Archive for March, 2011

Rent Controls To Expire In June Under NY State Budget Agreement

March 28, 2011

Nicholas Confessore and Thomas Kaplanny in NY Times article Budget Deal Cuts Aid to Schools and Health Care report “The budget also did not include an extension of state rent regulations, which are set to expire in June, another issue that many Democratic lawmakers from New York City had supported.”

Neither Arab World Revolutions, Nor Anarchist Protests, Nor Trade Union Rallies Will Deter The Development Of Totalitarian Regional Government

March 27, 2011

A … Protest got violent in the UK as anarchists take over a massive trade union rally against austerity cuts. Ian Gallagher and George Arbuthnott in Mail Online write 200 arrested as hardcore anarchists fight police long into night in Battle of Trafalgar Square after 500,000 march against the cut

“Over 200 people were arrested as extremists brought violent chaos to central London yesterday after hijacking the much-heralded trade union protest against public spending cuts.

A massive clear-up operation was underway today after trouble continued to flare late into the night as hundreds of people clashed with officers in Trafalgar Square.

Injuries during the protests. At least 31 police were hurt with 11 of them requiring hospital treatment.

Hundreds laid siege to The Ritz hotel, attacking it with paint and smoke-bombs. A Porsche showroom was also smashed up and upmarket department store Fortnum & Mason was occupied by about 1,000 activists

Campaigners claimed they targeted the 300-year-old store because its owners are at the centre of a £40million tax avoidance row. Protesters also occupied Vodafone, Boots and BHS stores on Oxford Street for the same reason .

Sally Mason, one of the protesters who occupied the store, said: ‘Fortnum & Mason is a symbol of wealth and greed. It is where the Royal Family and the super-rich do their weekly shop and a picnic hamper costs £25,000.

‘This sits in stark contrast to everyone else who is struggling to make ends meet, fill in their tax returns and benefit forms and facing huge student debts, unemployment and the closure or dismantling of local services such as the NHS, libraries and leisure centres.

Owned by retail tycoon Sir Philip Green,Topshop was another main target.

In stark contrast, the daytime demonstration was hailed a ‘fantastic success’ by trade unions as people from across the UK marched through central London.

Organisers estimated between 400,000 and 500,000 teachers, nurses, firefighters, council and NHS workers, other public sector employees, students, pensioners and campaign groups converged on the capital.”

B … Endtime Message Ministry in article Progression of Kingdoms focuses on the apocalyptic chapters of Daniel 2: 29-35 and Daniel 2: 37-44, which reveal that it’s God’s intention to develop totalitarian state capitalism to government mankind.

Daniel’s prophecy begins with the dream of King Nebuchadnezzar of a great statue, comprised of different materials, which outlines the future history of the world; specifically the development of ever increasingly powerful world wide kingdoms to the very end of time.

A revived Roman empire will emerge soon out of sovereign debt, banking and financial crisis. John Whitney Rood, of Brussels, Belgium, in blog article The Coming European 10-Nation Confederation writes in fulfillment of bible prophecy of Daniel 2:40-44, Daniel 7:7, and Daniel 7:23-24, that we are living in the Days of the Iron and Clay Feet Kingdom.

He envisions that totalitarian global economic governance is coming out of Europe, specifically out of Germany. And that in fulfillment of Revelation chapters 12, 13 and 17, that a world Chancellor, the Sovereign, and the World Banker, the Seignior, will establish their base for world leadership in a Euro German empire. And that their world leadership will be equivalent to that of Charlemagne in the former Roman world empire. The EU will very much be an extension of the ancient Roman Empire.

Germany was appointed by God to be an economic superstar which will be the base of operations for the Sovereign and the Seignior. Andy Chiok in Shares Investment article London Bridge Is Falling Down – A Look At Eurozone’s Debt Issues details Germany’s strength and leadership not only in Europe but also in the world.

Vision.org provides insights into the person of the Sovereign in article Final False Messiah.

Summary

While some would like to see a redistributive project, overlooked by a democratically elected EU Economic Government; this will not happen as God ordained from eternity past that a ten toed world government, that is a ten region, one world government form, out of a revived Roman Empire, that being a Euro German Federal Government headed by a Chancellor, that is a Sovereign and a Banker, that is a Seignior.  These two will rise to power through state capitalism, and eventually they will own, the world, lock, stock and barrel, and eventually demand that all mankind worship the Sovereign as God incarnate.

The Seignior will be an global banker or financier, one such as George Sorosl Les Echos reports that Billionaire investor George Soros wrote that banking supervision should be carried out at the European level rather than being left in the hands of national authorities. That could be done by allowing countries to convert sovereign debt into bonds denominated in euros. (Hat Tip to Gary of Between The Hedges)

State Capitalism Is Coming To Rule World Wide

March 25, 2011

1) … Michigan’s Governor Snyder has signed Emergency Financial Manager Legislation which establishes rule of appointed officials. With the EFM legislation,  the word, will and way of appointed stakeholders will be law in Michigan counties, districts and cities. The EFM legislation establishes fiat rule of the sovereigns and corporations to govern on a local basis.  The legislation constitutes financial martial law, abolishes democracy, and establishes state corporate rule; that is state capitalism, otherwise known as state corporatism or statism.  Welcome to the modern feudal corporatism society. It’s now taxation without representation.

A) … Ed Brayton of Michigan Messenger reports Emergency Financial Manager legislation signed into law in Michigan: “Thousands of union workers may have shown up at the Capitol yesterday to protest the loss of collective bargaining rights but it did little to sway Gov. Rick Snyder. The governor signed Emergency Financial Manager legislation into law despite those protests.

Many Democrats and labor unions criticized the legislation as a state power grab that could set up virtual dictatorships and strip power from local elected officials. The Republican governor said the legislation will let the state offer assistance earlier when local governments and school districts are in financial distress and give financial managers better tools to exert change.

For too long in this state, we’ve avoided making the tough decisions,” Snyder said. “But waiting limits options and makes the solutions much more painful.

Emergency managers appointed under this law certainly will not lack for options; they are given near-dictatorial powers to dissolve contracts, sell off assets and even disband elected boards.

B) … Paul B. Farrell of MarketWatch reports New Civil War Erupts, led by Super Rich, GOP: “Not just the 16 new GOP governors in Wisconsin, Michigan, Ohio, Florida, and across America fighting for new powers. Others include: Chamber of Commerce billionaires, Koch brothers, Forbes 400, Karl Rove’s American Crossroads, Grover Norquist’s Americans for Tax Reform — which now has 97% of House Republicans and 85% of the GOP Senators signed on his “no new taxes” pledge — the Tea Party and Reaganomics ideologues.

in September 2008 by Naomi Klein, author of “Shock Doctrine: The Rise of Disaster Capitalism.” Yes, we were warned that the GOP’s Reaganomics ideology would stage a rapid comeback … warned before the market collapsed … before Wall Street was virtually bankrupt. … before Treasury Secretary Henry Paulson conned Congress into $787 billion in bailouts … warned before Obama’s 2008 election.

Free-market Reaganomics roaring back, more powerful than before.

Yes, back in the heat of battle, in September 2008, Klein warned America: “Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of ‘free market’ ideology.” Then the meltdown went nuclear.

Klein warned: “Free market ideology has always been a servant to the interests of capital, and its presence ebbs and flows depending on its usefulness to those interests. During boom times, it’s profitable to preach laissez faire, because an absentee government allows speculative bubbles to inflate.”

But “when those bubbles burst, the ideology becomes a hindrance, and it goes dormant while big government rides to the rescue.” Remember: A week later Paulson was on his knee, begging House Speaker Nancy Pelosi for that $787 billion bailout, to save our incompetent Wall Street banks that caused the meltdown from certain bankruptcy.

“But rest assured,” continued Klein in September 2008, Reaganomics “ideology will come roaring back when the bailouts are done. The massive debts the public is accumulating to bail out the speculators will then become part of a global budget crisis that will be the rationalization for deep cuts to social programs, and for a renewed push to privatize.”’

And yes, America, this war strategy is happening thanks to General Buffett, the new GOP Congress and 16 aggressive anti-democracy GOP governors.

Escalation of new Civil War: GOP dictators killing democracy.

After the 2010 election of these new GOP governors, the new Civil War escalated with a new phase of self-destructive “disaster capitalism,” thanks to the Supreme Court’s Citizen’s United decision. Their strategy was first revealed in the Wisconsin dictator Scott Walker’s war against the unions. Then last week the GOP assault went nuclear.

Michigan’s GOP Gov. Rick Snyder signed the “much despised emergency financial manager legislation into law,” said local ABC news, labeling the law “draconic” for giving the governor new dictatorial powers to appoint “emergency financial managers … to run struggling cities and schools, including the ability to terminate union contracts.”

We learned of Snyder’s democracy-killing coup a week earlier when MSNBC’s Rachel Maddow interviewed Naomi Klein. Maddow also exposed another particularly harsh tactic: Snyder’s $1.7 billion tax hikes against seniors and the poor. He was “not using it to close the budget gap. He is giving it away in the form of $1.8 billion in corporate tax cuts.”

Get it, folks? In the GOP governors new strategy escalating this Civil War, the GOP is robbing the poor to give to the rich.

Maddow exposed the truth behind the GOP’s economic strategy: “It’s not about the budget in Michigan … not about the budget in Wisconsin … not about the budget in Florida … not about the budget in Ohio … what Michiganders have been trying to get the rest of the country to pay attention to is that what these Republicans are doing in the states is not just not about the budget. It’s about something far worse.” Wake up America.

GOP using ‘shock doctrine’ to gain new anti-democracy powers.

The GOP is anti-democracy: With the GOP, “this whole democracy thing” is “very inefficient,” warned Klein. Republican governors are using “a fiscal crisis as a pretext to do stuff they otherwise want to do … Republicans in Michigan want to be able to unilaterally abolish your town. And how do you know when you’re in a financial emergency? Because the governor tells you … or a company he hires.”

Yes the GOP, the party of big business and billionaires, secretly hates democracy, it’s too inefficient for the rich class.

In the interview, Klein reiterated: The GOP governors’ strategy is a clear example of “disaster capitalism,” the Reaganomics war strategy that has dominated, obsessed and driven the GOP for a generation. Klein warns, “these guys have been at this for 30 years,” it is “an ideological movement … they believe in a whole bunch of stuff that’s not very popular,” like “privatizing the local water system, busting unions, privatizing entire towns. If they said all this in an election they’d lose.”

And that’s why crises are so crucial to the GOP war strategies to take over America: Crises “are very, very handy, because you can say we have no choice. … the sky is falling in.” Then the GOP governors “can consolidate power. We remember this from the Bush administration. They did this at the federal level. After 9/11, they said, we have a crisis, and we have to essentially rule by fiat.”

But the truth, warns Klein, is that the GOP “really doesn’t believe in the governments that they are running … this is a really old story.” The greed of their billionaire backers is insatiable. They do not like democracy. And the actions of the new GOP governors is proof that what they really want are dictatorial powers to privatize government and get personally richer.

GOP megalomania: Create crises, change the course of history.

Money, power, greed: That’s why the GOP is “so desperate to tie the hands of unions. Why 16 states are facing similar battles” says Klein, because “unions are the final line of defense against privatization of the public sector. Unions are the ones who fight privatization of the school system, of the water system, of the power system.”

And that’s why, in this new American Civil War the GOP keeps its “eye on the prize, because there’s a lot of money to be made in the kinds of crony deals that could be rammed through when you have all of that power consolidated in the governor’s office.” Get it?

Remember when Wisconsin dictator Scott Walker thought he was talking to billionaire GOP backer David Koch: The vision of the GOP became very clear. Walker said: “This is our moment to change the course of history.” This same egomaniacal mind-set has obsessed the GOP since Reaganomics emerged a generation ago. Crises are opportunities for the GOP, whether real or fake (as we saw in Wisconsin and Iraq), every crisis is an excuse for the GOP’s dictators to activate every possible weapon in their “disaster capitalism” arsenal.

Yes, each crisis triggers a grandiose button in the GOP psyche, an obsession to “change the course of history,” to act like Ronald Reagan in the “moment that ended communism,” as Walker said. That’s also why GOP governors like Walker are comparing the unions to communism, drawing clear battle lines in this new American “Civil War.”

‘Disaster capitalism’ is the GOP strategy in this new Civil War.

In my review of “The Shock Doctrine: The Rise of Disaster Capitalism” a few years ago I called it “the most important book on economics in the 21st century.” That’s truer today. Events the past four years make this a must-read for anyone interested in understanding the Second American Civil War being fought by Buffett’s rich class, Wall Street CEOs and the GOP dictators batting to dominate America.

Reaganomics, “Shock Doctrine” and disaster capitalism all define the same ideology that’s been driving the GOP for over a generation, an ideology gaining even more power now as they accelerate their battle plans, increasing efforts to gain total power over our government, economy and culture, a strategy that will ultimately destroy everything.

Klein’s recent interview with Maddow exposed the GOP’s charade: Now we know with certainty that the budget crises in the 50 states were “created on Wall Street then moved to Main Street, deepened by the policy decisions to bail out banks instead of bailing out homeowners, instead of bailing out workers. And that means your tax base collapses.”

We know Wall Street greed was the fuel igniting America’s current economic problems. And now, unfortunately, average Americans have “to pay for the crisis again. First, with a bailout. And now, people are paying with it again, with budget cuts.”

And underneath all is the GOP’s free-market Reaganomics ideology. Wake up America, you’re losing the new Civil War to a rich class that’s lost its moral compass.

Bottom line, Klein warns: “What this fight is really about is not unions versus taxpayers, It’s a fight about who’s going to pay for the crisis that was created by the wealthiest elite in this country.”  

2) …The Constitutional Court of North Rhine-Westphalia effectively ruled that the task of parliamentary majorities in future will be limited to be carrying out the orders of financial experts, business lobbyists, or the federal government, which will prescribe budgets. Democratic policy-making will be a thing of the past and elections are of little effect..

Dietmar Henning of WSWS.org reports Court declares German state budget unconstitutional  “On Tuesday, the Constitutional Court for the state of North Rhine-Westphalia (NRW) declared that the supplementary budget drawn up by the state administration, a coalition of the Social Democratic Party and the Greens, was unconstitutional. The decision is unprecedented in Germany and has implications reaching far beyond NRW.

The state administration headed by premier Hannelore Kraft (SPD) agreed the supplementary budget in December last year, supported by the votes of the Greens and the Left Party. According to the government the €2.4 billion supplementary budget was necessary because the previous conservative administration (Christian Democratic Union and Free Democratic Party) headed by Jürgen Rüttgers (CDU) had incorrectly calculated the state’s legal financial obligations, particularly funds allocated to municipalities. In addition, the SPD-Green government had allocated an additional €1.3 billion to bail out the state’s ailing bank, the Landesbank WestLB.

The SPD-Green administration justified its reworked budget, which increased the level of new debt to €8.8 billion compared to the previous conservative budget of €6.6 billion, by referring to potential repercussions for the macro economy should it not be implemented. According to the state constitution, new borrowing should not exceed the sum of the investment. Article 83 of the constitution permits an exception in the event of damage to the macro economy.

The CDU and Free Democratic Party (FDP) then appealed against the supplementary budget in the state constitutional court. In January the court’s judges and its president, Michael Bertram, issued an injunction to stop additional new loans and expressed its initial doubts about the constitutionality of the budget at its first hearing in mid-February. The state government responded by promising cuts of €400 million to reduce the deficit to €8.4 billion. Meanwhile, this figure has been further reduced to €7.1 billion as a result of higher than expected tax revenues. However, even this figure is well in excess of the state’s outgoing payments of €5 billion.

In their judgment, the constitutional court judges raised doubts about any damage to the macro economy, declaring that no firm evidence of any such damage had been presented. At the same time, no case had been made that the proposed new supplementary budget would effectively counter any macro-economic damage.

Judge Bertrams referred to, amongst other bodies, the Advisory Council of the Federal government—a nonelected body of pro-business professors—which declared, based on economic growth rates, that the state should stop all measures aimed at economic stimulus.

The judges were not content, however, merely to reject the supplementary budget as a whole. They also threw out the individual items of expenditure, thereby lining up unconditionally with the jubilant conservative opposition.

The ruling of the Constitutional Court of North Rhine-Westphalia represents a serious attack on the constitutionally guaranteed separation of powers. The right to adopt a budget is one of the key competencies of an elected parliament. This right has now been effectively annulled by a state court. At the same time, the judgment serves to render illegitimate the state election in May 2010, which threw out the conservatives and awarded a majority to the SPD and Greens.

Should this ruling be generally accepted—and this apparently is the intention of the judge—then the task of parliamentary majorities in future will be limited to be carrying out the orders of financial experts, business lobbyists, or the federal government, which will prescribe budgets. Democratic policy-making would be a thing of the past and elections no longer necessary.

Writing in the Süddeutsche Zeitung, home affairs editor Heribert Prantl referred to a “small coup-d’état” and continued, “The constitutional court in Münster…no longer makes policy by merely controlling policy based on the separation of powers. They make policy by contravening the political actions of a government—by tearing up the budget bookkeeping, and thereby depriving the government of the money it needs to implement its policy.”

This disenfranchisement of democratically elected bodies by the judge is not, however, totally unexpected. In 2009 the federal conservative coalition of the CDU-CSU/SPD inserted a so-called debt brake into the country’s constitution on the initiative of then Finance Minister Peer Steinbrück (SPD). The measure commits federal and state governments to balance their budgets without new borrowing. The federal government is committed to balance its budget by 2016, and the states by 2020. In the meantime nearly all of the country’s 13 states have inserted similar type debt brakes into their constitutions.

At the time we wrote, “The inclusion of the debt brake into the constitution means the grand coalition no longer has room for maneuver, financially. As a result socially necessary investment in education and infrastructure is rendered impossible. The debt brake is being used primarily for political purposes. It provides the pretext to impose rigorous austerity measures in the face of massive resistance. Following an election, the SPD and conservative Union will declare that the promises they made in the election campaign cannot be realized due to the debt brake.”

The debt brake has since had devastating consequences at both a federal and state level. Between 2000 and 2009, the debt burden of states increased by more than 50 percent. This is overwhelmingly a result of tax cuts to big business and the rich, combined with massive handouts to local banks in the wake of the 2008 finance crisis. In order to comply with the debt brake, some states have had to reduce their expenditure by almost 20 percent.

A large part of state budgets, however, consists of expenditure for legally binding services or transfers of finances from the federal budget to the municipalities. In addition the states must pay annual interest payments to the banks—a sum totaling €4.5 billion in NRW in 2010. The debt brake can therefore only be met by drastic reductions in social investment and cuts in spending on public sector workers. In NRW, out of a total budget of €56 billion, the state pays out €21 billion in personnel costs for its 320,000 employees and officials.

In principle, all of the political parties in North Rhine-Westphalia are agreed that massive cuts be made in the coming years. The SPD-Green coalition led by Hannelore Kraft has explicitly “set as its aim budgetary consolidation and respect of the debt brake in 2020.” And in a press release last Thursday the finance department in NRW proudly announced that following its budget plans for 2011, NRW “will once again be the state with the lowest per capita expenditure.”

The conflicts between government and opposition, which led to the latest court ruling, are not about whether cuts should be made, but rather how best to implement them. The Left Party, which supports the SPD-Green administration in the NRW parliament, is also in principle willing to accept and implement budget cuts. It has done so repeatedly in Berlin, where the party has shared power with the SPD for the past 10 years.

A few days ago, Premier Kraft threatened to appeal to voters if the constitutional court revoked the supplementary budget. Now, however, she rules out new elections. On Monday she told the Berlin Tagesspiegel, “Basically, we are not seeking new elections, because this government has been elected for five years, and we have created our coalition for five years.”

This is despite the fact that the SPD and Greens are reckoned to have good chances of coming out on top in a new election. Both parties fear, however, a campaign in which they would be expected to speak out against the very cuts they decided to implement a long time ago.

The CDU and FDP also have little interest in elections in which they could expect to suffer even greater losses than in May last year. They have, however, threatened on many occasions to request the dissolution of parliament if the supplementary budget is declared unconstitutional and will have a hard time reneging on their pledge.

The Left Party, which has faithfully lined up behind the minority government of Social Democrats and Greens from the start, fears it could lose votes and its seats in parliament in a new election. A statement of Left Party leaders and parliamentary representatives declared, “Repeat elections are no solution.”
Regardless of whether new elections take place in NRW this year, all of the political parties are united in their determination to uphold the ruling of the constitutional court and resolve the budget crisis at the expense of the population.”

3) … Presidential executive order and participation in UN Sanctioned military action usurps the constitutional power of Congress.

Mike Mish Shedlock writes of Usurpation of Legislative Power stating: “This course of action may be, bombing airfields in another country is clearly an act of war … only Congress has the power to declare war. For a discussion please consider Declaration of war by the United States.”

What makes this war different from President George W. Bush’s war in Iraq is an outright request for action from the Arab League, a buy-in from the UN Security council, a buy-in from neighboring countries, and a request from Great Britain and France.

It is near-miraculous to get a buy-in from Russia and China on this. Five Nations abstained but neither Russia nor China vetoed the action.

However, where where was the debate in the US? How are we going to pay for this? How long will it last? How much can we spend? Questions abound.

We were not attacked and there was clearly enough time for the president and Hillary Clinton to make the case to Congress and the citizens of the United States.

Slowly but surely, powers granted Congress in the constitution have been steadily usurped by the executive branch. This sad state of affairs applies to Republican and Democratic president alike.”

4) … In Europe, Leader’s Announced Framework Agreements such as the Greek Debt Bail Out Agreement of May 2010, the vetting of national budgets before national legislatures meet, and the Ireland Bank Bailout serve as federal law establishing regional political and economic governance.

5) … North American Leaders have announced frameworks agreements which establish the North American Continent as a region of global governance.

The leaders have announced and will continue to announce Security and Prosperity Framework Agreements, such as the Federal Reserve’s TAF, TSLF, and PDCF, and also the Canada And US Leaders, Agreement for Perimeter Security and Economic Competitiveness as well as the Security and Prosperity Partnership of North America.

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”.

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?  

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 collectives 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.     

6)  … Conclusion: State capitalism is coming to rule mankind
Robert Wenzel in Economic Policy Journal writes in The Rise Of State Capitalism: “Eurasia Group’s Kevin Kajiwara spoke today at the Second Annual CFA Institute Middle East Investment Conference in Abu Dhabi. What he sees developing is state capitalism replacing globalization. With regard to the Middle East, Kajiwara breaks the recent unrest into three key phases. The first phase was the secularist, nationalist rise of people power across the region, reinforced by social and global media coverage. The second phase was the state response, which has ranged from promises of reform to direct subsidies to crackdowns, and which has swung the tide from the protesters to state consolidation. The third and final phase is the reassertion of state power and the internationalization of conflicts.”

Bible prophecy of Revelation 13 foretells that a beast system of state capitalism, a beast leader, and a beast banker will rise to rule mankind.

Bible Prophecy of Revelation Chapter 13:1-3 foretells a seven headed and ten horned beast system of world wide state capitalism will rise to rule mankind; this behemoth will be comprised of mankind’s seven institutions and ten regions of centralized government that rises from the sea of humanity to rule mankind.  

The seven heads symbolize mankind’s seven institutions:
1) Education,
2) Finance, banking, commerce, investment and trade.  A large part of this head is the six biggest banks in the United States; they now possess assets equivalent to 60 percent of America’s gross national product; these are by and large traded by RWW, what I call the Ben Bernanke portfolio, as he traded out US Treasuries for the banks toxic assets, thereby committing a financial coup de etat, which created an integrated banking and government oligarchy that established state corporatism. By nationalizing the banks, he socialized losses and risks to the people and capitalized profits and wealth to the banks and investment bankers and those insightful enough to go long stocks.   
3) Body Politic.
4) Military,
5) Religion,
6) Media,
7) Science & Technology.

The ten horns symbolize ten regions of global governance called for by the Club of Rome in in February 1974 and covered in October 1974 Time Magazine article The Club of Rome: Act Two.

Brent Jessop writing in GlobalResearch.ca relates that the Club of Rome is the premier think tank comprised of approximately 100 global leaders including scientists, philosophers and political advisors which envisioned totalitarian regional governance and a unifying global ethic –a world consciousness to solve interlocking world problems; and it relates this through published material such as ‘Mankind at the Turning Point’, and ‘The First Global Revolution’.

The Apostle John  in Revelation Chapter 13 Verses 2  describes future governance: ”the beast which I saw was like unto a leopard, and his feet were as the feet of a bear, and his mouth as the mouth of a lion: and the dragon gave him his power, and his seat, and great authority.” A leopard is camouflaged, and as such blends in with the background so it can not be seen by its prey. It operates furtively and prefers the darkness, and then at dusk, or at night, strikes to ensare, enslave, destroy and consume.

Revelation 13:3 relates: And I saw one of his heads as it were wounded to death; and his deadly wound was healed: and all the world wondered and followed after the beast.

The head that has a mortal wound is the institution of finance, banking, commerce, investment and trade.  The wound is a global financial system breakdown, caused by a cardiac arrest in seigniorage, that is moneyness, due to a credit evaporation, that is a liquidity evaporation, and stock and bond market crash.

Revelation 13:5-10 foretells that a beast world leader will rise to rule globally. He is the world’s Sovereign, the world’s king who reigns sovereignly for 42 months demanding that all worship him.  

Revelation 13:11-18 foretells tells that a beast religious leader and banker will rise to call people to  a universal vision. He is the Seignior, meaning, top dog banker who takes a cut; in modern-day terms, an investment banker, he is also the world’s religious leader, and via investment and commerce connections institutes a global seigniorage wealth and commerce system that sustains commerce and industry.

Unlike Many I Am Not A Peddler Of Liberty

March 21, 2011

I am not a Libertarian, I do not consider my self to be a sovereign individual; rather I consider my self to be one of Him The Sovereign Lord Jesus Christ.

It is only faith in him, that makes one free. He sets one free from the slavery of sin, that is doubt. When one calls upon the name of the Lord Jesus Christ for life, one is set free from sin and death.

Unlike many blog authors, especially the Austrian Economists, I do not peddle liberty. And unlike so many so called Christian ministers, I do not ask for donations. And unlike some tea party talk show hosts, I have not received even a penny from wealthy oil industry business leaders for their so called proclamations of liberty. 

Yes, many get have gotten thousands of dollars by placing ads for books linking to Amazon in the left hand side of their blog.

What has this world come to?

Those who have accepted money while proclaiming themselves to be champions of liberty show just how corrupt their morals are.

I have come to the conclusion that the afore-mentioned individuals have no idea what true liberty is.

Michigan’s Governor Snyder Signs Emergency Financial Manager Legislation Which Establishes Rule Of The Sovereigns

March 18, 2011

Michigan’s Governor Snyder Signs Emergency Financial Manager Legislation Which Establishes Rule Of The Sovereigns

Ed Brayton of Michigan Messenger reports “Thousands of union workers may have shown up at the Capitol yesterday to protest the loss of collective bargaining rights but it did little to sway Gov. Rick Snyder. The governor signed Emergency Financial Manager legislation into law despite those protests.

Many Democrats and labor unions criticized the legislation as a state power grab that could set up virtual dictatorships and strip power from local elected officials. The Republican governor said the legislation will let the state offer assistance earlier when local governments and school districts are in financial distress and give financial managers better tools to exert change.

“For too long in this state, we’ve avoided making the tough decisions,” Snyder said. “But waiting limits options and makes the solutions much more painful.”

Emergency managers appointed under this law certainly will not lack for options; they are given near-dictatorial powers to dissolve contracts, sell off assets and even disband elected boards.”

The appointed stakeholders word will and way will be law in Michigan; the legislation establishes rule of the sovereigns on a local basis. The legislation constitutes financial martial law and abolishes democracy.  Welcome to the modern feudal society. It’s taxation without representation.

European Financials Fall Turning The Euro Lower … As Exhausting Quantitative Easing Turns The Nasdaq, Technology And World Shares Shares Lower

March 16, 2011

Financial Market Report for March 16, 2011

European shares, VGK, fell 3.1% lower on falling European Financials, EUFN, -3.6%. Falling European Financials turned the Euro, FXE, 1.8% lower. Germany, EWG, -3.6%, Italy, EWI, -4.3%
Spain, EWP, -4.1%

The United Kingdom, EWU, -3.2% and Sweden, EWD, -3.1%

Japan, EWJ, -3.7% and Japan Small Caps, JSC, -3.1%

Solar, KWT, -3.6%

Too Big To Fail Banks, RWW, -1.4%
Banks, KBE, -1.5
Technology, MTK, -2.5%
Semiconductors, XSD, -1.7%
Nasdaq 100, QTEC, -2.1%

World Stocks, ACWI, -2.4%

Gulf States, MES,  -2.9

South Africa,  EZA, -2.7

Australia, EWZ,  -2.7

Emerging Market Financials, EMFN, -2.0
Thailand, THD, -2.7
Indonesia, IDX, -3.2
Philippines, EPHE, -2.3
Turkey, TUR, -3.7%
China,  YAO, -2.0%
Brazil, EWZ, – 2.0%

Emerging Markets, EEM, -2.1%
Brics, EEB, -2.3%

Mexico, EWW, -2.2%

New Zealand, ENZL, -2.2%

Global Real Estate, WPS, -2.5

Major Currencies, DBV, -1.6
Emerging Market Currencies, CEW, -0.8%

South African Rand, SZR,  -1.5%
Swedish Krona, FXS, -1.5%
Mexico Peso, FXM, -1.3%
Russian Ruble, XRU, -1.2%
Australian Dollar, FXA, -0.8%
The Euro, FXE, -0.8%
Brazilian Real, BZF, -0.8%
Canadian Dollar, FXC, -0.7%
New Zealand Dollar, BNZ, -0.5
British Pound Sterling, FXB, -0.3

Indian Rupe, ICN, +0.5
Swiss Franc, FXF, +0.9
Japanese Yen, FXY, +1.2

Competitive currency devaluation is now underway as the US Dollar,$USD, is rising, and most all currencies except the Yen and the Franc are falling.

The failure of quantitative easing is specifically seen in the trading lower of the distressed Fidelity mutual fund FAGIX, which approximates the value of the US Federal Reserves’ assets taken in under TARP, and which together with Excess Reserves, served as the basis of Neoliberalism’s seigniorage.

Today’s rising Dollar is evidence of quantitative easing failure and also the end of neoliberalism.

Junk bonds, JNK, manifested massively bearish engulfing today providing even more evidence of the failure of neoliberalism’s seigniorage.

Failed neoliberalism means there will not be economic growth.

Failed neoliberalism also means the world is passing into The Age of Deleveraging which will be characterised by inflation destruction, debt deflation, credit ill-liquidity, instability, economic contraction and austerity.

The European Leaders Pact on Competitiveness, which will be formally announced, will be yet another Leader’s Announced Framework Agreement such as the Greek Debt Bail Out Agreement of May 2010, the vetting of national budgets before national legislatures meet, and the Ireland Bank Bailout.

Germany has all the strong cards and is playing its hand fully to its advantage; and from my perspective is even laying the groundwork for a future exit from the Euro if needed. In so doing Germany is further entering into a most dangerous embroglio, which will reach out and engulf and consume this fiercely strident country. 

The European Leaders are effecting a bloodless political economic coup which draws out an important concept that the rule of the sovereigns replaced neoliberalism and democracy in February and March of 2011.

The rule of the sovereigns is now the governing political and economic regime and construct. 

Neoliberalism was the political and economic regime that governed mankind from the time that the Free To Choose economic theory of Milton Friedman replaced the gold standard in the early 1970s, to the exhaustion of Ben Bernanke’s quantitative easing 1 and 2 on February 22, 2011, which was reflected in the fall in value of the distressed securities, which underwrote quantitative easing, and which are approximated by the Fidelity Mutual Fund FAGIX.

It was on February 22, 2011 that the value of FAGIX, and world stocks, ACWI, both fell lower.

Under the rule of the sovereigns, leaders meet in task groups such as the Pact for Euro, that is the Pact for Competitiveness, to develop Framework Agreements.

Then leaders meet in summits to formally announce Framework Agreements, which set forth regional political and economic governance which replace treaty, constitutional and historic rule of law. The Leaders’ Agreements waive national sovereignty.  One is no longer a resident of a sovereign nation state; rather one is a resident living in a region of global governance, as called fro the Club of Rome in 1974.

Government minsters and business leaders appoint stake holders who effect the mandate of the leaders which promotes global corporatism, that is combined state corporate rule. Policies are enacted which promote the security and prosperity of corporations, and enforce austerity for the people.

Neoliberalism and democracy are replaced by the rule of the sovereigns, where the word will and way of the leaders is law. 

The European sovereign crisis will intensify, and out of  Götterdämmerung, an investment flameout, a Sovereign, and a Seignior an Old English term for top dog banker who takes a cut, will emerge to establish a common EU Treasury with fiscal sovereignty, as well as a new seigniorage replacing the currently failing US Federal Reserve’s Quantitative Easing seigniorage; and the Bank of Japan’s failed Yen Carry Trade seigniorage.

These two will assure the security and prosperity for select corporations while providing austerity for all people. Global Corporatism and the Rule of the Sovereigns will replace Neoliberalism as the world’s economic and political regime.

Banks will become even more integrated with government; and leased property living like that presented in the 1973 movie Solyent Green will be the norm

Fraud Alleged In Portugal Agriculture Subsidies

March 16, 2011

Open Europe reports;  The front page of Correio da Manhã reports that a police investigation has been launched into the handing of agricultural subsidies by the Agricultural Ministry in the Portuguese district of Braga following allegations that subsidies may have been falsely claimed by up to 900 people from 2007 to 2010. The list of suspect claimants includes local Councillor Alexandra Marinheiro, who is reported to have received €7,874 over three years, despite not owning any agricultural land.

Failure Of Seigniorage Intensifies Driving Developed Market Small Caps, Commodities, And Commodity Currencies Lower

March 15, 2011

Financial Market Report for March 15, 2011

1) … Failure of the seigniorage of neoliberalism intensified today, driving developed market small caps, commodities, commodity currencies, major world currencies, and emerging market currencies  lower. Bonds appear to be topping out once again, and thus the world is on the verge of entering Kondratieff Winter.   

European shares, VGK, traded 2.5% lower, being led lower by Germany, EWG, which traded 3.3% lower and Deutsche Bank, DB, which traded 4.0% lower as its nuclear power plants came under review today.

European Financials, EUFN, traded lower on a Bank for International Settlement report that they have £1.6 trillion exposure to ailing quartet of Greece, Ireland, Portugal and Spain sovereign debt

Ambrose Evans Pritchard.   

The failure of quantitative easing is seen in the trading lower of the distressed Fidelity mutual fund FAGIX, which approximates the value of the US Federal Reserves’ assets taken in under TARP, and which together with Excess Reserves, serves as the basis of Neoliberalism’s seigniorage. Junk bonds, JNK, fell sharply lower today.   

Continued exhaustion of Neoliberalism’s seigniorage turned world stocks, ACWI, and commodities, DJP, down. And appears to have stopped out bonds, BND, which manifested a dark cloud cover candlestick. Falling stock prices turned commodity currencies, CCX, major currencies, DBV, and emerging market currencies, CEW lower.  

Australian Shares, EWA, fell lower on BHP Billiton, BHP, which traded 2.3% lower, which turned the  Australian Dollar, FXA, a commodity currency, CCX, lower..

South Africa, EZA, fell lower on lower gold mining shares, GDX, which traded 2.3% lower, and turned the South Africa Rand, SZR, a commodity currency, CCX, lower.

Russia, RSX, fell lower on lower commodity prices, turning the Ruble, XRU, a commodity currency, CCX. lower.

The world small caps, excluding the US, VSS, traded 2.6% lower, on the continuing failure of quantitative easing seigniorage.

Canada Small Caps, CNDA, and Australia Small Caps, KROO, turned lower on lower basic material stock prices. Taiwan Small Caps, TWON,  and South Korea Small Caps, SKOR, fell lower on the exhaustion of quantitative easing.  Japan Small Caps, JSC, fell lower on the tragedy of the reactor failures.

Taiwan, EWT, and South Korea, EWY, fell lower on a lower Japan, EWJ, and on failing seigniorage.  

The UK, EWU, fell lower on a lower British Pound Sterling, FXB, and on a high rate of inflation.

Switzerland, EWL, fell lower on lower Credit Suisse, CS, and a lower UBS Bank, UBS.,

New Zealand, ENZL, fell lower on a lower New Zealand Dollar, BNZ.

Commodities turned lower on accumulated lower stock, ACWI, prices. Commodities, DJP, -3.3% and US Commodities, USCI, -3.7%.
Its been the continuing fall in paper manufacturing stocks, like, Kapstone Paper, KS,  that drove Timber, CUT, -1.7%, lower today.
Its been falling energy stock prices, XLE, that turned Oil, USO, -3.7%; Petroleum, DBC, -3.7; Gasoline, UGA, -4.6 lower today.
Its the accumulated price decline in agricultural stocks, MOO, that drove agriculture commodities , JJA, down 5.7 and Food, FUD,  down 4.5% today..
It was the falling price of textile manufacturer, Unifi, UFI, that drove cotton, BAL, down 4.9% today.

The US Dollar, $USD, traded unchanged at 76.33. Currencies traded lower on falling stock prices as follows:

Major Currencies, DBV, -1.8
Commodity Currencies, CCX -1.3

South Africa Rand, SZR. -2.2
Australian Dollar, FXA -2.2
Canadian Dollar, FXC -1.2
New Zealand Dollar, BNZ -1.1
Russian Ruble, XRU -0.9
Mexico Peso, FXM -0.8
Indian Rupe, ICN -0.6
Emerging Market Currencies, CEW-.0.6
British Pound Sterling, FXB, -0.6
Swedish Krona, FXS -0.6
Chinese Yuan, CYB - 0.4; this is a significant fall for the Chinese currency.

The Yen,  FXY, rose 1.1%
The Swiss Franc, FXF rose 0.7%

The Optimized carry ETN, ICI fell 0.9%, lower from its November high, further documenting that quantitative easing with its negative real interest rate has turned toxic destroying carry trade investing.

The fall lower in the currency leverage curve, RZV:RZG, came from a fall lower in the currencies listed above and a fall lower in silver mining stocks, SIL, and gold mining stocks, GDX, as these are considered value shares. The fall lower in the currency leverage curve means that debt deflation is underway. The FX currency traders have instituted competitive currency deflation, taking a number of currencies lower with the US Dollar, a strong exception so far is the Swiss Franc, FXF. and strangely the Euro, FXE.

Wealth is best preserved by investing in and taking possession of gold, GLD, and silver bullion, SLV, as is communicated by the chart of gold relative to the Australian Dollar, GLD:FXA.   

In summary, inflation destruction continued to turn stocks and commodities lower today; and finally has started to turn currencies lower.

Urban Dictionary defines inflation destruction as 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.

Inflation Destruction may precede Debt Deflation which 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.”

The Age of Leverage was characterised by debt expansion, credit liquidity, stability, economic growth and expansion and prosperity … The world is now passing into The Age of Deleveraging characterised by inflation destruction, debt deflation, credit ill-liquidity, instability, economic contraction and austerity.

2) … Failure Of Seigniorage As Well As Failure Of US Treasuries As An Investment Means Leasing Of Homes Will Be Common Place
Dawn Kopecki in March 8, 2011 Bloomberg article BofA Segregates Almost Half of its Mortgages Into ‘Bad Bank,  relates that Bank of America, BAC, the biggest U.S. lender by assets, is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst performing “legacy” loans, said Terry Laughlin, who is running the new unit.

Irvine Renter writes the insightful March 14, 2011 article B of A To Establish Special Home Investment Trust As A Bank To Hold Toxic Assets and questions: “Will lenders maintain their properties to a reasonable standard, or will they all become slumlords?”

I expect to see a kind of leased property living like that presented in the 1973 movie Solyent Green.

In my March 11, 2011 article European Leaders Affirm Angela Merkel’s European Economic Governance And Austerity Plan, I relate: Neoliberalism was the political and economic regime that governed mankind from the time that the Free To Choose economic theory of Milton Friedman replaced the gold standard in the early 1970s, to the exhaustion of Ben Bernanke’s quantitative easing 1 and 2 on February 22, 2011, which was reflected in the fall in value of the distressed securities, which underwrote quantitative easing, and which are approximated by the Fidelity Mutual Fund FAGIX. It was on February 22, 2011 that the value of FAGIX, and world stocks, ACWI, both fell lower.

The fall lower in world stocks, ACWI, commodities, DJP, world major currencies, DBV, and today in emerging market currencies, CEW, documents the failure of seigniorage of the neoliberal economic and political regime, as well as entrance into Kondratieff Winter. It is reasonable to expect desperate economic conditions and great austerity with evaporation of lending and falling investment prices.

30 Year US Government Treasuries, EDV, appear to be cresting in an Elliott Wave 2 of 2 high, and appear ready to fall lower in an Elliott Wave 3 of 3 Decline at a price of 80; and the 10 Year US Government Note, TLT, appears to be cresting at and Elliott Wave 2 of 2 high and ready to fall lower in an Elliott Wave 3 of 3 Decline at a price of 92.88.  The beginning of the Elliott Wave 3 of 3 Down in US Treasury values means the likelihood of failed Treasury auctions. We are witnessing the end of credit as it has traditionally been known. Both bank lending and home lending will be a thing of the past.

All of the following bonds seem very much a transitional point ready to turn lower: Corporate Bonds, LQD, Long Duration Corporate Bonds, BLV, Mortgage Backed Bonds, MBB, Build America Bonds, BABS, International Corporate Bonds, PICB, and world government bonds, BWX. I believe the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, will steepen on risk aversion to US Sovereign Debt.  

3) The failure of seigniorage of Neoliberalism means a Sovereign and a Seignior will arise to provide a new seigniorage.
The European Leaders Pact on Competitiveness, which will be formally announced, will be yet another Leader’s Announced Framework Agreement such as the Greek Debt Bail Out Agreement of May 2010, the vetting of national budgets before national legislatures meet, and the Ireland Bank Bailout.

Germany has all the strong cards and is playing its hand fully to its advantage; and from my perspective is even laying the groundwork for a future exit from the Euro if needed. In so doing Germany is further entering into a most dangerous embroglio, which will reach out and engulf and consume this fiercely strident country.  

The European Leaders are effecting a bloodless political economic coup which draws out an important concept that the rule of the sovereigns replaced neoliberalism and democracy in February and March of 2011. The rule of the sovereigns is now the governing political and economic regime and construct.  

Neoliberalism was the political and economic regime that governed mankind from the time that the Free To Choose economic theory of Milton Friedman replaced the gold standard in the early 1970s, to the exhaustion of Ben Bernanke’s quantitative easing 1 and 2 on February 22, 2011, which was reflected in the fall in value of the distressed securities, which underwrote quantitative easing, and which are approximated by the Fidelity Mutual Fund FAGIX. It was on February 22, 2011 that the value of FAGIX, and world stocks, ACWI, both fell lower.

Under the rule of the sovereigns, leaders meet in task groups such as the Pact for Euro, that is the Pact for Competitiveness, to develop Framework Agreements. Then leaders meet in summits to formally announce Framework Agreements, which set forth regional political and economic governance which replace treaty, constitutional and historic rule of law. The Leaders’ Agreements waive national sovereignty.  One is no longer a resident of a sovereign nation state; rather one is a resident living in a region of global governance, as called fro the Club of Rome in 1974. Government minsters and business leaders appoint stake holders who effect the mandate of the leaders which promotes global corporatism, that is combined state corporate rule. Policies are enacted which promote the security and prosperity of corporations, and enforce austerity for the people. Neoliberalism and democracy are replaced by the rule of the sovereigns, where the word will and way of the leaders is law.  

The European sovereign crisis will intensify, and out of  Götterdämmerung, an investment flameout, a Sovereign, and a Seignior an Old English term for top dog banker who takes a cut, will emerge to establish a common EU Treasury with fiscal sovereignty, as well as a new seigniorage replacing the currently failing US Federal Reserve’s Quantitative Easing seigniorage; and the Bank of Japan’s failed Yen Carry Trade seigniorage. These two will assure the security and prosperity for select corporations while providing austerity for all people. Global Corporatism and the Rule of the Sovereigns will replace Neoliberalism as the world’s economic and political regime.

Götterdämmerung, Rule of the Sovereigns, The Sovereign, The Seignior, Currency Leverage Curve, Yield Curve, Leverage Curve, Age of Deleveraging, Kondratieff Winter, Pact on Competitiveness, Pact For Euro, Debt Deflation, Quantitative Exhaution, Inflation Destruction, Failure of Seigniorage,

Failure Of Seigniorage As Well As Failure Of US Treasuries As An Investment Means Leasing Of Homes Will Be Commonplace

March 14, 2011

Dawn Kopecki in Bloomberg article BofA Segregate Almost Half of its Mortgages Into ‘Bad Bank,  relates that Bank of America, BAC, the biggest U.S. lender by assets, is segregating almost half its 13.9 million mortgages into a “bad” bank comprised of its riskiest and worst performing “legacy” loans, said Terry Laughlin, who is running the new unit.

Irvine Renter writes the insightful article B of A To Establish Special Home Investment Trust As A Bank To Hold Toxic Assets and questions: “Will lenders maintain their properties to a reasonable standard, or will they all become slumlords?”

I expect to see a kind of leased property living like that presented in the 1973 movie Solyent Green.

In my article European Leaders Affirm Angela Merkel’s European Economic Governance And Austerity Plan, I communicate the concept that Neoliberalism was the political and economic regime that governed mankind from the time that the Free To Choose economic theory of Milton Friedman replaced the gold standard in the early 1970s, to the exhaustion of Ben Bernanke’s quantitative easing 1 and 2 on February 22, 2011, which was reflected in the fall in value of the distressed securities, which underwrote quantitative easing, and which are approximated by the Fidelity Mutual Fund FAGIX. It was on February 22, 2011 that the value of FAGIX, and world stocks, ACWI, both fell lower.

The fall lower in world stocks, ACWI, commodities, DJP, world major currencies, DBV, emerging market currencies, CEW, documents the failure of seigniorage of the neoliberal economic and political regime, as well as entrance into Kondratieff Winter on March 11, 2011. It is reasonable to expect desperate economic conditions and great austerity with evaporation of lending and falling investment prices.

US Government Treasuries fell lower in an Elliott Wave 3 Decline, as reflected by the 30 Year US Government Bond, EDV, trading lower from 80.46 to 78.40; and the 10 Year US Government Note, TLT, trading lower from 92.37 to 91.55.  The beginning of the Elliott Wave 3 Down in US Treasury values means the likelihood of failed Treasury auctions. We are witnessing the end of credit as it has traditionally been known. Both bank lending and home lending will be a thing of the past.

Failure of seigniorage as well as the failure of US Treasuries as an investment means leasing of homes will be commonplace.

European Leaders Affirm Angela Merkel’s European Economic Governance And Austerity Plan

March 14, 2011

European Leaders affirmed Angela Merkel’s Pact On Competitiveness as a Framework Agreement for stronger European economic governance as stocks, commodities, world government bonds and currencies turn lower on the week ending March 11, 2011, as the US Dollar rises.

Report on The European Leader’s Meeting of March 11, 2011

Constant Brand, Jarle Hetland, Tim King and Ian Wishart in European Voice article Eurozone Leaders Agree On Steps To Bolster Euro report that Van Rompuy communicates that the European Leaders have made political commitment to the Pact On Competitiveness for stronger economic governance of the Eurozone: “Van Rompuy said that all 17 leaders of the eurozone countries agreed that their economies needed to be more competitive and more convergent. The pact would help achieve that, he said. Eurozone governments would make their first pledges at the end of this month, as to what action they were going to take at a national level to help the eurozone. “What has changed is the political commitment,” he said.”

Furthermore, European Voice communicates that Ireland was deemed failing in making concessions to EU Leadership, and will not be getting an interest rate reduction in its bailout agreement.

European Voice reports: “However, Angela Merkel, Germany’s chancellor, said the leaders had agreed to lower the interest rate charged to Greece by 100 basis points. She said that Greece had agreed on “additional efforts” to reduce its debt further by selling various public properties to bring in an estimated €50bn in revenue.”

“Nicola Sarkozy, the French president, hailed the pact as a “decisive step forward”.”

“Sarkozy reiterated that the EU would not allow any country to default. This would entail huge problems for the euro and that is out of the question,” he said.”

I comment: This means that Germany is fully committed to the Euro, and will not be leaving the Eurozone before 2013; however the devil is in the details of the forth coming agreement, and thus beginning in  2013, anything can happen. i.e. Germany may very well attempt to leave the Euro at that time  

XE.com provides the Text of the Euo Zone leaders’ Deal On Boosting Financial Safety Nets

Rocket News in article Eurozone Agrees Pact In Principle reports: “In a message on Twitter, Mr Van Rompuy had initially said: “We have an agreement on the Pact for Euro.” The message was later amended to: “Update from ongoing meeting: Agreement in principle on the Pact for the Euro, but still discussing the other elements of the package.” …. “A pact would give members a say over each other’s major economic policies – a move aimed at keeping countries under firm fiscal discipline. Any agreement would need to be endorsed at a summit of all 27 EU states on 24-25 March, 2011”

Nick Ottens in Atlantic Sentinel article Eurozone Leaders Enact New Financial Pact reports: “The leaders agreed over the weekend to expand the bailout fund to a total of €500 billion and set up a separate, permanent facility of the same size in 2013 when the temporary fund expires. The current as well as future fund will be able to purchase bonds directly from eurozone countries and itself be financed by at least some capital contributions from member states instead of the current system of guarantees.”  ….. “Along with French President Nicolas Sarkozy, Chancellor Angela Merkel previously proposed a pact to boost Europe’s competitiveness, including raising the retirement age across the eurozone, abolishing the indexation of wages to inflation, harmonizing corporate tax rates and instituting a “debt brake” that would limit the ability of national governments to plunge deep in the red.”

Ambrose Evans Pritchard communicates Mrs Merkel got 100%, yes 100%, of everything she was seeking from the European Leaders as he writes in Total German Triumph As EU Minnows Subjugated. The Iron Chancellor of Germany could not have been clearer. “Whoever wants credit must fulfill our conditions“.

“For Greece, the terms are a fire-sale of €50bn (£43.2bn) of national assets within four years, a tenfold increase from the original €5bn that premier George Papandreou thought he signed up to a year ago.  When the IMF first mooted this sum last month he told the inspectors not to “meddle in the internal matters of the country.“  State holdings in Hellenic Post, Hellenic Railways, Athens Public Gas, the Pireaus port authority, Athens airport, Thessaloniki water, and ATEbank, to name a few, will not fetch more €15bn. What next?  In return, Chancellor Angela Merkel has agreed to cut the penal interest rate on the EU share of Greece’s €110bn loan package by 100 basis points (still penal), and stretch the maturity to 7.5 years.”

“This does not restore solvency. Greece’s debt spiral is too far advanced. The debt load will approach 150pc of GDP this year, and debt service costs are 14.4pc of tax revenue.
Meanwhile, austerity is biting harder.  The jobless number jumped almost a full point to 14.8pc in January. Youth unemployment hit 39pc.”

“For Portugal, the condition is more hair-shirt retrenchment, a fiscal squeeze of 5.3pc in one year. Pensions, welfare, and health will be cut, following wage cuts already under way.  “A descent into Hell,” said the Bloco de Ezquerda.”   Almost 300,000 youth took to the streets of Lisbon and Oporto on Saturday in a day of wrath by the “Desperate Generation”, openly invoking the events of Egypt’s Tahrir Square.  A wing from the ruling Socialist Party said it would not vote for a “disastrous policy”. They said the cabinet did not even know about the cuts imposed by Brussels before Wednesday night.  Fiscal tightening of this magnitude in a country with public-private debt of 330pc of GDP, an over-valued currency, and reliance on fickle foreign financing, is not a happy prospect.”

“This is likely to have meaningful implications for the stability of the domestic banking system,” said Giada Giani from Citigroup. Yields on Portugal’s 5-year bonds hit a record 8pc on the news of cuts. The bond markets view further belt-tightening as self-defeating.”

“For Ireland, one condition, as yet unmet, is to give up the 12.5pc corporate tax rate described by France’s leader Nicolas Sarkozy as “shameful”.

“Angela Merkel was more clinically imperious: “We weren’t satisfied with what Ireland agreed to, so the question of lowering interest rates has only been addressed for Greece.”  What a debut for the new Taoiseach, Enda Kenny.  This tax has been the foundation of Ireland’s economic strategy, a reason why it has been able to build a pharmaceutical, medical, and software industry so far from Europe’s geographic core.”

“Peter Sutherland, former EU competition tsar, said Ireland is being punished for transparency. The real corporate tax rate in France is 8.2pc when hidden incentives are included.  He called the EU rescue deal a Diktat, with “exorbitant“ interest of 5.8pc.  Such a rate is suffocating for an economy in the grip of core deflation, already reeling from a 22pc contraction in nominal GNP.”

“The condition for Spain, Italy, Belgium et al, is intrusive surveillance of pensions, wage policies, productivity levels, as well as demands for a mandatory “debt-brake”, regardless of whether or not such a reactionary policy implies 1930s deflation.  

“Just as eurosceptics always feared, monetary union has led to a state of affairs where, in order to “save the euro” as Mrs Merkel puts it.  Europe’s ancient states find themselves having to accept a quantum leap towards political union and a degree of subjugation that would not have been tolerated otherwise.”

“There is no democratic machinery to hold this central system to account since the European Parliament lacks a unifying language or demos, and remains a technical body in practical terms. Raw power is shifting, but to whom exactly?  It is as if Merkel has somehow been crowned Magna Mater Europae by the Consilium, behind closed doors.”

“In exchange for these conditions, Germany has agreed to boost the deployable lending power of the rescue machinery (EFSF, soon to be ESM) from €250bn to €500bn.  It is not clear how this can be squared with the fund’s AAA rating, though the looming threat of EU rules to make Moody’s, Fitch, and S&P liable for “incorrect ratings“ may secure some flexibility.”

“She has agreed to let the fund buy bonds of rescued states “as an exception“, and not on the secondary market. The language is odd, and EU summits have a habit of issuing communiques that mean different things to different countries and unravel under scrutiny.”

“She has not agreed to eurobonds or a “soft-restructuring“, where debtors buy back their own bonds at a discount on the market, to chip way away at the debt burden. Yet unless this is done, the laggards will struggle to pull out of debt deflation.”

“She has not agreed to the purchase of bonds of crippled debtors pre-emptively to cap yields and nip crises in the bud, and has certainly not agreed to pay one cent in extra transfers to southern Europe or Ireland.”

“Mrs Merkel professed to be “very pleased“ with the outcome. “We’ve accomplished out national goals,“ she said.”  Indeed.  The deal does not take Germany across the Rubicon into a ‘Transferunion’. It ushers in economic integration on Teutonic terms, but without the prize of shared debt liability. Germany gets most of what it wants, and avoids most of what it does not want.”

“She can return to the Bundestag and plausibly reassure the three blocs of her coalition that she has not violated their instructions, or signed off on concessions that manifestly violate Maastricht or the German Constitution.”

“Yet is this the “grand bargain“ that will resolve the crisis once and for all?”

“The tenor is cruelly one-sided, as if this were a morality tale of wise and foolish sovereign virgins. The debtor states are made to carry opprobrium for what is at root a pan-European banking crisis.”

“Ireland and Spain never breached the deficit ceiling of the Stability Pact, though Germany and France did. They did not break the rules. If anything, it was the European Central Bank that broke the rules by running negative real interest rates and gunning the money supply.”

“Europe’s whole financial system was out of control, and still is. The North has not yet forced banks to rebuild their capital buffers or nationalize those that cannot do so, understandably in one sense since it might risk a credit crunch. Germany’s policy towards the Landesbanken is a study in paralysis.”

“That is why Europe dares not lance the boil with “haircuts” and debt restructuring. It dares not risk a repeat of Europe’s Lehman moment in May 2010. It is why the EU has scotched any quick move by Ireland to deflect the shards of pain from taxpayers to senior bank creditors.”

“How long will democracies accept being made the scapegoat for what is in part a Franco German -Benelux banking debacle?”

“Not for ever, judging by comments this week by Avriani, a paper with ties to Greece’s ruling PASOK party. “We should default and return to the Drachma to punish foreign loan sharks who have bled us dry,” it said.”

“Ireland’s Enda Kenny may ultimately have to choose between his EU club loyalties and his duties to the sovereign nation that elected him. Some within his coalition ranks already seem tempted to retaliate by pulling the plug on EU banks. That would certainly remind Chancellor Merkel and President Sarkozy what this crisis is really about.”

“Popular revolt is the dog that has not barked since the long slump began. This may just be a question of time. The pattern of the 1930s is that deep alienation starts in year three as austerity grinds on, and in this case tensions on the eurozone periphery can only turn nastier as the ECB tightens monetary policy.”

“What is clear is that sovereign states are being forced to cut wages and dismantle parts of their welfare state under foreign diktat, with a gun held to their heads. This will not be forgotten lightly. The character of the European Project has changed utterly.”

Atlantic Sentinel continues: “At the previous meeting of government leaders last month, it became evident that Europe didn’t want Germany’s rules. The leaders agreed to a watered down version of the competitiveness pact over the weekend which proclaimed that the policy mix “remains the responsibility of each country.” Under the new regime, the European Commission would supervise fiscal commitments that are national prerogatives. The existing Stability and Growth Pact sets a deficit limit of 3 percent of GDP and a debt limit of 60 percent of GDP. At times of crisis however many the nations that carry the euro have broken those rules.”

And, Atlantic Sentinel reports:  “It’s difficult to ask others to help finance a plan but not concern themselves with the tax side,” President Sarkozy told reporters after the summit. Heated debates between Ireland’s newly elected prime minister and the French president reportedly caused the negotiations to drag on until the early morning hours.”

Mike Mish Shedlock relates: Clear violation of the “no-bail-out clause” in the Maastricht Treaty, the group voted to allow the ECB to directly purchase sovereign bonds.

“Note that the ECB is is already stuffed with sovereign bonds. It bought them in the secondary market because buying them in the primary market was against the rules.”

“Flashback May 4, 2010: Trichet, a Monetarist Pussycat at Heart, Throws ECB Rulebook Out the Window   While the ECB is prohibited from buying assets directly from authorities, it can buy them on the secondary market. Trichet said on May 2 that “at this stage, we have absolutely no decision on the purchase of government bonds.”  I said at the time “No Decision” means pussycat-hearted Trichet is considering it. And so it was. “No decision” quickly became a decision, in clear violation of the intent of the treaty.”

“With strong objections from German central bank president Axel Weber, Trichet started loading up the ECB’s balance sheet with garbage.”

“Now the EU has voted to allow the ECB to buy bonds in the primary market but not the secondary one.”

“As noted above, this bond buying debacle is not part of the Maastricht Treaty. Thus German voters need to ratify this provision. In effect, German Chancellor Angela Merkel just sold Germany down the river to meet her political goals. She will not survive this.”

Vihar Georgiev reports The Pact for the Euro: a Summary

Bloomberg reports: Portugal’s 5-Year Yield Jumps to Euro-Era Record on Bailout Speculation. The yield on Portuguese five-year debt reached a euro-era record amid speculation the nation may be nearing a request for financial aid.  Bunds rose for a third day as stocks fell after an earthquake struck northern Japan. Ten-year Portuguese bonds fell for a fifth day.  When asked whether his country was preparing to request a bailout, Finance Minister Fernando Teixeira Dos Santos said European leaders must understand the “seriousness” of the region’s debt crisis. He made the remarks at a press conference in Lisbon before a European summit later today. Spanish and Italian bonds jumped, while Irish and Greek securities fell. The minister’s comments “might indicate that financial support for Portugal will be discussed at the weekend,” said Michael Leister, a fixed-income analyst at WestLB AG in Dusseldorf, Germany. “Yields show that the market is concerned, and is waiting for something,” he said. The yield on the Portuguese five-year bond rose 22 basis points to 7.99 percent as of 4:45 p.m. in London, the most since at least 1997 when Bloomberg began collecting the data. (Hat Tip to Gary of Between The Hedges)

Commentary on the Pact For The Euro
The Pact for the Euro, to use Van Rompuy’s term, or the Pact on Competitiveness, to use Merkel’s terms, does nothing, nada what so ever to address the fact that Portugal has lost its debt sovereignty, that is, its debt seigniorage, and that its banks are insolvent, and cannot obtain funding, and are not making loans, as are many other European Financial Institutions, EUFN. The EU is stuck in a purgatory between bailout and default,     

The Leaders Pact, to which the European Leaders have given their assent, which is now forming, and which will be announced at the end of March 2100, will feature Mrs Merkel’s austerity measures, and  Mr Rompuy’s means of supervision “keeping countries under firm fiscal discipline’. New and more significantly harsh austerity measures will be announced by Portugal’s government and by Greece’s finance ministry. Greece will attempt to sell off assets, but, will it sell a 51%, that is controlling interest. And given that some of the assets such as Hellenic Railways have so much debt and are represented by unions, one should question if they are sellable.     

Mr Trichet will be most displeased that he will not be allowed to sell the toxic debt he acquired to the EFSF. Will he retaliate by stopping the ECB’s purchases of bonds?

The Leaders Pact on Competiviveness, which will be formally announced, will be yet another Leader’s Announced Framework Agreement such as the Greek Debt Bail Out Agreement of May 2010, the vetting of national budgets before national legislatures meet, and the Ireland Bank Bailout.

Germany has all the strong cards and is playing its hand fully to its advantage; and from my perspective is even laying the groundwork for a future exit from the Euro if needed. In so doing Germany is further entering into a most dangerous embroglio, which will reach out and engulf and consume this fiercely strident country.  

The European Leaders are effecting a bloodless political economic coup which draws out an important concept that the rule of the sovereigns replaced neoliberalism and democracy in February and March of 2011. The rule of the sovereigns is now the governing political and economic regime and construct.  

Neoliberalism was the political and economic regime that governed mankind from the time that the Free To Choose economic theory of Milton Friedman replaced the gold standard in the early 1970s, to the exhaustion of Ben Bernanke’s quantitative easing 1 and 2 on February 22, 2011, which was reflected in the fall in value of the distressed securities, which underwrote quantitative easing, and which are approximated by the Fidelity Mutual Fund FAGIX. It was on February 22, 2011 that the value of FAGIX, and world stocks, ACWI, both fell lower.

Under the rule of the sovereigns, leaders meet in task groups such as the Pact for Euro, that is the Pact for Competitiveness, to develop Framework Agreements. Then leaders meet in summits to formally announce Framework Agreements, which set forth regional political and economic governance which replace treaty, constitutional and historic rule of law. The Leaders’ Agreements waive national sovereignty.  One is no longer a resident of a sovereign nation state; rather one is a resident living in a region of global governance, as called fro the Club of Rome in 1974. Government minsters and business leaders appoint stake holders who effect the mandate of the leaders which promotes global corporatism, that is combined state corporate rule. Policies are enacted which promote the security and prosperity of corporations, and enforce austerity for the people. Neoliberalism and democracy are replaced by the rule of the sovereigns, where the word will and way of the leaders is law.  

The European sovereign crisis will intensify, and out of  Götterdämmerung, an investment flameout, according to New Testament Bible Prophecy of Revelation 13:3, a Sovereign, Revelation 13:5-10, and a Seignior Revelation 13:11-18, an Old English term for top dog banker who takes a cut, will emerge to establish a common EU Treasury with fiscal sovereignty, as well as a new seigniorage replacing the currently failing US Federal Reserve’s Quantitative Easing seigniorage; and the Bank of Japan’s failed Yen Carry Trade seigniorage. He will assure the security and prosperity for select corporations while providing austerity for all people. Global Corporatism and the Rule of the Sovereigns will replace Neoliberalism as the world’s economic and political regime.     

This is in line with the Old Testament Bible Prophecy of Daniel 2:40-43, which foretells a Euro German empire, will arise prior to the emergence of an end time one world government.  There has been four great world powers since Daniel wrote the prophecy.  Babylon, Persia, and Greece were all conquered and absorbed by the Roman Empire.  All were described in the form of a giant statue representing­ng the four Kingdoms.  Babylon was the head of gold. Persia was the chest and arms of silver.  Greece was the belly and thighs of bronze, followed by the two appearance­s of Rome, two legs of iron, Western and Eastern.  And two feet of iron mixed with clay, which will be a revived Roman Empire coming forth as a United States of Europe, whose influence will spread to ten toes, that being ten regions of global governance­, which was called for by the Club of Rome in 1974, and which is described as a ten headed beast, manifesting­ in mankind’s seven institution­s in Revelation 13:1-4.  Soon a EU President will be Caesar over a Revived Roman Empire, having the type of power of Charlemagne  This Chancellor­, or Sovereign, is described in Revelation 13:5-10.  He or she will be accompanied­ by a Banker, a Seignior, as described in Revelation 13:11-18.  Their rule will become global as described by Daniel in Daniel 7:7.

Financial market report for the week ending February 11, 2011
The failure of US Central Bank seigniorage continued for its third week, as the distressed securities owned by the US Federal Reserve, and whose value is approximated by the Fidelity Mutual Fund, FAGIX, turned lower again.from its February 18, 2011 value of 9.87, to close this week at 9.75

Exhaustion of Quantitative Easing continued to force world stocks, ACWI, down from its February 22, 2011 value of 47.92 to close at 47.65 this week.

Falling world stocks, VT, turned commodities, DJP, down. And falling US Stocks, VTI, turned US Commodities, USCI. Now both stocks and commodities are manifesting inflation which Urban Dictionary defines as “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.  Inflation Destruction may precede Debt Deflation which 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.”

Bond vigilantes seized control of debt sovereignty, and called sovereign debt interest rates higher globally, causing emerging market bonds, EMB, to enter an Elliott Wave 3 Down at a price of 106.25, on March 9, 2011, and world government bonds, BWX, to enter an Elliott Wave 3 Down 59.70 on March 1, 2011. The nations of the world have lost their debt sovereignty, that is their debt seigniorage to the bond vigilantes.

US Government Treasuries fell lower in an Elliott Wave 3 Decline, as reflected by the 30 Year US Government Bond, EDV, trading lower from 80.46 to 78.40; and the 10 Year US Government Note, TLT, trading lower from 92.37 to 91.55.  The beginning of the Elliott Wave 3 Down in US Treasury values means the likelihood of failed Treasury auctions. We are witnessing the end of credit as it has traditionally been known. Both bank lending and home lending will be a thing of the past. Vincent Giudice of Bloomberg reports “The U.S. government, facing a record annual fiscal shortfall and a congressional impasse over financing, posted the largest monthly deficit ever in February, reflecting increased spending.  The gap totaled $222.5 billion last month compared with a $220.9 billion shortfall in February 2010  This year’s budget deficit is projected to reach $1.5 trillion   The Treasury’s report today showed that government spending rose 1.4% in February to $333.2 billion and revenue and other fees increased 2.9% to $110.7 billion.   Individual income tax receipts rose 26.6% to $422.8 billion on a fiscal year-to-date basis.  Corporate income tax receipts fell 15.9% on a fiscal year-to-date basis.”  

Emboldened by inflation destruction in stocks and the failure of world government bonds, FX Currency Traders instituted a global currency war on the world central bankers by commencing competitive currency deflation.  The U.S. dollar index, $USD, rose 0.4%. On the upside for the week, the Mexican Peso, FXM, increased 0.8%, the New Zealand Dollar, BNZ, 0.6%, the Japanese Yen, FXY, 0.6%, the Swedish krona, FXS, 0.2%, the South Africa Rand, 0.5%,  and the Australian Dollar, FXA,  0.2%.  On the downside, the British pound, FXB, declined 1.2%, the South Korean won 0.9%, the Taiwanese dollar 0.7%, the Danish krone 0.7%, the Brazilian real, BZF, 0.6%, the Euro, FXE, 0.6%, the Norwegian krone 0.5%, the Indian Rupe, ICN, 0.4%, the Swiss Franc, 0.4%, and the Emerging Market Currencies, CEW, 0.2%.

The Euro, FXE, entered an Elliott Wave 3 Down on Friday March 11, 2011, trading lower to a price of 138.47.

The fall lower in world stocks, ACWI, commodities, DJP, world major currencies, DBV, emerging market currencies, CEW, documents the failure of seigniorage of the neoliberal economic and political regime, as well as entrance into Kondratieff Winter on March 11, 2011.  It is reasonable to expect desperate economic conditions and great austerity with evaporation of lending and falling investment prices.

The rise of the US Dollar, $USD, from 76.50 suggests a dollar liquidity crisis is likely to occur, as investors take profits on their inflated assets and cover their US Dollar shorts.  Peter Garnham of The Financial Times reports:  “Hedge funds and forex dealers are betting record amounts against the dollar, reflecting a growing belief that the US currency has lost its haven appeal and that eurozone interest rates will soon rise.  Figures from the Chicago Mercantile Exchange, which are often used as a proxy for hedge fund activity, showed that short dollar positions surged from 200,564 contracts in the week ending February 22 to 281,088 on March 1.  This meant that the value of bets against the dollar on the CME rose $11.5bn in the week to March 1 to $39bn, $3bn more than the previous record of $36bn in 2007.”

Richard Milne and Peter Wise of the Financial Times report:  “The cost of borrowing for Portugal, Ireland and Greece has hit euro-era highs, amid concern in the market that European leaders will fail to take concerted action to dispel fears of sovereign defaults.  The long-term market interest rate for Spain has come close to setting a record and Italy’s borrowing cost rose above 5% for the first time since November 2008.”

Emma Ross-Thomas of Bloomberg reports:  “Spain’s credit rating was cut to Aa2 by Moody’s. which said the cost of shoring up the banking industry will eclipse government estimates. The risks to public finances are ‘skewed to the downside,’ the company said.  The outlook is ‘negative,’ suggesting more rating cuts are under consideration.”

Ben Bernanke’s quantitative easing and anticipation of quantitative easing 2 gave global  seigniorage to investments. Zachary R. Mider and Jeffrey McCracken of Bloomberg report the details of the great crack up boom:  “The merger boom that started in 2010 isn’t looking like any of the past three. The takeover binge of the 1980s was fueled by Michael Milken’s junk bonds; the late- 1990s wave of Internet and telecom deals, by inflated stock prices; and the private-equity frenzy that produced a record year for deals in 2007, by leveraged loans.  The more recent surge comes from the expanding BRIC economies,  Brazil, Russia, India and China, and beyond.  Deals are rising among the companies that supply raw materials to these countries.  Worldwide deals in energy, power and basic materials made up about a third of the merger and acquisition market in 2010, compared with about 20% in the previous decade. Emerging-market acquisitions helped the total value of announced deals for 2010 grow 27% to $2.2 trillion, driving up advisory fees.”

Sapna Maheshwari of Bloomberg reports of the financialization of securities that came as a result of quantitative easing: “Leon Black’s Apollo Global Management LLC and Fortress Investment Group LLC, FIG, are bringing back bonds that let companies make interest payments in the form of extra debt as investors chase returns about 12 times greater than those for investment-grade securities. S ales of the bonds have more than tripled this year to $1.3 billion from $375 million in all of 2010.  ‘I actually thought these kinds of deals would be dead after the last meltdown because some of these PIK notes traded down to worthless,’ said Marc Gross, a money manager at RS Investments.  Investors are ‘going out as far as they can on the risk spectrum,’ he said.”

Aline van Duyn of the Financial Times reports  “Demand is growing for ‘synthetic’ financial instruments that enable investors to take positions in the US junk bond market without owning the underlying securities.   The instruments, created by using credit derivatives on junk bond or high-yield indices, resemble transactions linked to US mortgages that proliferated before the financial crisis.   The collapse of these synthetic mortgage-backed collateralized debt obligations, CDOs, when mortgages turned sour was a big feature of the crisis   Now, hedge funds are buying the riskiest parts of instruments linked to bonds.  This demand reflects more bullish views on the US economy, which investors believe will translate into lower corporate defaults.   ‘We see much interest in synthetic high yield, more than we would have predicted just a few months ago,’ said Sivan Mahadevan, managing director at Morgan Stanley.”

Ashley Lutz of Bloomberg reports on the de-population and de-industrialization of Ohio:  “When Vaughn Bullman moved to Drummer Avenue in 1961, thousands of people built cash registers at the NCR Corp. in Dayton, Ohio, and assembled cars at a General Motors Co. plant in nearby Moraine.   Now, 10 of Drummer Avenue’s 30 houses are empty.  NCR and General Motors are gone   ‘This whole street used to be full of families who owned their homes,’ said Bullman. ‘Today, the neighborhood is so different because there is no feel of community and no way to take pride in living here.’   Dayton has 21.1% of its housing stock vacant   The city exemplifies a trend in Ohio of de-population and de-industrialization. That means less tax revenue, fewer jobs and less political clout.”  I report NCR’s executives moved the corporation’s manufacturing locations out of the rust belt to more opulent locations in Duluth, GA and Columbus, GA, the very center of golf cart community living.

Doug Noland in Prudent Bear article Risk and Dollar Carry Trade writes of the debasement of the US Dollar that came with the anticipation of and execution of QE 2 and the Global Inflation Trade Rally, the European Bank Stress Test Rally, and the European Financial Institution, EUFN, Earnings Report Rally:  “The dollar has been trending lower for much of the past 10 months.  Dollar bearishness has again become prominent, underpinned by about the most dollar bearish fiscal and monetary backdrop imaginable.  And not dissimilar to ‘07/early-’08, commodities and risk markets have been on a run.  For the most part, borrowing in dollars and lending/speculating elsewhere has provided an ongoing profit bonanza.  Especially knowing that hedge fund and sovereign wealth fund assets have recovered back to record levels, it’s not crazy to suspect that that the old “dollar carry trade” has re-emerged as well” ….. “So far, 2011 has brought a few market cracks and the occasional whiff of tumult.  The resources stocks were hammered to begin the year.  Emerging equities have disappointed.  Commodities and equities have turned increasingly volatile (i.e. crude, wheat, semiconductors),  one could argue unstable.  The respite in the European periphery debt crisis has come to an end, perhaps portending a similar circumstance for the U.S. municipal debt market.  The world is, after all, not oblivious to structural debt issues.  The accident in waiting, referred to generally as the “Treasury market” – is garnering increasing amounts of attention (none constructive).  On a few occasions, it has seemed almost as if the leveraged players were about to find themselves on the wrong side of the markets.  But throughout it all, the old stalwart weak dollar has refused to let the marketplace down.  Presuming that myriad global uncertainties will not find resolution anytime soon, I’m left pondering how the markets will react when the dollar inevitably musters some sort of rally.”

Ray Dalio in Barrons relates “Currency devaluations are good for stocks, good for commodities and good for gold. They are not good for bonds.” I comment that Ben Bernanke sacrificed the US Dollar in order for he thought we be a worthy effort to prevent a deflationary collapse ….. Money good US Treasuries were indeed a casualty as is seen in the chart of the Flattner ETF, FLAT, the 30 Year US Government Bond, EDV, the 10 Ten Year US Government Note, TLT, and the US Dollar ETF, UUP, …. FLAT, EDV, TLT, UUP and now with the dollar swing trade fully complete, inflation destruction has come to the most inflationary of stocks, that being Solar, KWT, Silver Mining, SIL, Copper Mining, COPX, Semiconductors, XSD, Small Cap Energy Shares, XLES, Hard Asset Producers, HAP, Coal Miners, KOL, Gold Miners, XSD, Energy Service, IEZ, Nasdaq 100.

Symbols: UUP, VGK, KWT, COPX, XSD, GDXJ, SIL, XME HAP, KOL, IEZ, QTEC, FXE, BWX, ACWI, VT, VTI, DJP, USCI, EMB, EDV, TLT, FLAT, DBV, CEW, FXB, BZF, JNK,   

Keywords: Pact on Competitiveness, European Economic Governance, Pact For The Euro, End Of Credit, Kondratieff Winter, Global Governance, Framework Agreements, The Inflation Trade, Dollar Carry Trade, Global Seigniorage, The Failure of Seigniorage, Quantitative Easing Exhaustion, Dollar Liquidity Crisis, Inflation Destruction, debt sovereignty, debt seigniorage, bond vigilantes


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