Archive for June, 2011

June Marks The Two Month Milestone Of The Failure Of The Seigniorage Of Neoliberalism

June 30, 2011

Financial market report for June 30, 2010

The Greek parliament voted 155 to 138 for the austerity package, and approved the implementation bill today.

Nicolas Sarkozy appointed budget minister Francois Baroin as France’s new finance minister.

Bloomberg reports German Banks Near Greek Plan. German financial companies pushed toward an agreement to roll over their Greek debt holdings as Deutsche Bank AG, DB, Chief Executive Officer Josef Ackermann predicted banks would contribute to help avert a “meltdown.” Representatives of German banks and insurers hammered out a draft proposal to present at a meeting today with Finance Minister Wolfgang Schaeuble and top industry executives, including Ackermann. The German firms, which are using a French proposal as a blueprint for discussions, are likely.

Zero Hedge reports It’s Official: China Is The “Mystery” Daily Buyer of Billions of Euros.

The failure of seigniorage of Neoliberalism, and the exhaustion of quantitative easing is seen in competitive currency deflation, the downturn in commodities, DJP, and bond prices, BND, especially world government bonds, BWX, and US Treasuries, EDV and TLT, as well as the following sectors and countries falling lower. Since April 27, 2010, competitive currency deflation has brought debt deflation, that is currency deflation as follows:

FXS -6.4%
FXB -3.8%
SZR -3.4%
FXA -2.5%
FXE -2.0%
FXC -1.9%
FXM -1.8%
XRU -1.7%
CEW -1.3%

VNM
EGPT
EWJ
CAF

SEA
PSCE
GDX
GDXJ
OIH
KBE
FAA
FONE
ALUM
WOOD
EUFN
XSD
KME
COPX
GEX
CVCO

Business Insider reports A Huge Number of Americans Believe The Economy Has Now Entered “Permanent Decline”. 39% of Americans believe the US economy has now entered “permanent decline” according to a new poll from CBS and NYT.

Tyler Durden reports QE 2 POMOs are no longer available. Going forward the Fed will only roll maturing debt and he asks asks “the biggest question of who will buy bonds now that Primary Dealers will be unable to roll debt to the Fed remains.”

Bloomberg reports Rice Supplies Tightening in China May Increase Imports, Bolster Inflation.

Financial Timers reports IMF warns US of global debt shock.

The failure of the seigniorage of Neoliberalism  is seen in the chart of VT relative to BWX.

Chart of World Stocks, ACWI, shows that stocks globally have entered an Elliott Wave 3 Down.

The Seigniorage Of Neoliberalism was based upon the Milton Friedman floating currency regime and credit liquidity provided by the US Federal Reserve as well as 1% interest carry trade investing financed by the Bank of Japan.  The Seigniorage Of Regional Economic Governance will be based upon Framework Agreements and Leaders Diktat. In Europe, a Chancellor, and a Banker, will arise to provide a new seigniorage based upon their word, will and way. The power of the Sovereign and the Seignior will rival that of Charlemagne as they rule in authority that rivals that of the former Roman Empire.

Will A European Financial Crisis Be Postponed By A France And German Proposal For A CDO and Off Balance Sheet SPV To Handle Greek Sovereign Debt?

June 29, 2011

Financial market report for June 29, 2011

The rating agencies have consistently stated that a rollover of Greek debt will constitute a default. Nevertheless banking interest is coalescing behind a France and German led plan for rollover of debt. An inquiring mind asks, is this a scenario for systemic risk? And an inquiring mind asks just who and what is sovereign in Europe? Will an innovative solution arise to place Greek Debt in a CDO and handle it off balance sheet in a SPV?  

Bloomberg reports Greek Rollover Would Probably Rate as Default, Fitch Says in FT. A “voluntary rollover” of Greek bonds, as they mature, into bonds with similar terms would “very likely” be viewed by Fitch Ratings Ltd. as a sovereign default, according to David Riley, Fitch’s group managing director with responsibility for sovereign ratings and international public finance. In a letter to the Financial Times, published today, Riley disputed a statement in a June 24 FT article that Fitch has “signaled” that it wouldn’t downgrade Greek bonds to default in the event of such a rollover, which wouldn’t amount to “a failure to pay coupons or principal.” In fact, the Greek sovereign rating would probably be placed in “restricted default,” Riley wrote. Fitch is “guided by the spirit as well as the letter” of its yardsticks and “if it looks like a default, we will rate it as a default,” Riley said.

Open Europe relates the Eurocrats created moral hazard in granting Greece seigniorage aid: La Tribune, French Economics Professor Florin Aftalion quotes Open Europe’s finding that the ECB currently holds Euro 190bn of Greek debt, while its capital and reserves amount to only €82bn. He argues: “When it agreed to participate in Greece’s temporary bail-out during the spring of 2010, the ECB bowed to political pressure. It made a fatal mistake and seriously betrayed the trust placed in it, while taking excessive risks for which European taxpayers will have to foot the bill.”

Open Europe relates Il Sole 24 Ore reports that the European Commission has threatened to impose new fines on Italy unless the serious problems with waste disposal in Naples are solved quickly. EU Environment Commissioner Janez PotoÄnik is quoted saying, “I hope that the Italian authorities address the problem so that [Italian] taxpayers’ money can be spent on improving the situation rather than on paying fines.”

Zero Hedge reports Greek Debt Rollover – Who Is Getting Rolled Over? The analysis clearly demonstrates that the Troika is put into more risk sooner, and with less control than it would be without the rollover. Greece will be paying a higher coupon over the next 3 years by offering the SPV rates in line with its existing long bonds. The banks get immediate risk relief from a combination of cashing out 20% of their short dated Greek bonds and structuring the SPV to ensure maximum recovery. The banks have also made a proposal that ensures they will be receiving a good rate of interest in spite of the relatively low headline coupon mentioned. It is no wonder why the banks are falling all over themselves to agree to the plan. It sounds like they are being kind, but they are much better off with the plan by shifting near term risk to the Troika and longer term rate risk to Greece.

Yet in today’s news Reuters reports:  “The whole charm of the French model is that it was worked out in a such way that it will be fine with the rating agencies.” and Tyler Durden of Zero Hedge comments: “There it is: expect headlines to slowly start leaking from S&P et al that the MLEC part deux will actually not be an Event of Default, and so Europe has the all clear to continue kicking the can down the road for several more years courtesy of money that is literally created out of thin air, and pledged by that no longer generate virtually any cash flows.assets.”

Mr Durden quotes from Reuters: Politicians and bankers are confident a French proposal for a Greek bailout can be adopted without triggering a default or a payout in credit insurance, lifting a key hurdle to a rollover of Greek debt, sources told Reuters.

Banks have received positive signals from rating agencies that they will not call a French rollover plan for Greek debt a default, three people close to German lenders said on Wednesday.

“The whole charm of the French model is that it was worked out in a such way that it will be fine with the rating agencies,” one of the people said.

Another source said the fact the French model was developed by banks implies the rollover will be fully voluntary — a precondition for rating agencies not to declare a default.

“It is not rocket science for a lawyer to figure out that a debt exchange won’t trigger a credit event,” a derivatives expert with knowledge of the talks said.

“(The French plan) will be seen to comfortably not trigger the CDS,” he added.

However, a senior official at Standard & Poor’s on Monday said it was too soon to judge the ratings impact of the discussed debt relief package. “I can tell you only that we cannot give a judgment on something we have not even seen,” Moritz Kraemer, S&P’s head of European sovereign ratings, had said.

French banks, who have some of the largest holdings of Greek sovereign debt, have proposed voluntarily renewing part of the bonds when they fall due, but on different terms.

That proposal is being discussed in Germany, too, and sources close to the talks said details such as the volume of any rollover and the coupon payments of new bonds need to be finalized.

Joseph Ackerman, whose asset base is 84% of Germany’s GDP, summarized it best: The head of German market leader Deutsche Bank (DBKGn.DE), Josef Ackermann, said on Wednesday the financial industry is prepared to agree to sacrifices because a Greek default would be more dramatic than the crisis at investment bank Lehman in 2008. “The solution for Greece must avoid the collapse of the entire system,” said Ackermann, while pointing out the German proposal for a voluntary rollover of Greek debt would lead to 45 percent writedowns on the bank’s entire portfolio.

And Mr Durden concludes: “There you have it: the global ponzi will now continue, courtesy of the infinitely expandable EFSF and MLEC 2, in the form of one giant CDO and one massive off balance sheet SPV conduit, precisely the two things that led to the cratering of the financial system in the first place.”

Bloomberg reports Trichet Urges New Vision for Europe

I perceive that Sarkozy of France and Merkel of Germany together with LaGarde of the IMF, and Mario Draghi of the ECB, as well as Jean Claude Trichet are rising as sovereigns in Europe to provide seigniorage for Greece as it has lost its debt sovereignty. With the passage of austerity measures, the people of Greece are no long citizens of a sovereign nation state, rather they are residents living in a region of global governance, one of ten called for by the Club of Rome in 1974. As it stands today, a European Sovereign Debt and Banking Crisis is apparently being held in abeyance, but it cannot be abated. Out of the soon coming economic chaos, that is an investment flameout, Götterdämmerung, a Chancellor, The Sovereign, possibly Jean Claude Trichet, and a Banker, possibly Mario Draghi, will rise to power in Europe to impose great austerity, and a new seigniorage that is more political than financial. The word, will and way of these two operating through Framework Agreements will provide European economic governance and austerity for all.

Chart of the European Financials, EUFN, shows a rise to 21.93 during mid-day trading.   

Bonds, and US Treasuries continued lower today.

Chart of TLT

Chart of EDV

Chart of Bonds, BND

A Global Financial Tsunami Is On The Way As Bonds Fall Lower In Anticipation That The Rating Agencies Will Declare A Default On Greek Debt

June 28, 2011

Bond market report for June 28, 2010

European newspapers report French banks agree to roll over 70% of their sovereign debt, with 50% to be invested in a 30-year bond, and the remaining 20% to go into a Euro bond. Some German banks have expressed an interest in this scheme; but Reuters is reporting that Deutsche Bank is opposed. And Sarkozy’s campaign against the Socialists is based on his plan to maintain France’s AAA-rating.  He says there are still €5bn in savings lacking in order to achieve the 2012 target of a 4.6% deficit, according to Le Monde. “If we don’t achieve the 4.6% deficit in 2012 there is no chance in getting to 3.0 % in 2013, which would allow us to stabilize the debt and to avoid entering the dangerous zone (of a debt level) of 90% of GDP which would suffocate us with the interest rates”, Carrez said.

The rating agencies have consistently communicated that a rollover constitutes default. And today US Treasuries and Bonds sold off on anticipation that the rating agencies will follow through on their announcements. The global financial techtonic plates shifted today as the bedrock of Neoliberalism, that is US Treasuries turned parabolically lower with the result that a Global Financial Tsunami is on the way. Out of the soon coming economic chaos, that is an investment flameout, Götterdämmerung, a Chancellor, The Sovereign, possibly Jean Claude Trichet,  and a Banker, possibly Mario Draghi, will rise to power in Europe to impose great austerity, and a new seigniorage that is more political than financial.

France and Germany have the most to loose from a Greek default; that is why they are pushing for a one euro government solution to the current banking and sovereign debt crisis. They know full well that the their efforts will not be met with applause, by the rating agencies; their aim is political and not economic. Their efforts are designed to establish themselves as major stakeholders in a new alliance that lead in unified and austere European economic governance that will come as national sovereignty is waived in new Framework Agreements, by state leaders, to preserve the Euro.   
   
Business Insider reports Satellite Images Show Spain’s Expensive New Airports Are Empty Too. (pics) In addition to Spain’s uninhabited housing developments, millions of dollars in unused infrastructure is wasting away. There’s a $213-million airport in the town of Castellon, which hasn’t had any scheduled flights since it opened in March, according to The New York Times. Another white elephant is the privately-held airport in Ciudad Real, which entered bankruptcy last year for lack of traffic. Spain is similarly overstocked with highways — after adding 5,000 kilometers in ten years — and high speed rail — after becoming Europe’s biggest HSR network in December.

Bonds, BND, fell parabolically lower today suggesting that peak credit has been achieved.

The 30 Year US Government Treasuries, EDV, turned parabolically lower yesterday.

And the 10 Year US Government Note, TLT, turned parabolically lower as well yesterday.

The 300% 20 Yr Treasury Bull ETF, TMF, and the Flattner ETF, FLAT, and the 30 10 Demand Curve fell lower, $TYX:$TNX, and as the 10 30 Yield Curve, $TNX:$TYX, steepened. The chart of TMF shows an evening star and an island reversal.

TMF

The chart of FLAT shows a dark cloud covering candlestick.

Annaly Capital Management, NLY, fell parabolically lower suggesting an end to the of profitable securitization of GSE debt.

Mortgage Backed Bonds, MBB, has turned lower and Intermediate Bond Mutual Funds such as PIMCO GNMA Fund, PDMIX, have turned lower.

The chart of the ratio of BLV relative to LQD, BLV:LQD, communicates the end of the age of leverage in bonds.

The Washington Post reports The future of Europe will soon be in the hands of a dapper, 63-year-old Italian economist with a name reminiscent of a James Bond villain and with long experience in the delicate art of economic diplomacy. Mario Draghi is set to take office as president of the European Central Bank in November, making him, along with the Federal Reserve’s Ben S. Bernanke, one of the world’s two most powerful central bankers. He is inheriting an extraordinarily difficult situation, taking control in the midst of a debt crisis, with little time to learn on the job.

The European media refers to Draghi as “Super Mario” for his energetic style. The question is whether he can live up to the nickname. Draghi has won respect among central bankers on both sides of the Atlantic, who view him as a thoughtful participant in international discussions with a knack for guiding groups toward agreement.

HomePath And HomeSteps May Be The Best Way To Purchase A Home … Personally I Have To Live With Others Or In Public Housing

June 27, 2011

Irvine Renter in article Fannie Mae and Freddie Mac are aggressively liquidating their REO writes Many buyers of GSE properties use FHA loans requiring only 3.5% down. Fannie Mae even has it’s own low-money-down program. With the GSEs covering all other closing costs, they are getting those buyers with only the absolute minimum down payment.

With an income below the poverty level, my housing choices are Public Housing or living in a boarding house such as the one at Potter and Humbolt in the York neighborhood of Bellingham WA 98225, where one can rent a room at $350 plus utilities, $200 move-in deposit; utilities can run up to $100 a month.

Worsening European Debt Poses Major Threat To British Banks … Tighter Rules In Europe Drive European Financials Lower

June 25, 2011

Financial Market Report for June 24, 2011.

1) … World stocks, ACWI, fell lower today. Loss leaders included Italy, EWI, Norway, NORW, Junior Gold Mining, GDXJ, Silver Miners, SIL

European Bank: Llyods Bank United Kingdom, LYG,

European Bank: Royal Bank of Scotland, RBS,

European Bank: Netherlands: ING Groep NV, ING,

European Financials, EUFN,

2) … In Today’s News
The Telegraph reports Greece’s Olympic Dream Has Turned Into a Nightmare for Village Residents. The vast glass edifice was once the gleaming entrance where the world’s athletes signed in for the 2004 Olympics but it now stands empty, stripped of all assets including copper piping, electricity points and marble tiles. “I don’t know why we’re here now,” said one guard smiling behind his Ray-Bans. “Thieves took everything of value, I guess we’re just here to stop the squatters moving in.” Seven years after the outpouring of national pride and delight as Athens showcased its new public works to the world, the Olympic Village, 12 miles north west of the capital in the shadow of mount Parnitha, is now a symbol of national shame. (Hat Tip to Between The Hedges)

Financial Times Deutschland reports the European Banking Authority has stiffened criteria in stress tests and is demanding lenders to consider the possibility of default of Greek government bonds. (Hat Tip to Between The Hedges)

Kathimerini reports officials form the European Union and IMF assessing Greece’s efforts to cut its budget deficit have expressed doubts about the viability of $5.4 billion of measures slated for this year. The officials are also pushing for the reintroduction of measures, such as a reduction in the income tax threshold, dropped by former Finance Minister George Papaconstantinou after pressure from lawmakers in the ruling Pasok party. (Hat Tip to Between The Hedges)

ZeroHedge reports Number of European Banks Resorting to 1 Week ECB Liquidity Jumps to Two and a Half Year High. (graph)

Taipan Daily reports The PIIGS’ $616 Billion Time Bomb … Credit Writedowns European Bank Exposure To Greece  … Wall Street Journal reports Tighter Rules In Europe … New York Times Worsening Debt Is Call Major Threat To British Banks

Bloomberg reports Italian banks slumped in Milan trading amid concern the European debt crisis may spread just as lenders face scrutiny from regulators over capital levels. UniCredit SpA (UCG), Italy’s biggest bank, and Intesa Sanpaolo SpA (ISP), the second-largest, led lenders lower, tumbling as much as 8.9 percent and 7.2 percent respectively. Both stocks were briefly suspended after breaching limits on intraday swings. Italian 10-year bonds fell, increasing the additional yield investors demand to hold the securities instead of benchmark German bunds to the most since the euro was introduced in 1999.

“Contagion fears keep re-emerging as long as credible, lasting solutions in Greece are pending,” said Christian Weber, a Munich-based strategist at UniCredit.

Prime Minister Silvio Berlusconi said today the country’s banks are “well capitalized.” Speaking at a summit of European leaders in Brussels, Berlusconi said he wasn’t worried about Moody’s comments about the country’s banks.

The European Banking Authority yesterday updated its stress tests to take into account extra trading losses that banks may face on their holdings of sovereign debt from crisis-hit European Union countries including Greece.

Italian banks are also seeking to raise money from investors to bolster capital. Unione di Banche Italiane ScpA (UBI), Italy’s fourth-biggest bank, fell as much as 5 percent to 3.628 euros. The lender may struggle to lure buyers to its 1 billion- euro ($1.4 billion) rights offering, which closes today. The bank is offering investors eight new shares at 3.808 euros for every 21 held.

Reuters reports Greece In Deal With EU/IMF On Austerity Plan. Greece’s new finance minister grappled with EU and IMF officials over gaps in his austerity plans on Thursday, with European leaders insisting on deep spending cuts and more tax hikes if Athens wants to secure funds and avoid potential default. Euro zone governments are meanwhile talking to European banks and insurance companies to try to convince them voluntarily to maintain their exposure to Greek debt when their bonds mature, as part of a possible second rescue for Athens.

Greek Finance Minister Evangelos Venizelos met inspectors from the European Commission, European Central Bank and the International Monetary Fund in Athens to try to iron out differences over the current bailout program.

“All conditions must be met,” Luxembourg Prime Minister Jean-Claude Juncker told reporters as he arrived for a summit of EU leaders at which Greece’s crisis will top the agenda.

“If Greece does what it has to do, we will do what we have to do. This is not a threat. It’s just a confirmation that we’re continuing our efforts.”

While Papandreou has expressed confidence over the June 28 vote in public, Slovak Prime Minister Iveta Radicova said he had voiced uncertainty in a private telephone call on Wednesday.

“Papandreou has serious doubts about whether the necessary steps will pass in parliament,” Radicova told the Slovak parliament’s European affairs committee.

Janet Tavakoli in Huffington Post cites the Cook County State of Illinois debt problem. Our total debt for the municipality, education, county, sanitary, park, fire, township, library and special services is now $108 billion. That means the debt per person in Chicago exceeds $37,000 or more than $63,500 per household, and that is just local debt. The other problem is that the Illinois economy isn’t growing. Many of those households have no income coming in other than government subsidies, and some have no income at all.

Unofficial unemployment numbers top 20%. State of Illinois taxes increased from 3% to 5%, an increase of around 67%. Taxes on real estate, utilities, sales, and more are expected to skyrocket. Businesses like the Chicago Mercantile Exchange are being courted by low income tax states (at least the income taxes are currently low) like Florida.  (Hat Tip to EconomicPolicy Journal)

New York Times in article Spain’s Building Spree Leaves Airports and Roads Begging To Be Used communicates ghost infrastructure leave burden of debt.

Mario Draghi, the former vice-chairman of Goldman Sachs International, and currently heads Italy’s central bank, has been confirmed to head the European Central Bank, when Jean-Claude Trichet term expires on October 31.  (Hat Tip to EconomicPolicy Journal)

Bloomberg reports Trichet Says Risk Signals ‘Red’ as Debt Crisis Threatens Banks. European Central Bank President Jean-Claude Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks. “On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks. BNP Paribas (BNP) SA, France’s biggest bank, and rivals Societe Generale (GLE) SA and Credit Agricole SA (ACA), may have their credit ratings cut by Moody’s Investors Service because of their investments in Greece, the ratings company said on June 15. German banks could also be at risk from contagion, Fitch Ratings said last month.

“The most serious threat to financial stability in the EU stems from the interplay between the vulnerabilities of public finances in certain EU member states and the banking system,” Trichet said. There are “potential contagion effects across the union and beyond.”

Jared Parden of The Bellingham Herald reports Gateway Pacific coal shipping terminal needs new environmental permit

Associated Press reports Budget talks suspended as Cantor bolts over taxes

Tyler Durden reports easy credit is driving Canada’s soaring housing prices.

Tyler Durden relates Identify the common characteristic of these three statements: 1. The Federal Reserve will never let the stock market decline, i.e. the “Bernanke put” … 2. The Chinese government will never let property prices decline … 3. The European Central Bank will never let Greece default, The answer of course is moral hazard — Moral Hazard Now Exists On A Global Scale

3) … The U.S. dollar, $USD, gained 0.8% this week.  For the week on the upside, the Swiss franc, FXF, gained 1.8%, the South Korean won 0.7%, the Norwegian krone 0.6%, the Mexico Peso, FXM, 0.3%, and the Taiwanese dollar 0.3%.  On the downside, the South African rand, SZR, declined 2.0%, the British pound 1.5%, FXB, the Swedish krona 1.3%, FXS, the Australian dollar 1.2%, FXA, the Canadian dollar 0.9%, FXC, the Danish krone 0.8%, the Euro 0.8%, FXE,  the Brazilian real, BZF, 0.4%, the Singapore dollar 0.4%, Emerging Market Currencies, CEW, 04.%, the Indian Rupe, ICN, 0.3%, the Russian Ruble, XRU, 0.2%, and the New Zealand dollar, BNZ,  0.1%.

The currency yield curve, that is the ratio of the worlds major currencies, relative to the emerging market currencies, DBV:CEW, fell lower again this week evidencing that competitive currency devaluation, that is competitive currency deflation, is underway.

The Swedish Krona, FXS, is the currency loss leader since May 1, 2011 as is seen in this Finviz currency screener.

John Glover and Zeke Faux of Bloomberg report  “Relative yields on junk bonds, JNK, are rising at the fastest pace since the start of Europe’s sovereign debt crisis in May 2010 on rising concern that Greece’s debt burden will further roil Europe and depress the global economy.   The extra yield investors demand to own speculative grade corporate debentures instead of government debt has risen 56 bps this month to 568 bps on average, That’s the most since the spread widened by 142 last May.”

4) … Doug Noland writes Red Alert.  While Greece Prime Minister Papandreou’s government survived a no-confidence vote, this positive development provided little reprieve for the marketplace.  Contagion jumped the fire line thought to reside at Spain, as Italy arose as a cause for concern.  Yesterday, Moody’s lowered its outlook on 13 Italian banks and warned that 16 others were vulnerable to Credit ratings downgrades.  The Italian bank sector was pummeled today, with some of the leading stocks down as much as 5.0%.   Credit default swap (CDS) prices spiked dramatically throughout the Italian banking sector the past two sessions.  In reference to signals of financial stability, ECB President Trichet admitted things had turned to “red alert”.  The eruption of systemic risk within Italy should be viewed as a serious debt contagion escalation.

Following last Friday’s warning of a possible sovereign debt downgrade, Italy’s 10-year sovereign yields jumped 16 bps this week to 4.97%.  Yields were up 35 bps in three weeks to the highest level since early March.  Perhaps more noteworthy, Italian 2-year yields spiked 24 bps in the past two sessions to 3.27%, the high since late 2008.  

The price of Italy CDS jumped 34 bps in two days to surpass 200 bps for the first time since January.  Spain’s 2-year yields jumped 21 bps this week to 3.66%, the high since early January.  Ireland saw its 10-year yields jump 57 bps to a record 11.72%, as Portuguese yields surged 50 bps to a record 11.11%.

Greek contagion fears now cast quite a pall.  There were indications of ongoing de-risking and de-leveraging.  The energy and commodities sectors suffered another tough week, and the leveraged players certainly can’t feel better about the world.   

And it is an important part of the thesis that a debt crisis-induced tightening of financial conditions will particularly weigh on those economies suffering structural short-comings.  Italy fits the bill.

At 119%, Italian debt as a percentage of GDP is second only to Greece (143%) in the Eurozone (according to Bloomberg data).  In the best of market times, this debt appears sound; in the worst, its non-productive and a huge problem.  Fortunately, a highly accommodative global marketplace has to this point made Italy’s heavy debt-load manageable.  At about 5%, Italy’s annual deficit has looked favorable relative to many countries in and outside the region.  And with Italian banks having limited exposure to periphery debt, the market had believed the sector was largely immune to the crisis.

Yet Italy today hangs very much in the balance.  Contagion fears are pushing up Italy’s market yields, risking a problematic jump in future debt service costs (and deficits).  And as was demonstrated in Greece, when market sentiment changes and things turn sour…  The Italian system now confronts market, political, economic and social uncertainties these days associated with additional austerity measures.  Voting with their feet, the marketplace this week scampered away from the Italian financial sector.  A tightening of lending by the markets and the banking sector comes at an inopportune time for the moribund Italian economy.  GDP expanded only 1.3% in 2010, this following 2009’s 5.2% contraction and 2008’s 1.3% drop.

Not dissimilar to the United States of America, Italy’s debt mountain ($2.3TN) is sustainable only with decent and persistent economic growth.  When global market confidence is running high, liquidity abundant and risk-taking in vogue, envisaging an optimistic scenario comes easily for the marketplace.  But when the clouds darken, things turn dismal in a hurry.  And when folks become nervous about a debt-laden and structurally-challenged economy, they will quickly take a keen interest in capital ratios and the general soundness of that economy’s banking system.  Economic and debt structures suddenly move to the front burner.  That’s where we are with Italy, and others, these days, as contagion effects gain important momentum by the week.

5) … Failure of European sovereign debt will lead to a banking collapse and a Chancellor, The Sovereign, and a Banker, rising to power in Europe to impose great austerity, and a new seigniorage that is more political than financial.

Stephanie Bodoni of Bloomberg reports: “The Greek crisis has ‘radically intensified’ and risks turning ‘the entire euro zone on its head,’ Luxembourg Prime Minister Jean-Claude Juncker said. ‘If we make mistakes in the way we handle the Greece crisis, it will jump to other euro countries and will bit by bit turn the entire euro zone on its head,’ Juncker, who also leads the group of euro-area finance ministers, said.”

Briefing.com reports that sovereign debt risks are soaring
Illinois Municipal Debt Credit Default Swap 203.0 +2.89%
Western Europe Sovereign Debt Credit Default Swap Index 235.83 +4.97%
Emerging Markets Sovereign Debt CDS Index 188.92 +12.41%
Euro Financial Sector Credit Default Swap 130.16 +12.22%

Chart of EUFN, KRE, XLB, COPX, PSCE shows the failure of the seigniorage of the US Federal Reserve and the European banks.

Tyler Durden reports on the Greek Leader Papandreou: With the resurgence of Greece back to the top of global news, incompetence and labor strikes charts (just like back in 2010 at roughly this time, which is to be expected since 2011 has been following the 2010 script to the dot) there has been far too little focus in the mainstream media on the family whose actions were responsible for Greece’s rise to glory and subsequent collapse into default. As Associates Press notes in its report the ruling family, “One family has dominated Greek politics for more than half a century: the Papandreous.” For all those who are wondering who the men behind the curtain, or as the case may be, front and center, are, the following expose is for you

I relate that the rating agencies have communicated time and time again that the rollover by banks constitutes a default. And now, European Sovereign Debt held by banks poses systemic risk not only in Europe but in the UK as well. A self imposed deadline of German and French leaders for announcing the Vienna Initiative is July 3, 2011.  Abigail Moses of Bloomberg reports “European policy makers are on a collision course with the bond market as they seek to resolve the Greek debt crisis without triggering payouts under credit-default swap insurance contracts.  European Central Bank chiefs are determined to ensure any Greek debt restructuring won’t be deemed a credit event enabling buyers of protection to seek compensation from swaps sellers. A debt restructuring that doesn’t trigger swaps would be more damaging to the market as it would devalue contracts, according to analysts at JPMorgan… and Merrill Lynch. Such a move would leave banks with unprotected, or unhedged, holdings, forcing them to sell bonds and ultimately drive sovereign borrowing costs higher.  ‘The ECB fears having to admit a colossal mistake when it declared euro zone governments as undefaultable,’ said Georg Grodzki, head of credit research at Legal & General Investment Management.  ‘The ECB wants to protect its balance sheet and reputation.’  The ECB’s total exposure to Greece may be between 130 billion euros ($184 billion) and 140 billion euros, Dutch Finance Minister Jan Kees de Jager said  The ECB provided 90 billion euros of liquidity to Greek banks, he said.”

Failure of European sovereign debt will lead to a banking collapse and a Chancellor, The Sovereign, and a Banker, rising to power in Europe to impose great austerity, and a new seigniorage that will be more political than financial. Seigniorage, that is moneyness, will come from the word, will and way of the Sovereign and the Seignior, as European Leaders will waive national sovereignty and establish a region of global economic governance, by means of Framework Agreements as called for by the Club of Rome in 1974. The Sovereign’s and the Seignior’s power will rival that of Charlemagne as they rule in diktat establishing for all practical purposes, a revived Roman Empire.   

6) … Keywords
Mario Draghi, Jean Claude Trichet, Seigniorage, The Sovereign, The Seignior, Competivive Currency Deflation, Competitive Currency Devaluation, Neoliberalism, George Papandreou, Club of Rome, Charlemagne, Revived Roman Empire, Framework Agreements, Currency Yield Curve, Systemic Risk, Gateway Pacific Terminal, Moral Hazard, Global Moral Hazard, Cook County, Municipal Debt,

Stocks And World Government Bonds Fall After Federal Reserve Speech And On Growing Awareness That Greek Default Is Only A Matter Of Time

June 23, 2011

Financial Market Report for June 23, 2011

1) … World Stocks and World Government Bonds, fell lower after Ben Bernanke spoke from the Federal Reserve; Mike Mish Shedlock writes the Fed has lowered (yet again) its economic forecast. It also lowered its inflation expectations, primarily because of falling gasoline prices … Chart of ACWI

BWX,

Harvard University Professor Martin Feldstein wrote in the Financial Times expressing the growing awareness that the rating agencies will downgrade Greek to default status as Germany pushes plans for a rollover of Greek sovereign debt.

In Sovereignty News, Martin Wolf of the Financial Times writes in Open Europe, A more efficient Union will be less democratic

 
2) … Stocks falling lower included Exxon Mobil, XOM

3) … Stock ETFs falling lower included
GDXJ
EUFN
GDX
REM
PSCE
SIL
COPX
XLE

4) … Country ETFs falling lower included
NORW,
EWD,
EWY
EWO
EWL
CNDA
KROO
VGK

5) … Commodities, DJP, fell lower on sharply lower oil BNO, USO, and DBC as the Asscoiated Press reports The International Energy Agency, which includes the U.S. and 27 other countries, said Thursday it would release 60 million barrels of oil from emergency stocks in an effort to stave off a possible spike in energy prices that could strain the global economic recovery. This marks only the third time in its history that the Paris-based agency has released oil onto the markets. Half of the 60 million barrels will come from the U.S.’s emergency stocks. The oil will be released over the next 30 days.

6) … The US Dollar, $USD, UUP, rose as the world’s currencies, DBV, Commodity Currencies, CCX, and Emerging Market Currencies, CEW, were taken lower on collapsing Euro, FXE, South African Rand, SZR, and Swedish Krona, FXS, as is seen in this Finviz screener of FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, CYB, BZF, XRU, FXY, BNZ, DBV, CEW, and CCX. Only the Swiss Franc, FXF, rose; it remains near its all time high. Exhaustion of quantitative easing, and sovereign crisis is inducing competitive currency devaluation, that is competitive currency deflation. The Milton Friedman, Free To Choose, floating currency regime, is history as the world’s currencies are following the US dollar into the Pit of Financial Abandon.

The Age of Leverage is over and the Age of Deleveraging is over now that the Seigniorage of Liberalism has failed; this being seen in the world banks falling lower; thes include
South Korea Bank, KB Financial, KB
European Bank: Paraibas France, BNPQY,
European Bank: Switzerland, UBS Bank, UBS,
Australian Bank: Westpac Banking, WBK,
Brazil Financials, BRAF,
Chile Banco de Chile, BCH,

7) … The longer out US Treasuries, such as ZROZ,  EDV and TLT increased more than the shorter duration ones such as IEF, as is seen in the Flattner ETF, FLAT, rising to a double high.

8) …  Europeans Doubts Greece’s Ability To Enforce Its Austerity Plan, NYT Reports … Rachael Donadio of the New York Times Europe doubts Greece’s ability to enforce its austerity plan

In the year since Greece received its first financial bailout, many things have changed. The country has reduced its budget deficit by 5 percent of gross domestic product. Workers have been hit by wage freezes and pension cuts, prompting a growing popular outcry. The state has revealed for the first time how many people it employs, and tax collectors can now cross-reference swimming pool ownership with declared income to help determine wealth and cut down on rampant tax dodging
But some things are harder to change. Asked if the state had the means, let alone the will, to properly collect taxes, Froso Stavraki, the head of the collectors’ union, took a long drag from a cigarette. “Huge efforts have been made,” she said in an interview in a cafe here last week. “But no, I don’t think people are afraid of us.”

A year ago, Prime Minister George Papandreou hammered out a $155 billion loan agreement with the European Union, European Central Bank and the International Monetary Fund. In return, Athens pledged a range of structural reforms: cracking down on tax evasion, raising the retirement age to 63 and a half from 61 and a half, limiting early retirement and opening the so-called closed professions whose guilds grant limited access to newcomers.
Now, as he comes back to Greece’s foreign creditors asking for the next $16.8 billion installment of aid — predicated on persuading Greeks to accept more tax hikes, wage cuts and the privatization of more than $71 billion in state assets before 2015 — doubts have emerged about the government’s ability to implement and enforce the measures it has already passed.
“The main problem is that he’s only been able to deliver on the parts of the austerity package that are easily enforceable and transparent and irrevocable,” such as cuts to public sector salaries and pensions, said Spyros Economides, a political scientist who co-directs the Hellenic Observatory at the London School of Economics. “Unfortunately, the rest of it is a complete mess.”
“It’s very easy to legislate,” Mr. Economides added. “The problem is to enforce legislation. There’s no enforcement mechanism. It’s all done for the eyes of the public.”

On Sunday, finance ministers from the euro zone will meet in Luxembourg and are expected to approve the next dispersal of aid. But if Mr. Papandreou fails to push through the new austerity measures that Parliament is expected to begin debating next week — with a confidence vote scheduled for Tuesday following a cabinet reshuffle last week — it could jeopardize the second rescue package that Greece needs in order to carry it through next year. A default would send the euro zone and world markets into a tailspin.

In March, Greece fired its top tax official on the grounds that he had not increased tax revenues enough. In 2010, Greece brought in 52.5 billion euros in tax revenue, up only marginally from 50 billion euros in 2009. The country failed to collect on another 40 billion euros in back taxes owed in 2010, Ms. Stavraki said. “The problem is that most usually pay 20 percent of what they owe, and then they disappear,” she said.

To try to break what Ms. Stavraki described as a “personal, human” rapport that many Greeks have with their tax collectors, the state is reducing the number of collection offices to 72 from more than 200, and introducing a centralized electronic database system. But it has also cut the salaries of tax collectors, a move some say could encourage corruption. “Morale is low,” Ms. Stavraki said.
Adding to the difficulties, as the panic and uncertainty spreads, Greeks continue to take their money out of local banks. According to data from the European Central Bank, Greek banks lost 4 billion euros in deposits in May, following 2.4 billion in losses in April — part of a bank run that has seen an estimated 60 billion euros, a quarter of Greece’s gross domestic product, leave the country since the crisis began.
In February, the government passed a much-publicized law that removed the barriers to some of the so-called “closed professions, which range from truck drivers to pharmacists to engineers.
Powerful guilds essentially control who can get a license to practice in those professions, a system critics say rewards connections over merit.
In late May, the Finance Ministry listed the 136 professions to be opened up starting in July. It includes taxi drivers and beauticians, but does not include three of the most powerful groups in Greece — notaries, lawyers and civil engineers. Their guilds are slated for liberalization “at a later date,” the ministry said, without specifying when.
Antonios Avgerinos, 60, a retired army pharmacist, said the new measures had still not helped him realize his dream of opening his own pharmacy. “Nothing has changed,” he said in a telephone interview. “Qualified pharmacists still can’t open their own businesses unless they have connections.”
As a Socialist elected with union support, Mr. Papandreou also faces resistance to the privatization of state assets, slated to be part of the next round of austerity measures.
Greece’s public power company union has called for rolling power cutoffs starting Monday to protest the government’s plan to sell 17 percent of the state’s stake in the Public Power Corporation, which is listed on the Athens stock exchange.
Costas Koutsodimas, the vice president of the union, known as Genop, called the plan a win for the banks and a loss to Greek patrimony, questioning how selling state assets, perhaps to foreign utilities that are reportedly interested in buying stakes, would be good for Greece.
“It’s a prefixed game, and it’s being played at the expense of the biggest state enterprises in Greece,” he said in an interview.

Yet even as austerity measures have brought pain to thousands of state workers, many Greeks, especially in the private sector, remain angry at a public workforce they view as an untouchable caste with the luxury of a guaranteed salary.
“Nobody’s accountable,” said Leo Apostolou, a Greek-Australian who owns two upscale delicatessens in Athens, echoing a widespread sentiment. He described his dealings with local officials as he tried to set up his second store in a wealthy northern suburb of Athens earlier this year. “I was never told directly that they wanted money,” he said. “But I was told that if I helped them in some way it would be quicker.”
Some analysts say it is unrealistic to expect Greece to transform such entrenched parts of its social fabric in so short a time, with the financial markets spinning far more quickly than the wheels of government or society.
“It is the most any developed economy has ever done in such a short space of time,” said Simon Tilford, the chief economist for the Center for European Reform in London. “And they have been pilloried for not having done enough.”
For others, the very prospect of foreign aid has hindered reform.
Today, the government and much of Greek society “sense that they can get away with all sorts of things because the euro zone partners are petrified of default,” said Mr. Economics of the London School of conomics. “They sense that at every turn, some form of bailout will be found.”

9) … G-Pap selects rival Evangelos Venizelos to move forward with privatization and austerity as London Thomas of the New York Times reports Tapped by a Rival, Greece’s New Finance Minister Faces Daunting Task. The article communicates that the Socialist Parties in Greece have stymied past deficit reduction programs but now the elites have settled their differences now that seigniorage aid  is thretened.

10) … Bloomberg reports Trichet Says Risk Signals ‘Red’ as Debt Crisis Threatens Banks. European Central Bank President Jean-Claude Trichet said risk signals for financial stability in the euro area are flashing “red” as the debt crisis threatens to infect banks. “On a personal basis I would say ‘yes, it is red’,” Trichet said late yesterday in Frankfurt after a meeting of the European Systemic Risk Board, referring to the group’s planned “dashboard” to monitor risks. BNP Paribas (BNP) SA, France’s biggest bank, and rivals Societe Generale (GLE) SA and Credit Agricole SA (ACA), may have their credit ratings cut by Moody’s Investors Service because of their investments in Greece, the ratings company said on June 15. German banks could also be at risk from contagion, Fitch Ratings said last month. “The most serious threat to financial stability in the EU stems from the interplay between the vulnerabilities of public finances in certain EU member states and the banking system,” Trichet said. There are “potential contagion effects across the union and beyond.”

11) … Open Europe relates the author of the book “Democracy in Europe” Larry Siedentop looks at the lack of a European demos and argues: “[Europeans] have come to feel that integration is not something they are doing, but rather something that is happening to them. This is not bleak nationalism, but a concern for self-government.” Prospect: Siedentop

Euro And European Financials Bounce Higher On Eve of Vote Of Confidence In Greek Government … A negative vote by the Greek parliament could trigger poltical and investment chaos in Europe … Vote on Austerity Plan to take place on June 30th.

June 21, 2011

Financial Market Report for June 21, 2011

1) … Stocks bounced higher on the eve of a vote of confidence in the Greek Government
ACWI 1.7%
IWM 2.1%

SIL 5.2
GDXJ 4.1
XME 3.6
KOL 3.4
IGN 3.4
COPX 3.3
PSCT 3.2
XSD 2.9
PSCE 2.8
HAP 2.7
MOO 2.7
HAP 2.6
RZG 2.6

Chart of the Euro, FXE

Chart of European Financials, EUFN

2) … Between The Hedges relates The Local reports Big German/French Businesses Make Plea to ‘Save the Euro’. Dozens of Germany’s leading business executives have made an impassioned defence of Europe’s common currency in a newspaper ad campaign urging angry taxpayers to look beyond the cost of bailouts to the benefits the euro. Bosses from 50 of Germany and France’s top companies, among them. Siemens, BMW, Deutsche Bank, ThyssenKrupp, EON and Daimler, joined the plea to stand firm with the embattled euro in advertisements carried in major newspapers on Tuesday under the headline, “The euro is necessary”.

3) … Reuters reports the S&P has reconfirmed Greek debt restructuring likely a default

Are You Looking For Low Cost Housing In Southern California?

June 20, 2011

It’s been a while since I have treated you my blog reader to one of my real estate articles, so I decided to post this one today.

Are you looking for low cost housing in southern California, well then perhaps the 3 Bedroom and 2 Bath home located at 521 LANIER St Hemet, CA 92543 listed for 79,900 is for you.

Is The Merkel and Sarkozy Vienna Initiative A Prelude To European Governmental And Investment Coup d’état Introducing A New Fiat Order?

June 18, 2011

Financial market report for the week ending June 17, 2011

European Leaders Merkel and Sarkozy announced a plan for “Voluntary Restructuring” of Greek debt challenging the rating agencies. Such is a prelude to a European governmental and investment coup d’état introducing a new fiat order.

1) … Bloomberg reports Merkel, Sarkozy, and Trichet plan “Vienna-Style” Agreement which involves a voluntary restructuring of Greek which the rating agencies have repeatedly said will invoke a downgrade to default status. “Echoing the Vienna plan, used during the financial crisis of 2009 for eastern European units of banks to maintain their exposure, would involve encouraging creditors to roll over expiring bonds, buying time for Greece until its austerity program shows results or until a permanent rescue fund kicks in from mid-2013. A rollover involves reinvesting the proceeds from maturing bonds in new securities.“This is a breakthrough,” Sarkozy said. “Finally we have found a solution for an involvement of the private sector on a voluntary basis,” he said. “What we decided just now is precisely in the spirit of what was decided in Vienna.”

Mike Mish Shedlock relates Sovreign debt bond market rejects Greek solution already and I say that it is impossible to structure a debt rollover in a voluntary way. This is a sham and prelude to a European governmental, banking, economic and investment coup d etat.

2) … The World Passes Through Peak Credit As Bond Sales Plummet On Soaring Greek CDS
Bloomberg reports Bond sales plummeting as spreads soar on Greece: Credit Markets. investors steering clear of the corporate bond market are driving down debt offerings to the least this year as European officials struggle to contain a Greek debt crisis that’s sent relative yields to a five-month high. Bond sales from the U.S. to Europe to Asia declined 56% this week to $27.9 billion, according to Bloomberg. Investors are demanding an extra 1.65 percentage points in yield over government debentures, the most since January, Bank of America Merrill Lynch Index data show.

Bloomberg reports China bond sale fails for second time this year on rate increase concern. “The auction was affected by tighter liquidity brought by the reserve-ratio hike,” said Frances Cheung, a senior strategist at Credit Agricole CIB in Hong Kong. “The high auction yield represents investor expectations for a near-term policy rate hike.”

CNN Money reports Small business lending plummets. (graph) Bank lending to small businesses fell $15 billion in the first quarter of this year, according to a report released this week from the U.S. Small Business Administration’s Office of Advocacy.

ZeroHedge reports Ice-Nine Spreads to Shanghai: Chinese Interbank Liquidity Evaporates.

Bloomberg reports on the failure of seigniorage of Neoliberalism: Leveraged Loan Prices Poised to Fall for Sixth Week on Greek Debt Crisis. Leveraged loan prices in the U.S. are poised to fall for a sixth consecutive week, led by Caesars Entertainment Corp., the world’s biggest casino operator, and First Data Corp. amid concerns that Greece may default and signs of a slowing economy.

The Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index has declined for 12 consecutive days to 94.32 cents on the dollar in a six week slump not seen since December 2008 and the longest daily losing streak in almost five years. The decline underscores that senior secured loans are also not immune from investor fleeing from all assets but the safest government bonds as the European Central Bank tries to contain a sovereign debt crisis. Confidence is also eroding on signs that the expansion of the world’s largest economy has slowed.  

Financial Times reports that the failure of seigniorage is flowing through to banks: Financials’ Risk Premiums Jump Sharply. Risk premiums for US banks and other financial institutions have jumped sharply this month as investors question their credit quality, weighing on equity and credit markets.

The Chart of bonds, BND, communicates that Peak Credit has been achieved

3) … In Today’s News
Bloomberg reports Ethanol production tax break, tariff rejected by U.S. Senate in 73-27 Vote.
The U.S. Senate voted to eliminate a tax credit and a tariff that subsidize ethanol production, providing the strongest signal yet that Congress will curtail subsidies for corn-based biofuel.
The 73-27 vote exceeded the 60-vote threshold needed to advance the measure as part of an economic development bill. The underlying legislation isn’t likely to become law, so the vote mostly indicated that it will be difficult for ethanol supporters to extend the 45-cent-a-gallon tax break and the 54- cent-a-gallon tariff beyond their scheduled Dec. 31 expiration.

Elisa Martinuzzi and Maria Petrakis of Bloomberg report: “Prime Minister George Papandreou vowed in 2009 to scrap an agreement to sell a stake in Greece’s biggest phone company in a bid to get elected. This month, forced to raise cash, Greece triggered an option to sell 10% of Hellenic Telecommunications Organization… to Deutsche Telekom AG. The price: less than one-third of what Europe’s largest phone company paid for shares when it last bought OTE stock in 2009. That deal underlines the challenge facing European countries such as Greece and Ireland, awash in debt, that are hoping to raise as much as 71.5 billion euros ($103bn) in the continent’s largest yard sale of state assets in more than a decade. The threat of Greek default or euro breakup is scaring buyers and depressing prices.”

Stephen Castle of the New York Times reports “With European governments divided over how to shape a new bailout for Greece, Mario Draghi, who is likely to become the next president of the European Central Bank, warned… against forcing private investors to take part. At a confirmation hearing at the European Parliament, Mr. Draghi… also highlighted the risk that a Greek default could set off a ‘chain of contagion.’

Open Europe reports Finnish government talks are expected to come to an end tomorrow, with Jyrki Katainen, leader of the National Coalition Party, heading a six-party coalition, reports Yle. The True Finns walked out of negotiations last week because of irreconcilable differences towards EU policies. Hs.fi Yle.fi

Open Europe reports Violence kicked off outside the Catalan Parliament yesterday as protestors marched against austerity cuts to Catalonia’s budget. The Bank of Spain’s annual report released yesterday notes that “almost half of the austerity measures required for us to meet our deficit targets by 2013 will have to be made by the autonomous communities and local government”, El País El País 2 Bank of Spain Report

Open Europe reports An internal battle among German Christian Democrats over a eurosceptic paper tabled by the Secretary-General of the CSU, Alexander Dobrindt, in which he warned against the “automaticity in which powers are being transferred to Brussels”. FAZ

Robert Wenzel of EconomicPolicy Journal reports The U.S. Government Attack on Gold. On Friday, I detailed how part of the Dodd-Frank Act may ultimately lead to the tracking of gold coins, They Want to Track Our Gold!. Now comes word that provisions of the Dodd-Frank Act will result in some commodity dealers halting some of their gold trading operations. Forex.com has sent this letter to its clients (Via Lew Rockwell and Zero Hedge): From: FOREX.com, Date: Fri, Jun 17, 2011 at 6:11 PM, Subject: Important Account Notice Re: Metals Trading. “We wanted to make you aware of some upcoming changes to FOREX.com’s product offering. As a result of the Dodd-Frank Act enacted by US Congress, a new regulation prohibiting US residents from trading over the counter precious metals, including gold and silver, will go into effect on Friday, July 15, 2011.

In conjunction with this new regulation, FOREX.com must discontinue metals trading for US residents on Friday, July 15, 2011 at the close of trading at 5pm ET. As a result, all open metals positions must be closed by July 15, 2011 at 5pm ET.

We encourage you to wind down your trading activity in these products over the next month in anticipation of the new rule, as any open XAU or XAG positions that remain open prior to July 15, 2011 at approximately 5:00 pm ET will be automatically liquidated.

We sincerely regret any inconvenience complying with the new U.S. regulation may cause you. Should you have any questions, please feel free to contact our customer service team.

Mr. Wenzel continues: It is unclear exactly what in Dodd-Frank is triggering this move by Forex.com. I hope to have more on Monday, but these events should not be viewed in isolation. There is a clear bias in the Dodd-Frank legislation to slow and monitor activity in gold. All holders of gold should be alarmed. I expect more developments along these lines. In my view it is an attempt to gain control over how, when and where gold can be used. There would be too much uproar in the country if gold was confiscated in the manner FDR did in 1933, so this time it needs do be done incrementally, but it sure looks like this is going on.

How long after the Dodd-Frank regulations kick in, before it is discovered that a terrorist cell financed its operations using gold coins and that even more monitoring of gold is going to be required? The stage certainly appears set for further government attacks on gold.

4) A new fiat order is coming.
An inquiring mind asks why is Germany insisting a voluntary rollover at a time when Moody’s and S&P communicate that such a plan constitutes a default?

Germany and France are telling the rating agencies to go take a hike, because they believe that Germany is Europe’s Leader. In the 1960’s I came to visualize a United States of Europe, to be led by a leader whose power would rival that of Charlemagne. Out of Götterdämmerung, that is an investment flameout, Leader’s Framework Agreements will waive national sovereignty, and establish the authority for a Chancellor, The Sovereign, and a Banker, The Sovereign, to rule Europe.

The seigniorage of Neoliberalism came via the Milton Friedman Free to Choose Regime beginning in the early 1970s, and was enhanced by yen carry trade investing from the Bank of Japan at 1% lending as well as by the Czar of Credit Liquidity, Alan Greenspan, and Helicopter Ben Bernanke with Quantitative Easing policies such as TARP and then QE2.

Trading in fiat currencies ruled Neoliberalism and inflated commodity prices especially gold since the War of Terror commenced in 2001. And those who were buy and hold investors in GNMA Intermediate Bond Mutual Funds such as PIMCO GNMA Fund, PDMIX, did quite well over the long term providing both growth of principle and interest payments.

PDMIX

The Seigniorage of Neoliberalism failed in April 2011; the coming seigniorage, that is moneyness, will be more political than economic.

The fiat of the Sovereign and the Seigniorage will rule the Age of Authoritarianism. The word, will and way of the Sovereign and the Seigniorage will replace the economic policies of Neoliberalism.

The soon coming authoritarian rule will implement debt servitude and austerity for all. The sovereign and banking debt of the Age of Leverage will be applied to every man woman and child on the European continent.

The Age of Wilding Is Upon Us

June 16, 2011

Robert Wenzel of EconomicPolicy Journal relates the Age of Wilding may be upon us.  I  say that the Age of Wilding is the companion to the Age of Deleveraging and the Age of Authoritarianism. 

Bible prophecy of Revelation 13:14-15, reveals that in the Age of Wilding most of the world will initially hail the Sovereign as a political savior. But three-and-a-half years into a soon coming Middle East peace covenant that he oversees, he will invade Israel and establish Jerusalem as his world capital. He will outlaw all religions, except the worship of himself. And a hologram, that is a holographic image of himself,  will be empowered to speak and “cause those who refuse to worship it to be killed”.  

Being half way through the Tribulation, this will introduce The Great Tribulation, at which time, a remnant of God’s people with find sanctuary here on Earth for a time, times, and half a time, that is the last forty-two months of the Beast’s rule.      

The Sovereign will establish the Abomination of Desolation, which is a specific worldwide practice in the end times that is an sacrilege to God. This abomination will lead to the desolation, that is the destruction, of many people and nations. This abomination begins when the Sovereign claims to be God, and demands that all accept his claim to sovereignty, as evidenced by worshipping him as God. This legal decree of the Sovereign will cause great desolation worldwide.

The abomination is disdainful, as he sits in the holy place in the Jerusalem Temple, and as he forces all into luciferian worship.

God will destroy the people who worship him by the plagues in the Book of Revelation (7 seals, 7 trumpets and 7 bowls of wrath).

This brings to mind a previous abomination and desolation, of another king recorded in Daniel 3:1-6: ”Nebuchadnezzar the king made an image of gold, whose height was sixty cubits and its width six cubits … and whoever does not fall down and worship shall be cast immediately into the midst of a burning fiery furnace.”

The hologram that talks, along with the mark of the Beast, Revelation 13:15-16, will be the main vehicles to enforce the worldwide worship of the Sovereign. With the hologram, one will one will have a means of worship, something to give worship to, as well as to be watched and observed via over what will likely be a type of interactive global Wi-Fi. One will observe and be observed during one’s worship.

Sign Posts Of The Times in article Apple patent reveals plans for holographic display relates that a recently granted patent reveals that Apple, the company behind the iPod and iPhone, has been working on a new type of display screen that produces three-dimensional and even holographic images without the need for glasses. The technology could be used to produce a new generation of televisions, computer monitors and cinema screens that would provide viewers with a more realistic experience. Richard Gray of the Telegraph reports that this technology would also create images that appear to be holographic because of the ability to track the observers movements: “An exceptional aspect of the invention is that it can produce viewing experiences that are virtually indistinguishable from viewing a true hologram. “Such a “pseudo-holographic” image is a direct result of the ability to track and respond to observer movements.

The mark of Revelation 13:16-18, is a sacrament, that is an outward sign or outward proof, of one’s covenant to worship the Sovereign. People will not accidentally take this mark. Just as no one intentionally calls upon the name of the Lord for life, the mark will only be taken by those who willingly understand what they are doing.

In summary, the Abomination of Desolation is a term that is used both for an activity and a time period. Daniel confirms three and one-half years as his rule: ”from the time that the daily sacrifice is taken away, and the Abomination of Desolation is set up, there shall be 1,290 days.” (Dan 12:11). And finally from Old Testatment prophecy we have insight which relates the Sovereign is a vile person (who) shall come in peaceably, and seize the kingdom by intrigue (Dan. 11:21).  And from the New Testament we see that the coming of the lawless one is according to the working of Satan, with all power, signs, and lying wonders (2 Thes. 2:9)


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