — that it is time for resolution of the underlying issues involved.

And the mayor’s edict should be a clarion wake up call to libertarians that the age of Free To Choose And Free To Be is ending politically, financially and economically.

The Apostle John had a vision of the days of which we are now living in and wrote of it in the bible prophecy of Revelation 13:1-4, where he saw a beast system rising to be sovereign from the sea of humanity integrating mankind’s seven institutions and governing over ten world-wide regions, these being the ten regions of global governance called for by the Club of Rome in 1974. And the Apostle vision of Revelation 13:5-10 presents a global Chancellor, The Sovereign, who will rise to rule mankind. And who according to Revelation 13:11-18 will be accompanied by a global Banker, The Seignior.

The seigniorage of the Milton Friedman Free To Choose Currency Regime, consisting of the distressed investments held by the US Federal Reserve, such as  FAGIX, as well as the 30 Year Government Bonds, EDV, and 10 Year US Government Notes, TLT, surged in both September 2010, and December 2010. But seigniorage failed February 22, 2011; as all of these have now turned lower in value.

Seigniorage is no longer providing moneyness, to world stocks, VT, and world small cap stocks, VSS.  There will be soon be a follow on effect whereby ”in delayed time”, there will come a downturn in economic reports such as Capitol Goods Orders, Industrial Production, Exports, and Bloomberg Financial Conditions Index, as quantitative easing continues to exhaust.  

Debt deflation is the contraction and crisis that follows credit expansion.  One of the most famous quotations of Austrian economist Ludwig von Mises is from page 572 of Human Action … “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.”

Exhaustion of quantitative easing commenced debt deflation on February 22, 2011, when stocks fell across the board. Failure of seigniorage is seen a documented in a failure of stocks globally.

The Morgan Stanley Cyclical Index, $CYC, fell from 1127 to 1088,  Four of its components have experienced significant deterioration; these being Temple Inland, TIN, International Paper, IP, Johnson Controls,JCI, and Deere, DE .

And the Coal Producers, KOL, fell to 45.53,

And the South Korea Shares, EWY, fell to 58.09,

And the Taiwan Shares, EWT, fell to 14.52,

And the Copper Producers, COPX, fell to 18.62,

And the Metal Manufacturing, XME, fell to 69.79,

And the Semiconductors, XSD, fell to 60.85,

And the Nasdaq 100, QTEC, fell to 27.31,

And the Russell 2000, IWO, fell to 91.03,

And the German Shares, EWG, to 25.68,

And the Canada Small Caps, CNDA, fell to 34.75,

And the Real Estate, IYR, fell to 59.09,

And the Small Cap Energy Shares, XLES, fell to 37.66,

And the Dow Jones Energy Services, IEZ, fell to 63.73,

And the Small Cap Discretionary, XLYS, fell to 28.12,

And the Internet Retailers, HHH, fell to 76.81,

And the Solar Companies, KWT, fell to 13.66,

And the Timber Companies, WOOD, fell to 47.97

And the Small Cap Pure Value, RZV, fell to 40.10,

And the Banks, KBE, fell to 26.47,

And the World Stocks, ACWI, fell to 47.92,

And the S&P, SPY, fell  to 131.83,   

And the Emerging Markets Small Caps, EWX, fell to 51.80,

Small Cap Industrial, XLIS, Small Cap Consumer Discretionary, XLYS, and Small Cap Information Technology, XLKS, are now greatly underperforming Small Cap Energy, XLES, and Small Cap Financial Services, XLFS, and Small Cap Health Care, XLVS, as is seen in the chart of XLES, XLFS, XLVS, XLIS, XYLS, and XLKS

And the ratio of the Developed Market Currencies Relative To Emerging Currencies, DBV:CEW, fell to 1.06.     

All of this occurred as the seigniorage of the US Federal Reserve, as measured by the distressed securities mutual Fund FAGIX, fell 9.80 and the value of Junk Bonds, JNK, fell to 40.41, documenting that quantitative easing is exhausted.

The chart of KBE, XSD, XME, COPX, and EWY shows that debt deflation is underway and that it is global in nature.  

The snap declines in leading sectors document that a bear market has commenced. And the chart of the S&P Weekly, SPY Weekly, as well as World Stocks Weekly, ACWI Weekly, show that an Elliott Wave 3 Down has commenced in both.

QE exhaustion has propelled the world from the Age of Leverage and into the Age of Deleveraging. The world is passing from The Age of Leverage characterised by sovereign debt expansion, currency inflation, credit liquidity, stability, stock and junk bond inflation, economic growth and expansion and prosperity  …  and passing into The Age of Deleveraging characterised by failure of sovereign debt, currency deflation, credit ill-liquidity, instability, stock and junk bond deflation, economic contraction and austerity.

2) …  The libertarians perceive that they are sovereign individuals; they are not.
Libertarians are of the belief that they are sovereign individuals; this group of individuals includes: individualist anarchists, (Lysander Spooner), anarcho-capitalists (Murray Rothbard, John Locke), constitutionalists (Chuck Baldwin), fiscal libertarians (Kristin Davis), objectivists (Ayn Rand), libertarian economists (Milton Friedman), left-libertarians (Noam Chomsky), and anarcho surrealists (Andre Breton).

Yet the truth be told: the leaders of their region, both economic and political, are their sovereigns; as they, the sovereigns meet and announce framework agreements which waive national sovereignty and which establish regional economic governance and and political policy.  

We are living in the age of global governance: when crisis arises, leaders announce policy, that is they govern by announcement. The word, will and way of the leader or leaders becomes the law of the land.  

The socio, economic, and political landscape is completely different from it was pre European Sovereign Debt Crisis time of May 8, 2010.  Crisis arose and governance changed. At the Eurozone May 2010 Summit, The EU Finance and State Leaders announced European Economic Governance and called for Monetary Union with a federal debt agency, the EFSF, with seigniorage authority to issue eurobonds and in so doing they effected a bloodless coup where they waived national sovereignty. Sovereign nations are a principle of a bygone era.

One is no longer a citizen of a nation-state; rather one is a resident in a region of global governance.

Andrew Gavin Marshall in article The Global Political Awakening and the New World Order, The Technological Revolution and the Future of Freedom, Part 1 ….. writes: Strobe Talbott worked as a journalist for Time Magazine for 21 years, and has been a fellow of the Yale Corporation, a trustee of the Hotchkiss School and the Carnegie Endowment for International Peace, a director of the Council on Foreign Relations, the North American Executive Committee of the Trilateral Commission, and the American Association of Rhodes Scholars, and a member of the participating faculty of the World Economic Forum. Talbott served as Deputy Secretary of State from 1994 to 2001 in the Clinton administration and currently sits as President of the Brookings Institution, one of the premier American think tanks. Writing in America Abroad: The Birth Of The Global Nation Time Magazine: July 20, 1992, Mr. Talbott said …..  “within the next hundred years,” …..  “nationhood as we know it will be obsolete; all states will recognize a single, global authority.” He explained:  “All countries are basically social arrangements, accommodations to changing circumstances. No matter how permanent and even sacred they may seem at any one time, in fact they are all artificial and temporary. Through the ages, there has been an overall trend toward larger units claiming sovereignty and, paradoxically, a gradual diminution of how much true sovereignty any one country actually has”.

David Rothkopf, a scholar at the Carnegie Endowment for International Peace, former Deputy Undersecretary of Commerce for International Trade in the Clinton administration, former managing director of Kissinger and Associates, and a member of the Council on Foreign Relations, recently wrote a book titled, “Superclass: The Global Power Elite and the World They are Making.” As a member of that “superclass,” his writing should provide a necessary insight into the construction of this “New World Order.” He states pages on 315-316, “In a world of global movements and threats that don’t present their passports at national borders, it is no longer possible for a nation-state acting alone to fulfill its portion of the social contract.” He wrote that, “progress will continue to be made,” however, it will be challenging, because it “undercuts many national and local power structures and cultural concepts that have foundations deep in the bedrock of human civilization, namely the notion of sovereignty.” He further wrote that, “Mechanisms of global governance are more achievable in today’s environment,” and that these mechanisms “are often creative with temporary solutions to urgent problems that cannot wait for the world to embrace a bigger and more controversial idea like real global government.”

4) …. Austerity will come first to the poorest and then universally to all.
Kyle Turner and Alexander Fangmann in WSWS.org article write Cook County, Illinois To Cut Jobs And Social Services write: “Already on February 14, it was announced that 138 nurses would be laid off at Oak Forest and Provident hospitals, pending approval by a state board. While still accepting walk-in emergency room patients, Provident Hospital, on Chicago’s south side, will also no longer accept ambulances. Ambulances will have to take patients to facilities farther away, risking health and lives. Oak Forest Hospital will be converted from a hospital into a “primary care center,” requiring south suburban residents needing urgent care to seek treatment elsewhere.”

Oak Forest Hospital, 15900 S. Cicero Ave, Oak Forest, IL 60452 website relates: ”Oak Forest Hospital’s inpatient services include: long-term intermediate/supportive care, skilled nursing care, sub acute care, comprehensive rehabilitation, and acute care units. Specialty programs include ventilator, palliative and AIDS units, as well as brain injury rehabilitation, pain management, and vocational services. Oak Forest was one of the first hospitals in the state to establish a program for ventilator-dependent individuals, persons who cannot breathe on their own. The facility now cares for an average of 30-35 patients with ventilator needs who require intensive monitoring and oversight.”

“The rehabilitation unit, which provides comprehensive inpatient therapy and medical services to people with physical and cognitive disabilities, is accredited by the Commission on the Accreditation of Rehabilitation Facilities. During an inpatient stay, a comprehensive team of rehabilitation specialists assists patients in maximizing their abilities. Restoring physical and cognitive skills, after a stroke, for instance, can involve physical, occupational, speech, recreational, and vocational therapies, as well as nursing and psychology. The team is led by a physiatrist, a physician specializing in physical medicine and rehabilitation.”

“The unit is a vital step between acute care and return to the community for persons with disabilities. Follow-up outpatient therapies and services are provided to assist people in living full and active lives after they are discharged. Consistent with the Bureau of Health Services’ emphasis on meeting community needs, Oak Forest is a specialty hospital that also is keenly responsive to the evolving health concerns of its area residents. In the past few years, Oak Forest has initiated programs in Oncology, maternal fetal medicine, and pain management, for example. To stem a high incidence of breast cancer in the community, Oak Forest implemented mammography services, which received a three-year accreditation from the American College of Radiology. Due to the increased number of persons being screened at three affiliated outpatient clinics managed by the Ambulatory and Community Health Network, cancer is being detected earlier and more frequently. As a result, Oak Forest added an oncologists to treat patients closer to home.”

“The hospital rehabilitates a growing number of teenagers who are paralyzed by gunfire, many of whom require ventilator care. Consequently, Oak Forest provides age-specific social and psychological support for the special needs of these adolescents. Hospital staff members have also taken a lead in creating programs to reduce gun violence. A group of long-term patients who are gunshot survivors participate in the “My Life, My Choices” program. They speak out in various settings, encouraging young people to shun the world of gangs and violence. Oak Forest also sponsors a number of other anti-violence initiatives, including a violence prevention health fair for high school students.“

5) … Bible prophecy foretells of a world war between Israel, Iran, Syria, Turkey and other Arab nations that draws in Russia, Germany, Bulgaria, Romania, as well as Turkey.
One can read of this in Jack Kelley’s article The Battle Of Ezekiel 38 on the Grace Through Faith Website.

And bible prophecy of Daniel 9:27 foretells that the world’s Sovereign will one day, after this terrific war, will establish a peace covenant between Israel and Arab nations; in so doing it is very likely that he will insist that an international peacekeeping force be present within both Israel and within Jerusalem and at Israel’s borders.  

Yet the Sovereign will not fully honor that covenant as he will break it after 36 months. “He shall confirm the covenant with many for one week”; here each day represents one year. This important phrase indicates that the event that starts the 70th week, the seven-year tribulation, is the signing of a seven-year covenant between the Sovereign and Israel. The signing of the covenant begins the period called the Tribulation. At the halfway point of the Tribulation, which is three and a half years, the Sovereign will break this covenant with Israel with an event called “The Abomination of Desolation.” It is at this time that God provides a physical place of safety, that is a refuge, for a select group of saints.This also signals there is only three and a half more years remaining before Christ returns to earth to set up His Earthly Kingdom, which will last for a 1,000 years.

It is a given that the covenant between the Sovereign and Israel will permit the Jews to rebuild their temple, where they will once again practice their sacrifices.

6) … Bible prophecy of Revelation 13:17-18, foretells that when currencies collapse, a new worldwide credit system will be installed.
One will either be executed or accept the beast’s seigniorage system consisting of the charagma, or mark, necessary to conduct commercial activity.

7) … The World’s Sovereign has an appointment: he will be on the plains of Megiddo for The Apocalypse, that is, The Battle of Armageddon.
The word Armageddon appears only once in the New Testament that being in Revelation 16:16.  The word comes from Hebrew har məgiddô (הר מגידו), meaning “Mountain of Megiddo or “place surrounded by hills”.  Megiddo was the location of many decisive battles in ancient times.
The King of kings comes forth to do battle with the Sovereign, Revelation 19:11-19; he and the false prophet will be seized and defeated, Revelation 19:20-21.

8) …  The rule of The King, Jesus The Christ, will last for a 1,000 years, and is called the Millenium; it is found in Revelation 20:1-4.
This seventh day will complete the 7,000 years from Adam until the eternal kingdom; for as the Apostle Peter said in  2 Peter 3:8: But, beloved, do not forget this one thing, that with the Lord one day is as a thousand years, and a thousand years as one day. It will be the genuine celebration of the feast day of Sukkoth – The Feast of Tabernacles. The Kingdom begins with The Lord, The Prince of Peace, reigning from Jerusalem; it will be a most happy day.

9) … Suggested Reading
People Get Ready… The Sovereign’s Activity Among The Gentile Nations
Triton World Mission ….  Revelation 13:1-18 | He who has an ear
Theyenguy …. What Does Global Governance Mean?

10) … Keywords and URL
debtdeflation, worldleader, antichrist, theantichrist, the antichrist, thesovereign, austerityforall,

http://tinyurl.com/4khcz2r

The Fundamentals For Continued Economic Growth Have Been Dissolved By QE Exhaustion

February 24, 2011

1) … Introduction
The fundamentals for continued economic growth have been dissolved, as the seigniorage for both stock market and economic growth has exhausted. Seigniorage over the last two years has come via quantitative easing 1 and quantitative easing 2; it has been totally consumed and expended. Now exhaustion of quantitative easing will cause economic contraction, to be seen soon in falling capital goods orders, falling industrial production,  and a falling Bloomberg Financial Conditions Index.

2) … With the exhaustion of quantitative easing, the world is passing through an inflection point.
Seigniorage failed February 22, 2011 as World Stocks, ACWI, World Currencies, DBV, and Emerging Market Currencies, CEW, turned lower, as quantitative easing exhausted.

Exhaustion of quantative easing has turned the World Financials, IXG, lower. The Brazilian Financials, BRAF, Australian Bank, Westpac Banking, WBK, India Bank, HDFC Bank, HDB, the European Financials, EUFN, led by Banco Santender, STD, and the Emerging Market Financials, EMFN, the US Financials, XLF, and Banks, KBE, all fell lower, communicating an end to the seigniorage, that is moneyness provided by quantitative easing and the seigniorage of central banks globally.

Failure of seigniorage comes from the fall lower in distressed investments like those in mutual fund, FAGIX, which constitute a large part of the US Federal Reserve’s balance sheet, and which served to underwrite the recovery of the last two years.  Also the turn lower in junk bonds, JNK, from its recent high, and a topping out in world government bonds, BWX, serves as evidence to the end of US central bank seigniorage. Failure of seigniorage is also sen in the ratio of US Stocks, VTI:TLT,  relative to US Government Note, and in the ratio of world stocks relative to world government bonds, VT:BWX, both turning lower. Without seigniorage, ACWI, world stocks will fall precipitously world wide. And economic expansion will turn to economic contraction.

The Morgan Stanley Cyclical Index, $CYC, fell lower; its fall communicates an end to the current growth cycle. Given that this growth cycle, and the rise in the Morgan Stanley Cyclical Index, came via the extreme use of the seigniorage of QE, its reasonable to believe that there will be a dramatic fall lower in stock value, and very soon a downturn in economic reports such as Capitol Goods Orders, Industrial Production, Exports, and Bloomberg Financial Conditions Index, as quantitative easing continues to exhaust, effecting deleveraging both in stock market value and in economic activity as well.  

The fall lower in the Industrial stocks, IYJ, comes at the same time as the fall lower in the Transportation stocks, IYT, and communicates the Dow Theory principle that a bear market has commenced — as industrial stocks and transportation stocks make market turns together.

This bear market will be the bear market of all bear markets, as the seigniorage of the long enduring Milton Friedman Free To Choose Currency Regime developed over the last forty years has failed.

The where-with-all since the last financial collapse, that is the subprime collapse, has come via quantitative easing 1 and quantitative easing 2. The seigniorage, that is the moneyness, came via an asset swap, where Ben Bernanke, traded out money good US Treasuries for distressed securities, like those traded by mutual fund FAGIX. For the most part, then the banks placed the US Treasuries into Excess Reserve with the US Federal Reserve. The distressed investments, and the Excess Reserves have been the great springboard of investment growth; but now growth shares and the Asian country shares have fallen lower.
 
The Coal Producers, KOL, fell to 45.53. Arch Coal, ACI, has entered an Elliott Wave 3 Down.  

And the South Korea Shares, EWY, fell to 58.09.

And the Taiwan Shares, EWT, fell to 14.52.

And the Copper Producers, COPX, fell to 18.62.

And the Metal Manufacturing, XME, fell to 69.79.

And the Semiconductors, XSD, fell to 60.85,

And the Nasdaq 100, QTEC, fell to 27.31,

And the Russell 2000, IWO, fell to 91.03,

And the German Shares, EWG, to 25.68,

And the Canada Small Caps, CNDA, fell to 34.75,

And the Real Estate, IYR, fell to 59.09; Leading REITS have fallen lower; these include Gilmcher Realty Trust, GRT, and First Industrial Realty Trust, FR,  

And the Small Cap Energy Shares, XLES, fell to 37.66, Clayton Williams Energy, lCWEI, fell to 96.33

And the Dow Jones Energy Services, IEZ, fell to 63.73, National Oil Well Varco, NOV, fell to 77.89.

And the Small Cap Discretionary, XLYS, fell to 28.12,

And the Internet Retailers, HHH, fell to 76.81,

And the Solar Companies, KWT, fell to 13.66,

And the Timber Companies, WOOD, fell to 47.97

And the Small Cap Pure Value, RZV, fell to 40.10,

And the Banks, KBE, fell to 26.47,

And the World Stocks, ACWI, fell to 47.92,

And the S&P, SPY, fell  to 131.83,   

And the Emerging Markets Small Caps, EWX, fell to 51.80,

The snap declines in leading sectors document that a bear market has commenced.

The chart of the S&P Weekly, SPY Weekly, as well as World Stocks Weekly, ACWI Weekly, both show that an Elliott Wave 3 Down has commenced in each.

SPY Weekly,

QE exhaustion has propelled the world from the Age of Leverage and into the Age of Deleveraging.  The world is passing from The Age of Leverage characterised by sovereign debt expansion, currency inflation, credit liquidity, stability, stock and junk bond inflation, economic growth and expansion and prosperity  …  and passing into The Age of Deleveraging characterised by failure of sovereign debt, currency deflation, credit ill-liquidity, instability, stock and junk bond deflation, economic contraction and austerity.

Ben Bernanke in effecting quantitative easing through its TARP Facility effected a bloodless financial, banking, and economic coup d’état that nationalized the banks, and socialized losses to the public while privatizing profits to the corporations. QE created a behemoth of global corporatism which made US Treasuries, distressed securities and junk bonds the money good of worldwide recovery. Now its expansionary inflation has reached its limits, and has turned toxic, destabilizing US Treasuries, EDV, 10 Year US Government Notes, TLT, emerging market bonds, EMB, world government bonds, BWX, emerging market currencies, CEW, emerging market investments, EEM, and the BRICS, EEB.

It was on November, 4, 2010, that the bond vigilantes called the Interest Rate on the US Ten Year Note, $TYX, and the Interest Rate Higher on the 30 Year US Government Bond, $TNX, higher as Ben Bernanke’s QE2 constitutes monetization of debt. The anticipation of Quantitative Easing 2 created a liquidity trade, that was a safe money trade, a money good trade. But investors sold Ben Bernanke’s actual announcement of QE 2, taking profits on Bonds, BND. A flattening in the 30 10 Leverage curve, $TYX:$TNX, which is the inverse of the 10 30 Yield Curve, illustrates the loss of value in the 30 Year US Goverment Bonds, EDV, and the 10 Year US Government Notes, TLT.

Now, debt deflation has come to the greatly inflated ones, that is RZV, XME, XSD, QTEC, HHH, IWO, IYR, KWT, WOOD as Ben Bernanke’s monetization of debt has turned risk appetite to risk avoidance

And debt deflation has even come to the gold mining stocks, GDX, and the junior gold mining shares, GDXJ, as they have fallen lower, having disconnected once again from the price of gold, GLD, as is seen in the chart of gold stocks relative to gold … GDX:GLD.

The HUI Precious metal stocks, ^HUI, have been the great swing trade of all time, now quantitative easing exhaustion has deleveraged even these awesome stocks as is seen in the chart of the HUI Precious Metal Stocks relative to gold $HUI:$GOLD.

Once very desirable precious metal mining companies such as  Nevsun Resources, NSU, and Silver Standard Resources, SSRI, have turned down.

Gold, $GOLD, has risen to be the sovereign currency and storehouse of investment wealth as monetization of debt by the US Federal Reserve has created an investment demand for gold.  

3) … The Yen Carry Trade as a means of leveraging investments for gain has failed: the end of credit as it has been known has commenced.
The borrowing of funds via the Bank of Japan at 0.25 interest is no longer profitable for investment gain; using yen carry funds to invest long no longer leverages stocks as the value of world stocks relative to the Japanese Yen, VT:FXY, has turned down.

The optimized carry ETN, ICI, turned down on announcement of QE2 and has entered an Elliott Wave 3 of 3 Down.  

Thus both spigots of investment liquidity, the US Federal Reserve lowering of interest rates and the provision of carry trade loans by the Bank of Japan have failed. Tthe great world wide investment bubble has popped. The end of credit, as it has been known, has commenced.

The Milton Friedman neoliberal Free To Choose, Floating Currency Regime has come to an end.

A new global banking, and investment regime will soon emerge. It will feature a Seignior, a word which comes from Old English and means top dog banker who takes a cut. He will establish fiscal sovereignty, as well as credit seigniorage, and institute unified regulation of banking globally, as called for, by Timothy Geithner and reported by James Politi and Gillian Tett in the Financial Times.   

4) … The US Dollar may take a bounce higher tomorrow February 25, 2010.
The US Dollar, $USD. closed at 77.10. it may bounce up tomorrow February 25, 2010 and  a large number of these currencies FXY, FXF, SZR, FXE, FXB, FXS ,ICN, FXA, BZF ,BNZ ,FXM ,FXC ,BZF, and CEW, fall lower, as FX currency traders renew their global currency war against the world central bankers, in a new round of competitive currency devaluations, that is competitive currency deflation. One can use this Finviz Screener to create a portfolio of currencies to track currencies.

The other scenario will be for the US Dollar to collapse through its current base of 77; but I think it will bounce higher before doing so.

5) … The inflation caused by Quantitative Easing has destabilized governments world wide.
Quantitative easing drove up investment in the Philippines, EPHE, EPHE, China, YAO, India, INP, Indonesia, IDX, Turkey, TUR, Thailand, THD and Brazil, EWZ.  But the first announcement of  QE2 at Jackson Hole destabilized all, as is seen in the chart of   EPHE, YAO, INP, IDX, TUR, THD, and EWZ

Coal miners, KOL, have lost more investment value than copper miners, COPX, with  Arch Coal, ACI, and ANR Resources, ANR, being prime examples. Other QE exhausted investments include Pharmaceuticals, XPH, Nasdaq Biotechnology, IBB, S&P Biotechnology, XBI, Las Vegas Sands, LVS,  Brazil Financials, BRAF, Airlines, FAA, Shipping,SEA, and Manufactured Housing, CVCO as is seen in the chart of CVCO, FAA, SEA, XHP, XBI, IBB and KOL.

Quantitative easing 1 and 2 created a crack up boom in commodities, particularly agricultural, JJA, and food commodity, FUD, prices.

Governments in Africa, AFK, and the Middle East, MES, are in turmoil; turning down investment in gold rich South Africa, EZA.

The sovereign in Tunisia has been deposed. And now Ambrose Evans Pritchard of the Telegraph reports Saudi ruler offers $36bn to stave off uprising amid warning oil price could double. The king of Saudi Arabia last night announced $36bn (£22bn) of extra benefits for his people in an attempt to stop the wave of Arab uprisings spreading to the world’s biggest oil exporter, as experts warned Brent crude could hit $220 a barrel.

Gregory Viscusi of Bloomberg reports Qaddafi Is No Mubarak; Overthrow May Mean ‘Descent to Chaos’. Muammar Qaddafi may leave Libya without a way of avoiding further bloodshed. After protesters forced out the leaders of Tunisia and Egypt, both countries had constitutions that laid out the transfer of power to caretakers who are now negotiating a path to greater democracy. Libya, where Qaddafi has ruled since his coup overthrew the monarchy in 1969, has no constitution and political parties and unions have been banned for 35 years. “If Qaddafi goes, there will be an enormous vacuum, not just politically, but also socially and economically,” Diederick Vandewalle, a professor at Dartmouth College in New Hampshire, said by telephone. “There’s no organization that could interact between the government and the protesters.” Libya, home of Africa’s largest oil reserves, may be set for a longer and bloodier period of unrest than its neighbors as Qaddafi, the world’s longest serving non-royal leader, clings to power and no alternative leader emerges.

Robert Hutton and Kitty Donaldson Bloomberg reports Cameron Says World May Need to Act to Stop Libyan Repression. The international community may need to take action to halt attempts by the Libyan leader, Muammar Qaddafi, to crush a revolt against his regime, U.K. Prime Minister David Cameron said. It’s still open to Colonel Qaddafi to stop that behavior,” Cameron said in an interview in Qatar yesterday for Al Jazeera television. “More will have to be done if this violence continues.”

Rajhkumar K Shaaw and Shikhar Balwani of Bloomberg India’s Sensex Falls Most Since November 2009 on Inflation, Oil Concerns. India’s benchmark stock index tumbled the most in more than 15 months as food-price gains accelerated and surging oil prices stoked concern inflation will lead to higher interest rates. Tata Motors Ltd., the nation’s biggest truck-maker, sank 7.8 percent, the most in 22 months. Larsen & Toubro Ltd., the largest engineering company, slid 5.3 percent. An index of wholesale farm-product prices rose 11.49 percent in the week ended Feb. 12 from a year earlier, after climbing 11.05 percent the previous week, the commerce ministry said today. Oil surged to the highest in 30 months in London as Libya’s violent uprising cut supplies from Africa’s third-biggest producer. The Bombay Stock Exchange Sensitive Index, or Sensex, slid 545.92, or 3 percent, to 17,632.41 at the 3:30 p.m. close in Mumbai, the biggest drop since Nov. 3, 2009.

Emma Charlton and Keith Jenkins of Bloomberg Greek, Irish Bonds Fall as Crude Oil Gain Damps Demand for Riskier Assets. Greece and Ireland led declines in the bonds of the euro region’s most-indebted nations as escalating violence in Libya pushed the price of oil to a 30- month high, sapping demand for assets perceived to be risky. Greek 10-year yields climbed 11 basis points, or 0.11 percentage point, to 11.86 percent at 4:24 p.m. in London, after reaching 11.89 percent, the highest level since Jan. 11. The Irish 10-year yield surged 17 basis points to 9.32 percent. Portuguese 10-year yields added four basis points to 7.50 percent, while Italian 10-year yields gained one basis point to 4.84 percent.

Zero Hedge Liquidations Coming: Hedge Fund Margin Debt Surges – Total Free Cash Lowest Since July 2007, Just Prior to Quant Wipe Out.

(Hat Tip to Gary of Between The Hedges for the above five news items)

6) … Summary
February 22, 2011, was a day that will live in financial and economic infamy, as quantitative easing failed, and the seigniorage of the US Federal Reserve failed, as the mutual fund FAGIX, and Junk Bonds, JNK, both turned lower. The direction in stock values worldwide, ACWI, is now down.

The United States, has lost totally lost its debt sovereignty, that is its debt and currency seigniorage. The assets of Ben Bernanke’s QE have been used up. Mary Bottari in December 2, 2010 article Ben Bernanke’s Secret Global Bank writes: “Thanks to tremendous public pressure and the recently passed Wall Street reform bill, the U.S. Federal Reserve was forced to reveal the details of its emergency bailout of the financial sector for the first time yesterday. From a quick review of the data now available on the Federal Reserve website, we can see that the Fed took an expansive internationalist view of its role, prompting U.S. Senator Bernie Sanders to ask: “Has the Federal Reserve Become the Central Bank of the world?”

Now. the economic growth expansion capability of that bank’’ assets have been fully exhausted, evidence by the world stocks having turned down.  

Soon there will come Gotterdammerung, an investment flameout, as US Government Treasuries, EDV, the US Government Ten Year Note, TLT, and World Stocks, ACWI, loose more and more value,  Then out of the ensuing chaos a global Chancellor, that is a Sovereign, and a global Banker, that is a Seignior, will arise to establish a new global order, a new and universal Seigniorage with austerity for all.   

7) … Suggested Reading
Ron Hara in 321Gold article QE2 And Its Consequences writes that QE2 monetizes US Government debt and runs the risk of collapsing the US Dollar, $USD.

Wall Street Journal EU Should Surrender Budget Powers … subscribes only (I say a fiscal collective, that is a United States of Europe will be born out of the European Sovereign Debt Crisis and that the EFSF currently constitutes a debt union that monetizes the debt of formerly sovereign nation states)

A New Global Financial And Monetary Order Will Shortly Emerge

February 24, 2011

A new global Financial and Monetary order will short emerge as the Yen carry trade and quantative easing have failed as a means of leveraging Investments for gain and economic growth.

The borrowing of funds via the Bank of Japan at 0.25 interest is no longer profitable for investment gain; using yen carry funds to invest long no longer leverages stocks as the value of world stocks relative to the Japanese Yen, VT:FXY, has turned down. The optimized carry ETN, ICI, turned down on announcement of QE2 and has entered an Elliott Wave 3 of 3 Down.  

Exhaustion of quantative easing has turned the World Financials, IXG, lower. The Brazilian Financials, BRAF, Australian Bank, Westpac Banking, WBK, India Bank, HDFC Bank, HDB, the European Financials, EUFN, led by Banco Santender, STD, and the Emerging Market Financials, EMFN, the US Financials, XLF, and Banks, KBE, all fell lower, communicating an end to the seigniorage, that is moneyness provided by quantitative easing and the seigniorage of central banks globally.

Failure of seigniorage comes from the fall lower in distressed investments like those in mutual fund, FAGIX, which constitute a large part of the US Federal Reserve’s balance sheet, and which served to underwrite the recovery of the last two years.  Also the turn lower seen in the chart of junk bonds, JNK, from its recent high, and a topping out in world government bonds, BWX, serves as evidence to the end of US central bank seigniorage. Failure of seigniorage is also seen in the ratio of US Stocks, VTI:TLT,  relative to US Government Note, and in the ratio of world stocks relative to world government bonds, VT:BWX, both turning lower. Without seigniorage, world stocks, ACWI, and the S&P, SPY, are now going to fall precipitously world wide. And economic expansion will turn to economic contraction.

Thus both spigots of investment liquidity, that is first  the US Federal Reserve lowering of interest rates, and second the provision of carry trade loans by the Bank of Japan, have failed. The great world wide investment bubble has popped. The end of credit, as it has been known, has commenced.

The Milton Friedman neoliberal Free To Choose, Floating Currency Regime has come to an end.

A new global banking, financial and investment regime will soon emerge. It will feature a Seignior, a word which comes from Old English and means top dog banker who takes a cut. He will establish fiscal sovereignty, as well as credit seigniorage, and institute unified regulation of banking globally, as called for, by Timothy Geithner and reported by James Politi and Gillian Tett in the Financial Times.   

Steven M Collins of Prophecy Updates and Commentary writes that God’s ordained future will see  the “seven heads and ten horns” tear down of the existing global financial/monetary order before the beast system even comes into being, and the beast system has 42 months to rule the earth (Revelation 13:5)

Are You Looking For A Home In Riverside California?

February 24, 2011

Are you looking to purchase a home in Riverside? Well then perhaps the newly listed 3 bedroom and 1.5 bath home at  3892 San Mateo Ave, Riverside, CA 92504, is for you.


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