Archive for October, 2011

A Sovereign And A Seignior Are About To Make Their Debut

October 28, 2011

1) … A Sovereign and a Seignior are about to make their European debut.
FT article Italian Government On Brink Of Collapse quotes Silvio Berlusconi as saying “No one in the EU can nominate themselves as special administrators and speak in the name of elected governments and the European people.”

This is one of the most timely remarks of this age. The seigniorage, that is the moneyness of Neoliberalism, came through the securitization of Treasury Debt, floating currencies, yen carry trade investing, the creation and use of the Euro, securitization of GSE debt by mortgage, and US Federal Reserve credit  liquidity, ZIRP, quantitative easing 1 and 2.

The seigniorage of Neoauthoritarianism will come through diktat. Out of a soon coming Sovereign Armageddon, a sovereign debt and banking collapse, Eurozone Leaders will waive national sovereignty, and announce regional framework agreements which call for structural reforms which liberalize labor markets and overhaul pension systems, establish a Fiscal Union, which governs fiscal policy and manages spending, provides wider powers for the ECB, integrates banks with government, and establishes a stakeholder group from government and industry to oversee credit for companies critical to the security and prosperity of the region.

Bible prophecy foretells, a Leader, the Sovereign, Revelation 13:5-10, will arise to speak for and to the Eurozone; and together with his banking partner, the Seignior, Revelation 13:11-18, will provide seigniorage, that is moneyness, based upon their combined word, will and way.

The European Super Government will be a type of revived roman empire, and will feature a Fiscal Union, whose New Charlemagne, will rule with diktat, enforcing structural reforms, austerity measures, and debt servitude. The people will be amazed by the new seigniorage, that is the new moneyness, and follow after the Beast Regime of Neoauthoritarianism, Revelation 13:1-4, giving it their allegiance as held forth in Revelation 13:3-4. The vision of the sovereigns will be the basis for a collective Europe: totalitarian collectivism is the way of the future.

The coming President of the EU will be one knowledgeable with the scheme of framework agreements. He must be a fierce leader as he will have a whole spectrum of angry people 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’.

The Apostle John describes the Beast Regime of Revelation 13:1-4, as rising from the sea of humanity, and as having seven heads, symbolic of mankind’s’ seven institutions, and ten horns, symbolic of the world’s ten regions. And Daniel the prophet presents the statue of the progression of world kingdoms in Daniel 2:31-45, where a Ten Toed Kingdom of iron diktat is mired with clay of democracy, to form a world wide government. Its political components are not compatible building materials, and will fail, introducing a fierce one world government seen in Daniel 7:7.

In 1974, three hundred of the world’s elite met as the Club of Rome. Their Clarion Call is for regional economic government, as a means to deal with the chaos stemming from the deleveraging and  disinvesting out of the Milton Friedman Free To Choose floating currency regime. That call is clear, distinctive and ringing for the world federalists; and it carries an authoritarian imperative that will flow globally.

God is actively revealing the sovereignty of His Son who will introduce a new social order. The Bible reveals that Christians, have been set free, by the grace and truth of Jesus Christ. There are the church, the called out ones. These know the Sovereign Lord God, and have experience and identity out of him. Faithful Christians participate in Gods’ free mankind movement, by patiently enduring, where according to Revelation 2:27, God is destroying all forms of economic life and sovereign nation states such as Greece, to install his millennial kingdom on planet earth. Man’s 6,000 year existence of rule by human kings is coming to an end. The Apostle John said a day is as a thousand years and a thousand years is as a day, 2 Peter 3:8. This communicates that it has been two days since the Lord’s last appearance. Speaking of his body the church, the Lord said in John 2:19, that on the third day, He would raise it up. Believers are on the brink of being raised up to rule and reign with Christ for a thousand years, Revelation 5:9-10, completing a week of human experience on this planet, which introduces life in the Heavenly Jerusalem, Revelation 21:2-4. Wade E. Taylor writes of preparation for the third day relating that from Hosea 6:1-2, after a time of testing, He will raise us up, and we will live in His sight; all creation is groaning for this manifestation of His presence, that is parousia. In the coming age, there will be no double entry bookkeeping.

2) … European Federalists are moving to take one step closer to having a one world government.  What is being said about the EU, can be said of the entire world. Why stop at the EU, when you can have a one world currency, a one world bank and economic system?
I recently wrote that the First Horseman of the Apocalypse, seen in Revelation 6:1-2, is effecting a global coup d etat, establishing the rule of state corporatism through the announcement of regional framework agreements. The end goal is the establishment of the Ten Toed Kingdom of regional economic government as foretold in Daniel 2:31-42.

Jeremy Kahn of Bloomberg writes of the leaders of the one world movement who are working for a political and economic union in the Eurozone.

Nicolas Berggruen, the Berggruen Institute, and his vision for European integration via the Council for the Future of Europe. “In Europe, all the experts say you need more integration, but the public doesn’t buy it yet,” says Nathan Gardels, a senior adviser to the Berggruen Institute. “So their job is really to resell the vision of an integrated Europe to the public.”

Berggruen is moving to save the West from sinking into chaos. He says the stock market swoons of 2011, the brinkmanship in Washington over the debt ceiling and the euro-zone debt debacle are symptoms of the same underlying problem. “What you really have is a deep, deep governance crisis in the West,” he says. To reduce the political paralysis that threatens the U.S. and Europe, the billionaire donated $100 million to create the Nicolas Berggruen Institute, with offices in Berlin, Los Angeles, New York and Washington.

In early September, the institute assembled a group called the Council for the Future of Europe. It includes former government leaders Gerhard Schroeder of Germany and Felipe Gonzalez of Spain, former European Commission President Jacques Delors, as well as economists Nouriel Roubini, Joseph Stiglitz and Mohamed El-Erian, the chief executive officer at Pacific Investment Management Co. Former British Prime Minister Tony Blair has served as an adviser. In public statements from Brussels, the group called for greater political integration within Europe. That includes the centralization of some fiscal policy, wider powers for the European Central Bank and European Financial Stability Facility to restructure the debt of private banks and the issuance of joint euro-area bonds to relieve the sovereign debt crisis.

2A) … Information on Gerhard Schroeder
Reuters reports Former German Leader Calls For United States Of Europe Former German chancellor Gerhard Schroeder on Sunday called for the creation of a United States of Europe, saying the the bloc needed a common government to avoid future economic crises. Schroeder, a Social Democrat who ran the country from 1998 to 2005, said in an interview with Der Spiegel that European Union leaders were wrong to expect the euro to drive the bloc on its own. “The current crisis makes it relentlessly clear that we cannot have a common currency zone without a common fiscal, economic and social policy,” Schroeder said. He added: “We will have to give up national sovereignty.”

“From the European Commission, we should make a government which would be supervised by the European Parliament. And that means the United States of Europe.”

Schroeder, who nurtured a close relationship with France during his leadership, welcomed an initiative launched by German Chancellor Angela Merkel and French President Nicolas Sarkozy to move toward a fiscal union in 2012. Their proposal, which would mean giving up sovereignty over budgetary policies with the aim to shore up the 17-nation currency union, has received a lukewarm response from other euro zone countries.

“Germany and France have sent a strong signal with the plan for a European economic government, if it is meant seriously and receives suitable authority such as a European finance minister,” Schroeder said.
“That is the correct way forward and the precondition for the correct funding, euro bonds,” he said. Germany, which enjoys lower costs for issuing debt than its single currency partners, has led resistance to joint euro-denominated bonds. “It is a huge bond market — speculators would no longer harbor hopes of splitting it up,” Schroeder said.

In order to initiate these changes, Schroeder said EU member states would have to return to the negotiating table and hammer out a new treaty to replace the one agreed in Lisbon that currently serves as the bloc’s institutional framework.

“In the crisis lies a real opportunity to achieve a political union in Europe,” he said. Schroeder, who says the EU can only respond to growing competition with the United States and Asia by being fully united, has long pointed to Britain as a hurdle to further EU integration. “Great Britain causes the greatest problems. (It is) not in the euro but the British nevertheless always want to participate when it comes to designing a European economic area,” he said. “That doesn’t work.”

The Global Viewpoint Network, and the Nicolas Berggruen Institute Press Release Gerhard Schröder: A Robust Vision of Europe for the 21st Century relates, My reform program, Agenda 2010, saw Germany respond to two challenges: globalization and demographic changes in German society.

We changed areas of the welfare system, in particular health care, pension and unemployment security. Also, Germany’s short-time working program played an important role, where the state now shares the costs with industry to keep skilled workers on the payroll during economic downturns, thus enabling them to scale up quickly when the economy picks up. We also made pensions and health insurance more flexible and placed greater emphasis on the responsibility of the individual in keeping costs down.

For the German welfare state, this step marked a paradigm shift that many believed would carve away hard-earned benefits. In fact, we were able to strengthen the system by making Germany globally competitive and ensuring that benefits remained affordable for our aging population. At the same time, we raised expenditures in education, research and innovation. This gave a further boost to German industrial base. Implementing these reforms was politically challenging — they cost me my job — but the result has shown it was worth it: Germany is now the best situated of all European economies. France, Italy, Great Britain and others now have to catch up with this reform process, but under much more difficult conditions.

With Germany’s strength, however, comes a political responsibility for Europe in overcoming the financial crisis and spurring growth in the global economy as a whole. Germany has to contribute its share to stabilizing Europe’s economy and its currency, the euro.

Though it could have acted with greater determination when the crisis first began to unfold, the current German administration is now doing this. The decisions to bolster the euro stability mechanism, and in particular the further moves toward a common economic government for the currency union, as agreed upon by France’s President Sarkozy and Chancellor Merkel, are a step in the right direction. What we need now is to move more decisively toward greater coordination of economic, fiscal and social policies in Europe.

This is the precondition for surmounting the currency crisis. To do this we also need a single European bond market with Eurobonds. Eurobonds will at some point become inevitable, but can only be introduced as part of a coordinated European policy that fosters the convergence of economic conditions. Otherwise the ground will merely be laid for the next crisis. In addition, we need an agenda for growth and employment across the whole of Europe to overcome the weak competitive position of states like Greece, Ireland and Spain.

Greater coordination among the 17 Eurozone countries would also reinforce the development of a “two-speed Europe.” The Eurozone as “core Europe” will see more rapid integration than countries, such as Great Britain, which have a more skeptical stance toward further integration. The most important thing is that this “core Europe” remains open to all countries willing to integrate, in particular Eastern European countries, such as Poland, which is not yet a member of the Eurozone.

The end goal of an accelerated process in “core Europe” will be the formation of the United States of Europe, a real political union to which member states will transfer national power. This United States of Europe must include the membership of Turkey and an association with Russia. Closer ties with Russia are important for Europe because they guarantee direct access to Russia’s enormous energy resources, thus contributing to global energy security. For this same reason, the cooperation between American and Russian energy companies in the Arctic should be welcomed. Peace and stability on the European continent can only come about with, and not against, Russia. The second most important country for Europe is Turkey.

The current developments in the Arab world have made this clear. There is now a chance for democracy and freedom to emerge from within the societies themselves. Turkey is the template for this in the region because it demonstrates that a non-fundamentalist form of Islam and a free society are compatible. This is also a reason why the European Union must accept Turkey as a member. It will be a bridge between Europe and the Islamic world and will greatly help to ensure security not only for Europe, but also for the United States.

Europe has arrived at a crossroads. Either Europe develops into a political union and becomes a truly global player, or it moves backward as a continent of nation states that have neither political nor economic clout on the global level. We saw a premonition of such a weak and disparate Europe during the UN climate change talks in Copenhagen in 2009. The EU nation states played only a marginal role while the emerging economies, led by China, made the key decisions.

For me, one thing is certain: We need a united, strong Europe. Such a Europe is also in the interests of the U.S. and would strengthen the transatlantic alliance. For we now know that today’s great global challenges, from financial instability to climate protection to the fight against terrorism to peace in the new Middle East, cannot be met by a single state in the world on its own. Germany, firmly embedded within European structures, must do its share and not follow the temptation to retreat into its own national ego.

Spiegel Interview With Gerhard Schröder: Europe Needs to Wake Up

Lew Rockwell 20 Quotes From European Leaders That Prove That They Know Are Doomed

2B) … Information on Felipe Gonzalez
Club Of Madrid Profile for Felipe Gonzalez. Felipe González has been awarded numerous national and international prizes, among them the Charlemagne Prize, the Necklace of the Order of Isabel the Catholic and the Great Cross of Gold from the Republic of Austria. He is the author of many books and articles, including Un discurso ético (co-author, 1982), El Socialismo (1997), El futuro no es lo que era (co-author, 2001). And Memorias del futuro (2003).

Civitas EU Facts presents the following quotes
1) The Euro is a tool to help us master globisation and help us resist irrational shifts in the market’, Dominique Strauss-Kahn, French finance minister, 1997-1999
2)  ‘The single currency is the greatest abandonment of sovereignty since the foundation of the European Community, the decision is of an essentially political nature.’, Felipe González, Spanish Prime Minister, 1998
3)  ‘We will defend the Euro, whatever it takes.’, José Manuel Barroso, EU Commission President, 2010.

The Guardian relates Spain’s future depends on a more relevant Europe, Felipe González Says

2C) … Information on Jacques Delors
Notre Europe relates Jacques Delors was president of the European Commission from 1985 to 1995. He had previously been minister of finance in France. In October 1996, Jacques Delors founded the research institute Notre Europe and is today its founding president.

Eurozine relates Jacques Delors is a French economist and politician. He became the eighth President of the European Commission in January 1985 and was the first person to and was the first person to serve three terms in that office. Since leaving the Commission, he has chaired the UNESCO Commission on Education for the Twenty-first Century, (1993-1996). He founded the Paris think tank Notre Europe in 1996 and remains one of its presidents, and in 2010 M. Delors supported the new initiative the Spinelli Group, which was founded to reinvigorate the move for federalism in the European Union.

Oxford University Press relates Jacques Delors (born in 1925) was a French economist and politician who is particularly noted for his fundamental role in promoting and shaping Europe’s single market in his capacity as the President of the European Commission (1985-1995). Following careers in both the private and public sectors in France, and a period as a MEP (1979-81), Delors took on the role of Commission President in January 1985. The European Community (EC) that greeted Delors was lacking enthusiasm and integration had stalled. Delors himself had immense faith in the value of the European project so was determined to restore ambition to the deflated EC. The single market was Delors’ principal project and it is for this success that he receives the most acclaim. In cooperation with Lord Cockfield (who was appointed to the Commission by Margaret Thatcher in 1985) a Commission White paper on the completion of the internal market was drafted and submitted to the Council in 1985, which detailed all the barriers to the completion of the single market in Europe. It presented a framework for action towards, and set a latest date for, the completion of the project. The work of these two men underpinned the creation of the Single European Act (SEA) (1986) and the single market itself. This bold venture was not Delors’ only success. He also lay the foundations for the final stages of Economic and Monetary Union (EMU) which was articulated in the Maastricht Treaty (1992) (also known as the Treaty on European Union (TEU)). For this, Delors and his commissioners are known as the ‘Founding Fathers of the Euro’. Furthermore, the Maastricht Treaty ushered in the transformation from EC to EU.

3) … A Christian’s perspective why governments make war.

3A) … Justin Raimondo in Antiwar writes Why Governments Make War
We start, therefore, with the question of who is doing the formulating. In “democratic” societies, we are told, “the people” are the ultimate policymakers, because they, in theory, hold their rulers accountable, not only at the polls but in the forum of public opinion and whatever parliamentary apparatus shares power with the executive. In practice, however, foreign policy is a completely separate realm, the domain of “experts” and specialists ensconced in think tanks – and, of course, the higher reaches of the councils of state.

This distancing of the citizenry from the policymaking process is accentuated, in the US, by the erosion of congressional power in the foreign policy realm. In the latter days of the American empire, policy is made almost entirely within the White House and the national security bureaucracy: Congress ceded its war-making powers long ago.

The conduct of America’s, or any country’s foreign policy, therefore, is the province of a very small group at the very top of the political pyramid: what might be called, for lack of a better group description, the ruling class, otherwise known as the “Establishment.” These are the chief actors, aside from freelancers like terrorist groups, various “liberation” movements, and George Soros on the world stage.

To answer the question posed at the beginning of this article, it is necessary to ask what motivates the Establishment: what causes them to come to a consensus and act? For libertarians, and for those of a realistic mindset, not always the same thing, the answer is simple: it’s all about power.

The real reason for the Libyan adventure was the necessity of averting a political crisis inside the Democratic coalition: Obama wanted a “team of rivals,” and that is what he got. Having ceded the foreign policy of his administration to the Clintons, the President had little choice but to let Hillary assert herself: Libya was her war, and Obama let her have it for purely internal political reasons.

This commonality is demonstrated by the fact that democracies are just as likely to engage in imperialistic wars as are dictatorships of one sort or another: our current policy of endless war demonstrates this rule rather dramatically, and history confirms it. Britain, by far the most liberal and democratic empire that ever existed, was simultaneously the greatest aggressor, relentlessly expanding the Empire to nearly every continent, abolishing slavery and enslaving millions.

The politicians, in short, are in it to stay in it: they are in the business of acquiring and keeping power, and that is what motivates them in all matters foreign and domestic.

A libertarian theory of foreign affairs starts with the axiom that those in power wish to remain in power: all else follows from this basic proposition. It’s the “all else,” however, that is the important part, and not a mere detail to be filled in later. Because political and policy decisions are made by real people, not impersonal “forces” and floating abstractions, the specific context in which these decisions are made is key to understanding the course of events. It is not enough to say that there is some Vast Conspiracy – say, the Illuminati, the Bilderbergers, or the Elders of Fandom – operating behind the scenes and manipulating the “crisis” of the moment to its own advantage. It is necessary to cite specifics, i.e. evidence establishing causal connections between specific individuals, certain policy outcomes, and benefits accrued.

This is why journalism is such an important branch of the literary arts, and why its decline is such a blow to the cause of peace and liberty. Without specifics, and unarmed with facts, neither the professional analyst nor the interested citizen can get a clue as to what is going on with the biggest – and most dangerous – power on the planet. That’s why Antiwar.com is such an important tool in the fight against interventionism and militarism: because we give you the news they don’t want you to know about.

We cannot rest, because the tendency of governments to constantly seek opportunities to expand their power – including across national borders – is inherent and constant. It can be neither eradicated, nor ignored: it has to be constantly watched – and challenged. That’s why we’re here, and that’s why we must continue to be here for as long as governments exist.

3B)  … Leaders of sovereign authority make war for more power so as to expand and maintain their empire.
This was the case going back to the time when Chedorlaomer captured and looted Sodom and Gomorrah, and took the people of the cities into captivity, including Abraham’s nephew Lot, who was living there with his wife and two daughters. Abraham’s response was swift and decisive; he led 318 servants of his household into battle, defeated Chedorlaomer’s military coalition forces and rescued Lot and his family, Genesis 14:1-16.  This was ordained and planned by God. A questioning mind asks, what king of Salem, that is Jerusalem, did Abraham meet with after he rescued Lot? Answer, Melchizedek, Genesis 14:18-20.

In article We Are Witnessing The Beginning Of The End Of Democracy In Europe As God Is Destroying National Sovereignty And Personal Sovereignty So As To Reveal The Sovereignty Of His Son Jesus Christ
I write, The prophet Daniel in Daniel 2: 31-43 foretold that great leaders would arise as history unfolds. These have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority. Soon ten kings will come to rule, each in his own regional power base. The statue of kingdoms seen in Daniel 2:31-43 communicates that God has ordained two iron kingdoms, these are the combine of the UK and Europe, and US Dollar Hegemony. And God has ordained the Beast Regime, the Ten Toed Kingdom of Regional Economic Government, to rule mankind. The coming President of the EU will be one knowledgeable with the scheme of framework agreements. He must be a fierce leader as he will have a whole spectrum of angry people o 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’

Eventually, the Beast Regime, being mired in the clay of democracy and the iron of diktat, will crumble. The Sovereign will gain the upper hand, and install a one world government, as foretold in Daniel 7:7, with  one world bank, and provide global seigniorage as presented in Revelation 13:5-18.

Libertarianism, with its precept of personal sovereignty is now a bankrupt philosophy, as God is effecting his Sovereignty, by destroying nations so as to reveal the sovereignty of his Son, as seen in Revelation 2:27.  Sovereign leaders will be replacing sovereign individuals. Freedom and choice are illusions on the Neoauthoritarian desert of the Real. Angela Merkel and Nicolas Sarkozy are ambassadors of regional economic government, as Kathimerini reports Merkel, Sarkozy and Papandreou will hold talks with Papandreou expected to outline plans for privatisation and further spending cuts. They are laying down the rule of diktat in the EU.

The Beast Regime of Neoauthoritarianism, foretold in Revelation 13:1.4, is built upon many; it is fathered by the 300 luminaries of the Club of Rome, whose 1974 Call is clarion, compelling, and comes with authoritarian imperative for regional economic government, as an answer to the chaos coming from unwinding carry trades and deleveraging stocks, as well as the failure of sovereign debt

A Super European Government is coming. Between The Hedges relates Sueddeutsche Zeitung reports Italy is prepared to give up “all sovereignties necessary” to allow the creation of a European central government,” citing Foreign Minister Franco Frattini. The European Union’s existing contracts should be extended or changed if necessary to incorporate a “stabilizing finance mechanism,” according to the report. The ECB should gain a “political role,” while remaining an independent institution, Frattini said.

Because of the severity of a soon coming sovereign debt and banking collapse, Eurozone Leaders will waive national sovereignty, and announce regional framework agreements. One Leader, the Sovereign, will arise to speak for and to the Eurozone; and together with his partner, the Seignior, they will provide seigniorage, that is moneyness, based upon their combined word, will and way.

The European Super Government will be a type of revived roman empire, and will feature a Fiscal Union, whose Iron Chancellor, will rule with diktat, enforcing structural reforms, austerity measuyrs, and debt servitude. The people will be amazed by the new seigniorage, that is the new moneyness, and follow after the Beast Regime of Neoauthoritarianism, giving it their allegiance as held forth in Revelation 13:3-4.

3C … What do religions and philosophy provide?
The ultimate goal of Buddhism, is Nirvāṇa, a state of absence of desire and craving.

The Khazar’s are occupying Zion and practice Zionism.

The Austrian Economists, profess personal sovereignty, and seek the limitation of government intervention, and seek Freedom so as to use personal property as they see fit to practice Free Enterprise.

The christian has a white stone, Revelation 2:17, and as Peter Anderson relates Let us be encouraged by the fact that in our hand we hold an admission ticket to Heaven, and an admission ticket into His presence at this very moment. We hold an acquittal that was personalized with a name that identifies us uniquely.

4) … One might consider reading these related articles on bible prophecy
Bible In The News Britain, Europe and The Economic Crisis

Contender Ministries Is the EU the Revived Roman Empire

COG Writer Herman von Rompuy, the Greek Debt Crisis, and Where May this Lead?

The Trumpet The Greek Crisis Was Planned!

Jimmy DeYoung The President of The European Central Bank Is Calling For A One World Economic Structure

Grace To You The Beast Out of the Sea, Part 2

Jim Baker Show New Euro Empire Plot By Brussels

Bible In The News The Greek Crisis And The Future of Europe

Will The Rating Agencies Write Down Sovereign Ratings …. As A Result Of The EU Leaders Plan To Write Down Greek Debt And Leverage The EFSF? … The Seigniorage Of Diktat Commenced Today, October 27, 2011

October 28, 2011

Financial Market Report for October 27, 2011

1) … World Stocks, ACWI, World Small Cap Stocks, VSS, the BRICS, BIK, and Emerging Markets, EEM,  Emerging Market Small Caps, EWX, and the Russell 2000, IWM, soared on news of the European leaders plan to write down Greek debt and increase the lending capability of the EFSF.  The seigniorage of diktat has commenced.
The seigniorage of the European leaders rose up the most dead of zombie stocks. The word, will, and way of the European sovereigns rallied the stocks which were Neoliberalism’s stars. Today was the death  of the Keynesians. Keynesianism and Neoliberalism died today. Time Magazine wrote in 1965, We are all Keynesians Now.  Soon all be vassals of the Neoauthoritarians, living in debt servitude, to the vassal state of Neoauthoritarianism.  Stock ETFs rising the most today included the following: TAN, CHIX, EUFN, CHII, FGEM ALUM SLX COPX EWO, KCE,RSXJ, EMMT, CHIM, WCAT, PSP, ARGT, RZV, URA, SKYY, XHB.

Neoliberalism’s hot money stocks seen in this in this Finviz Screener increased an average of 7%.

The Too Big To Fail Banks, RWW, Nasdaq Banks, QABA, Banks, KRE, Emerging Market Financials, FGEM, China Financials, CHIX, Australian Dividends, AUSE, India Earnings, EPI, and Brazil Financials, BRAF, rose. Bespoke Investment Blog writes You know this market has gotten crazy when 100% of Financial sector stocks are trading above their 50-days!  Bank computer service firm FISV rose strongly

The Morgan Stanley Cyclicals Index, $CYC, rose 5%.

Junk Bonds, JNK, rose manifesting a shooting star and a triple top. Financial Preferred, PFF, rose 2% to just shy of 200 day moving average.

The volatile mobile home builder, CVCO, rose 17%.

Utilities, XLU, rose with the chart of  DTE, rose manifesting a likely dark cloud covering candlestick.

A number of banks, DB, BBVA, RBS, CS, CHIX, UBS, KB, LYG, STD, likely manifested what will turn out to be evening stars; all of the world’s leading banks, IYG, rose strongly as seen in this Finviz Screener.

Small Cap Industrial RBC Bearings, ROLL, likely manifested an evening star.  And Small Cap Industrial and Teledyne, TDY, likely manifested a shooting star.

Education Companies, LRN, APOL, rose strongly

Stocks manifesting likely evening stars include PII, INTC, XRAY, ORLY,

The Yen’s, FXY, rose to 129.79. And the world’s major currencies, DBV, and emerging market currencies, CEW, rose even more strongly with the Commodity Currencies, CCX, leading. Rising currencies, blasted world government bonds, BWX, and emerging market bonds, EMB, higher. But  pummeled the US Dollar, $USD, which closed at 74.88 … The currency demand curve, RZV:RZG, rose, but still shows that a debt deflation, that is currency deflation, bear market is underway. The emerging markets yen carry trade, CEW:FXY, rose to 50 day moving average … Jamie Saettele, of Daily FX wrote the USDJPY has finally broken down, confirming the 5th wave interpretation. Look lower towards the measured 7400 level. I plan on playing an early November (bullish) reversal. Previous – “The sharp advance may be the beginning of the end of the wave 4 correction that has been unfolding since August. Currently testing Elliott channel resistance, 7784 is also resistance. As long as price is below 7956, I favor a top, reversal and decline to all time lows in order to complete 5 waves down from April for USD/JPY.

Copper, JJC, Timber, CUT, Base Metals, DBB, Silver, SLV, and oil USO, jumped, leading commodities, DBC, higher.

Bonds, BND, turned lower. The longer out US Treasuries, ZROZ, and EDV, fell more than the US Ten Year Notes, TLT, causing the 30 10 Yield Curve, $TYX:$TNX, $TYX:$TNX, to fall lower as reflected in the Flattner ETF, FLAT, falling and the Steepner ETF, STPP, to rise.  Of note, LQD, is trading near its all time high, but BLV is trading sharply lower. The BLV:LQD ratio shows that investors are rapidly disinvesting from longer duration corporate bonds. A falling yield curve shows investors are derisking out of bonds.

2) … Will the rating agencies declare a default or write down sovereign ratings as a result of the EU’s Greek writedown and the leveraging of the EFSF?

2A) … The EU sets 50% Greek writedown.
Bloomberg reports EU Sets 50% Greek Writedown, $1.4T in Rescue Fund. European leaders cajoled bondholders into accepting 50 percent writedowns on Greek debt and boosted their rescue fund’s capacity to 1 trillion euros ($1.4 trillion) in a crisis-fighting package intended to shield the euro area.

Sarkozy said the bankers were escorted in “not to negotiate, but to inform them on decisions taken by the 17 and then they themselves went on to think and work on it.”Luxembourg Prime Minister Jean-Claude Juncker said the banks’ resistance was broken by a threat “to move toward a scenario of total insolvency of Greece, which would have cost states a lot of money and which would have ruined the banks.”

The resulting “voluntary” losses by bondholders were the key plank in a second bailout for Greece, which was awarded 110 billion euros in May 2010 at the outbreak of the crisis. The new program includes 130 billion euros of official aid, up from 109 billion euros envisioned in July. The Washington-based IMF, meanwhile, said it is ready to disburse its 2.2 billion-euro share of the next installment of Greece’s original bailout. The release of the euro zone’s 5.8 billion-euro share was approved last week.

The Bloomberg article quotes Laurent Bilke, global head of inflation strategy at Nomura International Plc in London, as saying “There are several issues left open, but I do believe that getting a more necessary debt relief for Greece is a pretty important step.

The WSJ reports that Herman Van Rompuy, who called the Eurozone leaders for the first summit in May of 2010, relates that the agreed upon new voluntary writedown for private greek creditors will be 50%

An inquiring mind asks, with a 50% writedown, are the banks any more solvent, are the bonds any more tradeable, are the bonds worth 50% ?

2B) … The EU plans to leverage the EFSF.
Reuters reports Greek Prime Minister George Papandreou said in Brussels after the deal was struck. “The debt is absolutely sustainable now … Greece can settle its accounts from the past now, once and for all,”

An inquiring mind asks, does a 50% write down on Greek debt provide substantive relief? Does it make the Greek indebtedness any more sustainable, that is, can the people of Greece pay off their debts with any amount of relief?

Reuters continues, A top lawyer for the International Swaps and Derivatives Association said that because banks had agreed to accept the losses, the deal was unlikely to trigger a “credit event” in which default insurance contracts would be paid out.

An inquiring mind asks were the banks were coerced into accepting losses and should this trigger a default?

Reuters presents the details of the EFSF leverage. Around 250 billion euro remaining in the fund will be leveraged 4-5 times, producing a headline figure of around 1.0 trillion euros, which will be deployed in a variety of ways. The EFSF will be leveraged in two ways, either by offering insurance, or first-loss guarantees, to purchasers of euro zone debt in the primary market, or via a special purpose investment vehicle, SIV, that will be set up in the coming weeks and which is aimed at attracting investment from China and Brazil. The methods could be combined, giving the EFSF greater flexibility, the euro zone leaders said. But EU finance ministers are not expected to agree on the nitty gritty elements of how the scaled up EFSF will work until some time in November, with the exact date not fixed. There is also concern about Italian Prime Minister Silvio Berlusconi’s commitment to implementing reforms seen as crucial for restoring confidence in the bloc’s third largest economy. Dogged by scandals, Berlusconi has promised to raise the retirement age to 67 by 2026 and attempt other reforms, but the EU is reserving judgment.

And an inquiring mind asks are the means to increase the EFSF’s firepower achievable? Will the rating agencies downgrade sovereign debt due to the leveraging of the EFSF? Will the markets eventually see the leverage as either ineffective or a monetization of debt and call interest rates higher? Will anyone or any organization purchase leveraged or guaranteed bonds?  Would you buy a CDO backed by the European sovereigns?

Euro Intelligence provides the best of coverage in their for fee investment newsletter. I recommend that one purchase their news coverage which relates that FT Deutschland said this morning that Angela Merkel, Nicolas Sarkozy, and Jean-Claude Juncker made the banks an offer they could not refuse. Either they accept a 50% voluntary haircut, or an even larger haircut will be forced on them. The European Council said in its statement that this was a unique agreement that applied only to Greece. Of course, such pledges lose credibility once they are broken, as was a similar pledge in relation to the July agreement of a 21% haircut. It will take until the end of the year when the details of this agreement will have been worked out.

EuroIntellilgence adds that the IIF has until end of the year to deliver the voluntary participation.

And EuroIntelligence relates Herman van Rompuy said leveraging was no big deal, since banks have been doing this for centuries.

An inquiring mind asks will the Institute for International Finance, IIF, consider the European leaders voluntary haircut?

2C) … The EU calls for bank capitalizations.
The Telegraph reports European Banks Given Just Eight Months to Raise €106bn.  And Bloomberg reports Greek banks to raise 30 Billion, Spain 26, France 9, Italy 15 and other banks the balance.
European Union talks with banks on bondholder losses as part of a second Greek bailout ran aground, dimming the chances for a comprehensive strategy at a summit to stamp out the debt crisis. A statement issued close to midnight in Brussels by the Institute of International Finance, the bank lobby, said there was no agreement “on any element of a deal.” The outlines of a deal to safeguard banks emerged, centering on a June 30, 2012 deadline for lenders to reach core capital reserves of 9 percent after writing down their sovereign debt holdings, according to a statement after all 27 EU leaders met. A group of 70 European banks will need to raise 106 billion euros in the next eight months to meet the goal, the European Banking Authority, the banking regulator, said. Greek banks need 30 billion euros; those in Spain need 26.2 billion euros. In France, the need totals 8.8 billion euros and in Italy, it’s 14.8 billion euros.  And Mike Mish Shedlock, relates Banks that fail to raise enough capital on the markets will first tap national governments, falling back on the EFSF rescue fund only as a last resort

An inquiring mind asks, is it believable that the French banks only need 9 Billion in recapitalization? Can the banks be recapitalized, or will they eventually be nationalized and known as the government bank or gov bank for short? Have the European leaders have kicked the can down the road, and if so, for how long? Till next year?

2D …Bloomberg reports Italy Is Key to Euro-Zone Crisis, Barclays’s Callow Says

2E) … New sovereign authority is emerging.
Gary of Between the Hedges writes One of the large problems over the last 15 years is the market rewarding politicians for short-term “fixes” to major problems that have devastating longer-term consequences.

Obama in his first official act under Neoauthoritarianism provides a stealth bailout to loan owners. IrvineRenter relates By directing the GSEs to relax their eligibility requirements for refinancing, the Obama administration will increase the losses on the GSE portfolio and add to the final cost of the bailout.

Nature economist Elaine Meinel Supkis writes The Greeks know what is happening next so they are Sending their savings to Switzerland!  Wealthy Greeks stashed 200 billion euros in Switzerland and the little people are stashing their money under the bed or buying gold in preparation for fleeing Greece.  Just like in the stock market crash/currency crisis of the Great Depression, people flee their home states.  Inside the US, people fled places like Oklahoma for California.  States tried desperately to stop citizens from entering and the system nearly collapsed here

The EU banks need ‘core tier 1 capital’ which is a very funny thing since there is a huge, immense debate over ‘what is capital’ which as raged for um…about since a book called ‘Das Kapital‘ appeared 150 years ago!  Defining ‘capital’ has been a messy, messy business.  Much of what passes for ‘capital’ has turned into ‘debt instruments’ and of course, stocks.  And then there is FOREX accounts that hold raw ‘money’.  Money, by the way, is another financial thing that is hotly debated.  Right now, all it is ‘pieces of paper and or numbers on a computer somewhere’ and has only a tenuous connection with reality which is why it threatens constantly to fly to infinity and then collapse to zero.

And what is ‘capital’?  Karl Marx had this brainstorm: it is LABOR when added to COMMODITY MATERIALS and then advanced via cooperative actions into producing GOODS that can then be sold in markets or sustain societies.  It is not stocks, it isn’t bonds, it isn’t printed paper money and above all, it is not gold.  It is labor added to materials. Kill off labor and you have no capital.  All the gold in Midas’ coffers couldn’t buy him a drink of water because it turned to gold.  That is, eliminate labor from capital accumulation via cutting wages and accumulating all wealth at the top and voila: capital vanishes.

People really think this whole thing is now over.  It isn’t over for the simple reason, the EU can loot Germany’s capital base but they can’t look China’s capital base.  Even so, European Debt Deal: Markets Rally Because It Could Have Been Worse.  The ‘worse’ part will get worse because all countries are now frantically cutting public and private debt as fast as possible.  They must do this to create ‘capital’ since the game of using debt as capital has collapsed.   Neither Germany nor China are holding toxic levels of debt capital.  They hold industrial/manufacturing capital which can be systematically destroyed by the EU and US via currency collapse and defaulting on debts.

Regional economic government is rising to replace sovereign nation states as sovereign authority.

Traditionally sovereign nation states have effected seigniorage by issuing sovereign debt and this has expanded both the economy and investments.  But with the EU leaders Crisis Plan and use Force Majeure to write down debts they are effecting a Eurozone wide political, economic, and financial coup.  In as much as news reports relate that they are pleased with the efforts of the Italian President in beginning to press for structural reforms, pension overhaul and austerity measures, the leaders are now sovereign in Europe: sovereign authority is now in the hands of the EU leaders.

The evidence is clear, cogent and convincing, that the EU leaders are now the sovereign authority. Bloomberg reports Prime Minister George Papandreou urged Greeks to support his efforts to revamp the economy after euro area leaders hammered out a new bailout package for the country and imposed deeper losses on bondholders.  Read and weep, a new bailout package and deeper losses on bondholders, means the EU leaders are now the ruling authority in the EU.

Leaders issuing diktat has replaced central banks issuing treasury bonds. The financial markets gave their faith to the leaders authority by rising strongly. The markets gave allegiance to the leaders. The seigniorage of diktat commenced on October 27, 2011 as the financial markets accepted the EU leaders plan for resolution of the European sovereign debt crisis, and the write down of Greek bonds by fifty percent, and as Prime Minister George Papandreou urged Greeks to support his efforts to revamp the economy.

The European Leaders spoke, and a catastrophe was averted but not avoided. Sovereign Armageddon, a credit bust and global financial collapse, is now in abeyance, it cannot be avoided. Sovereign default is coming. The Leader’s decree took a bite out of credit default swaps today. Mike Mish Shedlock writes As a result of labeling 50% haircuts “voluntary”, Credit Default Swap contracts have proven to be useless when it comes to protecting against sovereign default. The serious implication is investors will need to find another way to hedge; Derivatives King Always Win.

Neoliberalism was characterized by wildcat finance, a Doug Nolan term. But, Neoauthoritarianism is characterized by wildcat governance, as The Telegraph reports Italian MPs In Fist Fight Over pensions. Mr Bossi has objected to plans to reform Italy’s generous pension system, crippling the government’s attempts to convince the EU that it is serious about embarking on serious structural reforms to kickstart the moribund economy.  In a television interview, Mr Fini claimed that Mr Bossi’s opposition to a pensions overhaul was linked to the fact that his wife had retired on a generous state pension at the age of 39 from her job as a teacher.  Italy’s complex and outdated pensions system allows some state employees to retire unusually early.

Despite the statement of leaders, the Greece has lost debt sovereignty. And its debt is not sustainable.  The Greek people receive seigniorage aid from the Troika. The fiscal spending resource of the Greeks does not come from debt, but rather the sovereigns of the Troika.  Because those in the EU, live in a currency union, and the leaders have sovereign authority with a plan and authority over debt, the debts of one nation are now the debts of all nations. All one one, living in debt servitude to the sovereign leaders.      Bloomberg continues with the doublespeak of the leader relating  Papandreou said, “We negotiated and managed to erase a very important part of our debt. Tens of billions of euros have been lifted from the backs of the Greek people.” And  Sarkozy said “Greece can save itself, but it has to make efforts.” The reworked deal on Greece will cut the debt ratio to 120 percent of gross domestic product by 2020 from a forecast of about 170 percent for next year. The 130 billion euros in public funding plus the 50 percent writedown on Greek debt follows a fully taxpayer-funded package of 110 billion euros in May 2010

3) …. Monetary contraction has intensified in Portugal
Ambrose Evans Pritchard writes Portugal enters ‘Grecian vortex’  Monetary contraction in Portugal has intensified at an alarming pace and is mimicking the pattern seen in Greece before its economy spiralled out of control, raising concerns that the EU summit deal may soon washed over by fast-moving events.

4) … Between the Hedges relates People’s Daily reports More than 60% of Chinese bankers surveyed felt pressure from limited lending and uncertainty in economic growth and inflation trends, citing a survey by the China Banking Association.  Chinese Financials, CHIX, blasted 6% higher today.

5) … In today’s sovereignty news
Front Page Interviewer with the David Horowitz Freedom Center questions Sovereignty or Submission? And quotes John Fonte, a senior fellow and director of the Center for American Common Culture at the Hudson Institute.in interview, Today the forces of global governance are a major actor in world politics and a serious adversary of our constitutional regime. My book is a moral and intellectual defense of democratic, or what I call “Philadelphian” sovereignty.

Stocks Trade Lower In Front Of Conclusion Of EU Summit … Might A EU Leader Arise To Speak In The Name Of A Collective Europe?

October 26, 2011

Financial Market Report for October 25, 2011

1) … The risk trade rally in stocks likely ended today, October 25, 2011
New Zealand, ENZL, and Italy, EWI, led world stocks, ACWI, world small caps, VSS, emerging markets, EEM, and small cap pure value, RZV, lower.

Yahoo Finance Briefing.com reports Precious metals rallied sharply today. Gold prices surged 2.9% to settle at $1700.40 per ounce, while silver prices finished up 4.4% at $33.05 per ounce. Crude oil prices added to yesterday’s rally, adding 2.1% to finish at $93.17 per barrel. Most of crude’s gains came in electronic trade. Futures traded in a relatively small range throughout the session, but once again closed the gap between Brent prices. Gold, GLD, rose 2.6% to 165. Silver, SLV, rose 5% to 32, Oil, USO, rose 1% to manifest a questioning doji at 35.80. Brent Oil, BNO, traded unchanged  Investment analyst Jack Chan of JC’s Buy and Sell Signals, gave a buy signal on gold today. I believe that the rise in Silver, SLV, does not constitute a buy; its chart shows a strong rise in a bear flag. I would have gone short silver mining stocks, such as SIL, and SIVR, as in a bull market one buys in dips; and in a bear market one sells into rises.

Between the Hedges reports Stocks Falling Sharply Into Final Hour On Rising Global Debt Angst, Global Growth Worries, Rising Energy Prices and Financial Sector Pessimism.  The TED spread is now at the highest since June 2010. The Libor-OIS spread is at the widest since July 2010. The 2-Year Euro Swap and 2-Year swap spreads are still very close to their recent highs, which is also noteworthy considering the recent strong equity advance. The Western Europe Sovereign CDS Index, the European Financial Sector CDS Index and the Asia-Pacific Sovereign CDS Index are still near their records and trending higher. China Iron Ore Spot continues to pick up downside steam, plunging -31.4% since February 16th and -27.2% since Sept. 7th.

The end of the risk trade rally is seen in Junk Bond, JNK, leveraged buyouts, PSP, as well as  Solar Energy, TAN, Airlines, FAA, Shipping, SEA, Nanotechnology, PXN, Wildcaters, WCAT, Small Cap Real Estate, ROOF, High Paying Dividend, ABCS, Gaming, BJK, Chinese Small Caps, HAO, Home builder, ITB, and XHB, Nasdaq Internet, PNQI, Dow Internet, FDN, Internet Retailers, HHH, Small Cap Industrials, PSCI, Cloud Computing, SKYY, China Materials, CHIM, Coal Miners, KOL, Aluminum Producers, ALUM, and Copper Miners, COPX turning lower.

Steel manufacturers, X, fell 9%, and AKS fell 14%, turning steel, SLX, 4%, lower. Bloomberg reports Lower Demand Has Iron Ore Under Fire. The iron-ore sector has remained relatively buoyant in the face of broad commodity losses since the summer. But a deterioration in demand for steel in the past six weeks has put prices under pressure. Prices for steel have fallen as the deteriorating economic situation in the West has hit demand and sentiment. In addition, credit tightening in China continues to weigh on heavy industry there.

S&P Oil Producers, XOP, 4%, and Small Cap Energy, PSCE, and Wildcatters, WCAT, fell 3%. Energy stocks falling lower included DNR, MPC, VLO, PXD, EOG, QEP, NBL, RRC, HP, EQT, as seen in this Finviz Screener.

Yanzhou Coal Mining, YZC, fell 6%, leading Chinese Materials, CHIM, lower.

Basic Materials and Banking leader, Australia, EWA, traded 3% lower.

JDS Uniphase, JDSU, fell 8%, turning networking, IGN, 3% lower.

Wood manufacturers, WOOD, traded 3% lower.

Dow Internet, FDN, Internet Retailers, HHH, and Nasdaq Internet, PNQI, traded 3% lower,

Quality Distribution, QLTY, Landstar, LSTR, Hub Group, HUBG, led Transportation, IYT, lower.

Reynolds America, RAI, and Altria Group, MO, led Tobacco stocks lower.

Medicines, MDCO, fell 5%, turning the sure but sure, plodding turtle Nasdaq Biotech, IBB, turned 3% lower.

Consumer Discretionary leader Hansen Beverages, HANZ traded parabolically lower.

Utilities, XLU, and American Water Works, AWR, traded lower

Verizon Communications, VZ, traded lower.

Great Lakes Drudge and Dock, GLDD, Granite Construction, GVA, Tutor Perini, TPC, Mastec, MTZ,,  led heavy construction as seen in this Finviz Screener lower.

Credit providers, seen in this Finviz Screener, traded lower.

Leading mining companies seen in this Finviz Screener, traded lower.

Farm and Equipment Manufacturers seen in this Finviz Screener traded lower.

Vehicle Manufacturers seen in this Finviz Screener traded lower turning Automobiles, VROM, and CARZ, lower.

DHT Holdings, DHT, led Shippers, SEA, seen in this Finviz Screener lower.

Medical equipment and supplies whole sellers HWIV, HSIC, OMI, PDCO, CAH, ABC as a group seen in this Finviz Screener turned lower.

3M, MMM, the manufacturing component of the Morgan Stanley Cyclicals Index, $CYC, traded 6% lower, as Bloomberg reports 3M Declines After Cutting Forecast. 3M Co. fell the most in almost a year after the maker of LCD television parts and Scotch-Brite sponges cut its 2011 forecast and posted profit that trailed analysts’ estimates for the first time in 10 quarters. Earnings will be $5.85 to $5.95 a share this year, the St. Paul, Minnesota-based company said today in a statement. 3M had predicted $6.10 to $6.25, including a 22-cent cost related to pension benefits. Electronics sales are slowing after several quarters of what 3M called “very good growth.” The company, whose stock rallied 14 percent this month before today, is seeing the effect of a slowdown in developed countries earlier than other manufacturers because some of its products, such as components for liquid-crystal-display TVs, are tied to consumer demand.

Investment Brokers, IAI, and Investment Bankers, KCE, and the Too Big To Fail Banks, RWW, led Financial shares, EUFN, Australian Dividends, AUSE, Emerging Market Financials, FGEM,  Brazil Financials, BRAF, and Banks, KRE, lower.

Chinese Financials, CHIX, traded lower as WSJ asks China’s Shadow Banking System: The Next Subprime? Of note, Copper, JJC,  the collateral used in the this ponzi financing system, trade 1% lower.

UK Bank, HDB, and Brazil Bank, BSBR, led the world banks, seen in this Finviz Screener, lower.

Old National Bancorp, ONB, Bancorp South, BXS, Regions Financial, RF, SunTrust Banks, STI, US Bancorp, USB, and Northern Trust, NTRS, Hancock Holding, HBHC, led regoinal banks, IAT, lower.

Trustco Bank, TRST, S&T Bancorp, STBA, led Nasdaq Banks, Towne Bank, TOWN, Metro Bancorp, METR, traded lower, leading Nasdaq Banks, QABA lower.

The credit sensitive Russell 2000, IWM, traded 3.0% lower.

The US Dollar, $USD, traded up to 76.12.

The 200% US Dollar, ETF, UUP, closed at 21.50; a likely bottom as the currency demand curve, RZV:RZG, manifested a dark cloud covering candlestick, suggesting that the recent demand and use of currencies is exhausting.  The weekly chart of the optimized carry ETF, ICI, manifested an evening star, suggesting that carry trade investing has come to an end.

The Yen, FXY, rose to 129.72. And the Canadian Dollar, FXC, the South African Rand, SZR, and the Australian Dollar, FXA, all traded lower; turning the commodity currencies lower, CCX, lower. The world major currencies, DBV, and emerging market currencies, CEW, traded lower, as did the Euro, FXE.

An inquiring mind asks is the trade of the USDJPY down to 75.85 finished, or is a fall lower to 74.70, which is 61.8% resistance in store as seen in this Action Forex chart article USD/JPY MidDay Outlook.

Action Forex in this chart article EUR/JPY Daily Outlook, shows the EURJPY at the middle of a broadening chart pattern; and as the Street Authority saying goes, when you see the broadening top, the market will eventually drop.

Bloomberg reports Reserve Bank of India Raises Rates, Signals End to Cycle on Growth Concern. India raised interest rates for a 13th time since the start of 2010 and signaled it’s nearing the end of its record cycle of increases as the economy cools. Bonds rose and the stock index climbed to near a three-month high. “The likelihood of a rate action in the December mid- quarter review is relatively low,” the Reserve Bank of India said in a statement in Mumbai today after it boosted the repurchase rate to 8.5 percent from 8.25 percent. The Reserve Bank today cut India’s growth estimate, predicting the second-slowest expansion in nine years, and blamed the government’s “expansionary” budget for stoking inflation. “The damage that rate increases are starting to inflict on the economy is getting larger,” said Sanjay Mathur, Singapore- based head of research and strategy for Asia excluding Japan at Royal Bank of Scotland Group Plc. India’s benchmark wholesale-price inflation was 9.72 percent in September, staying above 9 percent since the start of December. By comparison, consumer prices rose 7.3 percent in Brazil, 6.1 percent in China and 7.2 percent in Russia.

2) …  Graham Summers of Phoenix Capital Research asks Guess Who’s Even More Leveraged Than European Banks?
While the world is awash in liquidity, no one seems to notice that it’s actually in the form of leverage or cheap debt, NOT real capital or equity.  The US banking system as a whole is leveraged at 13-to-1. While this is not horrible relative to Europe’s banking system (more on this in a moment), these levels still mean that an 8% drop in asset values wipes out ALL equity.

Then you have Europe’s banking system, which is leveraged at 26-to-1. Anecdotally, this is borderline Lehman Brothers (30 to 1). Financially, these levels, even a 4% drop in asset prices wipes out ALL equity.

Japan’s banks are leveraged at 23 to 1. France’s are 26 to 1. Germany is 32 to 1.You get the idea. However, worse than any of these the US Federal Reserve. With $2.8 trillion in assets and only $52 billion in capital, the Fed is leveraged at 53 to 1. Yes, 53 to 1. My question is: if the Fed prints money for itself, is it “raising capital?” More to the point if that was true why doesn’t the Fed do it? Why maintain these leverage levels? Only Bernanke can know; but the rest of us should feel a very serious shudder when we consider that THE bank that’s supposed to bailout the world/ fix the problems plaguing the financial system, is in fact even more leveraged that most of the institutions it’s helping.

Yes, stocks are rallying now based on the view that more QE 3 or monetary easing is on the way; but they’re missing the BIG picture here. The BIG picture is that there is far too much debt in the financial system. Europe’s getting taken to the cleaners today; but these very same issues are going to spread to Japan and the US in short order. Even China, which is considered THE creditor nation of the world, is estimated to post a REAL Debt to GDP ratio of 200%. Yes, 200%. China. So the idea that somehow the world’s going to pass through this current chapter in its history without some MAJOR fireworks- systemic failure, seems a little too optimistic. Folks, something VERY bad is brewing behind the scenes. The Sarkozy- Merkel talks, the short-selling bans, the halted stocks, the leveraged EFSF, the hints of QE 3, all of this is telling us that the financial system is on DEFCON 1 Red Alert. Ignore stocks, they’re ALWAYS the last to “get it.” The credit markets are jamming up just like they did in 2008. The banking system is flashing all the same signals as well.

3) … Sovereign debt angst grew larger today as a leadership default emerged over resolving the European Sovereign Debt Crisis; the issue being European Sovereigns are massively indebted and European banks are massively under-capitalized.
One can visualize the crisis in the chart of the Athens stock market and the Bank of Greece, together  with the European shares and the European Financials. And Reuters reports What EU Leaders Must Decide At Crisis Summit

CNBC reports EU Summit Unlikely to Reach Deal. A European official says there is now serious doubt that EU heads of government will agree on a broad package of financial measures at a summit meeting in Brussels on Wednesday. And AP reports AP reports Italian government on the brink as EU plan stalls. And Credit Writedowns writes Italians Rally Around Berlusconi After The Merkozy Smirk.  New York Times reports Pressed Hard Italy’s Cabinet Fails To Act. Morningstar relates 5 Hard Truths the Eurozone Deal Must Address. OpenEurope writes Berlusconi feels the Heat (Again). Ambrose Evans Pritchard reports EU Rescue Plans Hostage To Raw Politics.

The Telegraph reports Italy Battles To Meet EU Deadline On Economic Reforms.  Silvio Berlusconi, the embattled Italian prime minister, is in last-ditch talks on a comprehensive plan to boost economic growth in Italy with just hours to go on an EU-imposed deadline.A Cabinet meeting to draft measures on Monday evening ended without agreement after Mr Berlusconi’s coalition allies in the Northern League party opposed raising the pension age to 67 years – a measure demanded by the EU. Northern League leader Umberto Bossi said the disagreement on pension reform could bring down the government and force early elections. “The government is at risk.,” he said. “The situation is difficult, very dangerous. This is a dramatic moment.” He also added that If the government changed the pension system, voters “will slaughter us”. EU leaders, led by German Chancellor Angela Merkel and French President Nicolas Sarkozy, have demanded that Berlusconi present firm plans for growth and reducing Italy’s massive debt in time for a summit meeting in Brussels on Wednesday.

CNN Money reports Europe Grimmer By The Minute  Calls have been growing for private sector banks and investors to voluntarily accept larger writedowns, or haircuts, on the value of Greek government bonds. Under a July agreement, bondholders had agreed to a 21% reduction on the face-value of Greek debt. But the latest estimates suggest that writedowns of 50% or more will be necessary. It won’t be easy. Analysts say talks with the Institute of International Finance, which represents the interests of banks that hold Greek debt, have been challenging. IIF president Charles Dallara said in a statement that the institute and EU officials continue to “explore options” for Greece. But he added that “there are limits” to what the private sector will tolerate as voluntarily, warning that any “unilateral actions would be tantamount to default.” Analysts said the writedowns must be voluntary because an involuntary haircut could trigger credit default swaps, which act as insurance policies on bonds.

Between the Hedges relates Handelsblatt reports Plans to increase the euro rescue fund’s firepower are aimed at supporting Italy and should be rejected, citing German Free Democratic Party lawmaker Frank Schaeffler. The euro region’s sovereign debt crisis would take a “new dimension” if Italy would require access to the European Financial Stability Facility, citing Schaeffler. Even a leveraged EFSF won’t be big enough to support Italy, Schaeffler said.

Bloomberg reports German, French Notes Advance on Debt-Crisis Concerns; Greek Bonds Slide. German and French two-year notes rose, with Germany’s yields dropping the most in seven weeks, amid speculation European leaders will fail to agree on a solution to the region’s debt crisis and avoid a Greek default. The securities extended gains after the U.K. government said a meeting of European Union finance ministers scheduled for tomorrow had been canceled. The EU leaders’ summit will still take place as scheduled, the statement said. Greek notes fell, sending two-year yields toward a euro-era record

Bloomberg reports Bigger Bailout Fund for Europe Needs Work as Germany Faces Parliament Vote. Boosting the effectiveness of Europe’s bailout fund will require further talks with investors as German lawmakers prepare to vote on its new powers tomorrow, a European Union document showed. While the European Financial Stability Facility can be bolstered under two models that may be combined and implemented “quickly,” the extent to which the fund is leveraged can only be ascertained after discussions with investors and rating companies, the document provided to German lawmakers said. The draft underscores the gaps remaining in European Union efforts to address the debt crisis as Chancellor Angela Merkel and fellow leaders prepare to return to Brussels tomorrow for a second summit in four days. EU leaders are still jousting with banks over the size of losses they take on Greek bonds while deliberating over leveraging the fund after ruling out tapping the European Central Bank’s balance sheet. “A lot of people will wait to see the detail” of how the EFSF capacity is increased, Kit Juckes, head of foreign-exchange research at Societe Generale SA in London, said in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene.

Bloomberg reports Italy, Spain May Be Biggest Losers in European Bank Capital Plan. Italian, Portuguese and Spanish lenders will bear the brunt of a 100 billion-euro ($139 billion) plan to recapitalize European banks, while their counterparts in the U.K., Germany and France may avoid raising additional funds. European policy makers, trying to reach agreement before a meeting in Brussels tomorrow on how to tackle the euro zone crisis, may force banks to boost core Tier 1 capital to 9 percent of risk-weighted assets by the end of June, two people with knowledge of the talks said. UniCredit SpA, Italy’s largest bank, Banco Comercial Portugues SA, Portugal’s second-biggest, and Banco Bilbao Vizcaya Argentaria SA, Spain’s No. 2, are among companies analysts say may have to raise the most capital. Lenders may be able to mark up the value of bonds that are trading above face value, allowing them to mitigate the cost of writing down their southern European sovereign debt, the people said. That may benefit U.K. and German lenders such as Royal Bank of Scotland Group Plc and Deutsche Bank AG, whose biggest holdings of bonds are those issued by their own governments. It may also allow French banks to avoid further fundraisings. “The mark-ups will definitely help German, northern European and British banks while hurting the peripheral countries,” said Christopher Wheeler, a London-based analyst with Mediobanca SpA.

Bloomberg reports Spain Slipping on Deficit Means Possible Contagion: Euro Credit. Spain will struggle to meet its deficit-reduction target this year as economic growth slows, threatening further debt-crisis contagion as Europe fails to erect a fail-proof firewall. “They will never make it,” said Ludovic Subran, chief economist at credit insurer Euler Hermes SA in Paris. “Our September forecast sees Spain’s deficit at 7 percent” of gross domestic product this year, he said, adding that the prediction was made before the nation’s credit rating was cut this month. Spain’s benchmark 10-year bond climbed seven basis points to 5.54 percent yesterday after European leaders ruled out tapping the European Central Bank’s balance sheet to boost the region’s rescue fund. The government has aimed for a deficit equal to 6 percent of GDP this year, down from 9.2 percent in 2010. Data on the deficit for the first nine months of 2011 will be published sometime this week. European leaders’ failure to end the debt crisis risks “a vicious circle” in which “deficit reduction weighs on growth, rendering targets unachievable and triggering more downgrades, eventually leading” to default, said Angel Laborda, chief economist at savings-bank foundation Funcas in Madrid. Policy makers must ensure that euro-area nations’ debt will be repaid even without growth, he said. While the European Union said yesterday that Spain is on track to meet its deficit goal for 2011, economists are revising their forecasts to reflect dwindling Spanish tax revenue, rising borrowing costs, and fiscal slippage in the semi-autonomous regions and in the social-security system.

Open Europe reports Banks and Eurozone leaders remain split over writedown of Greek debt; Merkel unlikely to get coalition majority in vote on leveraging the EFSF.  Eurozone leaders and banks remain split over the level of write downs which Greek bondholders should take. European officials are pushing for a 60% reduction in the ‘face value’ of Greek bonds, while the International Institute of Finance (IIF), representing the bondholders, is currently only willing to accept a 40% ‘net present value’ write down (making the real write down even lower) and is still demanding €55bn in collateral from the eurozone, a €20bn increase on the amount agreed under the 21 July deal.
There is still not definite consensus on how to beef up the eurozone’s bailout fund, the EFSF. Eurozone countries are discussing two methods of boosting the EFSF; through a special-purpose fund to buy troubled bonds, and through another fund that would guarantee bondholder losses. Separately, the Telegraph reports that the ECB ramped up purchases of government bonds in recent days, buying €4.49bn last week, double the previous week’s €2.24bn.
Meanwhile, following a U-turn by Angela Merkel’s CDU party, the German Bundestag will vote on the leveraging of the EFSF at a full plenary session, and not as previously agreed only by the Parliament’s Budgetary Committee behind closed doors. FAZ reports that the governing coalition is unlikely to secure a majority on its own, meaning it would have to rely on the opposition to support its position. Deputy CDU/CSU fraction leader Wolfgang Bosbach has told DPA he intends to vote no tomorrow, saying“the objections of the critics are not eliminated, but rather they have been confirmed.”
Open Europe’s Director Mats Persson is quoted in the Independent in an article looking at the personal relationships between European leaders. Of the relations between French President Nicolas Sarkozy and German Chancellor Angela Merkel, Mats said, “It’s never been a fantastic relationship, but they are stuck with each other”. Open Europe’s estimate of the cost of EU regulation was cited by Channel 4 News, and Open Europe was also quoted by the Mail.
FT FT 2 FT 3 FT 4 FT 5 FT 6 FT 7 FT 8 CityAM CityAM 2 WSJ WSJ 2 WSJ 3 Telegraph Telegraph 2 Irish Independent Irish Independent 2 Irish Times BBC Times Independent Mail IHT EUobserver EUobserver 2 El País Welt FAZ FAZ 2 Suddeutsche Suddeutsche 2 Suddeutsche 3 Suddeutsche 4 Bild FTD FTD 2 Channel 4 News Le Figaro La Tribune La Tribune 2 Les Echos Le Monde FT: Sarkozy FT: Soros Irish Times: Beesley Irish Times: Leader Irish Times: O’Brien Times: Poirier Independent: Popham BBC: Flanders IHT: Krugman Le Figaro: de Kerdrel Suddeutsche: Prantl FAZ: Mussler Bild: Kleine

OpenEurope asks A German Eurosceptic Party on the Horizon?

OpenEurope relates Doom, Gloom and a Dash of Slapstick: Commentariat Responds To EU Summit

OpenEurope relates A European “Union”

EuroIntelligence provides the best of coverage in its for fee newsletter service. I recommend that one purchase it. An example of there excellent report is they relats CDO In Full, And A Murder Threat

  • Reuters has details of the two EFSF options under discussion: bond insurance scheme with a seperable “partial protection scheme”, and an SPV with at least three tranches: a first lost equity tranche, a mezzanine instrument, and a senior tranche;
  • the paper seems to express a preference for the second option;
  • the summit agreement should pave the way for an immediate purchase of Italian bonds through the EFSF right after the summit;
  • this is the reason why Angela Merkel and Nicolas Sarkozy exerted so much pressure on Silvio Berlusconi, but Berlusconi responded with anger;
  • there was no progress on economic reforms at a cabinet meeting in Rome;
  • the Bundestag will hold a full vote on the leveraged EFSF on Wednesday morning, with opposition parties not yet committed;
  • Merkel’s coalition majority is expected to shrink further;
  • the EU now seeks a 60% “voluntary” haircut on Greek bonds;
  • there are now visible signs in Athens of a bank run;
  • the Greek government hopes to secure opposition votes in support of the legislation for a haircut;
  • German newspapers report that the European summit will de facto instruct the ECB to continue with their bond purchases;
  • bank recapitalisation plans hit Italy, Spain and Portugal the most;
  • Berlusconi, meanwhile, is pondering whether or not he should kill Lorenzo Bini-Smaghi

EuroIntelligence continues Financial Times Deutschland and Frankfurter Allgemeine Zeitung have a report on the summits reaction to Lorenzo Bini-Smaghi’s failure to resign from the ECB’s executive board (for now at least). Nicolas Sarkozy got angry because he cannot now appoint a Frenchman to succeed Trichet on the committee. Contrary to his promise to the French president Berlusconi has not yet managed to lure away Bini Smaghi whose mandate at the ECB has two further years to run. “Sarkozy started to get angry”, Berlusconi told reporters after the summit. “So I asked him at one point in time: What am I supposed to do? Should I kill him?” Berlusconi now appeals to Bini Smaghi to resign voluntarily by the end of the year in order not to become a “casus belli” between Italy and France.

Hats off to Reuters, the first media organisation to our knowledge which says it obtained a non-paper that explains the two toxic finance schemes in all its gory detail. Here is our interpretative summary of their summary.

First, under the insurance option, the EFSF guarantees a yet to be agreed percentage of the value of a newly issued sovereign bond, with a “partial protection certificate” (PPC). The PPC would be separable, and freely traded (presumably to pretend that this is still a bond, not some toxic waste product). The issuing government would buy EFSF bonds to back the guarantee, to be held by a trust or an SPV. It has yet to be defined what constitutes a default, but in the event the investor would exchange the PPC for EFSF bonds at the trust/SPV. There is also a discussion in the paper of the benefits and drawbacks. One drawback is the impact of the negative pledge clauses, which guarantees that the country that issues the bonds will not offer a more secure paper to investors later. Furthermore, since the programme focuses on primary markets only, it can only be used by countries that are not in a programme.

The second option is a similar to a classic CDO/SPV structure. The EFSF sets up the SPV with at least three tranches: the EFSF would be holding the equity tranche – which absorbs first losses – while private investors hold Participation Capital Instruments (PCI), which sounds like a mezzanine tranche, plus senior bonds. The SPV would lend to sovereigns, and invest in primary and secondary markets. All tranches of this CDO would be traded. Among the benefits the paper lists that the structure might attract sovereign wealth funds. It seems that option 2 is preferred because it is more flexible.

Gretchen Morgenson and Louise Story of  NYT write Dexia’s Collapse in Europe Points to Global Risks. To protect itself, Dexia entered into transactions with other banks. But in doing so, it made a major miscalculation and protected itself only if interest rates rose. Instead, interest rates fell, and according to Dexia’s trade agreements, Dexia had to post billions of euros in collateral to institutions on the opposite side of its trades, like Commerzbank of Germany, Morgan Stanley and Goldman Sachs.

Dexia is also suffering losses on about 11 billion euros ($15.3 billion) in credit insurance it has written on mortgage-related securities, the same instruments that felled A.I.G., echoing that insurer’s troubles. In this business, too, Dexia’s problems have been worsened by aggressive demands by some trading partners for additional collateral. According to a person briefed on the transactions, Goldman Sachs, one of Dexia’s biggest trading partners, has asked for collateral equal to nearly twice the decline in market value of its deals. As was the case with A.I.G., Dexia must provide the collateral when the prices of the underlying securities fall, even if they have not defaulted.

In all, Dexia has had to post 43 billion euros to its trading partners to offset potential losses, up from 26 billion at the end of April and 15 billion at the end of 2008. The bank’s need for cash to meet these demands drained its coffers, and contributed to its need for a government bailout. The Belgian, French and Luxembourg governments provided a guarantee of up to 90 billion euros to Dexia, and Belgium purchased part of it outright.

Dexia declined to specify how much money had already gone to each trading partner. A Commerzbank spokesman declined to comment. Jeanmarie McFadden, a Morgan Stanley spokeswoman, said that the bank’s exposure to Dexia was immaterial and that Morgan Stanley had received adequate collateral to cover it. Lucas van Praag, a spokesman for Goldman, said “we have no reason to believe that Dexia will not continue to meet its contractual obligations after it is restructured.”

As for the aggressive collateral calls by Goldman, Mr. van Praag said: “Our dealings with Dexia have been perfectly normal. In an environment of widening credit spreads and increased volatility, collateral calls are to be expected.” The suggestion that Goldman has been more aggressive than Dexia’s other trading partners is “quite odd,” he said, adding: “If collateral is owed, we ask for it.” Mr. Joly of Dexia said the bank did not have “significant issues” with Goldman over collateral owed on some contracts.

Economists and financial players are closely watching how European officials handle Dexia’s financial contracts, which span the globe, to see what that might mean for other European banks that might need government support. As trading partners demand more cash, those demands could consume more of the money put up by the Belgian, French and Luxembourg governments.

“We know what the guarantees are that the government put down, but you don’t know how much the taxpayer will end up paying,” said Paul De Grauwe, a professor of economics at Katholieke Universiteit Leuven in Belgium. “I’m pretty sure there are other banks in Europe that have done similar things and may be caught in the crisis that is now brewing. I don’t think this is an isolated incident.”

It may be difficult for European governments to avoid making bank trading partners whole, especially American institutions, since the United States government paid full value to foreign banks that dealt with A.I.G. and also opened Federal Reserve programs to troubled foreign banks. Dexia, for example, leaned heavily on emergency lending programs created by the Fed during the depths of the financial crisis. At its peak borrowing near the end of 2008, Dexia received $58.5 billion from the Fed.

Some financial players may also argue that since France and Belgium took equity stakes in Dexia in 2008, as part of the government bailout then  there was an implicit guarantee of the company’s obligations, similar to that of the housing finance giants Fannie Mae and Freddie Mac in the US.

Walker F. Todd, a research fellow at the American Institute for Economic Research and a former official at the Federal Reserve Bank of Cleveland, said governments were setting a troubling precedent when they bailed out a company and paid its trading partners in full, as occurred with A.I.G. and as might occur with Dexia.

“In the short run, it would help if the authorities would say they refuse to provide publicly funded money for the payoffs of derivatives,” he said. “This is like using public funds to support your local casino. It is difficult to see how this is good for society in the long run.”

4) … Inflation News of the day
Bloomberg reports Rice Jumps Exchange Limit to One-Month High on Asia Flood Damage. Rice futures jumped the most permitted by the Chicago Board of Trade, advancing to a one- month high, as flood damage to crops in Southeast Asia boosted prospects for U.S. exports. Storms since September damaged 12.5 percent of paddies in Thailand, the world’s largest exporter, and crops in the Philippines, Cambodia, Laos and Vietnam, the United Nations’ Food & Agriculture Organization said in a report dated Oct. 21. Floods and drought will cut U.S. output by 23 percent in the season that ends July 31, the government said Oct. 12. Prices have rallied 11 percent in the past two weeks. “Thailand won’t be able to export as much, which will drive business to the U.S.,” Dennis DeLaughter, the owner of Progressive Farm Marketing Inc. in Edna, Texas, said in a telephone interview. “The U.S. doesn’t have very much rice yet, so it will pop up prices. We’re talking about some world trade shortages.” Rough-rice futures for January delivery jumped by the CBOT’s 50-cent limit, or 3 percent, to settle at $17.215 per 100 pounds as of 1:15 p.m. in Chicago. That’s the highest price since Sept. 21, leaving the commodity up 19 percent from a year earlier.

Bloomberg reports Inflation Peaking In U.S. As Commodity Prices Tumble

Ed Yardeni communicates that slowing M2 and slowing credit and rising labor costs are being forced out of business, resulting in the strong decline in Chinese stock values. Higher nominal wages and rising labor costs have pushed the CPI up by 6.1% y/y through September, led by a 13.4% increase in food prices and a 12.3% increase in fuel prices. Anecdotal evidence suggests that inflation may actually be higher than shown by the official data. That explains why monetary and credit authorities have been tapping on the brakes since early last year. M2 (in yuan) rose 13.1% y/y through September, the slowest since May 2001. Bank loans are up 14.3%, the slowest since November 2008. Small firms are getting squeezed by rising labor costs and much tougher credit conditions. They are being forced out of business. The authorities are scrambling to provide credit to them, fearing that rising unemployment along with erosion in the purchasing power of recently raised wages will exacerbate social unrest. No wonder that the Chinese stock market is down 15.7% ytd, among the worst performing in the world.

Bloomberg reports China Boom-to-Bust Concerns Revealed in Agricultural Bank Slide. Kerry Stokes made his first billion dollars operating television stations and selling dump trucks in his native Australia. Now, he’s betting a chunk of that fortune on a bank that operates in the backwaters of rural China. Stokes became one of the cornerstone investors in Agricultural Bank of China Ltd., whose July 2010 initial public offering was the world’s largest, raising $22 billion. Investors such as Hong Kong billionaire Li Ka-shing and the sovereign wealth funds of Kuwait, Qatar and Singapore joined Stokes, 70, in wagering that the bank will benefit from the rapid development of China’s agrarian inland areas, where growth is already outstripping that of the wealthy coastal cities, Bloomberg Markets magazine reports in its December issue. They agreed to maintain a stake for at least one year. The payoff is far from assured. Global investors increasingly have doubts about the future of Chinese banks, which in 2009 and 2010 went on a 17.6 trillion yuan ($2.8 trillion) lending spree, according to People’s Bank of China data. Fitch Ratings estimated in a report issued in April that as much as 30 percent of all loans in China’s banking system — or $2.46 trillion — could become nonperforming. Hedge-fund manager Jim Chanos told Bloomberg News in September that he was shorting Agricultural Bank and other Chinese lenders. Investors worried about nonperforming loans pushed the MSCI China Financials Index down about 28 percent from July 1, 2010, to Oct. 24 of this year.

5) … In today’s sovereignty news
Daniel Gross of Contrary Indicator relates A Greco-Roman Tragedy: Europe wrestles with financial crisis

Zero Hedge reports Trichet Interrupts Speech Calling for Formation of European Finance Ministry, Booed Off by German Students.  And reports Trichet Repeats Call For European Finance Ministry, Abdication Of National Sovereignty

The FT reports that under new proposed transparency rules due to be unveiled by Internal Market Commissioner Michel Barnier, it will be mandatory for European companies to provide a breakdown, on a project by project basis, of how much they pay governments in individual oil, gas, mining and logging projects, dashing industry hopes for a less stringent regime. (Hat Tip to Open Europe)

Good Morning America reports HPV vaccine now recommended for boys

The New York Times reports Cameron Faces Internal Revolt Over European Policy.  And Open Europe reports 79 Conservative MPs defy Cameron to vote for EU referendum. David Cameron suffered his biggest rebellion in the House of Commons last night as 79 Conservative MPs voted for a backbench motion calling on the Government to hold a referendum on the EU, two acted as tellers for the motion, two abstained and 14 were not present. One Conservative PPS Adam Holloway MP resigned while a second, Stewart Jackson MP, was sacked. In addition 19 Labour MPs and one Liberal Democrat MP voted for the motion. The motion was opposed by the leaderships of all three main parties, and was rejected by 483 votes to 111.
In the Telegraph James Kirkup questions David Cameron’s tactics in imposing a three line whip on a backbench motion. In the Mail Melissa Kite also argues that David Cameron has misjudged the mood of the Conservative party while the FT quotes a Conservative MP supporting David Cameron saying: “It is a seminal moment; Cameron always knew his modernisation project would not be complete until he talked about the Europe question.” The Economist’s Bagehot takes a different line arguing that the Conservative Party’s “own leaders are deeply split between short-term pragmatism and deep Euroscepticism in the longer term. This vote tonight is only a milestone on a long journey, which is inexorably leading the British to a very different relationship with the EU.”
Telegraph Telegraph 2 Telegraph 3 Telegraph: Editorial FT FT 2 FT: Garel-Jones FT: Stephens Guardian Guardian 2 Express Express 2 Express 3 Express 4 Express 5 Express:Clark Daily Mail Daily Mail: Letts Daily Mail: Kite Daily Mail: Wood Daily Mail: Heffer Daily Mail: Comment EUobserver Independent IHT Mirror Sun Le Monde Huffington Post CityAM WSJ EurActiv European Voice Times: Leader Times: Coates Times Times: Ashdown Times: Sketch Conservative Home Conservative Home 2 Guardian: Toynbee Sun Economist: Bagehot Independent: Richards

EuroTribune reports Italy, The Eurozone’s Secret Superpower. While Italy is on the brink of becoming a rescue case, it has managed to occupy more strategic seats in the eurozone than any other country, Financial Times Deutschland writes. After Ignazio Visco’s nomination to the BoI, Italy will be the only euro country with three nationals present at the ECB governing council: the new president Mario Draghi, board member Lorenzo Bini Smaghi and Visco. Italians are heading three strategic general directorates in the ECB. One of them is Francesco Papadia, who is heading markets operation and in charge of the SMP. Then there is Vittorio Grilli, the head of the Economic and Financial committee, Marco Buti, director general of DG Ecfin and Andrea Enria, chairman of EBA in London. While the integrity and competence of these officials are beyond dispute, the accumulation of Italian influence in euro top jobs is raising eyebrows in the other member states and may soon lead to some rebalancing.

The FT reports the Financial Times reports Italian Government On Brink Of Collapse.   Silvio Berlusconi’s centre-right coalition government in Italy appears in danger of collapsing over European Union demands for a demonstration of concrete action on economic reform by Wednesday’s summit of eurozone leaders. The EU ultimatum delivered to Mr Berlusconi in Brussels on Sunday risks breaking his coalition instead of giving it an external impetus to move ahead on measures to cut Italy’s debt and promote economic growth. The ultimatum was delivered as part of efforts to resolve the eurozone sovereign debt crisis, but the Italians’ failure to reach agreement on reform threatens EU leaders’ stated goal of finalising at Wednesday’s summit a comprehensive solution to the crisis. Talks on Tuesday morning between Mr Berlusconi and his Northern League coalition partners failed to resolve the deadlock – centred on proposed pension reforms – after negotiations into Monday night made little progress. Silvio Berlusconi launched a verbal attack on EU officials stating “No one in the EU can nominate themselves as special administrators and speak in the name of elected governments and the European people. No one is in the position of giving lessons to his partners”.  The prime minister’s People of Liberty party has proposed that the pension age be raised to 67 years from 65 in line with increasing life expectancy, and that the system of length-of-service pensions also be modified. The Northern League is opposed and La Padania, its party newspaper, on Tuesday attacked what it called “euro-tyranny”.

6) … Might A EU Leader Arise To Speak In The Name Of A Collective Europe?
Elaine Meinel Supkis writes Kosovo Serbs Fight Off NATO–EU Encourages Ethnic Warfare
Today, the EU, which is falling apart rapidly, is still trying desperately to control this region and to divide and weaken the Serbs. The rule is simple: no one is allowed to revolt or ethnically divide the core EU/US imperial entities but all others are to be chopped up into smaller and smaller, weaker and weaker enclaves.  The EU and US are most anxious to continue doing this to Russia, Iran and China.

Recently I wrote We Are Witnessing The Beginning Of The End Of Democracy In Europe. A Super European Government is coming. Between The Hedges relates Sueddeutsche Zeitung reports Italy is prepared to give up “all sovereignties necessary” to allow the creation of a European central government,” citing Foreign Minister Franco Frattini. The European Union’s existing contracts should be extended or changed if necessary to incorporate a “stabilizing finance mechanism,” according to the report. The ECB should gain a “political role,” while remaining an independent institution, Frattini said.

Out of a soon coming Sovereign Armageddon, a sovereign debt and banking collapse, Eurozone Leaders will waive national sovereignty, and announce regional framework agreements which call for structural reforms which liberalize labor markets and overhaul pension systems.  Bible prophecy foretells, a Leader, the Sovereign, Revelation 13:5-10, will arise to speak for and to the Eurozone; and together with his banking partner, the Seignior, Revelation 13:11-18, will provide seigniorage, that is moneyness, based upon their combined word, will and way.

The European Super Government will be a type of revived roman empire, and will feature a Fiscal Union, whose New Charlemagne, will rule with diktat, enforcing structural reforms, austerity measures, and debt servitude. The people will be amazed by the new seigniorage, that is the new moneyness, and follow after the Beast Regime of Neoauthoritarianism, giving it their allegiance as held forth in Revelation 13:3-4.

The prophet Daniel in Daniel 2: 31-43 foretold that great leaders would arise as history unfolds. These have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority.

In Daniel 2:31-43, we see the EU/US imperial entities, as two legs of iron presented in statue of the progression of world kingdoms. Soon ten kings will come to rule, each in his own regional power base establishing a Ten Toed Kingdom of Regional Economic Government, as called for by the Club of Rome in 1974, as a means of dealing with the political and economic chaos, that comes with the failure of the Milton Friedman Free To Choose floating currency regime.

The seigniorage, that is the moneyness of Neoliberalism, came through the securitization of Treasury Debt, BWX, floating currencies, especially the Australian Dollar, FXA, the South African Rand, SZR, the Brazilian Real, BZF, the Indian Rupe, ICN, the Russian Ruble, FXRU, the Mexico Peso, FXM, the Canadian Dollar, FXC, the Swedish Krona, FXS, the British Pound Sterling, FXB, the Russian Ruble, FXRU, yen carry trade investing, DBV:FXY, and CEW:FXY, the creation and use of the Euro, FXE, securitization of GSE debt by mortgage REITS, REM, and US Federal Reserve credit  liquidity, ZIRP, quantitative easing 1 and 2.

The seigniorage of Neoauthoritarianism will come through diktat.

The coming President of the EU will be one knowledgeable with the scheme of framework agreements. He must be a fierce leader as he will have a whole spectrum of angry people 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’

Eventually, the Beast Regime, having seven heads, symbolizing mankind’s seven institutions, and ten horns, symbolizing mankind’s ten world regions, being mired in the clay of democracy and the iron of diktat, will crumble. The Sovereign will gain the upper hand, and install a one world government, as foretold in Daniel 7:7, with a one world bank, the Seignior providing global seigniorage as presented in Revelation 13:5-18.

One might consider reading these related articles

Bible In The News Britain, Europe and The Economic Crisis

Contender Ministries Is the EU the Revived Roman Empire

COG Writer Herman von Rompuy, the Greek Debt Crisis, and Where May this Lead?

The Trumpet The Greek Crisis Was Planned!

Jimmy DeYoung The President of The European Central Bank Is Calling For A One World Economic Structure

Grace To You The Beast Out of the Sea, Part 2

Jim Baker Show New euro ‘empire’ plot by Brussels

Bible In The News The Greek Crisis and the Future of Europe

Stocks Rally From Temporary Oversold Condition … Will The EU Find A Lender Of Last Resort In The EFSF Monetary Authority? If Not, Will Leaders Be Forced To Announce A Fiscal Union And A European Economic Government?

October 23, 2011

Financial Market Report for October 21, 2011

1) … World Stocks and World Small Cap Stock, rallied, early in the day, manifesting a short selling opportunities in a nascent basic materials, BRIC, and emerging markets, bear market.
World stocks, ACWI, and World Small Cap Stocks, VSS, rose early in the day as the Basic Materials, CHIM, TSXV, URA, EMMT, XLB, IYM, and MXI, led by Copper Miners, COPX, and Aluminum, ALUM, rallied from their sharp downturn, which rallied commodity currencies, CCX, and Base Metal Commodities, DBA, Copper, JJC, Commodities, DBC, Timber, CUT, Unleaded Gasoline, UGA, and Oil, USO, which in turn rallied Brazil, Russia, India and China. Silver, SLV, rose in a bear flag pattern, suggesting its fall lower again soon. This Finviz Screener of the Basic Material ETFs, shows gain of 3%.

Rallying emerging market currencies, CEW. took the emerging markets, EEM, and their leaders Thailand, THD, and Turkey, TUR, higher. The higher commodity prices rallied the South African Rand, SZR, and South Africa, EZA. A higher Euro, FXE, rallied the European Financials, EUFN, Austria, EWO, Switzerland, EWL, Norway, NORW, Sweden, EWD, and Germany, EWG. A stronger Ruble, FXRU, rallied Russia, RSX, and the Russia Small Caps, RSXJ.

The WSJ reports credit evaporation in the Emerging Market Financials, EMFN. which traded unchanged today.  Crisis in Euro Zone Weighs on Emerging-Market Banks. The euro-zone debt crisis is spilling over to emerging-market banks, signaling new risks for economies that had largely brushed off European troubles for the past two years, an industry survey found. Across Asia, Eastern Europe, Latin America and elsewhere around the world, banks are tightening credit standards and facing an increase in bad loans, according to the survey to be released Friday by the Institute of International Finance, a global association of big banks. The report found that funding conditions in international markets have “deteriorated significantly” even as local funding conditions remained stable

Growth driven South Korea, EWY, and South Korea Small Caps, SKOR, rose strongly. Regional Banks, KRE, continued to rally and the European Financials, EUFN, rose strongly, but the chart of the European Banks shows a dark cloud covering candlestick eight days ago, evidencing an end to their recent rally, in spite of today’s gains..

Investment Bankers, KCE, Metal Manufacturing, XME, rose. Brazil, EWZ, Brazil Small Caps, BZF, Russia, RSX, Russia Small Caps, RSXJ, India, INDY, India Small Caps, SCIN, India Earnings, EPI, China, YAO, Chin Materials, CHIM, and China Small Caps, HAO. rose.

China Stocks Drop for Biggest Weekly Loss in Five Months; PetroChina Falls. China’s stocks fell, capping the benchmark index’s steepest weekly drop in five months, on speculation slowing economic growth and the nation’s tighter monetary policies are hurting earnings. Petro China, PTR, slid to a one month low as the nation’s largest oil producer said it may have a 2011 refining loss of over 50 billion yuan. Yanzhou Coal Mining, YZC, led declines for coal producers. “China’s economic slowdown will hurt companies’ earnings in the fourth quarter and next year,” said Mei Luwu, a fund manager at Lion Fund Management Co. in Shenzhen. The Shanghai Composite Index, CAF, slumped, to 2,317.28 at the close, extending this week’s slump to 4.7 percent, the most since the week ended May 27.

In addition to being a basic materials and currency carry trade rally day, it was a credit rally day as well as the credit carry trade country Argentina, ARGT, rose the most of almost any country stock. Lender Capitol One Finance, COF, American Express, AXP, Nicholas Financial, NICK, Nelnet, NNI, Encore Capitol Group, ECPG, SLM Corp, SLM, PHH Corp, PHH, seen in this Finviz Screener all rose.

The rise in credit caused a rise in Eduction stocks such as APOL, DV, EDMC, ESI, CECO, LRN, BPI, STRA, EDU, XRS, CAST, seen in this Finviz Screener.

The Morgan Stanley Cyclicals Index, $CYC, rose 3% largely on a ratings upgrade on Ford, F.

The October rally continued today in the Transports, IYT, which rose more strongly than the the Industrials, IYJ. The Dow, DIA, jumped to just under 200 day moving average. And the S&P, SPY, and Banks, KRE, Energy, XLE, led by Chevron, CVX, and Conoco Phillips, COP, continued their rally in a breakout.  But the Russell 2000, IWM, simply rose to 200 day moving average. The chart of the S&P, SPY, versus, the poor performing country ETFs, shows it to be in a safe haven rally SPY, ARGT, RSX, EWG, EWI ,INDY EWZ ,YAO

Tyler Durden relates Rodrigo Serrano of Rational Capitalist Speculator Weekly Bull/Bear Recap for October 17-21, 2011. So far for the reporting season, 63.7% of S&P 500 companies have beaten consensus earnings per share estimates, which is stronger than the past 2 quarters.  Meanwhile, revenue per share has come in line with average beat rates. This earnings season has been been positive for equity markets. They have just broken through the top end of the roughly 3 month range.

Mr. Serrano adds PPI runs hotter than expected, coming in with a headline reading of 6.9% YoY in September.  When paired with an increase in import prices of +13.4%, inflation at the the producer and importer level will buoy the CPI, or decimate company margins if consumer’s wages can’t keep up.  Many bulls viewed the tamer CPI readings as a signal for more wiggle room for QE3.  Sure, go ahead bulls, let’s break that 23-yr high in the Misery Index.  We are one QE away from stagflation.

And Mr. Serrano concludes: 11 consecutive declines in the ECRI, ’nough said.

The defensive sector, Utilities, XLU, blasted higher on the higher currencies. Chart action suggests that DTE Energy, DTE, is the king of utilities. It pays a much coveted 4.6% interest.

Industrial And Office REITS, FNIO, Premium Equity REITS, KBWY, the High Dividend ETF, ABCS, and Small Cap Real Estate, ROOF, which had been acting bearishly rose strongly. Home builders, XHB, Junk Bonds, JNK, and Leveraged Buyouts, PSP, rose strongly.

Today’s volcanic rise in the Yen, FXY, upstaged the rally in emerging market currencies, CEW, and world major currencies, DBV, such as FXA, FXM, FXC, FXB, FXS, BZF, and BNZ. The explosive trade up in the Yen, FXY, puts the nail in the coffin to both carry trade investing and the Milton Friedman Free To Choose, floating currency regime. And gives the go signal for going short the Basic Materials, and the Emerging Markets as well as China. The chart of the Australian Dollar, FXA, the Canadian Dollar, FXC, shows what may be an evening star, and the chart of the Brazilian Real, BZF,  and the chart of the emerging market currencies, CEW, shows weak. India’s rupee ICN, dropped solidly yesterday  on speculation slowing economic growth and faster inflation will deter foreign investment.  Jeanette Rodrigues of Bloomberg reports Food inflation in India accelerated to 10.6 percent in the week ended Oct. 8 from a year earlier, the fastest pace since April. The currency demand curve, RZV:RZG, and the Optimized Carry ETN, ICI, suggests the October rally in currencies is over. The chart of the Japan shares, relative to the Japan Small Caps, EWJ:JSC, suggests that the October global risk rally is over.

Catarina Saraiva of Bloomberg reports Drops to Post WWII Low Against Yen. The US Dollar, $USD, closed at 76.39. I do not see it going much lower, as I see world major currencies, DBV, the emerging market currencies, CEW, and commodity currencies, CEW, going lower as the seigniorage of Neoliberalism, is failing. Jamie Saettele in Daily FX presents of a chart of the USDJPY falling from current 76.6 to a possible objective of 74.

Bloomberg reports Japan May Add Extra $52B Aid on Strong Yen. Japan is preparing to unveil plans to spend an extra 4 trillion yen ($52 billion) to help its exporters cope with a surging yen and spur job creation. And Bloomberg reports Japan Shipyards Demand Lower Steel Prices. Japanese ship builders will ask local steel mills to cut prices for plate used to construct vessels or be replaced by rivals from South Korea or China as the yen strengthens, three people familiar with the matter said.  Financial Times reports Japan’s cabinet announced Y2,000bn ($26bn) of subsidies to encourage companies to keep factories and jobs in the country. “We want to help companies overcome the surging yen,” Jun Azumi, finance minister, told reporters. And MarketWatch reports The head of Japan’s auto industry asked trade and industry minister Yukio Edano called for a drastic response to the persistently strong yen, warning that Japan’s economy is already “hollowing out” due to the strong currency.  In a meeting between Edano and executives of the Japan Automobile Manufacturers Association, JAMA president Toshiyuki Shiga said “fundamental counter measures are needed against the strong yen.”

It’s a well known fact that European Banks, such as Banco Santender, STD, have been a major source of carry trade lending in Brazil and Argentina. Today, Sara Schaefer Munoz and David Enrich of the WSJ relate that Spanish banking giant Banco Santander SA frequently says that it doesn’t shuttle money among its far-flung units, a declaration meant to assure investors that its parent won’t raid those units for cash in a pinch. The bank has “a model of subsidiaries which are autonomous in funding and capital,” Chairman Emilio Botín said in a speech here last month. The same day, Santander’s chief executive delivered a slide presentation that said “Each subsidiary is responsible for its own capitalization and funding needs … no cross border funding”

The 200% and 300% ETFs, URTY, EET, UYM, XPP, TNA, MATL, EDC, YINN, seen in this Finviz Screener, which had been selling off, rose strongly, making for an excellent entry point to begin short selling for those so inclined. Personally, I recommend that buy and take possession of gold bullion.

Gold, $GOLD, rose today to 1643, but may fall lower, to somewhere between $1,500 and $1,600 as currencies continue their downturn.

2)  … News reports show a the European Sovereign Debt Crisis intensifying.
Italian bond interest rates have reached the point of no return. Jeremy Warner of The Telegraph writes Italian bond yields back at 6pc are a deeply ominous sign that the eurozone’s third largest economy is reaching the point of no return, where markets essentially become too expensive for funding.

The now almost certain prospect of a double-dip in Europe has made the debt dynamics of these bigger economies look much more challenging. There is now virtually no prospect of Italy and France meeting their deficit reduction targets. Further austerity would only make the economic squeeze worse still. Even for the larger countries, a crisis which has hitherto been seen as largely one of absent market liquidity is fast turning into one of solvency.

Ambrose Evans Pritchard reports Standard & Poor’s is to warn that a double-dip recession in Europe would imperil France’s AAA rating and set off a string of downgrades across Southern Europe, undermining the EU’s debt crisis strategy. It is unclear whether the EFSF can function without France’s top rating to help anchor the system. The fund’s finance officer, Cristophe Frankel, said the EFSF would do “whatever is needed to keep the AAA rating” for its operation.

Steven L. Bernard of the WSJ Blogs writes EFSF Scheme Means France Absolutely Must Keep AAA Rating

Bloomberg reports France Likely to Lose Top Rating: S&P. France is among euro-region sovereigns likely to be downgraded in a stressed economic scenario, according to Standard & Poor’s. The sovereign ratings of Spain, Italy, Ireland and Portugal would also be reduced by another one or two levels in either of New York-based S&P’s two stress scenarios, the ratings firm said in a report dated today. These assume low economic growth and a double-dip recession in the first set of circumstances, and add an interest-rate shock to the recession in the second. “Ballooning budget deficits and bank recapitalization costs would likely send government borrowings significantly higher under both scenarios,” S&P analysts led by Chief Credit Officer Blaise Ganguin in Paris wrote in the report. “Credit metrics would deteriorate sharply as a result.” The analysts assume that the European Central Bank and governments would support the banks because failure to do so “could yield even more dire consequences,” according to the report. Speculative-grade corporate defaults would probably rise to 9 percent to 13 percent under the scenarios, S&P said.

Gabriele Steinhauser and Sarah Dilorenzo, of the Associated Press write that Greek Finance Minister Evangelos Venizelos welcomed the news that Athens would get the next euro8 billion ($11 billion) installment, calling it a “positive step.” A day earlier, Greek lawmakers had approved new, deeply contentious austerity measures to get the money.

The loans, which still need the approval of the International Monetary Fund, should be delivered during the first half of November. The money will keep Greece afloat for a little longer, but most economists agree that the country also needs a substantial cut to its debt load.

The findings of a report from Greece’s international debt inspectors piled more pressure on European finance chiefs to find a solution for the country, whose troubles kicked off the crisis almost two years ago.

According to the report, Athens won’t be able to raise money on financial markets until 2021 unless it is allowed to write off more of its debt load. If that doesn’t happen, the country would need hundreds of billions of euros in new bailout loans.

A person familiar with the report said a tentative deal reached with banks in July to give Greece easier terms on its bonds would still leave it with a huge debt load of 152 percent of economic output in 2020. The person spoke on condition of anonymity because the report is confidential. Germany is pushing for a revision of the July deal to have Greece’s private creditors take bigger losses of 50 percent to 60 percent and reduce its debt to some 120 percent of GDP by 2020.

The EU official said ministers had moved closer to Germany’s position on steeper cuts to Greece’s debt, but some financially weaker countries were still worried that could destabilize their markets and push their borrowing rates higher. “I wouldn’t say there’s a consensus but something close to that,” he said.

The eurozone needs to find a way to ensure that larger countries like Spain and Italy don’t get engulfed in the debt crisis, as they would be too expensive to bail out. Increasing the firepower of the bailout fund, the European Financial Stability Facility, is meant to offer that protection, but Germany and France still disagree over how to do that.

And Ben Rooney in CNNMoney article EU officials scramble to solve the crisis reports Eurogroup president Jean-Claude Junker and Herman Van Rompuy, head of the European Council, are among officials taking part in a flurry of meetings this weekend to finalize a broad plan to stabilize the euro.

Tyler Durden reports German, and US taxpayers, are merely giving Greece money so it can increase it debtor status with French and a few other European banks. To say that this is a viable solution is something that only those who bow at the altar of Alan Greenspan can do.” And so once again, in the endless battle between common sense and Keynesianism, it is former 1 – latter 0, after the Troika yesterday released its revised projections for total Greek debt/GDP, which has just been hiked from 149% to 186% by 2013.

John Redwood has been the Member of Parliament for Wokingham relates The government at this summit needs to grasp how big the EU ambition is  Mr Barroso made clear in his recent speech in Brussels to the European Parliament that the EU needs more integration. To him  the answer to every tension and problem is more EU central power.

The Commission plans a “single coherent framework for the better economic governance based on the community method. …The proposal will ensure the compatibility between the euro area and the Union as  a whole.. It will be done in a way that aims to integrate the Euro Plus Pact because coordination and integration must be carried out on a single Community level. ….It is essential that we do not create a division between the 17 members of the Euro area and the 27 members of the EU – most of whom wish to join the euro….”

This is a bureacratic way of saying the EU wishes to control the UK economy as well as Euroland ones.

His detailed measures include rapid implementation of the 6 pack (economic surveillance and budgetary control) and incorporating them into the “Community” method, as opposed to just confining them to the 17 euro members.

Despite UK government messages to the contrary, much of this work programme applies to the UK. The banking system measures apply to the UK, even though the UK authorities say they have done the job and all is fine. Mr Barroso wants more EU financial regulation which will affect us, and still of course presses the Financial Transactions tax which the Uk government says in certain circumstances it will oppose.

Mr Barroso says “We have to complement the monetary union with a real economic union”. “We will further reinforce the role of the Commissioner for economic and monetary affairs in full respect of the Treaty”  … “we urge for more discipline, more integration. It means more Europe…”

This is all clearly on the public record. The UK government has to wake up to this reality. It has to say we cannot possibly go along with this. This huge push for more control and more power is why the UK needs now to negotiate a different relationship.  Mr Hague’s burning building is well on fire. We need to be well outside the burning Euro building, and  keep it well hosed down to stop catching light to the UK. We need to control the hose ourselves.

3) …  Will the EU find a lender of last resort in the EFSF monetary authority?  If not, will leaders be forced to announce a fiscal union and a European economic government?
European state insolvency has arrived for two reasons. First, the Troika has stated that Greece won’t be able to raise money on financial markets until 2021 unless it is allowed to write off more of its debt load.
Writing off more of its debt load is a proposal that goes beyond what the rating agencies and the nations supporting the EFSF, have agreed to. … And second bond vigilantes have seized control of Italian sovereign debt and are calling interest rates so much higher that now Italy has effectively lost its debt sovereignty. And Greece, according to the news reports, is the Troika’s welfare child, providing for its fiscal spending resources until 2021.  Greece’s central bank is no longer its seignior, rather the Troika is Greece’s seignior.  Seigniorage is no longer coming from the securitization debt of a sovereign nation state, but rather, Seigniorage for Greece is coming from the Troika. Greece is no longer a sovereign nation state, rather Greece is a country existing in the diktat of a the Troika.

Because Greece is in a currency union, the loss of debt sovereignty for one nation means the loss of debt sovereignty for all, and will mean very soon, the loss of fiscal spending capability for all, as a nation cannot spend that what it does not have, unless it resort to printing Euros, which it does not have the authority to do.  There is coming an end to spending more than what one takes in.

The Euro currency union being a debt union, will soon see universal sovereign default, and which will require that leaders meet in summit, and announce regional framework agreements that provide for a Fiscal Union, the empowerment of the ECB as a bank, and the introduction of EU wide structural reforms that greatly reduce the number of state workers, lowering of national wage laws, and the introduction of numerous austerity measures, with the appointment of stakeholders from industry and government to manage resources, credit and economic activity, for the security and prosperity of the region. Such is the mandate of the 1974 Clarion Call of the Club of Rome for regional economic government.  Banks will be nationalized, and integrated into the governments, actually the Federal EU government, and be known as the government bank or gov bank for short.

The Automatic Earth relates EU banking credit evaporation and capital depletion. Bloomberg reports that Morgan Stanley predicts that EU (including UK) banks will need to sell assets, reduce lending and overall reduce short-term funding, as much as €2 trillion, other voices say they won’t be able to achieve that much, because they can’t sell enough assets. Ergo: they’ll need to reduce lending even more. Loomsby Anne-Sylvaine Chassany and Liam Vaughan of Bloomberg write on capital depletion of French banks. French lenders BNP Paribas SA, BNP.EU,  Credit Agricole SA, ACA.EU, and Societe Generale SA, GLE.EU, whose share prices have fallen 37 percent, 48 percent and 52 percent respectively this year, were the latest to announce asset reductions after investors shunned their stocks in August on speculation France was facing a credit-rating downgrade and concerns that the banks were too reliant on short-term funding.  … And Bloomberg reports Bloomberg Portuguese banks are being squeezed by demands that they boost capital as the government’s effort to reduce the deficit deepens the recession. Echoing the struggles of their Greek counterparts, Portuguese lenders are unable to tap the financial markets for funds and hobbled by debt-laden state companies. At the same time, international regulators are forcing them to raise capital as they’re dependent on the European Central Bank for funds. ‘Being Portuguese is what is penalizing their financing at the moment,’ said Filipe Silva, a fund manager at Banco Carregosa in Oporto, Portugal. ‘Financing will only get better when the state is able to give out signs of credibility’. … I envision further lending reduction and capital depletion of banks, resulting in their nationalization.

Financial Times reports Greece approves austerity bill on first reading‎ A protest by more than 100,000 striking workers did not deter Greek lawmakers on Wednesday evening from approving the country’s latest austerity package at its first reading, by 154 votes to 141. The result, which followed a day when clouds of smoke billowed over the Athens skyline after angry rioters set fire to piles of rotting rubbish and clashed with police in one of the biggest demonstrations seen in the Greek capital for decades, was a success for prime minister George Papandreou, improving the odds that Greece will be able to draw down the next €8bn tranche of its bailout loan from international lenders. Riot police blocked access to the parliament building overlooking Constitution Square, the scene of violent protests last June when the previous austerity package was narrowly approved after a threatened rebellion by socialist deputies.

Mr Papandreou called the government’s 18-month effort to push through fiscal and structural reforms a “war that has to be won.” He pledged the government would stand firm against street protests. The latest round of structural measures, seen as an unprecedented undermining of job security, have prompted strong reaction with 30,000 public sector workers due to lose their jobs by December. The decision to suspend sectoral wage agreements for the private sector, which has seen more than 250,000 jobs cut in the past two years, has triggered fears of large-scale sackings as companies struggle to survive a fourth straight year of recession.

Greece cedes sovereignty. The structural reform to dismiss 30,000 state workers, that G-Pap will carry out are in violation of the Greek Constitution. The abrogation of the Greek constitution is a coup d etat not only in Greece, but in the Eurozone as well, as it will officially create a debt union, and establish the Troika as sovereign authority over the Greek people. By submitting to the Troika’s demands for dismissal of state employees he is waiving national sovereignty, and is taking additional steps forward in a super European Government.

Robert Stevens of WSWS writes PASOK approves further austerity measures for Greece.  The government of Prime Minister George Papandreou insisted this week that the passage of the legislation was integral to Greece being able to remain in the European Union and to hold further upcoming negotiations with the “troika” (European Union, International Monetary Fund and European Central Bank) regarding its sovereign debt crisis. Just one PASOK MP, Louka Katseli, voted against the bill as she did not support Article 37 suspending collective bargaining in the private sector. Katseli had previously voted in favour of the overall new austerity law. For opposing one element of the bill, she was immediately expelled from the parliamentary group. The sovereign debt crisis ravaging Greece continues to escalate. It is estimated that by the end of 2012, the total debt owed by Greece to the international banks will reach €370 billion. The government stated earlier this month that without the next tranche of €8 billion, from the €110 billion loan package agreed in May 2010, Greece will go bankrupt.

The money should be released, “as soon as the agreed prior actions on fiscal consolidation, privatisation and labour market reform, which were announced by the government, have been legislated.” Despite the recommendation, it is not certain that the loan will be forthcoming. Kathemerimi said the report “was prepared in coordination with the European Central Bank but not with the International Monetary Fund, the other member of the troika, which is preparing a separate report.” Last month the credit ratings of eight Greek banks were downgraded by two notches by the Moody’s credit ratings agency. Dutch European Central Bank governing council member Klaas Knot, in an interview with Het Financieele Dagblad, said, “I had long been convinced that a default was not necessary. But the news from Athens is sometimes not encouraging. All efforts are aimed at preventing it, but I am now less certain in ruling out a default than I was a couple of months ago”. Knot is the first eurozone central banker to warn outright that the country may soon become bankrupt.

Terrified of workers striking in their millions in a mass rejection of their policies, on Wednesday evening the government moved to end by force the 17-day strike by refuse workers in Athens. The previous day, the government began issuing Civil Mobilisation Orders to the striking workers. According to reports, some 7,000 orders were expected to be issued by Thursday. Based on a law that goes back to World War II, the order allows for the compulsory provision of services. Striking workers are effectively conscripted into the army, with instructions to either to return to work immediately or face imprisonment for up to five years.

Kayleigh McEnany in Daily Caller writes on the patronage and pork of Greece Socialism I imagine the Wall Street protesters would embrace Greece’s unusually generous benefits and massive welfare state, which were put in place by Socialist Prime Minister Andreas Papandreou in the 1980s. The high price tag for the social programs that accompanied Papandreou’s entitlement matrix proved devastating, eventually ballooning Greece’s debt to 162 percent of its gross domestic product. As its debt skyrocketed, Greece’s unemployment rate climbed, hitting 16.5 percent in July. The economy is expected to contract 5.5 percent this year. This economic reality forced Andreas’s son, Socialist Prime Minister George Papandreou, to undo the work of his father.

One of the most powerful union leaders in Greece, Konstantinos Koutsodimos, criticized the prime minister, saying, “This is a political patricide. Papandreou’s policy is a complete betrayal. Before being elected, he promised that he would increase the social welfare state. He said he would increase wages, and in just two months after his election he reversed everything, he forgot all his promises.” But going back on election promises was not a choice; it was a necessity. The very welfare state the Occupy Wall Street protesters so eagerly applaud is what has saddled Greece with colossal debt and left its economy on the brink of collapse, igniting violent protests across the nation.

The WSJ reports Troika Says The Greek Sovereign Debt Is Not Sustainable.  And Ben Chu of The Independent reports New Greek Bailout Cash Comes With Dire Warning  International inspectors forecast Greek debt will reach 181 per cent of GDP.

Tyler Durden questions the EU’s solvency as it faces a large debt rollover challenge. The €1.7 Trillion Triangle Of Terror communicates that the EU’s   The three “problems” are summarized best in a chart by Morgan Stanley’s Huw Van Steenis n what we have dubbed the “Triangle of Terror”, these are Bank Solvency, Sovereign Stress, Bank Funding Stress. Yet the core problem at the very heart of European instability, is nothing more than, you guessed it, excess debt, €1.7 trillion worth of it to be precise: this is how much debt has to be rolled over the next 3 years, and also explains the magical €2 trillion number needed for the EFSF as only something that big can backstop the debt roll and insure the needed bank recap, which in reality needs more like €400 billion but that is the topic of a different post. Without the above mentioned support pillars of bank solvency, funding and sovereign stress being address and fixed, in a credible manner and at the same time, this debt will not be able to roll, and effectively lead to systemic European insolvency.

European finance ministers and European leaders will be meeting in conference this weekend to address the two causes of European Sovereign Debt Crisis. The first, the lack of any effective means of budget discipline among Euro members, can only be resolved by a Fiscal Union, where a Sovereign dictates structural reforms, such as the termination of the Constitution right in Greece to not be dismissed from a state job, and announces mass layoffs and imposes austerity measures.  The second cause of the crisis, is the inability to provide growth where jobs have gone to more competitive countries, cannot be addressed, as jobs that have departed, are now forever gone.

Mark Whitehouse of Bloomberg relates US Money Market Funds Still Exposed To European Crisis and that even a small loss may force a fund to “break the buck”. The U.S. financial sector is gradually severing its links with an increasingly troubled Europe, but the pace probably isn’t fast enough to prevent contagion if things go terribly wrong. The money market funds that hold about $1.5 trillion in U.S. savings would be among the first to suffer if Europe’s sovereign-debt problems bring down its banking system. That’s because the funds have invested heavily in the debt of European banks, a fact Federal Reserve Chairman Ben Bernanke has publicly noted in assessing the potential repercussions of a European meltdown. The managers of money-market funds recognize the risk, and have been paring their European exposure. Fitch Ratings estimates that as of September, 37.7 percent of all money-market assets were invested in European banks, down from 51.5 percent in May. Still, that leaves the funds’ exposure to Europe at more than $500 billion. Even a small loss on such an amount could force a fund to “break the buck,” bringing the share price below $1 as the Reserve Primary Fund did after the bankruptcy of Lehman Brothers Holdings in September 2008. That, in turn, could trigger a run on the funds by investors, crippling short-term lending markets on which companies rely for such everyday activities as buying supplies and paying their workers.

Of note, Between The Hedges reports Money Mkt Mutual Fund Assets stands at $2.635 Trillion.

An inquiring mind asks, will the EU find a lender of last resort in the EFSF monetary authority?  If not, will leaders be forced to announce a fiscal union and a European economic government?

4) … The investment, currency, fiscal, banking, credit and political policies of Neoliberalism, based upon freedom have failed. Neoliberalism produced the final tulip mania in stocks, bonds and government finance. Neoauthoritarianism is rising to provide new policies based upon diktat.
Neoliberalism, that is the Milton Friedman Free To Choose floating currency regime, has failed, as currencies are not floating, they are sinking in competitive currency devaluation, and as yen carry trade investing has terminated, with the rise of they Yen to a new all time high at 129.41. The US Federal Reserve ability to inflate stock values, and commodity values, and provide for growth through ZIRP, and Quantitative Easing 1, 2, and Operation Twist failed in the May through July 2011 time frame.

Seigniorage, that is moneyness, coming the production of base metals, particularly copper, failed, in July 2011. And seigniorage coming from the securitization of debt, has been comprised, and is coming to an end, as Greece has lost its debt sovereignty.  Credit is evaporating. With the failure of Dexia, institutional banking is no longer operative. With the flight of money from Greek banks, and the failure of several banks in Greece, and their acquisition by a special Greek government fund, retail banking has failed. In the case of the Greek people, their seigniorage comes from the diktat of the Troika.

Neoliberalism produced the final fiat wealth bubbles: the stock bubble, ACWI, the bond bubble, BND, and the global government finance bubble, BWX. In Zero Hedge Paul Brodsky writes The Seeds of Our Destruction Were, And Still Are, Sown In The Bond Markets.

Paul Brodsky does not trust the bond markets. That position may seem strange coming from someone who has spent most of his professional career trading bonds, but it’s precisely this insider knowledge that has led him to start directing investors to safer harbors. In fact, he thinks our credit system is so far out of control that it will cause a massive, and largely unavoidable at this point, devaluation of the US dollar (and most other fiat currencies, as well). In our interview with Paul, we asked him to explain the reasons for his concern and to detail how he sees a bond market breakdown unfolding. At the heart of the matter is the run-up in overnight systemic repurchase agreements among banks that started in 1994, which goosed the ensuing credit-driven buying orgy in our economy and has left the system much more vulnerable to exogenous shocks as a result. Add to this the lax oversight from the Fed at the time, which as Paul states seemed primarily focused on making sure “banks could expand their balance sheets”. At some point, the growing leverage in the system and the rising amount of new credit and money supply leads to ever larger distortions in market pricing. Paul sees this as leading to (soon coming inflation).

And Michael Patterson and Selcuk Gokoluk of Bloomberg report Companies in emerging markets have record amounts of international debt coming due just as financing costs rise to a 16-month high and their currencies sink the most since 2008. Businesses in the 10 biggest developing economies have at least $54 billion of foreign-currency bonds maturing in the next 12 months, the most since Bloomberg began compiling the data in 1999. The market for new international debt issues dried up after emerging-nation currencies tumbled 11 percent from this year’s high”  … Chart of India Earnings , EPI, shows the disinvestment out of companies which provide credit in India.

The wildcat finance of Neoliberalism, has produced the final tulip mania. The global investment, economic and political tectonic policies of Neoliberalism have shifted, with the result that an authoritarian tsunami is on the way.

In 1974, the Club of Rome called for regional economic government, as a means of dealing with the chaos of deleveraging, derisking and disinvesting, that would eventually come from the failure of Neoliberalism.

Angela Merkel and Nicolas Sarkozy have heard and heeded the Club of Rome’s vision and called for a true European economic government in their August 2011 Joint Communique.

Neoliberalism is being replace by Neoauthoritarianism as sovereign debt is not fundable.

Neoliberalism featured freedom, and wildcat finance which produced prosperity via rising currencies, credit liquidity, and debt expansion.

Neoauthoritarianism features diktat, and wildcat governance, where leaders bite, tear and rip at one another, which brings forth poverty, austerity measures, structural reforms, regional economic government, credit contraction, and debt servitude for all. Reuters reports Jean Claude Junker saying to Germany’s Focus Magazine on July 3, 2011,  “The sovereignty of Greece will be massively limited.” Gordon White relates Say goodbye to independence and sovereignty, Southern Europe and provides a quote from a comment found on the Telegraph Blogs “Thanks to their membership of the eurozone, peripheral countries such as Greece and Portugal  and to an increasing extent Spain and Italy, are undergoing a process of forcible deindustrialisation. Their economic sovereignty has been obliterated; they face a future as vassal states, their role reduced to the one enjoyed by the European colonies of the 19th and early 20th centuries. They will provide cheap labour, raw materials, agricultural produce and a ready market for the manufactured goods and services provided by the far more productive and efficient northern Europeans.

Neoauthoritarianism features the seigniorage of diktat. Soon, out of sovereign armageddon, that is a credit bust and global financial breakdown, new sovereign authority will arise in the form of regional economic government, where the word, way and will of the sovereign, the ruler, and the seignior, the banker, will provide moneyness. And the people will be amazed, and follow after it giving it their full allegiance.

The soon coming sovereign armageddon, will be accompanied by a further contraction of credit in China, as reflected in the fall of commodities such as copper, and iron, which has caused debt deflation, that is currency deflation, across the globe, turning the basic material stocks particularly copper miners, iron ore miners, uranium miners, and aluminum producers, lower.

Greece failed to be a sovereign nation state when G-Pap signed the legislation demanded by the Troika that 30,000 state workers be dismissed. Such legislation is an abrogation of the Greek Constitution.  The Greeks are no longer a sovereign people, as now both sovereignty and seigniorage belongs to the Toika.

Sovereign nations will soon be a relic of a bygone era. Freedom and choice are mirages on the Neoauthoritarian desert of the real. Sovereignty will soon reside in  regional economic government. There are no sovereign individuals, there are only sovereign leaders. The only sovereign wealth is gold and diktat. People will know the seigniorage of diktat.

5) … News of the day
My Budget 360 reports on the dynamics of the ponzi student loan market and relating that the student loan bubble continues to grow larger. The student loan market is back in the news as it makes its unrelenting march to the $1 trillion mark. This crippling figure comes in the face of a decade of lost wages for middle class Americans. Just like the housing bubble people were supplementing a disappearing middle class with more debt. The allure of housing was that never in our history have we seen national home prices fall, until they did in dramatic fashion. The same cultural nostalgia for education in every respect has created a zombie higher education system that is now expanding like the mortgage markets at the height of the housing bubble. Why? For-profit schools have largely lured in countless Americans into a system that has provided very little economic gains for students while enriching these Wall Street listed companies. It should come as no surprise that the highest default rates stem from the for-profit system and most of these loans are federal loans. In 2010 there were $100 billion in student loan originations, the highest ever in the midst of the deepest recession since the Great Depression. The Federal Reserve tracks federally backed student loan debt and the figures are astounding. The only sector of household debt that has expanded in manic fashion during this recession is with student loans. Yet there goes student loan debt saddling countless students with back breaking debt. Make no mistake, much of the for-profits are growing simply because of the government.

USA Today reports The highest default rates are at for profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation’s largest, got 88% of its revenue from federal programs last year, most of it from student loans. And now, the default rates for these institutions now rival that of subprime debt. After you combine all the federal loans, private bank loans, and private institution loans you can see how this is getting out of hand. $100 billion in student loan debt was taken on in 2010. How much has been pumped out in 2011? Did we not learn anything from the housing bubble?  And I add that the USA Today reports “The amount of student loans taken out last year crossed the $100 billion mark for the first time and total loans outstanding will exceed $1 trillion for the first time this year. Americans now owe more on student loans than on credit cards, reports the Federal Reserve Bank of New York. Students are borrowing twice what they did a decade ago after adjusting for inflation, the College Board reports. Total outstanding debt has doubled in the past five years, a sharp contrast to consumers reducing what’s owed on home loans and credit cards.” I note that the collateral for the loan is an “education”.

Bloomberg reports Two Iranians Indicted by U.S. for Murder Plot. Two Iranian men were indicted on charges they attempted to use a weapon of mass destruction to assassinate Saudi Arabia’s ambassador in Washington. Manssor Arbabsiar, 56, an Iranian-American car salesman living in Texas, and Gholam Shakuri, who the U.S. said was an Iran-based member of that country’s “Qods Force,” attempted to recruit a man posing as a member of a violent Mexican drug cartel as their assassin, according to a five-count indictment filed today in U.S. District Court in Manhattan. The recruited assassin was secretly working for the U.S. Drug Enforcement Agency, prosecutors said when charges were announced Oct. 11. Others from the Qods Force in Iran were also involved and helped bankroll the plot, which was to have cost $1.5 million, according to a criminal complaint filed at the same time. Both are accused by the federal grand jury of conspiring to commit a terrorist act that would “kill and maim persons within the United States and create a substantial risk of serious bodily injury to others by destroying and damaging structures, conveyances and other real and personal property.”

EU Observer relates that In a joint communiqué, European Council President Herman Van Rompuy and Commission President José Manuel Barroso said that Colonel Gaddafi’s death “marks the end of an era of despotism and repression” in Libya.

Politico writes Herman Cain has used an impressive bag of rhetorical tricks to avoid being pinned down on most questions that can’t be answered with “9-9-9.” His typical dodge involves describing an issue as very complicated, pointing out that he would want to take advice from a lot of different people, and sometimes – as in the case of most foreign policy questions – saying that he can’t really give a complete answer until he has access to classified intelligence. And Politico provides an example ot the Cain tap dance with him saying That’s not a simple yes-no answer

6) … May God’s will be done
Those of the Tea Party fly the Gadsden Flag and call for such things as freedom from government intervention, ending the US Federal Reserve, and privatizing the Grand Canyonn, so that they can pursue free enterprise.

Those of the Occupy, fly the protest banner and call for an end to the bailout of the banks.

Being of the church, the called out ones, I pray God’s will be done.

God is Sovereign, Isaiah 4:9-14, and is exercising His Sovereign Will, Ephesian 1:1, and is carrying out Operation Free Mankind, for the purpose of setting mankind free from sin, that is doubt, by destroying all forms of economic life, such as Greek Socialism as well as sovereign nation states, such as Great Britain, and Greece, Revelation 2:27.

Bible prophecy relates that He is is operating to replace the former regime of Neoliberalism with the Beast Regime of Neoauthoritarianism, Revelation 13:1-4. It has seven heads, indicative of its occupation in mankind’s seven institutions, and ten horns, indicative of its rule in all of the world’s ten regions

The former regime was headed up by Milton Friedman who received a Nobel Peace Prize. The latter will be headed up by a fierce sovereign, Revelation 13:5-10, and seconded by a European banker, Revelation 13:11-18. Their word, will, and way will provide seigniorage, that is moneyness, and the people will be amazed, yes marvel, and follow after it, giving it their full allegiance, Revelation 13:3-4. God has ordained from eternity past, totalitarian collectivism rule mankind.

Scripture refers us to know the signs of the times, Matthew 24:32-44.  The birth pangs began in 1948, when Israel became a nation. Israel is the primary timing indicator for discerning God’s prophetic timetable for end time drama.
1. Jerusalem is inhabited by citizens of the state of Israel and is surrounded by all nations and is at the center of world controversy (Zech. 12:1-3; 14:1-3; Joel 3:2, 12; Zeph. 3:8; Lk. 21:20-24; Rev. 16:12-16).

2. An international leader rises up to establish a peace treaty with Israel and the Middle East that results in world peace (Dan. 9:27; 1 Thes. 5:2-3) and provides Israel’s freedom to rebuild their Temple in Jerusalem, which is then desecrated by this leader  (Dan. 9:27; Mt. 24:15; 2 Thes. 2:4). The Sovereign, called the Little Horn, will destroy (Dan. 7:7-8, 20-24). He will speak pompous words. And He will consolidate his power by destroying three nations, as his original power base is uprooted.

3). Daniel in verses Dan. 7:1-8, describes the historical foundation for the end time worldwide empire. Its foundation is built upon four successive worldwide empires from ancient times, referred to as beast empires; these four empires are Babylon, Persia, Greece, and Rome. The fourth empire of Rome comes out of two distinct stages: the ancient Roman Empire, then a revived Roman empire. Thus, the sovereign will be a New Charlemagne, replicating Charlemagne, the king of the Roman Empire. He might even be awarded the Charlemagne Prize in the German City of Aachen, a most prestigious European honor.

Forbes reports on December 4, 2010 ECB’s Trichet To Receive 2011 Charlemagne Prize. Wikipedia relates that the Charlemagne Prize (German: Karlspreis; full name originally Internationaler Karlspreis der Stadt Aachen, International Charlemagne Prize of the City of Aachen, since 1988 Internationaler Karlspreis zu Aachen, International Charlemagne Prize of Aachen) is one of the most prestigious European prizes. It has been awarded once a year since 1950 by the German city of Aachen to people who contributed to the ideals upon which it has been founded. It commemorates Charlemagne, ruler of the Frankish Empire and founder of what became the Holy Roman Empire, who resided and is buried at Aachen. Traditionally the award is given to the recipient on the Ascension holiday in a ceremony in the town hall of Aachen.

Will A New Charlemagne, Rise To Power In The EU, And Establish A One Euro Government?

October 20, 2011

Romano Prodi of Italy, the President of the  European Commission, declared to the EU’s economic and social committee in 1999: “For the first time since the fall of the Roman Empire we are uniting Europe, and not by force of arms; but on the basis of shared ideals and agreed common rules.”

Now, for the first time since the Roman Empire, much of Europe now has adopted a common currency, the euro. And the currency union is at a crisis point.

An inquiring mind asks, will a New Charlemagne, rise to power and establish a Revived Roman Empire, futher unifying those in the EU under his diktat?

What Is Mystery Babylon Referred To In Revelation 17?

October 20, 2011

What is Mystery Babylon referred to in Revelation 17?

John Notter Jr. relates John saw this great economic, political, and spiritual unification as well, and it is he that coined the term, Mystery Babylon, while under the inspiration of the Holy Spirit.  The scarlet colored beast she rode in Revelation 17 with 7 heads and 10 horns was also clearly described in Revelation 13:1-2.

The harlot of Babylon will ride a beast that is headquartered in Europe and the Middle East.  She is great wickedness as she denies the true power of salvation, Jesus Christ.  This false religion will have the full backing of Satan and the unholy trinity.  It will unite east and west, and all of the world!  She will come about as men try to overcome a recent war with shouts of peace and safety, so they will bow to her wishes as they see this prostitute as a means to accomplish their ends.

The Seigniorage Of Credit And Currencies Is Failing … The Seigniorage Of Diktat Will Emerge Very Soon As Regional Economic Government Arises To Replace Sovereign Nation States

October 20, 2011

Financial market report for October 20, 2011
1) … Seigniorage, that is moneyness, began to fail in July 2011, as the financial sector and the emerging market currencies turned lower, as is seen in the ongoing Yahoo Finance Chart of XLB, EMMT, EMFN, XLF, CEW.
The seigniorage of Neoliberalism, that is the moneyness, of the Milton Friedman Free To Choose floating currency regime, has been based upon credit, that is a lending, securitization of stocks, US Federal Reserve quantitative easing, and ZIRP, rising world currencies, DBV, and rising emerging market currencies, CEW, the latter fell strongly lower today.

Two other words for credit are trust and faith. All of these have been evaporating with the exhaustion of Quantitative Easing, the worsening of the European Sovereign Debt Crisis, and unwinding carry trade investing, as seen in the Optimized Carry ETN, ICI, falling lower. The triune bedrock Neoliberalism, consisting of US Federal Reserve Policy, European Socialism, and carry trade lending from the Bank of Japan, has given way. Thailand, THD, and Indonesia, IDX, fell lower  on carry trade disinvestment. A fall in India Earnings, EPI, caused disinvestment out of India Small Caps, SCIN, and India, INDY. Credit carry trade country, ARGT, fell lower today.

William L. Watts and Deborah Levine of MarketWatch report Boris Schlossberg, director of currency research at GFT, as saying The risk rally is definitely running out of steam as high-beta currencies ran into their second straight day of liquidation sparked by weaker-than-expected GDP readings from China and continuing uncertainty over the efficacy of policy solutions that will be presented at an upcoming EU summit on the sovereign debt crisis.

Systemic risk is now apparent in as much as leadership gridlock has developed over resolution over the European Sovereign Debt Crisis and fears of debt monetization arisen. Currency traders are derisking once again out of the Eurozone currency, the Euro, FXE, and its popular carry trade pair, the EUR/JPY, seen in the chart of FXE:FXY, in response to fear over the European banking and sovereign debt crisis.

Currency traders are also derisking once again out of the emerging market currencies, CEW, and their carry trade investments, as is seen in the chart of CEW:FXY: Emerging Markets, EEM fell 2% today

The currency demand curve, that is the ratio of the small cap pure value shares to the small cap pure growth shares, RZV:RZG, has manifested bearish engulfing and is turning lower, suggesting that competitive currency devaluation, that is competitive currency deflation, is once again to commence.

World stocks, ACWI, and World Small Cap Stocks, VSS, traded lower today. Falling commodity currencies, CCX, will mean falling commodity prices. Silver, Oil, Base Metals, Gasoline, UGA, and Agricultural Products, will all be going lower as seen in the chart of  DBC, SLV, USO, DBB, JJA, UGA Base Metals, DBB, fell 3.6%, on this weeks’ strong fall in, EMMT, MXI, and CRBI.

News reports relate the heightened concern of the soveign crisis. Ambrose Evans Pritchard reports Franco-German deadlock over ECB’s role in rescue fund and David Gow of The Telegraph reports Sarkozy flies in for emergency euro talks to cement rescue deal.

Major issues abound for the EFSF monetary authority. I believe that the rating agencies know full well that the EFSF is not a sovereign authority, and its bonds are a CDO, that monetizes sovereign debt; and  I fully expect that the rating agencies to come out with a downgrade of France.  Ambrose Evans Pritchard reports Standard & Poor’s is to warn that a double-dip recession in Europe would imperil France’s AAA rating and set off a string of downgrades across Southern Europe, undermining the EU’s debt crisis strategy

2) … Out of Gotterdammerung, a clash of the Gods, that is the European Leaders and the rating agencies, Sovereign Armageddon will occur.
Sovereign Armageddon, is a credit bust and global financial breakdown, is coming. It will be accompanied with a contraction of credit in China, YAO, as reflected in the fall of the commodity copper, JJC, China Materials, CHIM, China Financials, CHIX, and China Infrasturcture, CHII, as well as the Shanghai Shares, CAF. These all turned strongly lower today, as is seen in this ongoing Yahoo chart of  CHIM, CHXX, CHIX, CAF as Bloomberg reports  China’s Stocks Fall to 31-Month Low on Economic Slowdown, Europe.

The mining kings of the Age of Leverage have fallen. The king of copper and gold mining Freeport McMoran Copper and Gold, FCX, has fallen. The king of copper Southern Peru Copper, SCCO, has fallen. The kings of iron ore Rio Tinto, RIO, Vale, VALE, BHP Billiton, BHP, and Cliff Natural Resources, CLF, have fallen. Bloomberg reports Iron Ore’s Worst Rout in 15 Months Seen Deepening as China’s Growth Slows. Iron ore’s biggest decline in 15 months may worsen as the economy slows in China, the largest importer, the European debt crisis persists and BHP Billiton Ltd and Rio Tinto Group increase production, analysts said.  An inquiring mind asks, which kings of the Age of Deleveraging will rise to replace them?

The socialist kings of the Age of Leverage are about to fall from their prosperity, as Greek sovereign authority and sovereign power are going to fall to a greater European Superstate, a One Euro Government.  Ekathimerini reported on Wednesday Brussels at odds with IMF about sustainability of Greek public debt.  The differing views between the European Commission and the International Monetary Fund on the sustainability of Greece’s debt have led to a delay in the issuing of a report by Brussels on the country. The IMF is maintaining a tougher stance vis-a-vis the Greek debt and how viable it could be and is seeking the drafting of a new streamlining program, as it considers the Commission’s estimates too optimistic. Austrian Finance Minister Maria Fekter said that “Austria’s position is that the new package requires a somewhat greater participation of the private sector,” but always on a voluntary basis. However, the time frame is particularly tight for an agreement as the eurozone summit of this Sunday is fast approaching and the aim of bring Greek debt below 100 percent of GDP by 2020 seems difficult.  But in juxtaposition, Reuters provides a more current report today The European Union and IMF’s “troika” mission to Greece recommends paying out a sixth aid tranche as soon as possible despite finding “extremely worrying” government debt dynamics, according to a draft of its long-awaited report obtained by Reuters on Thursday. Truth be told: Greece has lost is debt sovereignty, and is now the Troika’s welfare state. The Troika acts as seignior, that is money lord, for Greece’s fiscal spending.

Greek socialism is the most extreme form of European socialism  While the latter socialism provided for national wage contracts, the Greek Constitution forbids that state workers be dismissed. Bloomberg reports Papandreou Vows Further Austerity as Strikes Shut Greek Schools, Hospitals. Greek protesters clashed with police in central Athens after Prime Minister George Papandreou vowed to push through a further round of austerity and appealed to Europe to cut Greece’s debt load at an Oct. 23 summit. Riot police in white helmets used tear gas to hold back demonstrators from the parliament building in the Greek capital today as lawmakers debated the extra austerity measures demanded by Greece’s international creditors to keep aid flowing. Police said about 70,000 people gathered in Athens at the start of a 48-hour strike in one of the biggest protests yet against Papandreou’s latest program of cost-cutting and tax rises. “Without the measures, the 2011 budget won’t be met, neither will the budget in 2012,”

Finance Minister Evangelos Venizelos told lawmakers in comments broadcast live, as groups of hooded protesters in gas masks lobbed Molotov cocktails at the riot police outside. “We are giving the battle of battles up to Sunday evening.” With a four-seat parliament majority, Papandreou is banking on his Pasok party lawmakers to face down public anger and pass the bill in a vote due tomorrow, when the unions have called more protests. A test of support for the bill will be held in parliament later today. The package, which follows a round of austerity measures passed in June, includes new taxes, more cuts to pensions and wages and plans to dismiss 30,000 state workers.

The structural reform to dismiss 30,000 state workers, that G-Pap will have do are in violation of the Greek Constitution. The abrogation of the Greek constitution will in effect be a coup d etat not only in Greece, but in the Eurozone as well as it will officially create a debt union, and establish the Troika as sovereign authority over the Greek people. By submitting to the Troika’s demands for dismissal of state employees he will be waiving national sovereignty, and be taking additional steps forward in a super European Government. And it will mandate dismissal of many, many more Greek state workers.

Suzanne Daley in NYT article Greece’s Bloated Bureaucracy Defies Efforts to Cut It, describes the patronage and pork of Greek Socialism, where there is little meritocracy, and where there are only socialist and communist political parties.

The Euro is a Ponzi Currency where sovereign debt authority is separated from the currency, and moral hazard is shifted to all its users. In July, 2011 investors sold out of stocks when they became aware that a Debt Union had formed in the EU. The loss of debt sovereignty by one means loss of sovereign authority for all.  Ryan of Swift Economics writes Fiat Money is a Ponzi Scheme, No Better Illustrated Than in Europe The euro was established in 1992 to create a collection of countries that would rival the economic power of the US, all united under a common currency that would allow for seamless trade. The collaboration was all under the guiding principle of no bailouts to avoid any moral hazard problems. The idea is to incentivize countries to make sound fiscal decisions, and force those that over-leverage themselves to bear the costs of their poor decisions. This principle was abandoned when the Eurozone debt crisis hit with a full head of steam. First Greece, then Ireland and Portugal, spiraled toward insolvency. The other countries stepped in to supply them with the liquidity necessary to service their unsustainable levels of debt. As in a pyramid scheme, it will be the last holder of the “asset” that takes the full loss. In the case of Europe’s fiat money, it will be the taxpayer that foots the bill, rather than the original bondholders that made ill-advised investment decisions.

The seigniorage of fiat wealth in stocks, bonds, and currencies failed, in April 2011, and in July 2011, as is seen in the ratio of world stocks, ACWI, relative to world government bonds, BWX, ACWI:BWX, turning lower and is now turning lower again. The Seigniorage of Chinese Financials is dependent to some degree upon copper; and the failure of the seigniorage of the Chinese Financials is seen in the ratio of two, CHIX:JJC, turning lower in July 2010 and November 2010. Today, that ratio is manifesting a dark cloud covering candlestick, heralding a turn lower soon as well.

Seigniorage, that is moneyness, is no longer coming from the securitization of debt; nor is seigniorage coming from investing in industrial metals, whether it be iron, copper, or silver. The seigniorage of growth has failed.

3) … In the Age of Deleveraging, the only seigniorage besides gold that will work, is diktat, specifically the diktat of the soon coming the Sovereign, meaning lord, and the Seignior, meaning top dog banker who takes a cut, who will rise to rule in the Eurozone.

The economic, political and financial global tectonic plates have shifted, and an authoritarian government tsunami is on the way. This was foreseen by the 300 elite of the Club of Rome who in 1974 issued The Clarion Call for regional economic government, as a resolution of chaos stemming from the deleveraging and disinvestment coming with the end of the Milton Friedman Free To Choose floating currency regime.

Soon an individual familiar with the scheme of regional framework agreements will step onto Europe’s stage, and provide order out of chaos. He will be the New Charlemagne, establishing a type of Revived Roman empire. Perhaps this individual might be Herman Van Rompuy, as he arraigned the first summit over the crisis in May of 2010. Having both sovereign authority and fiscal authority, he will rule over a Fiscal Union, and a Common Treasury in the Eurozone. Angela Merkel and Nicolas Sarkozy have laid the groundwork by calling for true European Economic Government, in their August Joint Communique. The Sovereign will be cunning, that is shrewd, and fierce as well as he will face a whole spectrum of angry people.

Neoliberalism “ran with” the Milton Friedman Free Script. This previous regime featured floating currencies, that generated prosperity via wildcat finance, a Doug Noland term, as it set investors and bankers free to invest in whatever they chose, with leverage coming from deregulation via repeal of the Glass Steagall Act, and ponzi financing of GSE debt, as well as HELOC lending which created moral hazard. Democracy abounded.

In contrast, Neoauthoritarianism will “run by” the word, will and way of the Sovereign and the Seignior; It will provide austerity and debt servitude for all. This developing regime features deleveraging, derisking, disinvesting, and sinking currencies, that generates adversity for all, via wildcat governance, as leaders meet in summits, waive national sovereignty, and announce regional framework agreements, structural reforms, austerity measures and apply debt servitude to all. The Eurozone’s future will be Totalitarian Collectivism.

4) … In today’s news

4A) … Neoliberalism was characterized by wildcat finance, a Doug Noland term Neoauthoritarianism is characterized by wildcat governance, where leaders bite rip and tear at one another. This being seen in numerous reports such as Forbes Chinese Solar Stocks Plunge After U.S. Industry Group Alleges Dumping.

Mike Mish Shedlock reports Merkel Cancels Speech to Parliament; “Merkozy Marbles”

Between The Hedges reports 21st Century Business Herald China’s central bank will start a second round of investigations into the nation’s private lending and may introduce a monitoring system in the future, citing a person close to the People’s Bank of China.

Business Standard reports India Banks Face 560 Billion Rupees of Risky Power Debt.  The ongoing Yahoo finance chart of EPI, INDY, SCIN, that is, India Earnings, EPI, a proxy for lending in India, India, INDY, and India Small Caps, SCIN, shows the deleveraging and derisking that comes with the failure of Neoliberalism’s credit. The only solution for the soon coming chaos of the failure of Neoliberalism will be diktat.

I can assure you that Ralph Nader’s cry to Let Our Farmers Grow Hemp will go unheeded.

Of note, Huma Kahn of ABCNews reports Obama: “Dark shadow of tyranny has been lifted”

4B) … George Orwell in his book 1984 foresaw the day of a Truth Commission.
Tyler Durden provides the Bloomberg report EU Weighs Credit-Ratings Bans for Nations Getting Bailouts. The European Union may ban credit- ratings companies from making assessments of nations receiving European or international bailouts as part of plans for tougher regulation of the industry. “We are actively considering suspending or banning ratings” in cases where nations are making “full efforts” to implement assistance programs, Michel Barnier, the EU’s financial services chief, told reporters in Brussels today. The measure may be included in a draft law that Barnier will present in November. The EU may also force the companies to disclose the internal analyses they use when they decide to cut a government’s rating, according to Barnier, who said that he wanted to ensure “there is a clear method” behind such downgrades. EU governments have criticized decisions by ratings companies to downgrade Greek, Irish and Portuguese sovereign debt even though the countries are receiving international assistance, saying that the decisions are unjustified and exacerbate the region’s fiscal crisis. The European Commission said that a four-level cut of Portugal’s credit rating in July by Moody’s Investors Service added “an additional element of uncertainty” to the country’s situation.

5) … Sovereignty is fatefully calling forth a sovereign to deal sovereignly with the sovereign crisis.
Today’s trading in the emerging markets, EEM, and China, YAO, combined with this week’s fall in Materials, MXI, and CRBI, along with the fall in Base Metals, DBB, and Emerging Market Currencies, CEW, was the signal to be short not long.  Corporate Treasurers with cash may want to consider going short these 200% and 300% ETFs: URTY, EET, UYM, XPP, TNA, MATL, EDC, YINN as found in this Finviz Screener,

Fate is not without a sense of irony, as it moves the Eurozone quickly into Totalitarian Collectivism. Steven Erlanger in Euro, Meant to Unite Europe, Seems to Be Dividing It  Europe is unpopular, a local metaphor for globalization, faceless and interfering. It is by no means certain that the voters are ready to leap into a new world of economic integration. Even if they prove to be, the new treaty will be complex and take years to draft even before being put to the electorate for ratification, if there is ratification.  It is easy to say that the answer is “more Europe,” not less. That can seem self-evident to Eurocrats and the political elite. But “more Europe” may not be what voters want.“The only thing that can save the euro in its current form can’t and shouldn’t be done without democratic debate and support,” said Simon Tilford, chief economist for the Center for European Reform, a research institution.“You need to bring the electorate with you,” he said. Of course, he acknowledged, a real democratic debate “could exacerbate the crisis.” That may be the largest historical irony of all.  In response I relate, nothing can save the Euro in its current form, and there are two who will rise to put the electorate under them.

Today, Utilities, XLU, closed at a new rally high, with DTE, WEC, and D, stable in their rally trend as is seen in this ongoing Yahoo Finance Chart.

The schemes of Neoliberalism, such as securitization of mortgage debt by mortgage REITS, REM, and creation of high yielding debt by Wall Street, ABCS, cartel like support for industrial and office lending, FNIO, US Federal Reserve Policies of credit liquidity, ZIRP, quantitative easing, and TARP support for the Too Big To Fail Banks, RWW, as well as the use of the Euro, FXE, as a currency, have stimulated the investment demand for gold, $GOLD.

Physical possession of gold bullion, and diktat will be the only forms of sovereign wealth in the Age of Deleveraging. Bespoke Investment Group reports Gold Closing In On Lowest Close Since August Peak In the four weeks since that low, gold saw a modest rally of 5.5%, but it has since given up much of that rebound and is now within 1% of its closing low since its record high in August. I believe it could easily fall to $1,500 before heading much higher.

The scheme of regional economic government called for by the Club of Rome, is Clarion, that is, it is clear, ringing and distinctive. It comes with Authoritarian Imperative: it cannot be denied. Angela Merkel, has heard and heeded, with the result that true European economic government is coming.

God is Sovereign, Isaiah 4:9-14, and is exercising His Sovereign Will, Ephesian 1:1, and is carrying out Operation Free Mankind, for the purpose of setting mankind free from sin, that is doubt, by destroying all forms of economic life, such as Greek Socialism as well as sovereign nation states, such as Great Britain, and Greece, Revelation 2:27.

Bible prophecy relates that He is is operating to replace the former regime of Neoliberalism with the Beast Regime of Neoauthoritarianism, Revelation 13:1-4. It has seven heads, indicative of its occupation in mankind’s seven institutions, and ten horns, indicative of its rule in all of the world’s ten regions.

The former regime was headed up by Milton Friedman who received a Nobel Peace Prize. The latter will be headed up by a fierce sovereign, Revelation 13:5-10, and seconded by a European banker, Revelation 13:11-18. Their word, will, and way will provide seigniorage, that is moneyness, and the people will be amazed, yes marvel, and follow after it, giving it their full allegiance, Revelation 13:3-4.

The Seigniorage Of Apple iPhone And The Seigniorage Of Growth Fails As Well, Taking The Industrial Metal Mining, Silver Mining, And Gold Mining Stocks Lower

October 19, 2011

Financial Market Report for October 19, 2011

1) … The seigniorage of Apple iPhone failed, sending tech stocks lower.
Apple, AAPL, fell 5.6% after the company’s income and revenue fell short of forecast.  This turned the small cap technologies, PSCT, 2.8% lower.

2) … The Euro fell lower today as leadership gridlock developed over resolution over the European Sovereign Debt Crisis and fears of debt monetization arose.

2A) … The Euro, FXE, and the Euro Yen carry trade, EUR/JPY, traded lower,
Currency traders are derisking once again out of the Eurozone currency and its popular carry trade pair, in response to fear over the European banking and sovereign debt crisis. Action Forex provides the chart of the EURJPY stating The break of 105.12 minor support argues that rebound from 100.74 is finished at 107.67 already; in spite of the current recovery, we’re slightly favoring this bearish case.

William L. Watts and Deborah Levine of MarketWatch reported Boris Schlossberg, director of currency research at GFT, as saying yesterday The risk rally is definitely running out of steam as high-beta currencies ran into their second straight day of liquidation sparked by weaker-than-expected GDP readings from China and continuing uncertainty over the efficacy of policy solutions that will be presented at an upcoming EU summit on the sovereign debt crisis.

2B) … Ambrose Evans Pritchard reports Franco-German deadlock over ECB’s role in rescue fund
“If there isn’t a solution by Sunday, everything is going to collapse,” he told his inner circle before an emergency trip on Wednesday night to see German Chancellor Angela Merkel in Frankfurt.

The talks are deadlocked, reflecting a deep rift between Euroland’s two great powers. The French fear the EU’s €440bn EFSF rescue fund will not be enough to shore up monetary union without mobilising the might of the European Central Bank as lender of last resort. It is a view shared by UBS, Citigroup, RBS and the US Treasury.

Mr Sarkozy wants the fund to operate as a bank, able to leverage its rescue power by tapping the ECB’s credit window. This is less likely to endanger France’s AAA credit rating. Yet the idea is anathema to Germany and Bundesbank purists.

Paris has grave doubts about Mrs Merkel’s demand for larger “haircuts, perhaps 50pc, for Greek bondholders. Such a move risks triggering default, crystallising crippling losses for French banks and courting “Lehman-style” contagion.

Mr Sarkozy’s task is made harder by bail-out fatigue and mounting euroscepticism in the Bundestag. “It is not just Merkel we need to convince, the coalition is divided,” he said.

German finance minister Wolfgang Schäuble cannot stem the crisis by embracing eurobonds or fiscal union without a change in Germany’s constitution, requiring a popular vote. He has instead offered an ungainly compromise to boost the EFSF to €1 trillion or so by turning it into a bond insurer, perhaps taking the “first loss” of 20pc on Club Med debt.

Even this may be going too far in Berlin. Peter Schäffler, economics chief for the coalition’s Free Democrats (FDP), said Mr Schäuble had broken a pledge given to the Bundestag when it voted for the revamped EFSF last month.

“People feel deceived. He said there would be no leverage,” he told The Telegraph. “It is absurd for him to claim that this plan is not leverage.”

Mr Schäffler said escalating liabilities threaten Germany’s AAA credit rating. “That is what worries me about this whole situation.”

A chorus of analysts on Wednesday said the EFSF proposals are unworkable. “It is unlikely financial markets will be fooled by this for long,” said Commerzbank.

“I have no confidence in this plan whatsoever,” said Hans Redeker, currency chief at Morgan Stanley. “It creates a two-tier capital market, which is dangerous. How can you insure Italian debt but not Belgian, or French debt?”

Mr Redeker said the proposals risk setting off a chain reaction in which France loses its AAA rating, followed by Germany and the creditor core as ever greater liabilities engulf them, too.
Morgan Stanley said European and UK banks may have to slash their loan books by €2 trillion over the next two years to boost capital and cut dependence on short-term funding. Lenders have already identified €775bn in cuts. The credit squeeze risks trapping Europe in near-slump next year, exacerbating the debt dynamics of Italy and Spain.

Jacques Cailloux from RBS said the attempt to turn EFSF into a bond insurer is misguided. “In our view it will ultimately fail to restore confidence. It is very risky for euro area policy-makers to rush out some quick deal on leverage,” he said, adding that the plan concentrates risk. Its “Achilles Heel” is that financial stress in Club Med states would inevitably ricochet back into Northern banks, he said.

Mr Cailloux said coverage of just 20pc of damage is no longer enough to lure back shell-shocked investors. “It’s like insurance that covers the cost of a front door rather than the full house,” he said.

2C) … David Gow of The Telegraph reports Sarkozy flies in for emergency euro talks to cement rescue deal.
Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, held emergency talks in Frankfurt to try to cement a full-scale deal to save the eurozone from meltdown.

As around 100,000 Greeks staged violent protests in Athens at the austerity measures being imposed to prevent their country sliding into bankruptcy, Sarkozy underlined the scale of the crisis by flying straight to Germany’s financial capital rather than stay with his wife, Carla, for the birth of their first child.

The French president and German chancellor held talks with Christine Lagarde, IMF managing director, Jean-Claude Trichet, outgoing European Central Bank president, and other EU leaders.

Herman Van Rompuy, the European Council president, who was also present, said Lagarde and Trichet would attend Sunday’s eurozone summit in Brussels which is due to adopt a “comprehensive and global” deal to solve the sovereign debt crisis and prevent a renewed recession or even a slump. They were all taking part in a farewell ceremony for Trichet who leaves at the end of this month and who demanded “immediate action” to solve the crisis. Merkel called for “drastic changes to rules” and declared: “If the euro fails, Europe fails, but we will not allow that.” She said she was convinced there would be a deal.
In Athens demonstrators hurled chunks of marble and petrol bombs at riot police as Greece staged the first day of a 48-hour general strike but the euro rose against the dollar and stock markets rose after the Guardian reported on a Franco-German deal ahead of Sunday’s summit.

EU diplomats have said that the outline deal includes an agreement to boost the firepower of the eurozone bailout fund, the European financial stability facility (EFSF), from its current €440bn (£383bn) to around €2tn. This is the level demanded by the US and British governments and markets but some within Germany’s divided coalition government would prefer an upper limit of €1tn.

This “leveraging” could be done by allowing the fund to become an insurer and offer first-loss guarantees to holders of government bonds issued by countries which get into financial trouble.
But Sarkozy, under pressure to save France’s AAA credit rating and at risk of losing next year’s presidential election to socialist François Hollande, was making a last-ditch effort to persuade a hostile Merkel and Trichet to turn the EFSF into a bank.

The eurozone leaders are also seeking agreement on recapitalising Europe’s bigger (“systemic”) banks, with well-placed sources indicating that this could require €100bn rather than the €200bn mentioned by Lagarde last month.

These two core elements of the promised “grand bargain” are linked to an agreement to make Greece’s debt levels sustainable, with a report from a troika of the European commission, IMF and ECB due to be handed over to eurogroup finance ministers on Friday. This will inevitably impose bigger “haircuts”, perhaps as much as 50%, on bondholders than the voluntary losses of 21% agreed in July.

Van Rompuy indicated that a deal to “stabilise the situation, restore confidence and foster economic growth and employment” remained on the cards despite political differences. He spoke pointedly of handing the 17 eurozone leaders an early draft statement to work on.

The renewed sense of urgency among eurozone leaders to solve the crisis is heightened by evidence that Europe’s banks are finding it harder to borrow money from each other. The ECB reported that banks are now drawing up to €5bn from an emergency overnight lending facility that carries a punitive interest rate.

Earlier, José Manuel Barroso, EC president, held out the prospect of a political accord on the “comprehensive deal” at Sunday’s eurozone summit. “We are at a crucial moment that demands clear and determined responses,” Barroso said on launching a €50bn plan to speed up investment in big infrastructure projects.

He told reporters: “This weekend, I will insist on the need for decisive answers on all the five points of this roadmap, of this comprehensive package … It is a question of credibility for Europe that it can turn up at the G20 in Cannes with the main agreements in place.”

His aides increasingly expect a political deal to be reached this weekend but stress that the technical details of working out an interlocking agreement on making Greek debt sustainable, recapitalising Europe’s banks and boosting the bailout fund, the EFSF, are formidable.

This weekend’s summits will also be asked to endorse controversial plans to impose budgetary discipline on European countries “spending beyond their means”, including punitive fines and other sanctions. The sanctions being discussed, diplomats say, include forcing national parliaments to tear up planned budgets and start again and sending in inspectors to crack the whip of fiscal rectitude.
Europeans ‘slothful’.

The solution to the eurozone crisis is for Europeans to work harder and for longer, rather than being cushioned by the welfare system, said Jin Liqun, chairman of China Investment Corp, China’s sovereign wealth fund. He warned on Wednesday that Europe’s fundamental problem was that its workers were simply not productive enough.

“The root cause is the over burdened welfare system built up since the second world war in Europe: sloth-inducing, indolence-inducing labour laws,” Jin told Channel 4 News. The average Chinese working week is nearly 48 hours, the maximum allowed under European law. “We work like crazy,” said Jin.

2D) … Bild reports since the beginning of the crisis, over €200bn has been taken out of Greek banks and transferred to Swiss banks, with €10bn in the last couple of months.

2E) … Euro Intelligence provides the very best of all reporting. I suggest a purchase of their newsletter which relates the following two news items which are only a sample of their outstanding coverage.

Wolfgang Schäuble says it was possible to lever it to a maximum €1 trillion. German parliamentarians were deeply upsets when he told them that leveraging was under consideration. Germany is now pushing for a Greek PSI of 60-70%. He insisted the German guarantee of €211bn would not be increased by the manoeuvre but some of the deputies were nevertheless upset. At the recent parliamentary debate Schäuble had refused to provide any details or even confirm plans for leveraging the EFSF so some of the parliamentarians now feel duped by their finance minister. The other still undecided issue is PSI, which Germany wants to be as high 60% to 70%, but this is unacceptable to France. After Moody’s comments on France, the 10-year yields have risen to 1.125% overnight. France is now close to a spread where Italy was not too long ago. A downgrading of France (which we think is very likely to happen) would automatically lead to a downgrade of the EFSF as well, and require fundamental changes to the way the rescue mechanism works. There has been more bad news, after Moody’s  downgraded Spain to A1, and Standard & Poor’s downgraded 24 Italian banks and financial groups, citing weak growth and tight credit.

Sarkozy says Our destiny will be decided in the next 10 days. Nicolas Sarkozy did not react directly to Moody’s announcement to put France’s AAA on watch. But the French president did tell parliamentarians from his party over breakfast that “our destiny will be decided within the next ten days”, apparently hinting at Sunday’s EU summit, Le Monde’s Arnaud Leparmentier reports in his blog Elysée Coté Jardin. Later in the day Sarkozy warned that it was in the 20th century only that Europa had known the “two most barbarian” wars in the world. “To allow the euro to be destroyed is to take the risk to destroy Europe”, he said. “Those who destroy the euro will take over the responsibility of the resurgence of conflicts on our continent.” The president said the origin of the crisis was too much debt in Europe and consolidation was the only way to avoid the fate of Greece, Ireland, Portugal and Spain (he did not mention Italy). “We cannot hand over to our children the price of the cowardice of our generation”, he said.

2F) … Spain, EWP, fell 2.5% leading European Shares, VGK, lower as Bloomberg reports Spain’s rating cut to A1 by Moody’s. Banco Santender, STD, fell 4.3%

2G) … Zero Hedge reports German 10 year bund auction fails to cover issuance.

2H) … Major issues abound for the EFSF monetary authority.
A French downgrade by the rating agencies would require further changes to the EFSF treaty, beyond the agreements reached on Sunday. I believe that the rating agencies know full well that the EFSF is not a sovereign authority, and its bonds are a CDO, that monetizes sovereign debt; and I fully expect that the rating agencies to come out with downgrades.

3) … World Stocks, ACWI, and World Small Cap Stocks, VSS, traded lower today as the seigniorage of the industrial metal mining, silver mining, and gold mining stocks failed.
Between the Hedges reports China Iron Ore Spot continues to pick up downside steam, falling -23.03% since February 16th and -18.4% since Sept. 7th. causing the seigniorage of industrial metal stocks to fail once again. And Bloomberg reports Copper Drops For A Third Day As Europe’s Debt Crisis May Cut Into Demand. Copper, JJC, fell for the third straight day on concern that demand will ease as Europe’s debt crisis persists and economic growth slows in China, the world’s largest metal buyer. “Copper is under pressure because of a theme of slowing economies throughout the world,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Prices will need to go lower to attract Chinese buyers as there’s ample supply” in the country, he said. Copper futures for December delivery dropped 1.9 percent to $3.297 a pound at 10:29 a.m. on the Comex in New York. The price fell 1.4 percent in the previous two days. I comment that the China Financials, CHIX, are in part dependent upon the price of copper, and they traded lower today. The chart of CHIX relative to JJC, CHIX:JJC, manifested a dark cloud cover candlestick, suggesting that the China Financials are about to be delevered again.

CNBC reports Drop in Gasoline Use Fuels Lowest Oil Imports in 15 Years. A drop off in gasoline sales and refineries reluctant to buy new crude supply could keep demand weak, as oil imports hit their lowest weekly level in 15 years. Gasoline demand is now down about 2 percent year-over-year.

The risk trade is off. Investors derisked out of Unleaded Gasoline, UGA, and Oil, USO, today, as both traded lower.

The seigniorage of the Junior Gold Mining Shares And The Gold Mining Shares has failed once again as is indicated by the these disconnecting from the price of gold as is seen in GDXJ:GLD, and GDX:GLD turning lower.

The HUI Precious Metal Mining Stocks, GDX, and the US Treasuries, EDV, always make market turns together as is seen in the ratio of GDX:EDV, turning lower. Both will now be falling lower into the Pit of Financial Abandon together.

Mining stocks fell sharply lower including FCX, VALE, BHP, CLF, AA, SCCO, TNA, POT, CF, RIO

Stock ETFs falling lower today included SLX, XME, COPX, ALUM, GDXJ, GDX, IGN, JNPR, FIO,
MXI,  MOO, SKYY, XSD, EMMT, PSCE, PSCT, IYM, TAN, HHH, AMZN, BJK, XLB, IEZ, SIL,
RZV, OIH, ICLN

Commodity ETFs falling lower included DBC, DBB, USO, JJC, SLV. Silver is a risk trade ETF. How fast and how far it falls is anybody’s guess.

Country ETFs falling lower included TUR, THD, EWD, EZA, CNDA, EWO, KROO, CAF, FXI, HAO,
CHIX, CHIM, VGK,

The currency demand curve, that is the ratio of small cap pure value to small cap pure growth,  RZV:RZG, manifested bearish engulfing suggesting that currency devaluation is about to get underway again. The US Dollar, $USD, manifested a long legged doji for the second day, reflecting a struggle in the world major currencies, DBV, and emerging market currencies, CEW.  The commodity currencies, CCX, have traded lower. The bear market in materials has resumed. The Emerging Market Financials, EMFN, traded down 2% today, suggesting that a bear market in the emerging market banks may commence.

Intel, INTL, and Intuitive Surgical, ISRG, popped higher in what is likely an evening star pattern and represents a short selling opportunity.

5) … Investors see Operation Twist as monetization of debt and have abandoned US Treasuries.
Robert Wenzel reports Just news of Ben Bernanke’s ‘Operation Twist’ was enough to get China and other Asian countries to start hitting the Treasury security market bid. China sold $36.5 billion in U.S. Treasuries to cut its holding to $1,137 billion in August. Other countries in Asia cut their holdings as well, including Hong Kong, Taiwan, and Singapore. But, there are news saps at the table, the U.K. and Switzerland increased their holdings by $40 billion each, while Japan increased its portfolio by $21.8 billion

6) … Seigniorage, that is moneyness will no longer come from securitization of debt and ponzi financing, instead seigniorage will come from diktat
Bloomberg reports  Papandreou Vows Further Austerity as Strikes Shut Greek Schools, Hospitals. Greek protesters clashed with police in central Athens after Prime Minister George Papandreou vowed to push through a further round of austerity and appealed to Europe to cut Greece’s debt load at an Oct. 23 summit. Riot police in white helmets used tear gas to hold back demonstrators from the parliament building in the Greek capital today as lawmakers debated the extra austerity measures demanded by Greece’s international creditors to keep aid flowing. Police said about 70,000 people gathered in Athens at the start of a 48-hour strike in one of the biggest protests yet against Papandreou’s latest program of cost-cutting and tax rises. “Without the measures, the 2011 budget won’t be met, neither will the budget in 2012,” Finance Minister Evangelos Venizelos told lawmakers in comments broadcast live, as groups of hooded protesters in gas masks lobbed Molotov cocktails at the riot police outside. “We are giving the battle of battles up to Sunday evening.” With a four-seat parliament majority, Papandreou is banking on his Pasok party lawmakers to face down public anger and pass the bill in a vote due tomorrow, when the unions have called more protests. A test of support for the bill will be held in parliament later today. The package, which follows a round of austerity measures passed in June, includes new taxes, more cuts to pensions and wages and plans to dismiss 30,000 state workers.

The structural reform to dismiss 30,000 state workers, that G-Pap will have do so in violation of the Greek Constitution. The abrogation of the Greek constitution will in effect be a coup d etat not only in Greece, but in the Eurozone as well as it will officially create a debt union, and establish the Troika as sovereign authority over the Greek people. By submitting to the Troika’s demands for dismissal of state employees he will be waiving national sovereignty, and be taking additional steps forward in a super European Government.

The non functioning Eurozone interbank liquidity market is symptomatic of credit evaporation.  Two other words for credit are trust and faith. Faith and trust can not be found in Eurozone banking. There is no faith in sovereign authority. Tyler Durden relates There is no outcome that saves both the banks, and guarantees future European sovereign issuance under the currently contemplated structure. The EU nations have lost their sovereign debt capability; and having lost fiscal resources, chaos is imminent.

Sovereign Armageddon, that is a credit bust and global financial breakdown, is accompanied by a contraction of credit in China, as reflected in the fall of the commodity copper, JJC, which has caused debt deflation, that is currency deflation, across the globe, turning the basic material stocks, XLB, and IYM, particularly, the copper miners, COPX, lower.

The mining kings of the Age of Leverage have fallen. The king of copper and gold mining Freeport McMoran Copper and Gold, FCX, has fallen. The king of copper Southern Peru Copper, SCCO, has fallen. The kings of iron ore Rio Tinto, RIO, Vale, VALE, BHP Billiton, BHP, and Cliff Natural Resources, CLF, have fallen.  An inquiring mind asks, which kings of the Age of Deleveraging will rise to replace them?

The seigniorage of fiat wealth in stocks, bonds, and currencies failed, in April 2011, and in July 2011, as is seen in the ratio of world stocks, ACWI, relative to world government bonds, BWX, ACWI:BWX, turning lower. Today, that ratio manifested bearish harami. The Seigniorage of Chinese Financials is dependent to some degree upon copper; and the failure of the seigniorage of the Chinese Financials is seen in the ratio of two, CHIX:JJC, turning lower in July 2010 and November 2010. Today, that ratio manifested a dark cloud covering.

Seigniorage, that is moneyness, is no longer coming from the securitization of debt; nor is seigniorage coming from investing in industrial metals, whether it be iron, copper, or silver. The seigniorage of growth has failed..

In the Age of Deleveraging, the only seigniorage besides gold that will work is diktat, specifically the diktat of the soon coming Sovereign and Seignior who will rise to rule in the Eurozone.

The economic, political and financial global tectonic plates have shifted, and an authoritarian government tsunami is on the way. This was foreseen by the 300 elite of the Club of Rome who in 1974 issued The Clarion Call for regional economic government, as a resolution of chaos stemming from the deleveraging and disinvestment coming with the end of the Milton Friedman Free To Choose floating currency regime.

Soon an individual familiar with the scheme of regional framework agreements will step onto Europe’s stage, and provide order out of chaos. He will be the New Charlemagne, establishing a type of Revived Roman empire. Perhaps this individual might be Herman Van Rompuy, as he arraigned the first summit over the crisis in May of 2010. Having both sovereign authority and fiscal authority, he will rule over a Fiscal Union, and a Common Treasury in the Eurozone.  Angela Merkel and Nicolas Sarkozy have laid the groundwork by calling for true European Economic Government, in their August Joint Communique. The Sovereign will be cunning, that is shrewd, and fierce as well as he will face a whole spectrum of angry people.

Neoliberalism “ran with” the Milton Friedman Free Script. This previous regime featured floating currencies, that generated prosperity via wildcat governance, as it set investors and bankers free to invest in whatever they chose, with leverage coming from deregulation via repeal of the Glass Steagall Act, and ponzi financing of GSE debt, as well as HELOC lending which created moral hazard. Democracy abounded.

In contrast, Neoauthoritarianism will “run by” the word, will and way of the Sovereign and the Seignior; It will provide austerity and debt servitude for all. This developing regime features deleveraging, derisking, disinvesting, and sinking currencies, that generates adversity for all, via wildcat governance, as leaders meet in summits, waive national sovereignty, and announce regional framework agreements, structural reforms, austerity measures and apply debt servitude to all. The Eurozone’s future will be Totalitarian Collectivism.

7) … News of the day
Chile was one of the countries cited Milton Friedman for its receptiveness to his ideas. Now, we have reports of outbursts of violence after huge marches in Chile

Many US Federal Reserve officials live in a bubble; they suffer from bubble mania. Such are remnants of the bygone era of Neoliberalism, which featured wildcat finance, a Doug Noland term, that came via Fed ZIRP, Federal Reserve Quantitative Easing, and Ponzi Financing via the securitizaion of debt by Mortgage REITS, REM, for the GSEs.  Many with the Fed should receive Bubblenomics Awards for their creation of all kinds of bubbles, especially the global government finance bubble. The Bubblistas include James Bullard who Bloomberg reports as as Fed Policy Appropriately Easy, Relapse Unlikely.

Bloomberg reports Housing Starts in U.S. Rise 15%, Beat Forecast. Builders began work on more U.S. homes than forecast in September and consumer prices climbed at the slowest pace in three months, supporting Federal Reserve forecasts for a pickup in growth and a moderation in inflation. Housing starts jumped 15 percent to a 658,000 annual rate, the most since April 2010, the Commerce Department reported today in Washington. Data from the Labor Department showed the cost of living climbed 0.3 percent from August, in line with the median projection of economists surveyed by Bloomberg News. The increase in building was led by a surge in construction of apartments and other multifamily dwellings that may continue to support the industry as the housing slump turns more Americans into renters.

AP reports Violence Erupts as 2-Day Strike Shuts Down Greece The protest, which has grounded flights, disrupted public transport and shut down shops to schools in Greece, comes ahead of a parliamentary vote on a fresh package of tax increases and spending cuts required by international creditors in return for crucial bailout cash.

Robert Stevens of WSWS reports Greek refuse workers threatened with army intervention on eve of general strike Greece’s social democratic PASOK government is preparing to use the army against striking Athens refuse workers and threatening mass arrests ahead of today’s 48-hour general strike.

Robert Wenzel reports BofA Moves Risky Trades To Government Insured Subsidiary I relate that the Bank of America just got nationalized. The continues and magnifies a pattern of moral hazard and ponzi financing that will end up in the nationalization of all banks. Bank nationalization is the future of governments both in the US, in Europe and around the world. And will result in regional economic government being mandated by leaders as called for by the Club of Rome in 1974. Bloomberg provides this insightful report “the Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people.” Robert Wenzel continues The Merrill Lynch securities unit, held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. About $53 trillion, or 71 percent, were within Bank of America NA, according to the data, which represent the notional values of the trades. And Mike Mish Shedlock provides coverage in article Bank of America Moves a Merrill Lynch Derivatives Unit to an Insured Deposits Unit (Putting FDIC at Risk) writing Fed approves Move, FDIC Doesn’t.

Neoliberalism featured bubblenomics and Nouriel Roubini is an economist who favors bubbles of ever increasing amplitude. The greatest bubble economists have been Alan Greenspan, the purveyor of credit liquidity, and Ben Bernanke, the provider of ZIRP, and creator of quantitative easing. And Mike Mish shedlock provides profile data on Nouriel Roubini writing that he embraces bubbles of ever increasing amplitude. In contrast to Neoliberalism, bubbles will implode under Neoauthoritarianism and will be the genesis of structural reforms, austerity measures, and debt servitude.

Neoliberalism featured prosperity, but Neoauthoritarianism features austerity. Business Insider reports   America Has Experienced The Biggest Drop In Standard Of Living Since The Sixties. And Business Insider reports US Misery Index Is At A 28-Year High.

Neoliberalism featured democracy; but Neoauthoritarianism features coups. Washington Blog relates   The Federal Reserve and Bank of America Initiate Coup to Dump Billions of Dollars of Losses on the American Taxpayer.

Living In The Inner City Increases The Risk Of Being The Victim Of A Violent Crime By A Schizophrenic Individual

October 18, 2011

For the last twelve years, living in an inner city neighborhood, I have been fortunate that I’ve not been beaten, shot or stabbed by a person with schizophrenia.

Living in downtown ghettos and barrios, exposes one to others with severe mental illness, These often manifest in a confrontational manner, whose behavior is made violent by drugs, and or alcohol. Having easy access to convenience stores, often operated by immigrants from India  which sell beer and wine, psyhotic individuals pose a high risk to others.  With respect to these, I must withdraw, as I am under a no contact order from God, this being found in 2 Thessalonians  3:6.

For those with schizophrenia, hand guns abound, and are often used to calm one’s nerves and to settle the volcano within.

Rainer Valley is not Mercer Island. And Greeks will never be Germans. The Germans got the industrious genes, and the Greeks did not; and as a result, the former is hard working and the latter is club med. As for those living in the common currency region known as the Eurozone, bible prophecy of Revelation 13 foretells that they will all soon be one, living in austerity and debt servitude, under the diktat of the Sovereign, the ruler, and the Seignior, the top dog banker who takes a cut.

I believe many people are the way they are because their animal nature is manifesting. I believe in neurogenetic determinism. I believe in biological determinism. Wikipedia relates “Consider certain human behaviors, such as having a particular taste in music, committing murder, or writing poetry. A biological determinist would posit that such behaviours, and personality traits in general, are mediated primarily by biological factors, such as genetic makeup“.

Disorders like schizophrenia are often inherited; they come out of the womb. The patriarch David got blessed: he was wonderfully made in the womb. I believe people are the way they are, because God predestined them and formed them to be the way they are. It was a choice He made. Scripture relates that He preferred one over the other, as He said, Jacob I loved, but Esau I hated. His favoritism is known as the Election of Grace, and Divine Appointment, it is what has saved me. As for living in the inner city, it was God’s choice from eternity past, as he determines the times and places where one should live. John Calvin’s Doctrine of Election explains this all quite well.

The Lord said in Luke 22:29 And I appoint unto you a kingdom, as my Father hath appointed unto me. Soon I will be departing this world, and I look forward to ruling and reigning with Christ for a thousand years in his Millennial Kingdom; for this I was appointed, as all things are predestined by God. The sovereignty of God, operates to determine who one is and what one is, and it operates to place one where he lives.

His Faith directs me to believe the concept that God has two Wills and two Vessels; and that the Vessel either belongs to God or to Sin And Death. One is owned either by God, or is mortgaged to Sin and Death. Human beings do not own themselves. For those in Christ, The Apostle Paul said in 1 Corinthians 6:19-20, “Ye are not your own: for ye are bought with a price: therefore glorify God in your body, and in your spirit, which are God’s.” Paul simply states a fact: one does not own one’s self, one was redeemed by Christ’s blood. And he states a consequence, one is to glorify God in body and spirit; and he emphasises the ownership of God, stating that the believer’s physical body and spirit belong to God. Every limb of one’s frame belongs to God; it is his property; He has bought it “with a price.” Unlike Austrian Economists, I have no property and I do not have property rights. Wealth and Intellectual Ideas, belong to their creator. I own no material things as these belong to their creator; he owns all thing; they were created by him; he uses them as he wills; all things exist for and by his pleasure. He is sovereign, and owes an explanation of why he does and what he does to nobody.

Perhaps one might enjoy my article Tea Party Member Flies The Gadsden Flag Riling Neighbors for further presentation of these ideas.

Calvinist Baptists, Calvinist Methodists and Calvinist Presbyterians and Reformed share common belief in the doctrine of predestination.

Facebook relates Revelation knowledge of Jesus Christ produces saving Faith. Revelation (revealed knowledge) of the Father through the Holy Spirit, who Jesus is. This is a supernatural impartation of knowledge or knowing and cannot be initiated by man through his will. When this knowledge is revealed to a person then the faith of God for salvation is simultaneously released. No one can come to God unless the Father draws him and reveals Jesus to him by the divine election of grace.

Stocks Slide As Germany Cools Hope For Debt Deal …The Seigniorage Of Debt And Materials Fails Once Again … Soon The Seigniorage Of Diktat Will Emerge

October 18, 2011

Financial market report for October 17, 2011

1) … The stocks that rallied the most since October 3, 2011 fell the hardest today, as the German Finance Minister played down hopes for a comprehensive Eurozone rescue plan.
Associated Press reports Stocks Slide As Germany Cools Hope For Debt Deal.  And Bloomberg reports Germany Shoots Down ‘Dreams’ of Swift Crisis Fix. Germany said European Union leaders won’t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit. German Chancellor Angela Merkel has made it clear that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” Steffen Seibert, Merkel’s chief spokesman, said at a briefing in Berlin today. The search for an end to the crisis “surely extends well into next year.” The Euro, FXE, fell 1% on these reports today.

Tyler Durden reports Moody’s Announces That France’s Debt Metrics Have Deteriorated And Are Now The Weakest Of All Aaa-Rated Peers.

Between The Hedges relates Rheinische Post reports The structure of the European rescue fund would be undermined if France were to lose its AAA credit rating, citing Lueder Gerken, head of the Centre for European Policy, a Freiburg, Germany-based think tank. A cut in the rating would decrease the capacity of the European Financial Stability Facility by 35%, citing calculations by the CEP. Germany would have to increase its guarantees to the EFSF to 317 billion from 211 billion euros.

Non basic material rally leading stocks turned lower today; these include mobile home builder, CVCO, Russell 2000 value company, CCO, gaming stock, SFLY, consumer discretionary, RCL, PII, Business Services, URI, Health Care Information Services, CERN, Transportation Leader, R, Truck Manufacturers PCAR, and NAV, Retailer Build A Bear Workshop, BBW, Technology, Plantronics, PLT, Health Care Information Services, CERN, fell lower.

The emerging market shares, the basic materials, and the banking shares were the one which had rallied the most starting in October. They were the ones which fell the most today: EEM, 3%, KRE, 4%, WCAT, 2%, COPX, 5%, ALUM, 4%, KOL, 3%.

We are witnessing a competitive currency deflation, credit deflation, emerging market, banking, and basic materials bear market getting underway again, as the seigniorage of currencies, debt, banking, and basic materials, such as copper, iron, and coal is failing. Bloomberg reports U.S. Banks Fall as Wells And Citi Revenue Slump. U.S. banks fell after Citigroup Inc, C, and Wells Fargo & Co, WFC, the nation’s third and fourth largest lenders, said quarterly revenue dropped amid economic weakness and market turmoil linked to Europe. Those who went short these 200% and 300% ETFs profited URTY, EET, UYM, EDC, TNA, MATL were among the most significant fallers.

The currency demand curve, RZV:RZG, manifested bearish engulfing, suggesting that competitive currency devaluation is underway again. The US Dollar 200% ETF, UUP, rose to 200 day moving average. An inquiring mind asks, just how much higher will the US Dollar, $USD,will rise before it too succumbs to debt deflation, that is currency deflation? Will it rise to 77.5 78.0 or 78.5, 79.0, 79.5 before it too falls lower?

2) … Trading activity evidenced a market turn and short selling opportunities abounded.
In a bear market, one sells in strength; just as in a bull market one buys in dips. Given the accumulated strength, one might consider short selling. I personally recommend that one buy and take possession of gold bullion.

Networking shares. IGN, rise made for an excellent short selling opportunity; chief among these is Fusion-io, FIO, a small cap company.

The internet retailers, HHH, might be considered for short selling. These include GOOG, AMZN, EBAY, PCLN, YHOO, The chart of GOOG, AMZN, EBAY, and YHOO, all showed prime for short selling today.

The strength of the recent rally is seen in China Financials, CHIX  Emerging Markets, EEM, Banking, KRE, and Basic Materials, XHB, IYM.

The strength of the recent rally is also seen in the Baltic Dry Index, $BDI, the Currency Demand Curve, RZV:RZG, the Optimized Carry ETN, ICI, the Japanese Large Shares Command Ratio, EWJ:JSC, the ratio of basic material shares to commodities, XHB:DBC, and IYM:USCI, the ratio of the wood manufacturers to lumber, WOOD:CUT, the ratio of energy service companies to oil, OIH:USO, the ratio of industrial metal manufacturers to base metals, CRBI:DBB, the ratio of agricultural stocks to agricultural commodities, CRBA:JJA,

Shippers, SEA, turning lower included this group  NMM, TEU, EXM, GLF, HOS, GSL, BALT, ISH, TGP, TNK,

Yen carry trades showed signs of unwinding as DBV:FXY, and CEW:FXY, turned lower today.

The ratio of gold mining stocks to gold GDX:GLD suggests that the gold mining stocks will be turning lower, disconnecting again from the price of gold.

The ratio of the gold mining stocks to the 30 Year US Treasuries, GDX:EDV, turned lower suggesting that both the HUI Precious metals and US Government Bonds, will be turning lower.

The highly credit dependent Russell 2000, IWM, turned strongly lower as banks KRE fell lower. A short selling opportunity opened early in the day and persisted all day long.

The leading world banks, as a group, fell strongly lower; these include BSBR, ITUB, BBD, BMA, BBVA, BFR, WF, UBS, RBS, STD, DB, LYG

A number of credit service companies fell lower including PHH, AXP, NNI, COF, SLM, ECPG, NICK

Farm and Agricultural Equipment fell strongly lower these included MTW, CMCO, TEX, AGCO, CASC, ASTE, LNN, JOYG, CNH, CAT, DE, NC, CMI

A number of automobile  part manufacturers fell lower AXL, DAN, JCI, TEN, MGA,

Leading Technology turned lower SKYY, IGN, FONE

Debt shares, PSP, and JNK turned lower.

National Bank of Greece, NBG, fell 6%, taking the European Financials, EUFN, 4% lower.

The Utilities, XLU, appear to be topped out; with CenterPoint Energy, CNP, rising above many today.

Between the Hedges reports China Iron Ore Spot continues to pick up downside steam, falling -20.1% since February 16th. This suggests that the seigniorage of China credit is failing and growth in China has slowed.

Also, the European Sovereign Debt Crisis, is playing a significant part in deleveraging commodity currencies, CCX, the Australia Dollar, FXA, the Brazilian Real, BZF, the South Africa Rand, SZR, and the Canadian Dollar, FXC.  Leading Mining Stocks, FCX, VALE, BHP, CLF, AA, SCCO, TNA, POT, CF, plummeted.

ETFs trading lower today included
RSXJ, -3.1
RSX, -3.6
EPOL, -4.5
TUR, -4.7
EWD, -4.0
EWZ, -3.9
BRF, -3.6
EEM, -3.4
EWO, -3.2
VGK, -3.5
EWP, -4.8
EWI, -3.2
EWG, -3.6
EWQ, -3.6
EWN, -3.6
EZA, -3.2
ENZL, -3.5
EUFN, -3.6
CNDA -3.0
IDX -3.0
EMFN, -2.0

XME, -5.0
COPX, -5.0
TAN, -4.9
SLX, -5.2
IEZ, -4.6
OIH, -4.9
GEX, -4.2
ALUM, -4.0
ICLN, -4.0
KRE, -4.2
ITB, -3.7
XHB, -3.6
XSD, -3.2
KOL, -3.0
IGN, -3.0
IWM, -3.0

CUT, -3.4
NIB, -3.4
JJA, -1.1
JJC, -2.4
JJT, -4.5
LD, -1.4
DBB, -2.1
UGA, -3.2
JO, -2.5
DBB, -2.2
BNO, -2.5
USO, -1.3

3) … Currency deflation is poised to take debt lower as sovereign stress comes once again to sovereign debt.
The  chart of world government bonds, BWX, and the emerging market bonds, EMB,  suggests that these have reached a rally high;

4) …. .The Seigniorage Of Debt And Materials Fails Once Again … Soon The Seigniorage Of Diktat Will Emerge
The ponzi financing that pervaded Neoliberalism, with subprime lending, and GSE lending may resurface under Neoauthoritarianism, possibly via Obama administration diktat. The WSJ reports  New Mortgage Plan Floated. Underwater Borrowers Current on Payments Would Get Help. State and federal officials are pushing a plan that could help some “underwater” borrowers get refinancing assistance in the latest government bid to break a legal impasse with big banks over alleged foreclosure abuses and ease problems in the housing market. The proposal was raised in a meeting last week between government negotiators and giant lenders as part of an effort to settle allegations of questionable foreclosure practices. Discussions are still fluid and any final outcome is uncertain. Talks between government officials and the banks are expected to continue this week.

In neoliberalism seigniorage came via securitization of debt as well as the ZIRP policies of the US Federal Reserve.

MarketWatch reports Lacker said he did not support the Fed’s decision to reinvest proceeds from maturing agency mortgage-backed securities into the agency MBS market. Previously, the Fed had reinvested the proceeds into Treasurys. “It is simply inappropriate, in my view, for a central bank to channel credit toward some economic sectors and away from others,”

Irvine Renter reports on the devastating aftermath of mortgage equity withdrawl. The US economy and housing market is suffering due to the excessive debts taken on during the housing bubble. Heloc dependency has been terminated by market forces and the HELOC economy has collapsed. Hagerstown was taken over by Ponzis, (and now it has gone bust).  The few who didn’t participate get to pay the price in government bailouts and lowered property values. Mitra Kalita reports in Housing’s Job Engine Falters Hagerstown, MD, ranked among the highest for positive mortgage equity withdrawal—meaning people pulling cash out of their houses. Now, it ranks among the most negative, meaning families are defaulting or paying down debt, according to Moody’s Analytics. Irvine Renter continues, Once some other sector creates jobs, new households will form which will in turn create demand for real estate. With fresh demand for real estate, housing employment will start to recover, and the demand will snowball from there. The catalyst will not be housing. It must start in another sector of the economy.

Unfortunately, the economic, investment, and political tectonic plates have shifted. The world has moved out of the Milton Friedman Free To Choose Regime of Neoliberalism and into the Beast Regime of Neoauthoritarianism.

Freedom, Choice, Free Trade, Prosperity, belonged to the Age of Leverage. Now Diktat, Structural Reforms, Austerity Measures, Protectionism, and Debt Servitude are de rigueur in the Age of Deleveraging.

Mike Mish Shedlock writes Protectionism Cannot Bring Prosperity where makes the point that exported jobs will never return; and tariffs will destroy existing jobs.

I relate that the seigniorage of credit and basic materials such as coal, iron, and copper has failed. The seigniorage of diktat is commencing. Irvine Renter often reports on HELOC abusers, that is  borrowers who withdrew more money in HELOCs and refinances than the house is currently worth. I ask where did that money go, into trips to Las Vegas, investment property in Reno, cosmetic surgery like boob jobs? Did some of it make it into buying and holding gold coins?

I relate that In 1974, the 300 hundred of the world’s elite met as the Club of Rome, and presented regional economic government as the solution for the chaos that would come from deleveraging and disinvesting that comes with the failure of Mr Friedman’s Free to Choose dream. Their Clarion Call, has been heard by globalists such as Angela Merkel and Nicolas Sarkozy, who in their August 2011 Communique, called for a true European economic government.

Sovereign armageddon, that is a credit collapse and global financial breakdown, will come out of Gotterdammerung, the clash of the gods, that is the European leaders and the investors together with the rating agencies. This will result in the loss of national debt sovereignty, and extinguishment of state fiscal spending capability.

Sovereign crisis requires a sovereign solution. One Leader, the Sovereign, and his banker, the Seignior, will arise to speak for and to the Eurozone, which will be transformed into a Federal Europe, as leaders meet in summits and wiave national sovereignty, and implement a Fiscal Union, empower the ECB as a bank, and develop a common European Treasury. Seigniorage, that is moneyness, will no longer be based upon debt, but rather will be based upon the diktat of structural reforms, austerity measures and debt servitude; people will be amazed by this, and place their faith in it, and give it their full allegiance.

Tyler Durden reports Chinese GDP Prints at 2-Year Low as Inflation Still Persists  This to me indicates that the ponzi financing that has existed in China has pumped huge amounts of money into the economy.

Between The Hedges relates on Municipal Debt in China. China Daily reports China’s public road projects have stalled because of a lack of funding over the last two or three months in some provinces, citing research by the Ministry of Transport. Road completion may be about 20% below plan. Public road construction may face greater funding pressures in Q4. Reports by 16 provincial authorities showed they owed a combined $199 billion for the construction of toll roads. Only 4 provinces and municipalities including Beijing recorded profits from toll roads, according to the report.

China Business News reports Chinese rail projects are being halted on cash shortages. Over 10,000 km of building work has been halted, citing Wang Mengshu, a China Railway Group engineer. And Coal stockpiles at five major Chinese power companies rose to more than 60m tons as of the end of September, citing a person from one of the companies. Average daily coal consumption fell as much as 16% to about 3.3m tons.

The fantastic amount of securitization of local government debt, basically municipal debt, in China is proving to be highly inflationary. And now, coal is piling up at utility companies as they have to stop producing electricity because they are not allowed by governments to pass on higher raw material costs.

5) … Open Europe reports German Finance Minister played down hopes for comprehensive eurozone rescue plan and Osborne says UK taxpayers may have to contribute more to resolve the crisis.
At Saturday’s G20 summit in Paris finance ministers reiterated their call for a decisive and comprehensive solution to the eurozone crisis, but differences still remain between France and Germany over the level of Greek debt write-downs and a bank recapitalisation. However, speaking in Düsseldorf this morning, German Finance Minister Wolfgang Schäuble said, “European governments will not present an ultimate solution for the sovereign debt crisis at an upcoming European Union summit”, according to the Telegraph live blog.
Meanwhile, Chancellor George Osborne has raised the possibility of UK taxpayers having to make a bigger contribution to the eurozone’s rescue package through the IMF. He said, “We have indicated our willingness to consider our position on resources for the IMF,” although he added that “additional IMF resources must not be a substitute for the eurozone committing its resources to supporting its own currency.” The UK’s potential liabilities via the IMF are capped at $20bn (£12.6bn), of which around a quarter has been deployed to date.
The WSJ reports that at the summit, the idea of boosting the IMF’s resources with funding from the emerging economies, China and Brazil in particular, was rejected by the finance ministers from established economies, who insisted that the European debt crisis must be resolved by Europeans themselves. Separately, the Sunday Telegraph reported that there were “heated exchanges behind closed doors”, as the UK, US and India rebuked European leaders for acting too slowly and in particular for not mobilising the full lending capacity of the ECB, which is fiercely resisted by Germany.

EUobserver reports that Jean-Claude Trichet, the outgoing head of the ECB, has reiterated his support for a change to the European Union treaty to allow for the outside imposition of economic policy on a member state. “It is necessary to change the treaty to prevent one member state from straying and creating problems for all the others…to do this, one even needs to be able to impose decisions”, he said.
Open Europe’s Pieter Cleppe appeared on Sunday’s De Zevende Dag, Belgium’s morning politics show, discussing the eurozone crisis. He argued, “In order to keep the eurozone up and running until the end of 2014, it requires multiplying the eurozone’s bailout fund, which has just been doubled, by fivefold, giving it an effective firepower of about €2.3tr. This is not democratically feasible, and it will not solve the underlying problem of economic imbalances within the eurozone.”
Telegraph FT FT 2 FT 3 WSJ WSJ 2 WSJ 3 EurActiv European Voice EUobserver Independent Europe 1: Trichet CityAM Times Irish Times ARD Zeit Bild El País Welt Welt 2 Welt 3 Welt 4 Handelsblatt TS De Zevende Dag: Cleppe Mail Sun Le Figaro BBC FT Weekend FT Weekend 2 Sunday Times 2 Sunday Telegraph WSJ Saturday’s Times Saturday’s Telegraph Saturday’s Independent Saturday’s Guardian Welt: Kremp Zeit: Geis FT: Munchau FT Editorial Telegraph: Evans-Pritchard WSJ Review&Outlook WSJ: Stelzer Sunday Telegraph: Halligan Sunday Telegraph: Bootle FT Weekend: Barber

Dutch Economy Minister Maxime Verhagen has argued in De Volkskrant that the European Commission should be given the power to force all EU member states, not just eurozone countries, to address their economic problems, adding, “National competences should remain national. But the measures shouldn’t be free of consequence. EU countries should be judged on the result.”
De Volkskrant

In the Sunday Telegraph, Business Editor Kamal Ahmed argued, “There are at present at least 38 pieces of European regulation that have either been passed or are being formulated in Brussels which will have an impact on the UK’s financial services sector…We are in danger of sleepwalking to a new crisis – a crisis of regulation…It is time this Government put its foot on the regulatory ball and said enough is enough.”
Open Europe research Sunday Telegraph: Ahmed

François Hollande will be the French Socialist Party’s candidate for next year’s presidential elections, after he won the second round of a primary election against Martine Aubry, the daughter of former European Commission President Jacques Delors.
Le Monde Les Echos BBC: Hewitt Repubblica Le Figaro FT WSJ

Ceske Noviny reports that Czech Agriculture Minister, Petr Benld, has rejected European Commission plans to introduce a €300,000 ceiling on direct payments to farmers under the EU’s Common Agricultural Policy, arguing that it would endanger the competitiveness of Czech farmers.
Ceske Noviny

The Independent on Sunday reported that an international team of scientists will today kick-start an EU-funded study into the impact of global warming on the spread of allergies. The article notes that the study will cost around €3.5m.
Independent on Sunday


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