Financial Market Report for the week ending Friday April 20, 2012; the third weekly report of entrance into the Second Great Depression.
1) … The S&P commenced an Elliott Wave 3 Decline in April 2012.
The chart of the $SPX shows an Elliott Wave 5 high of 1,576 in 2007. The $SPX of 1,4222 in early April 2012, was an Elliott Wave 2 High. The $SPX, and the S&P’s ETF, SPY, entered an Elliott Wave 3 Down in April 2012, and as a result, the world entered into the Second Great Depression. The Third Wave Down is the most destructive of all economic waves as it destroys most of the wealth built on the prior 5 waves up.
This week a number of Real Estate REITS, such as SPG rose to new highs.
The Proshares 200% inverse ETFs seen in this Finviz Screener performed as follows, on the negative BIS -6.0%, SIJ -2.6%, FXP -3.2%, SMN -2.4%, IWM -1.9%, SJH -1.2%, DUG -1.4%, EEV -0.8%; on the positive, SSG 4.2%, TLL 1.,7%, BZQ 1.6%.
2) … Capitalism is dying and regional global governance is rising out of destructionism’s conflict and chaos.
Neoliberalism featured creditism which produced inflationism. But the global tectonic economic and political plates have shifted with the failure of neo liberal credit on the exhaustion of the world central banks’ monetary policies which have caused global trade and corporate growth and profit to falter. The global government finance bubble and global debt trade have been punctured by the loss of confidence caused with the default of Greece, the rising deficit in Italy and the failure of Spain’s banks as well as a rise above 6% in Spain’s sovereign borrowing costs. Now, out of the chaos and conflict of destructionism, regional global governance is rising to replace capitalism. Regionalization will bring forth regional trading economic and trading blocs as the dynamos of regional security, stability and sustainability power up and the dynamos of corporate profit and growth power down. The result being regional global governance is rising to replace capitalism.
Ambrose Evans Pritchard writes German Tempers Boil Over Back-Door Euro Rescues. Controversy is raging in Germany over soaring “payments” by the Bundesbank to shore up Europe’s monetary system and cope with a tidal wave of capital flight from southern Europe. Professor Hans-Werner Sinn, head of Germany’s IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. “The euro-system is near explosion,” he told Austria’s Economics Academy on Thursday. Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors – often by the back-door – that will saddle Germans with ruinous losses one day. “It is a horror scenario,” he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped. Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens. The furor follows a sharp jump in the Bundesbank’s “Target 2″ claims within the European Central Bank’s internal payment network from €547bn in February to €616bn in March. Bundesbank claims have risen sixfold since 2008, a rise mirrored in Holland and Luxembourg.
Euro Intelligence reports Jens Weidmann says it’s not the ECB’s job to solve Spain’s problems. Spain should take a rise in its bond yields as a spur to tackle the root causes of its debt woes, not look to the European Central Bank to help by buying its bonds, Jens Weidmann told Reuters. The head of the Bundesbank, who has led a push by some policymakers from core eurozone countries for the bank to begin planning an exit from its crisis mode, said no ECB policymakers favoured using the bank’s bond-buying plan to target specific interest rates on sovereign bonds, and ECB board member Benoit Coeure was simply stating a fact by saying last week that the programme still existed. Weidmann also said he saw no reason to discuss a third LTRO. We shouldn’t always proclaim the end of the world if a country’s long-term interest rates temporarily goes above 6 percent,“ he said referring to rates at which Spain currently has to borrow. „That is also a spur for policymakers in the countries concerned to do their homework and to win back (market) confidence through the pursuit of the reform path. (EuroIntelligence provides the best of reporting and analysis I encourage a purchase of their daily newsletter).
The trade lower in world stocks, ACWI, this month evidences the death of fiat money and credit, as well as capitalism. Confirmation of such comes from this month’s trade lower in Commodities, DBC.
Debt deflation is seen in the Small Cap Pure Value Shares, RZV, Large Cap Growth, JKE, Agricultural Commodities, RJA, DBA, Base Metals, DBB, Oil, USO, all trading lower this month on the exhaustion of the world central banks’ monetary policies to sustain growth, and the failure of debt sovereignty of the peripheral European nations.
Insolvent sovereigns and insolvent banks can’t support either capitalism or European Socialism. Sovereign debt insolvency means that sovereign fiscal spending is unsustainable. The baton of sovereign authority is passing from sovereign nation states to sovereign bodies, such as the ECB and EU ECB IMF Troika. Both European socialism and capitalism are dying and regional global governance is rising in its place.
Bloomberg reports Spanish Banks Gorging on Sovereign Bonds Shifts Risk to Taxpayer. Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors. Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros ($289 billion) at the end of January, data from Spain’s treasury show. Italian banks increased ownership of their nation’s sovereign bonds by 31 percent to 267 billion euros in the three months ended in February, according to Bank of Italy data. German and French banks, meanwhile, have cut holdings of those countries’ bonds, as well as Irish and Greek debt, by as much as 50 percent since 2010 in some cases. That leaves domestic firms on the hook for a restructuring such as Greece’s last month and their main financier, the European Central Bank, facing losses. Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union. “The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.” (Hat Tip to Between The Hedges)
A comment in relation to the report that “Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors.” These banks realize that the end of Neoliberalism, that is Milton Friedman Free To Choose Era, is almost over, and are seeking to develop a new banking model, one not based upon investment capital, but rather a banking model based upon political capital. The bankers want to stay employed and they want power, the kind of power that comes from their firms being integrated with government.
And a comment in relation to the report that ”Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union. “The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.” The banks are not only integrating with their government, but they are integrated with the ECB, and have expanded moral risk, that is increased moral risk to all people living within the EU as a whole. This subordinates their banks and their governments to the ECB. This has broken down national sovereignty. Portugal, Italy, Greece, and Spain are no longer sovereign nation states. Rather the ECB is now the monetary authority for all of the Euro zone; the ECB is now the sovereign authority in Europe. There is no genuine independent European sovereign debt market place, rather there is a singular purchaser of Euro zone Treasury debt, that being the ECB. The ECB is not only the sovereign in Europe, it is also the seignior, that is the top dog banker who takes a cut. The ECB, not an independent Treasury debt market place, is the sole funder of fiscal spending in the periphery nations. The resource for fiscal spending of the PIGS is not from traditional Neoliberal sources, but rather from new Neoauthoritarian sources. Investment capital is waning and regional political capital is rising to grease Europe’s economic wheels. Neoauthoritarianism’s regionalism is replacing Neoliberalism’s creditism, where the global sovereign debt trade, financialized by Investment Bankers such as Morgan Stanley, MS, and country specific housing industry debt trade, financed by Mortgage REITS such as Annaly Capital Management, NLY, and municipal debt financed by European State Banks such as Dexia, underwrote the foundation for global trade growth and corporate expansion.
Money and credit as they have traditionally been known, is history; capitalism is no longer providing money and credit in the Euro zone; neo liberal credit has been extinguished.
Neoauthoritarian credit is flowing as economic resource. Neoauthoritarian money and credit is rising to power Europe’s economy.
The PIIGS profligate spending, coupled with the world central banks’ monetary policies have pushed sovereign debt to the point where it is no longer sustainable. The seigniorage, that is the moneyness, of capitalism is history. The seigniorage, that is the moneyness of regional integrated banking and government is rising. Eurozone fiscal spending is not sustainable as the periphery nations have lost debt sovereignty. Current fiscal spending is being provided courtesy of the ECB; this will not continue much longer.
Reflecting on EU political life, I observe that Germans perceive themselves to be German citizens of the German Republic. Greeks consider themselves to be Socialists of the Hellenic Republic. The French perceive themselves to be Socialists of the French Republic. I perceive them all to be European Socialists.
Those of the Austrian Economic persuasion, such as Mike Mish Shedlock, continually cry out that an internal devaluation is very much needed or there will be a breakup of the EU.
Neither of these two things will happen. Please consider that after the soon coming Financial Armageddon, that is credit bust and economic collapse, all of those living in the Euro zone will be debt serfs living in a Eurozone regional of global governance, as called for by the Club of Rome in 1972 to 1976. Yes, all will be residents of a debt gulag, and a totalitarian collective, where the debts of Neoliberalism are applied to every man woman and child. Ten regions of global governance are coming to govern the economic affairs of mankind, as foretold in Daniel 2:31-33 and Revelation 13:1-4. Financial Armageddon will dramatically reduce the US and UK hegemony that has ruled the world since the late 1700s, as the dynamos of global growth, trade, and corporate profitability, wind down; and the dynamos of regional security, stability and sustainability power up. Soon EU leaders will meet in summits to waive national sovereignty, and pool regional sovereignty, to announce regional framework agreements, where new monetary authority and new sovereigns, such as foretold in Revelation 13:5-10, and Revelation 13:11-18, will be announced. In Europe, these will install monetary cardinals, and public private partnerships to oversee economic activity, and fiscal budget commissioners to enforce austerity measures and debt servitude.
3) … A global Eurasia war is coming.
As I read the bible prophecy website Signposts of the Times, I conclude that time the timing of the Ezekiel 38 War is imminent. Ezekiel 38:4-6 communicates that Iran, that is Persia, is one of nations aligned with Russia, in the Gog Magog War that encompasses all of Eurasia. “I will turn you around, put hooks in your jaws and bring you out with your whole army, your horses, your horsemen fully armed, and a great horde with large and small shields, all of them brandishing their swords. Persia, Cush and Put will be with them, all with shields and helmets, also Gomer with all its troops, and Beth Togarmah from the far north with all its troops, the many nations with you.”
4) … Global economics is increasingly being governed by statism and crony capitalism as neo liberal credit fails.
Paul Brodsky writes in Zero Hedge Statists At Play. Argentine president Cristina Fernandez de Kirchner announced that her Argentine government would expropriate and re-nationalize YPF, an energy company operating mostly in Argentina founded by its government in the 1920s and de-nationalized in the 1990s. Repsol, a Spanish company that owns (owned) 57% of YPF called the act “illegal and unjustified” and vowed to sue. As Paul Brodsky and Lee Quaintance of QBAMCO note, in times past such expropriation would surely be an act of war. FdeK’s timing was brilliant, to re-nationalize the Spanish-controlled energy company when Spain’s economy and funding are teetering means the Spanish government and businesses domiciled there lack the clout to make demands of Euro confederates. The political calculus among leaders of sovereign governments reduces to short-term domestic political benefits vs. threats of economic or military retaliation but with regard to natural resources, the QBAMCO pair critically note, the bigger implication that it is sovereign vs sovereign as the paper bets representing global production and resources that we call “capital markets” is in jeopardy of becoming a sideshow. Baseless paper money, fractional banking, revenue shuffling, financial returns, ever-increasing debts, unwarranted confidence building, nominal output growth and politicians posing as policy makers cannot sustain the most basic needs of societies.
Reuters reports Summers And Rubin, Remorseless Deregulators
Testosterone Pit writes in Zero hedge Pushing The Euro To The Brink that French President candidate Hollande wants banks eliminated and sovereigns integrated and funded by the ECB. If elected on May 6, he would immediately set out to implement his ambitious plan—though it might lead to the break-up of the Eurozone.
He’d renegotiate the fiscal union pact, a hastily drawn-up document that is supposed to induce budgetary discipline into the 25 governments that signed it in even greater haste. The pact is German Chancellor Angela Merkel’s grand oeuvre. She forced it through at the height of the crisis. But Hollande wants to include provisions for additional government spending and borrowing, his “measures of growth,” and he’d block ratification of the pact if he had to.
Then he hammered home just how serious he was in pushing the ECB to print money and lend directly to the governments. “It’s incredible that the ECB floods the market with liquidity,” he said, and that the “banks borrow from it at 1% and re-lend to the States, specifically Spain, at 6%.” Oops, he saw the 5% spread. A breath of fresh air. A politician who looks at the numbers!
“There comes a moment when one can no longer accept phenomena of that kind of income,” he added with an eye on the €1 trillion that the ECB lent to the banks via its Long Term Refinancing Operations. “It would be more judicious, more efficient, and faster for the ECB to lend” directly to governments “as first and last resort.” In other words, he wants to cut out the middlemen, namely the banks. And he has his eyes open: “I know that the Germans are totally hostile to this; well then, this will be part of the negotiation.”
In the age of regional global governance, the Eurozone will be the first region to see banks integrated with government; these will be known as Government Banks or Gov Banks for short. Bloomberg reports, The debt of banks is trading at the biggest discount to the broader corporate bond market since the depths of the funding squeeze in November as Europe’s sovereign crisis again threatens to rattle global financial markets. From Spain’s Banco Santander SA to Morgan Stanley…, the cost of credit-default swaps on a basket of the largest banks in Europe and the U.S. is 266 bps, compared with 137 for the Markit iTraxx Europe Index of 125 companies with investment-grade ratings. The 129 basis-point spread is the most since it reached 133 on Nov. 30… ‘The problem with emergency liquidity injections is that they become addictive,’ said Alex Bellefleur, an analyst at Brockhouse & Cooper Inc. ‘That is especially the case when injections are trying to fight underlying flows that are accelerating. This is the dynamic we are currently in.’” Bloomberg reports Greece’s four biggest banks reported a combined loss of 27.9 billion euros ($36.9bn) for last year after participating in the country’s debt exchange, the largest sovereign restructuring in history. Spain’s two major banks, BBVA, and STD, are leading the European Financial Institutions, EUFN, and the World Financial Institutions, IXG, lower into the Pit of Financial Abandon.
Regionalization of banks will be one of the outcomes of the 1972 to 1976 Clarion Call of the Club of Rome for regional global governance, just as the Milton Friedman Free To Choose script underwrote floating currencies, which enabled the global debt trade, and carry trade investing, to establish and empower creditism.
For the last forty years bankers waived wands of creditism that marked the age of Neoliberalism; but soon leaders will meet in summits and wave announcements of regionalization that will mark the age of Neoauthoritarianism
5) …. The poorest county in each state
MSN.com presents the poorest county in each state. Your blog host lives in a poverty; and I reside in a six-story trailer park, filled with many coming and going to prison.
6) … The Apostle Peter wrote in 2 Peter 1:1-10, that partaking of the Divine realm, is an alternative to living in the fiat realm.
Since my emancipation from my family of origin, the poneros, that is the unreasonable and wicked, have always been present in my life. For example, in the early in 1970s, I worshiped as a Catholic and volunteered in the Sacristy, that is the area where the priest robes up. One day Sister Ann appeared and said she held office in the Church, and being senior, would be taking over my responsibilities of preparing for daily mass. Few attended the daily ritual, there was only the Priest, his dog, named Whimper, who rested beneath the altar, Sister Ann and myself. When an unfamiliar person came in to the sanctuary, Whimper would stand up and bark until quieted by the Priest. After a year, the Priest became concerned about the credentials of Sister Ann. She said she was from a convent back east. So the priest wrote and then called the convent, and they said they had no record of her being part of their organization. The Priest confronted her, and said she would bring in paperwork establishing her credentials. She never returned, but was seen around town out of her habit, that is out of her black attire. I could go on, and on and on, with over a dozen examples of ponerous individuals, people who are black holes, sucking in all energy, matter and light. If one encounters a person without conscience, one who blames others, one who is controlling, one who continually offends, one who confronts others, one who leeches on others, please consider departing at light speed, and do not come in contact with that person again, even if that person is married to a loved son or daughter. One can give a reason, such as stating that, one has emotional troubles, or one has to be more private.
Virtuous living suggested in 2 Peter 1:1-10, where those of the like precious faith of Jesus Christ, being elect, that is the chosen, selected and appointed of God, add virtue and love to their faith, so as to partake of the divine nature, and receive the exceedingly great and precious promises of God, and to bear spiritual fruit, reflecting the obedience of faith.
Virtuous living developes the four dimensions of personhood. For the Christian, virtues, that is a set of moral excellencies, is practiced the same to all people; there is no moral duality. Virtues when faithed in Christ, confirm one’s identity as elect, and enable one to have organic union with the divine nature; whereas any other spiritual experience or philosophical experience is simply an ongoing experience in the dead state of Adam. Virtuous living glorifies 1) Livelihood, that is gainful occupation, 2) Family role, 3) One another living, 4) Sex life. Marriage, and a wedding band on the finger, places sexual passion in a fireplace where it can be safely and graciously enjoyed.
The degree of one’s moralness, or one’s ethicalness, or one’s fiat ruleness, establishes the clarity, definition, and distinctiveness of one’s personhood. Morality comes by a good conscience, which in turn comes by prayer, and by the development of purity, and by the practice of holiness as one reflects on and purposes for virtuous living. Many Germans have by cultural habit developed personal industry, their occupational ruleness gives them an economic advantage and defines a strong, conscientious, and capable worker, yet this does not make them morally superior, or more morally desirable, or morally anything, as it come out of one’s carnal or fiat nature. And as for the poneros who I have encountered, they continually and habitually have life experience out of their carnal ruleness, a condition where they have no genuine conscience to objectively discern right from wrong, they are only conscious of themselves and their own rules, and act without remorse to exact justice on the offenders of those rules. Psychiatrists say that 4% of the population are psychopaths; but, I believe the number is closer to 10% to 12% . These are terrifically destructive to moral living; flee from such immediately; give any reason; simply flee!
7) …Will the Export Import Bank continue to be funded?
Bruce Krasting asks in Zero Hedge Is Exim Going To Flop?