Financial Market report for September 29, 2011
1) … The Associated Press reports lawmakers in Europe’s largest economy voted overwhelmingly on Thursday in favor of expanding the powers of the eurozone’s bailout fund.
The Bundestag vote strengthened Chancellor Angela Merkel’s center-right coalition, which had struggled to win support from a bloc of rebellious members, and could bolster her ability to negotiate new European crisis measures. “It was a strong statement of Angela Merkel’s position. She has the backing and the support of the coalition and she is able to negotiate on the European level,” Peter Altmeier, the parliamentary whip for Merkel’s Christian Democrats, said after the tally was announced.
In an interview with the Spectator, Foreign Secretary William Hague criticised the creation of the euro saying, “It will be written about for centuries as a kind of historical monument to collective folly,” ….“I described the euro as a burning building with no exits and so it has proved for some of the countries in it.” ….. “Greeks or Italians or Portuguese have to accept some very big changes in what happens in their country…and Germans will have to accept that they are going to subsidise those countries for a long time to come, really for the rest of their lifetimes.”
The Express reports that French MEP Jean-Marie Cavada has put forward a proposal to teach children in primary schools about the benefits of EU citizenship, which would involve lessons on the EU institutions and the history of the EU becoming part of member states’ national curricula.
Financial Times reports Greece creditors in bail out backlash. Greece’s private creditors have reacted angrily to suggestions that some eurozone countries want bondholders to suffer bigger losses than those agreed in the second bail-out of Athens. Banks and other bondholders are resisting the idea by lobbying countries such as Germany and the Netherlands, where hardliners are pushing for private creditors to write down more than the current 21 per cent agreed in July’s €109bn Greek rescue, according to people close to the deal.
World stocks, ACWI, and World Small Cap stocks, VSS, rose slightly today.
I encourage acquisition of gold bullion to preserve wealth; but for those not so inclined Liquidity Services, LQDT, is a short selling opportuntiy. Oppenheimer on Sep 2 upgraded LQDT to Outperform from Perform and raised the target to $38 from $28 citing the acquisition of the consumer goods unit of Jacobs Trading Company. Liquidity Services, with a market cap of $840 million, is a leading online auction marketplace for wholesale, surplus and salvage assets.
Another short selling opportunity is RZV, which rose today on rising world currencies and emerging market currencies as the US Dollar, $USD, traded lower. Banks, KRE, also rising are a short selling opportunity opportunity, as in a bull market one buys on dips, but in a bear market one sells into rallies. Thor Industries, THOR, and Centerpoint Industries, CNP, manifested as short selling opportunities today.
The chart shows that the Chinese stocks, YAO, HAO, and CAF, along with the Shipping stocks, SEA, were the first to loose their seigniorage from the US Federal Reserve Quantitative Easing. And now, Bloomberg reports China Stocks sink to 14 month low as investors predict slowdown. China’s stocks fell, sending the benchmark index to a 14-month low, on concern economic growth will slow as the government maintains measures to curb inflation and demand for exports falters in Europe and the U.S. PetroChina Co. and Jiangxi Copper Co. paced declines by commodity producers after oil and metal prices dropped. China Vanke Co. and Gemdale Corp. retreated among developers after Vice Premier Li Keqiang said the top priority will continue to be stabilizing prices. Most global investors predict Chinese growth will slow to less than 5 percent by 2016, a Bloomberg poll showed. “The European debt problem will remain hanging over the market as there’s no possibility of solving it in the near future,” said Zhang Ling, general manager at Shanghai River Fund Management Co. “That’ll continue to bring turmoil to global financial markets as the appetite for risky assets is falling.” The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 13.11 points, or 0.6 percent, to 2,378.95 at 9:36 a.m. local time, set for its lowest close since July 5, 2010.
And Bloomberg reports Commodities head for biggest quarterly drop since 2008 on economy’s woes. Commodities fell, heading for the biggest quarterly slump since 2008, as Europe’s sovereign debt crisis threatened to derail the global economy, slashing raw material demand. The Standard & Poor’s GSCI index of 24 raw materials slid 2.7 percent to settle at 603.55 at 3:46 p.m. New York time. Since June 30, the gauge has slumped 9.8 percent, the most since the last quarter of 2008 during the most-severe recession since the 1930s. Copper closed at the lowest price in 13 months, and crude oil fell almost 4 percent. And the WSJ reports Copper fall hints at broader pains. In little more than a month, copper has careened into a bear market, catching commodities traders off guard and triggering alarm bells across financial markets. Copper prices have plunged 23% this month, a decline of 20% or more is commonly considered a bear market
Macro Business reports CDS signaling trouble for Chinese banks. There is a widespread belief that Chinese banks are a safe investment because they can’t possibly go bankrupt. After all, the government will be there to back-stop. I don’t disagree with the judgment, but have often joked that we will probably see an outcome similar to RBS, with Chinese banks still around but equity holders wiped out. Credit markets are also now showing distrust in Chinese banks. Credit default swaps spreads for Bank of China and China Development Bank have surged according to Société Générale, and they are rising at much faster rates than the rest of Asia ex. Japan. (Hat Tip to Between The Hedges)
In The Age of Deleveraging, love grows cold: David F. Ruccio writes on the United States of growing child poverty.
LA Times reports New York Fed to monitor Facebook and Twitter. The Federal Reserve Bank of New York wants to see what’s being said about it on social networks. But critics say it wants to keep tabs on them. Two bloggers who have incessantly criticized the Fed are Doug Noland and Elaine Meinel Supkis. The first has written extensively on moneyness, that is seigniorage, and the latter on carry trade investing and prepared the insightful article History of Seigniorage Wealth.
2) … A Eurozone Coup d Etat is underway.
Ambrose Evans Pritchard writes correctly The dangerous subversion of Germany’s democracy. Eurozone leaders are effecting a broad based economic and political coup d etat.
While Bloomberg reports Former ECB chief economist Issing says Greece will exit the Euro, no one knows if Greece will withdraw from the Euro, or will be pushed out and exist as an exiled nation. German people are 180 degrees opposed to Angela Merkel position for a true European economic government, as The Wall Street Journal reports Germans Reconsider Ties to Europe. “A poll for national German broadcaster ZDF earlier this month shows three-quarters of Germans are against the expanded European rescue fund that’s subject to Thursday’s vote. The measures before German parliament today would nearly double the main euro-zone’s bailout fund’s lending capacity to €440 billion ($595 billion) and allow the fund to buy sovereign bonds in the open market. Germany’s contribution to the new, expanded rescue loan package is €211 billion, still less than half the €500 billion it pledged to bail out its banks in 2008. But many see the European Central Bank’s moves to buy billions of euros in low-grade government bonds of southern European countries as another sign that European institutions are slipping away from them.”
Angela Merkel, Nicolas Sarkozy, and José Manuel Barroso, are apostles and ambassadors of the 1974 Clarion Call of the Club of Rome, which is compelling them to effect a Eurozone economic and political coup d etat, to establish regional economic government. The Club’s 300 visionaries foresaw that the engine of growth that came from Milton Friedman’s Free To Choose Floating Currency Regime, would sputter as currencies sink, as sovereign debt fails, and as credit evaporates, and that a new regime of state corporatism should rule in all of the world’s ten regions.
Zero Hedge reports Deputy PM says tax limits of Greek Society exhausted. As G-Pap goes from meeting to meeting with his hand held out making promises to asset strip and tax his country into oblivion, AP is reporting that Deputy PM Theodore Pangalos that the country’s tax-ability is exhausted. And Zero Hedge reports “A panorama of the European Debt System” – The definitive primer of the Eurozone.
Soon, out of the EU sovereign debt and banking crisis, European leaders will waive national sovereignty, announce regional framework agreements to establish a Fiscal Union as well as call for the appointment of a President of the EU. He must have the quality of fierceness, as he will have a whole spectrum of angry to deal with. A leading individual for this position is Herman Van Rompuy, as he orchestrated the original Greek bailout, and as who the Daily Mail reports as saying, the age of the nation state is over and the idea that countries can stand alone is an ‘illusion’ and a ‘lie’. When the sovereign comes to rule in Europe, he will exact more austerity out of the Greeks, and put an end to the state worker system, which has resulted in a situation where in every household, at least one member has a state job, which is currently protected by Constitution from being eliminated. The sovereign’s word, will, and way will be the law of the land replacing Treaty and Constitutional law. Diktat will replace democracy; there will be debt servitude for all.
Business Insider reports Herman Cain vaults to top tier: Romney and Perry lead, but not by much. Mr. Cain campaigns on the platform “that the United States of America will mot become the United States of Europe. Evidently he has not heard off either the Club of Rome or the coming North American Union.
Herman Cain, former Godfathers Pizza CEO, is a Tea Party hero, who believes the people must return to the principles of the Anti Federalist Constitution. Freedom’s Lighthouse relates Cain proclaimed the battle in Wisconsin as “ground zero for taking back our nation one state at a time.” He ended with his refrain that, “We the people of the United States of America are not going to let the United States of America become the United States of Europe – not on our watch!”
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.
Now, Keith Jones in WSWS.org article Canada And US Launch Continental Security Perimeter Talks documents how Canada’s Prime Minister and the United States’ President have further waived national sovereignty of their respective nations, by announcement of a Framework Agreement, at the North American Security Perimeter talks in early February 2011; and 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.
“Canadian Prime Minister Stephen Harper and US President Barack Obama announced, at the conclusion of a White House meeting earlier this month, the launching of bilateral North American Security Perimeter talks.”
“The stated aim of the negotiations is to greatly enhance the integration of Canadian and US border security and the harmonization of the two countries’ national security, immigration, refugee and regulatory regimes, so as to strengthen continental security, facilitate the cross-border movement of goods and people, and promote “economic competitiveness.”
“The negotiations are to be based on a joint declaration Harper and Obama issued following their February 4 meeting. “Beyond the Border: a shared vision for perimeter security and economic competitiveness” calls for the longstanding across-the-board security cooperation between the Canadian and US militaries, police forces, and border protection agencies, including through NATO and the North American Aerospace Defence Command (NORAD), o be taken to a new level. “We intend,” states the joint declaration, “to pursue a perimeter approach to security, working together within, at, and away from the borders of our two countries to enhance our security and the legitimate flow of people, goods and services.”
“The statement pledges the two countries will work together “to develop, implement, manage and monitor security initiatives, standards and practices” in the air, land, sea, space, and cyberspace and otherwise “enhance the security of our integrated transportation and communications networks.” This will include “improved intelligence and information sharing” and other forms of enhanced cooperation with the aim of identifying, preventing, and countering “violent extremism” and verifying the identity of travelers. The two countries will develop common standards for the collection and transmission of travelers’ biometrics and a common system for tracking persons entering and leaving Canada and the US. The statement also says that the two countries will “build on existing bilateral law enforcement programs to develop the next generation of integrated cross-border law enforcement operations.”
“Harper and Obama have established a bilateral Beyond the Border Working Group to develop a “joint Plan of Action” to realize the goals outlined in their declaration. They have also established a United States Canada Regulatory Cooperation Council with a two-year mandate to harmonize and streamline public health and safety and environmental regulations to improve “economic competitiveness”—that is, corporate profits. Harper, in a separate statement, emphasized the Canadian elite’s commitment to its strategic-military partnership with Washington and Wall Street, declaring “a threat to the Unites States is a threat to Canada, to our trade, to our interests, to our values, and to our common civilization. “Canada,” continued Harper, “has no friends among America’s enemies. And America has no better friend than Canada.”
“Powerful sections of the Canadian ruling elite have long been pressing for the creation of a North American security perimeter so as to underpin and deepen the economic partnership and continental economic integration fostered by the 1989 Canada-US Free Trade Agreement and its successor NAFTA. Represented by such organizations as the Canadian Council of Chief Executives and the Canadian Manufacturers’ Association, these sections of the ruling class view closer economic and security integration with the US as an essential element in their response to the emergence of new powers in Asia, the division of the world market into regional trading blocs, the growth of geopolitical tensions among the great powers, and the ever-diminishing share of global trade and investment that falls to Canadian capital. They also view closer integration with the US as providing them with a lever to press for regressive changes in socioeconomic and national security policy that have hitherto been resisted by the populace.”
Fate is operating that out of the dislocations of quantitative easing, competitive currency devaluations at the hands of the currency traders, as well as the unresolved sovereign debt crisis in Europe, a Gotterdammerung, that is an investment flameout. And from the ashes, a Chancellor, a Sovereign, and a Banker, a Seignior, will arise to establish global order and a new seigniorage. And that the United States, Canada and Mexico will be integrated together into a North American Union of state corporatism overseen by a troika of the President of the United States, the President of Mexico and the Prime Minister of Canada.
Chart of VSS
Chart of ACWI
Chart of SEA
Chart of YAO
Chart of LQDT