Archive for May, 2012

Financial Armageddon And Default By Greece Within The EU Will Be The Genesis Event For Regional Global Governance

May 22, 2012

1) … Financial Armageddon and default by Greece within the EU will be the genesis event for regional global governance.

Financial Armageddon, coming at the time Greece defaults on its debt, or shortly before, will result in a credit bust and global financial collapse; this is foretold in bible prophecy of Revelation 13:3 where one of the seven heads on the Beast suffers an apparent mortal wound; this is the institution of finance, trade, investment and banking breaking down.

One of The New Compact Bible Dictionary meanings for the word Beast is an Apocalyptic symbol of brute force, sensual, lawless, and God-opposing.  The New Strong’s Concordance relates that the word Beast in Revelation 13:1-4 comes from the Greek word therion and means a dangerous animal; and is used forty-two times in the Bible. The number forty-two is the number of a journey; as in the forty-two destinations of the Children of Israel between  Egypt and the Promised Land, when one counts the former and the later as  destinations. Therion, wild beast, is used as an oppressive system, and also refers to two oppressive potentates, Revelation 13:5-10, and Revelation 13:11-18, who are destined to control the affairs of the nations in the closing period of the human economic and political governance.

When Greece defaults on its debts it is likely to stay in the EU, as leaders meet in summits and announce regional framework agreements that waive national sovereignty, and announce regional global governance in the Euro zone, whereby a One Euro Government, that is a Federal Superstate, with political, monetary, economic, banking and fiscal authority is mandated by leaders’ agreement.

Mike Mish Shedlock writes What’s Best for Greece.  Greece needs to do what is best for Greece. Short-term there will likely be intense breakup pain in Greece if it exits the eurozone. However, if Greece manages its cards correctly, Greece will recover far faster by telling the Troika to go to hell than by living the nightmare for 10 more years. Greece and Iceland are not the same. Iceland has exports and a work ethic. However, the facts show that Iceland recovered far faster because it had the courage to default, telling eurocrats where to go. Simply put, Greece has nothing to lose and everything to gain bu exiting the euro, the exact opposite of what Bloomberg and most of mainstream media would have you believe.

It is not a question of what is best for Greece, it is a question of what does God’s Word communicate regarding Greece. Bible prophecy of both the Old Testament and the New Testament are in complete agreement that the world is currently at a pivotal point in mankind’s history, and that capitalism and European socialism will give way to regional global governance, Revelation 13:1-4, and  Daniel 2:31-33, as money died in April of  2011 when investors fled stocks, commodities and currencies on fears that a debt union had formed in the Euro zone, and credit died in April of 2012 as investors fled stocks for US Treasury Bonds, and longer duration US Corporate Bonds.

2) … Jesus the Christ, opened the first of the Seven Seals, in May 2010, resulting in the death of both money and credit as EU Finance Ministers announced European economic governance and a bail out of Greece, and in so doing sent the rider on the white horse, with a bow without any arrows, to effect global economic and political coup d etat, by passing the baton of sovereignty from sovereign nation states to sovereign leaders and bodies, as the dynamos of corporate profit and global growth and global trade that sustained capitalism and European socialism are winding down, and the dynamos of regional security, stability, and sustainability that establish regional global governance are winding up.

An inquiring mind asks, what is money? Money is the value of exchange, that is coinage given by governance, to fiat investments such as stocks and bonds, money market accounts, checking accounts, savings accounts, farmland, intellectual property, artwork, antiques, equipment, textiles, vehicles, personal services, real estate, commodities such as corn,  base metals, like lead, and precious metals, like gold and silver, and currencies. After the soon coming Financial Armageddon, that is credit collapse and global financial breakdown, diktat will be considered to be money.    

Some people have money and some do not. I do not have any money, neither do the Argentines, the Greeks, the Cubans, or the Egyptians.  My blog does not feature pictures, as I don’t have money to buy the right to show intellectual property.

Money died with the rise of the US dollar in April 2011, as seen in the ETF, UUP, trading higher, on awareness of sovereign insolvency and banking insolvency in Greece, when investors sold out of the South African Rand, SZR, the Indian Rupe, ICN, the Brazilian Real, BZF, and the Euro, FXE; this stimulated disinvestment out of the BRICS, EEB. Competitive currency deflation since April 2011, has caused strong deleveraging out of commodities, DBC, such as natural gas, UNG, agriculatural commodities, RJA, base metals, DBB, silver, SLV, and gold, GLD.

The death of money developed a safe haven in Zeroze, ZROZ, +60%, 30 Year  Treasuries, EDV, 55%, Ten Year US Notes, TLT, 30%, Long Duration Bonds BLV, 20%, Build America Bonds, BAB, 18%, but deleveraged commodities, DBC,-13%, JJC, -19%, SLV, -25%, and deveastated stocks, EWZ, -27%, RSX, -32%, INP-, 27%, YAO, -23%, VGK, -20%, EZA, -15%, EWY, -15%, EWT, -20%. ARGT, -43%, COPX, -37%, SLX, -35%. One of the last remaining successful investments is Utilities, XLU, owing to the fact they have risen with falling interest rates; Next Era Energy, NEE, is one such Utility.      

Neoliberalism, that is the Milton Friedman, Free To Choose,  floating currency regime, which commenced in 1971, died in June of 2011, as Angela Merkel and Nicolas Sarkozy, called in joint communique, for ”true European economic government”.

Neoauthoritarianism, the Beast regime seen in bible prophecy of Revelation 13:1-4, is rising from the profligate Mediterranean country of Greece, GREK, to rule the world, as the Sovereign Lord God, Ephesians 1:1-21, and 2 Corinthians 5:17-18, has appointed his Heir, Jesus The Christ, to open the seven seals. Look and see in Revelation 6 as a rider on a white horse has been sent to pass the baton of sovereignty from sovereign nation states to regional authorities and bodies, and the rider on the black horse has been sent to bring death, to all existing forms of political and economic life; this so as to reveal the Son’s Kingdom, Revelation 2:26-27.

The Beast regime has seven heads, symbolic of its occupation in all of mankind’s institutions, and ten horns, symbolic of its rule in the world’s ten regions. This is the same monster as the Ten Toed Kingdom of Daniel 2:31-33, where regional global governance comes to replace the global hegemony of the UK and the US, as ten toes of iron diktat and clay democracy, replace crony capitalism and European socialism.

Under regionalization, ten global regional blocs will from as state sovereignty will be surrendered for a pooling of regional sovvereignty as managers from government and corporations are appointed to public private partnerships for coordination of resources and common industrial production.

Germans cannot be Greeks, yet both will be one, living as serfs in a totalitarian collective, under statism, and in debt servitude. Germany will rise to be preeminent leading a type of  revived Roman empire where the periphery nations exist as client states.

Charles Hugh Smith writes in Zero Hedge The E.U., Neofeudalism And the Neocolonial-Financialization model. The capital foundation of the principal—housing and the crippled budgets of post-bubble Member States has eroded to the point of mass insolvency. Faced with rising interest rates resulting from the now inescapable heightened risk, the citizenry of the colonized states are rebelling against the loss of their credit-dependent lifestyles and against the steep costs of servicing their debts to the big Eurozone banks.

Now the losses resulting from these excesses of rampant exploitation and colonization by the forces of financialization are being unmasked, and a blizzard of simulacrum reforms have been implemented, none of which address the underlying causes of this arbitrage, exploitation and financialization.

Understood in this manner, it is clear there is no real difference between the monetary policies of the European Central Bank and the Federal Reserve: each seeks to preserve and protect the “too big to fail” banks which are integral to the Neoliberal State-cartel partnership.

The “too big to fail” Eurozone banks were offered a double bonanza by this implicit guarantee by the E.U. to make everything right: not only could they leverage to the hilt to fund a private housing and equities bubble, but they could loan virtually unlimited sums to the weaker sovereign states or their proxies. This led to over-consumption by the importing States and staggering profits for the TBTF Eurozone banks. And all the while, the citizens enjoyed the consumerist paradise of borrow and spend today, and pay the debts tomorrow.

Both are attempting to rectify an intrinsically unstable private-capital/State arrangement– profits are private but losses are public–by shoving the costs of the bad debt and rising interest rates onto the backs of the core-country taxpayers (now indentured serfs). The profits from the euro arbitrage and Neocolonial exploitation were private, but the costs are being borne by the taxpaying public of both core and periphery.

The Power Elites are attempting to set the serfs of the periphery against the serfs of the Core, and this is necessary to keep both sets of serfs from realizing they are equally indentured to the Core’s pathological Financial Elite-State partnership.

Credit died in March 2012, when debt deflation, that is competitive currency deflation, caused the US Dollar, $USD, UUP, to rise once again, and falling Major World Currencies, DBV, and Emerging Market Currencies, CEW, caused derisking out of risk assets such as ONN, AMJ, IEZ, URA, ALUM, KOL, COPX, REMX, CHIM, PXR, SLV, GDX, GLDX, SSRI, EUFN, BRAF, EPI, MXI, seen in this Finviz Screener; but came most intensely to China Minerals, CHIM, such as Aluminum Corporation of China, ACH, which has fallen 52% over the last year, as the US Dollar, $USD, UUP, started to rise.

The fiat money system will be replaced by the diktat money system, where diktat serves as both money and credit.

3) … Financial market report for May 22, 2012.

In the third week of May 2012, a nascent investment demand for gold has commenced, as the chart of the gold ETF, GLD, shows that it is on the verge of breaking out of a triangle consolidation pattern at a price of 150 to 153; but failed to do so as it closed at 152, as currency traders sold the world major currencies, DBV, and the emerging market currencies, CEW, which caused the US Dollar to rise; it has been hard for gold to breakout on fears of sovereign insolvency and banking insolvency when the US Dollar rises. The chart of the US Dollar, $USD, shows a close 0.5% higher at 81.49.

Today, currencies traded lower as follows, BZF, -1.5%, SZR, -1.5%, FXE, -1.1%, FXF, -1.0%, FXA, -1.0%, ICN, 0.9%, FXY, 0.8%, FXB, -0.6%, FXS, -0.5%, FXC, -0.5%, FXRU, -0.5%.

Stocks trading lower included, PSCE, -2.5%, KOL, -2.4% , ONN, -2.1%, XSD, -1.4%, FAA, -1.3%, EMIF, -1.3%.

India Bank HDB, -4.4%, and India Infrastructure, INXX, -2.9%, led the BRICS, EEB, -1.6%, EWZ, -2.8%, RSX, -1.0%, INDY, -2.8%, FXI, -.7% lower.

Falling currencies, DBV, and CEW, led Agricultural Commodities, RJA, -2.4%, Commodities, DBC, -1.4%, Oil, USO, -1.9%, Base Metals, DBB, -1.9%, Copper JJC, -1.7%, Gold, -1.7%, Silver, -1.3%, and Timber CUT, -0.5%.

Total Bonds, traded, 0-.2%, as the Steepner ETF, STPP, rose; and the Flattner ETF, FLAT, traded lower, as the 10 30 US Sovereign Debt Yield curve, $TNX:$TYX, rose on a rising us 10 Year US Treasury Note Yield, ^TNX, of 1.79%.

ZROZ -2.1%, EDV, -1.7%, TLT, -1.1%, PICB, -0.8%, BWX, -0.8%, BLV, -.7%, LTPZ, -0.7%, CMF, -.5%, BAB, 0-.4%

4) … In today’s news

Open Europe reports

Open Europe reports Greek conservatives and liberals form alliance ahead of elections as left-wing SYRIZA leader warns Angela Merkel there are no vassal states in the EU.  Alexis Samaras, leader of the conservative New Democracy party, and Dora Bakoyannis, head of the liberal Democratic Alliance announced yesterday that they would run on a common platform in the upcoming Greek elections on June 17.

Alexis Tsipras, leader of the radical left-wing SYRIZA party which currently leads on 28% in the polls, warned in Paris yesterday that German Chancellor Angela Merkel “must understand that she is an equal partner with others in a eurozone which has no tenants and owners. She should not allow herself to behave as if we are a protectorate”. EUobserver Les Echos Le Monde Le Monde 2 FT Kathimerini Telegraph IHT Les Echos 2 Le Monde 3 Guardian Guardian:Traynor Spiegel FAZ FT: Rachman FT: Blejer Independent: Lawson Mail: Leader WSJ: Swoboda Welt Welt: Eder Bild: Blome

Speaking in Berlin yesterday, Germany’s ECB Executive Board member Jörg Asmussen said, “The benefits of a currency union are so outstanding that they should be stabilised by deepening, which means a fiscal union and banking union as well as a democratic legitimised political union”, the Irish Times reports.  City AM EUobserver Irish Times Irish Independent FTD Reuters

An article in Der Spiegel runs with the headline, “Merkel is losing her Triple A”, noting that “she is getting more and more isolated in Europe.” The article suggests that, also in light of the recent defeats in local elections, Merkel “won’t be able to maintain her strict attitude on austerity policies towards European partners in the long run.” Spiegel

International Institute of Finance: Spanish bank losses could total €260b.  The International Institute of Finance warned yesterday that Spanish bank losses on bad loans could be as high as €260bn, with up to €60bn of extra capital needed to shore up the country’s troubled banking system, reports Expansión. Separately, El Paísreports that the European Commission will speed up the disbursement of €939m from the EU’s Cohesion Fund for infrastructure projects which have already been completed in Spain, but are still awaiting payment.

FAZ also reports on analysis by Deutsche Bank, the eurozone’s permanent bailout fund, the ESM, would have to be doubled to a total of €1tr to effectively shield Spain, Belgium and Italy from resorting to capital markets and to prolong the Irish and Portuguese programmes for three years in the event of a Greek exit. The bank also argues that in order to reduce the risk of capital flight from Spain and Italy and to support their banks, the (ECB) will have to launch a renewed liquidity program and loosen its security requirements as well as agree for Target 2 balances to increase. Open Europe research City AM Expansión BBC Expansión 2 El Mundo Il Sole 24 Ore El Mundo 2 Expansión 3 El País WSJ Real Time Economics FAZ Telegraph

Euro Intelligence provides the best of news reporting and analysis; I suggest that one subscribe to its daily email reports, which today reports

Alexis Tsipras styles himself as the front man against capitalism. Here is what Alexis Tsirpas said during his press conference in Paris after meeting with the leader of France’s Left Front, Jean-Luc Melenchon: “In Greece, we are fighting on behalf of Germans, French and all European people…. Financial capital, bankers and capitalists have joined forces in a European union against Greeks. They want to destroy Greece so they can attack Europe.” About the EU-IMF bailout programme he said: ““The memorandum cannot be negotiated because hell cannot be negotiated” (as quoted by Kathimerini, more quotes on Guardian).

Jörg Asmussen proposes a wide-ranging banking union with a single supervisory system for large, cross-border bank. Creating a fiscal and financial market union that would be underpinned with its own budget and stronger democratic control, Financial Times Deutschland reports. The German ECB board member wants to break the link between banks and their sovereigns through the ESM and by creating a “special fund in the EU budget for the eurozone”, which could be financed by the financial transaction tax that most euro members want to introduce. Also there should be a real financial market union for the eurozone with a banking supervisory and bank resolution authority with real competencies. In order to enhance democratic legitimacy, Asmussen proposes to give the EU parliament the right of initiative, which it does not have, and to set up a subcommittee, which would convene regularly with members of the eurozone only.

Thomas Mayer, meanwhile, is proposing a “geuro” to save us from “grexit”. The idea of a parallel currency for Greece is hardly new. A large number of economists have been thinking about how it could be accomplished. The basic idea is that Greece introduces a new financial markets instrument – an IOU – that is used in domestic transactions and that will soon float against the euro, against which it will devalue. Domestic prices and wages will be dominated in that new currency. At the end of the process the IOU will be abolished at then prevailing market rates. (The parallel currency is essentially a way to reduce wages and prices. But why would Greek trade unions accept a geuro over a direct wage cut, when the two mean exactly the same? Do we assume perfect money illusion? If this is an involuntary arrangement, then we wonder what could be the legal basis of this inside the EU? Legally, all contracts are denominated in euros.)

Diego Valiante calls for Building a political Euro area. The gap between democratic representation and political decision-making is widening in Europe. Not only the economy, but also the institutional setup in Europe needs to change.

Reuters reports

Euro area bonds to be discussed at informal EU summit

New York Times reports

Fitch downgrades Japan’s sovereign debt rating

WSWS reports Greek SYRIZA leader Tsipras pledges to repay banks in European tour. Alex Lantier writes Alexis Tsipras, the leader of Greece’s Coalition of the Radical Left (SYRIZA), visited Paris yesterday to meet with Left Front officials, before traveling on to Berlin today. In Berlin Tsipras is slated to meet leaders of Germany’s Left Party, Gregor Gysi and Klaus Ernst.

In Paris, Tsipras met with Pierre Laurent, the head of the Stalinist French Communist Party (PCF), and the Left Front’s candidate in this spring’s presidential elections, Jean-Luc Mélenchon. In addition to a press conference with Laurent and Mélenchon, he gave a speech to roughly 300 Left Front members gathered in front of the National Assembly building.

SYRIZA is leading in polls in Greece for elections next month, due to its criticisms of austerity measures imposed by the European Union (EU) on Greece since 2009. A poll published Sunday in Kathemerini showed that SYRIZA is set to win a plurality and possibly form a government after the June 17 elections. The elections were called after Greece’s parties failed to form a government coalition based on the May 6 election. With 28 percent of the anticipated vote, SYRIZA leads Greece’s main right-wing party, New Democracy, which has 24 percent, as well as the social-democratic PASOK party.

The purpose of Tsipras’ tour is to reassure the banks and the major imperialist powers that, despite his criticisms of the bailouts, he will be a safe pair of hands should SYRIZA win the elections and form a government. In a long interview Sunday with Reuters—excerpted in the Guardian and in France’s business daily Les Echos—Tsipras stressed that he supports the EU and intends both to repay the banks and to continue “reforms” begun by PASOK.

Tsipras told Reuters that he was traveling abroad because “we want the governments of these important European Union countries, France and Germany, to see what we stand for: what is being transmitted in Europe about us is not what we represent and want.” He added, “We are not at all an anti-European force.”

Noting that European taxpayers’ funds had been “wasted” in two previous multi-billion-euro bank bailouts of Greece, Tsipras explained that he sought to create better conditions for repaying the banks.

He said, “We want to make use of Europe’s solidarity and funding to create the basis for our long-term reforms. But we need to know that in two-three years we’ll have escaped this downward vortex, we will have growth, and we’ll be able to pay back the money they gave us. There is no way we could pay them off if we continued” with the bailouts on the current terms.

5) … Summary

Greece, Spain and Italy are insolvent nations and their banks are insolvent financial institutions. Insolvent nations cannot govern and insolvent banks cannot provide for growth,  nor can they sustain lending. Sovereign insolvency, coupled with maxed out lending by Chinese Banks, CHIX, and failure of banking in India, EPI, and Brazil, BRAF, are at the root of the termination of global growth and global trade. which has caused disinvestment out of Emerging Market Infrastructure, PXR, EMIF, China Mining, CHIM, China Small Caps, HAO, South Korea Small Caps, SKOR, Australia Small Caps, KROO, India Small Caps, SCIF, Brazil Small Caps, BRF, EWZS, Russia Small Caps, ERUS, and Poland, EPOL.

The European periphery nation states, the PIIGS, have lost their debt sovereignty; this evidences they have lost their sovereign authority. After Financial Armageddon, that is a credit bust and global financial breakdown, and default by Greece within the EU, new sovereigns, specifically sovereign leaders, and sovereign bodies,  will be announced as Euro zone leaders meet in summits and establish regional framework agreements, that call for a One Euro Government, that is a European Super State and Federal EU Government, with political monetary, economic, banking, and fiscal authority as national sovereignty is waived and sovereignty is pooled regionally. Regionalization will follow with private public partnerships managing resources and economic production as the dynamos of growth and profit that have powered capitalism and European Socialism wind down, and the dynamos of security, stability, and sustainability power up regional global governance.

Fate, not any human action, is working through creative destruction, as the monetary authority of the world central banks’ fails to stabilize banks worldwide, and in fact is a toxic factor, in turning the global economic economic paradigm of inflationism to destructionism.

It is God’s will to bring forth the Kingdom of his Son, Jesus The Christ, Revelation 2:26-27, by putting an end to UK and US global hegemony, and bringing forth the Ten Toed Kingdom of regional global governance, Daniel 2:30-33. To accomplish this,  He in May of 2010, opened the first of the seven seals, Revelation 6:1-2, to effect a global economic and political coup d etat, to destroy all current economic and political life; and furthered his aim by releasing the Beast of totalitarianism, statism, and debt servitude, to rise from the profligate Mediterranean nation of Greece, Revelation 13:1-4, to rule in all of mankind’s seven institutions, and in the world’s ten regions.

The Death Of Credit Drove Biotechnology, Small Cap Shares, Home Builders, Real Estate, And Dividend Payers Lower This Week

May 19, 2012

Financial Market Report for the week ending May 18, 2012; this is the seventh week of entry into the Second Great Depression

A bonfire ignited in the world’s banks this week on fears of sovereign insolvency and banking insolvency in the Euro zone and on fears of the awareness of a halt to credit growth and economic growth in China. European Financials, EUFN, -8%, Emerging Market Financials, EMFN, -10%, World Banks, IXG, -8%, The Too Big To Fail Banks, RWW, -7%, Regional Banks, KRE, -6%, Emerging Market Miner, EMT, -8%, Emerging Market Infrastructure PXR, EMIF, -7%, Mid Cap Growth, JKH, 7%, US Infrastructure, ITB, -8%, Steel, SLX, 12%, led stocks lower, ACWI, -5%, lower this week on the exhaustion of the world central banks’ monetary authority, specifically the death of credit, both sovereign and corporate, and the ending of global growth and global trade.

Spiegel reports Fears of Bank Runs Mount in Southern Europe: Following the downgrade of 16 Spanish banks by Moody’s, the focus in the euro crisis is back on the banking sector. Greeks are withdrawing hundreds of millions from their accounts, with reports that the same is happening in Spain. Experts are calling on the European Central Bank to step in and prevent full-scale bank runs.

Reuters reports Moody’s downgrades 16 Spanish banks. I comment that the Spanish banking system is insolvent. And given that this week the Spanish CDS rose to an all time high, I comment that Spain, EWP, is an insolvent nation. Countries that are insolvent are incapable of governing. Bible prophecy foretells both in the Old Testament ad in the New Testament foretells that soon, a One Euro Government, that is a Federal Government with unified political, monetary, economic, and fiscal authority will come to rule all of the Euro zone.

Reuters reports Cash pullout means more ECB reliance.

Tyler Durden writes LCH hikes margin requirements on Spanish bonds.  A few days ago we suggested that this action by LCH.Clearnet was only a matter of time. Sure enough, as of minutes ago the bond clearer hiked margins on all Spanish bonds with a duration of more than 1.25 years. Net result: the Spanish Banks which by now are by far the largest single group holder of Spanish bonds, has to post even moire collateral beginning May 25. Only problem with that: it very well may not have the collateral.

The chart of S&P International Dividends, DWX, -7%, and the chart of the European Financials, EUFN, -8%, communicates the death of money in April 2011, as investors fled out of stocks on fears that a debt union had formed in the Euro zone, and now in April 2012, communicates the death of credit in April 2012, on the fears of sovereign insolvency and banking insolvency in Europe.

Nick Beams of WSWS reports Fears grow over European banks. Every day brings the bankruptcy of Greece and its exclusion from the Eurozone a step closer, with incalculable consequences for the European and global financial system.

Hearts sank this week as the WSJ reported reported that Alexis Tsipras, the 37-year-old head of the Coalition of the Radical Left, known as Syriza, and potentially the country’s next prime minister says he sees little chance Europe will cut off funding to the country but that if it does, Greece will stop paying its debts. I comment that policy making has clearly hit the wall in Greece, and thus making investors count the cost of the European Sovereign and Banking Debt Imbroglio.

The Telegraph reports Greece will run out of money soon. Greece’s deputy prime minister has said the country will run out of money in six weeks unless it honours its bitterly disputed EU bailout deal. Speaking exclusively to The Sunday Telegraph, Theodoros Pangalos said he was “very much afraid of what is going to happen” after Greek voters rejected the deal in elections last Sunday. “The majority of the people voted for a very strange mental construction,” he said. “We want to be in the EU and the euro, but we don’t want to pay anything for the past.” 

The Irish Times reports Scale of reform task facing Greece is monumental

ABC News reports  Flight of Euros accelerates, adding to Greece’s worries

Bloomberg reports  “China’s four biggest banks reported almost zero net new lending in the two weeks ended May 13, Shanghai Securities News reported. Two of the four lenders increased outstanding loans by less than 20 billion yuan ($3.16bn), while the others posted drops as repayments exceeded new credit.  Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of China Ltd. account for about half of the loans in China.  Deposits at the four lenders fell by about 200 billion yuan in early May, according to the newspaper.  Yuan deposits at all Chinese banks decreased by 808 billion yuan in April from a year earlier, while new lending was 681.8 billion yuan, down from 1.01 trillion yuan in March…”

Bloomberg reports  “Chinese companies have accumulated ‘alarming levels’ of debt and will have difficulty with payments in an economic downturn, Xinhua News Agency said, citing Li Yang, vice president of the Chinese Academy of Social Sciences.  The debt-to-asset ratio of Chinese companies is about 105.4%, the highest among 20 countries examined in yearlong study by Li’s team of borrowing by China’s government, corporations and individuals, Xinhua reported.”

Doug Noland writing in  The jig is up relates Sam Jones, Tracy Alloway and Tom Braithwaite Financial Times report.  “The unit at the centre of JPMorgan Chase’s $2bn trading loss has built up positions totalling more than $100bn in asset-backed securities and structured products – the complex, risky bonds at the centre of the financial crisis in 2008. These holdings are in addition to those in credit derivatives which led to the losses and have mired the bank in regulatory investigations and criticism. The unit, the chief investment office (CIO), has been the biggest buyer of European mortgage-backed bonds and other complex debt securities such as collateralised loan obligations, CLO, in all markets for three years, more than a dozen senior traders and credit experts have told the Financial Times.” From what I’ve been able to discern, it’s all consistent with traders being incentivized by policymakers to take an aggressive “risk on” approach in the marketplace.  Yet resulting highly speculative markets and an evolving debt crisis in Europe at times led to bouts of market worry that policymakers didn’t in fact have things under control.  Both 2010 and 2011 had serious albeit brief bouts of “risk off,” where J.P. Morgan and other speculators were likely forced into partially hedging major “risk on” market exposures.  Importantly, late-2011 LTRO and concerted global central bank liquidity operations then likely incited many to offset/hedge their risk hedges to ensure full profits (and big bonuses), from what was anticipated to be yet another bout of reflationary “risk on” policymaking.  But when things then unexpectedly began unraveling in Europe in April, at least for J.P. Morgan, the whole thing seems to have become an unmanageable mess.  The Jig is Up.

Fixed Income, DVY, DGS, REZ, FNIO, SPG, XLU, and High Dividend Payers seen in this Finviz Screener BTI, MO, LO, RAI, AMT, AMLP, AUSE, BRAF, KBWY, DWX, JNK, PGX, SEA, IST, traded lower on the death of credit. The chart of Junk Bonds, JNK, communicates the end of Neoliberalism, and its debt trade. The chart of Preferred Shares, PGX, communicates the failure of fiat wealth. The chart of Shipping stocks, SEA, communicates the failure of global growth and global trade. The chart of Brazil Financials, BRAF, communicates the end of banking.

Credit providers, MA, DFS, V, and AXP, traded lower this week.

The last of the neo liberal risk-on momentum investing sectors XBI, -4%, IBB, -5%, XRT, -5%, ITB, -8%, IYR, -8%, traded lower. Significant risk capital came out of Biotech companies, GILD, AMGN, REGN, BIIB, MDVN. Homebuilders, PHM, -13%, DHI, -7%, LEN, -8%, TOL, -6%, SPF, -12%, LL, -3%, and SHW, -5%, turned slower this week; of note  Lumber Liquidators, with a PE of 27, has a significant short selling interest.  

Growth momentum stocks, BEAV, DXPE, FAST, Vice momentum stocks, MGM, BYI, SHFL, Small Cap Value momentum stocks, LQDT, FUN, SIX, and US Infrastructure momentum stocks, EXP, MAS, MTRX, TBI, have all turned strongly lower. Neoliberalism’s risk-on trade has died on the death of credit; safe haven investing in US Stocks, VTI, is history.

Chemical Manufacturers, seen in this Finviz Screener, traded lower.

Transports, IYT, fell more than Manufacturers, IYJ.

International Technology, IPK, finally gave way this week, being led lower by FONE, SKYY, IGN,  as Semiconductors, XSD, and Steel, SLX, continued lower.

Basic Materials, MXI, US Basic Materials, IYM, caved. Paper Producers, WOOD, fell on lower Timber, CUT, prices. Small Cap Energy Shares, PSCE, Energy Development, XOP, Energy Service, IEZ, fell lower on lower oil, USO, prices. Global Agriculture, PAGG, traded lower.

Large Cap Growth Shares, JKE, Universal Display, PANL, Tata Motors, TTM, Priceline, PCLN, finally broke loose and fell strongly lower. It was Technology Leader, AAPL, Business Services Leader, IBM, Energy Leader, XOM, Pharamecutical Leader, NVO, Beverage Leader, KO, Bitoch Leader, AMGN, Retail Leader, HD, that experienced the final infusion of neo liberal finance coming from LTRO1, and LTRO2.  And then on April 1, investrors, took flight to the last safe haven investment away from Euro zone debt contagion and moved to US Treasuries, TLT, EDV, and, ZROZ,  as well as to longer duration bonds such as BLV and LTPZ.

The ongoing two year Yahoo Finance Chart of Mid Caps, JKH, Large Cap Growth, JKE, Boeing, BA, and BE Aerospace, BEAV, communicates the end of neoliberal finace. 

Exxon Mobil, XOM, with a PE of 9, and dividend yield of 2.8%, and practically no debt, would in any other era be considered a value stock worthy of investment. But it made a triple all time high of 85 and has turned lower; it is a commodity stocks and like copper stocks, COPX,  is under selling pressre.  Its turn lower is proof positive, that is clear, cogent and convincing evidence of the termination of fixed income investing.  

Gold, GLD, and Silver, SLV, prices, rose on Thursday and Friday, bringing GDX, to a -2% loss and SIL to a -7% loss. The failure of fiat assets has created an investment demand for gold.

Commodities, DBC, stabilized on higher Precious Metal, JPP, and Agriculture, RJA, despite falling base metal, DBB, Copper, JJC, and Oil, USO, prices.  It as thirteen months ago, beginning in April 2011, that investors sold out of stocks, commodities, and currencies, on fears that a debt union had formed in the EU. This ongoing one year chart of Commodities, DBC, Stocks, VT, and the Zeroes, ZROZ, shows the deleveraging out of commodities, and derisking out of stocks.

The failure of national sovereignty as well as the failure of banks in Greece, GREK and Argentina, ARGT, is the greatest factor in driving stocks, ACWI, lower.

Small Cap Country shares, VSS, fell more than their larger peers, VT, reflecting their being shut out of credit markets.  This week saw Asia, EPP, get crushed on the failure of global growth and global trade as Indonesia, IDX, Malaysia, EWM, and Thailand, THD, Hong Kong, EWH, Singapore, EWS, and Shanghai, CAF traded lower. Small cap country shares trading lower included

BRF, 11%

ERUS, -11%

SCIF, SCIN, -5, -4%,

HAO, -7%

GMF, -6%

EPHE, -7%

KROO, -9%

ENZL, -6

SKOR, -12%,

CEE -6%

ECH, -9%

EPOL, -8%

CNDA, -8%

IWM, -5%

Currency Nations traded lower.

EWD -10%,

VGK -6%

EWZ -8%

RSX -11%

INP -3%

YAO, FXI, -7%,

EWA, -7%

EWW,  -7%

EWL, -4%

EWC,-5%,

EWU,-7%

EWY, -7%

EWJ, -4%

EEM, -7%

VTI, -5%

To highlight the great fall in World Stocks, VT, relative to US Stocks, VTI, Japan’s MTKAY, has fallen 17%, compared to ROLL, having falling 7%, SNA, 5%, and LECO 1%.

Total Bonds, BND, traded 0.2% higher.

ZROZ, 7%

EDV, 6%

TLT, 4%

BAB, 1%

MBB, 0% Elizabeth Trotta of The Exchange reports Mortgage Rates Hit Fresh Lows: 30-Year at 3.79%

MUB, 0%

CMF, -1%

BWX, -1%

EMB, -3%

PICB, -2%

JNK, -3%

The rise in the Flattner ETF, FLAT, on the fall lower in the US Ten Year Note to 1.70%, with the 10 30 US Sovereign Debt Yield curve trading near a weekly low, reveals  Systemic Risk on the part of many investors. The Japanese 10 Year JGB yield trade lower to 0.825%.

The chart of the US Dollar, $USD, UUP, shows a close at 81.29, with a weekly gain of 1.2%; and the Yen FXY, gained 1.0%.  Major Currencies, DBV, traded lower, and Emerging Market Currencies, CEW, traded -2.5, BZF, -3.5%, SZR, -3.4%, FSX, -2.8%, FXA, -2.1%, FXC, -1.9%, FXC, -1.9%, FXM -1.8%, FXB -1.%, FXE, -1.1%.

There have been diminishing returns; now there is no return from ZIRP, QE1, QE2, LTRO, and LTRO2. The limits of world central banks’ monetary authority have been reached; their policies have debased all the word’s currencies. Monetization of debt has caused disinvestment out of both commodities and stocks. Competitive currency devaluation, cannot stimulate growth. Tyler Durden writes Malinvestment and diminishing returns from intervention. We noted before the diminishing returns to government intervention. What is clear is that, as we have noted, that post the 1971 modified gold standard, over a long-period of time it has taken an ‘unsustainably’ increasing amount of government debt to create economic growth, with the post-2008 insanity that we need $2.50 to create $1 of economic growth. The two end with a discussion of the debt ceiling and deficit potential for a black swan event.  I comment that the Milton Friedman Free To Choose floating currency regime known as Neoliberalism is history. And that the diktat regime of regional global governance known as Neoauthoritarianism is rising in its place.

Could it be that peak M2 Money is being achieved? Doug Noland relates M2 (narrow) “money” supply declined $1.7bn to $9.869 TN.  “Narrow money” has expanded 6.6% annualized year-to-date and was up 9.3% from a year ago.

Financial Armageddon, that is a credit bust and global financial breakdown, is coming; it is foretold by John the Revelator in Revelation 13:3-4.

Some such as Graham Summers believe that the rise of nationalism will end the Euro before year’s end. But, out of the death of Capitalism and European Socialism, the Sovereign Lord God, Ephesians 3:1-21, has ordained the rise of a One Euro Government, as part of a Ten Toed Kingdom of regional global government, Daniel 2:30-31, where the Beast regime of totalitarian rule governs in all of mankind’s seven institutions, and the world’s ten regions. This monster is rising up out of the Mediterranean nation state of Greece, exactly as foretold in bible prophecy of Revelation 13:1-4.

EuObserver reports German Finance Minister Wolfgang Schäuble says Europe’s long-term response to the economic crisis must be further political and economic integration, arguing, “I would be for the further development of the European Commission into a government. I am for the election of a European President.”  And FT reports Schäuble calls for closer EU integration.  Also Christine Lagarde, Managing Director of the IMF, speaks from Aachen Germany relating The Legacy of Charlemagne,Wolfgang Schäuble and European Integration. “It is a great pleasure to be here to honor Wolfgang Schäuble, who will soon be awarded the most prestigious Charlemagne Prize. Charlemagne is often referred to as the Pater Europae, the leader who forged a cohesive unity out of a divided western Europe, and unleashed an intellectual and cultural revival. He is also famous for his economic reforms, he harmonized and unified a complex array of currencies, introducing a new currency standard, the livre, based on silver. Today, nobody has done more than my dear friend Wolfgang Schäuble to further the cause of European integration, and the destiny of a unified Germany within a united Europe. Nobody is more worthy of the mantle of Charlemagne or more deserving of the Charlemagne Prize.”

There is waiting in the wings of  Europe’s stage, one individual who will rise to rule the Euro zone. Fate, Revelation 1:1, not any human action, will open the curtains, and into the limelight will step one of seemingly little authority, the little horn of Daniel 7:8, the king of fierce countenance of Daniel 8:23, the Prince of the people of Daniel 9:26,  the willful king of Daniel of 11:36-45, the one who comes in his own name of John 5:43, the lawless one of 2 Thessalonians 2:3, because he works in regional framework schemes of Daniel 8:23, to change our laws and our times Daniel 7:25, abrogating constitutional and historical law.

Euroland will be a totalitarian collective characterized by statism and debt servitude. People living there will no longer be able to call themselves sovereign individuals, as all will be residents living in a region of Global Governance. Greeks, cannot be Germans, but bible prophecy reveals that both will be one, living under the word, will and way of the Sovereign, Revelation 13:5-10, and his banking partner, the Seignior, Revelation 13:11-18.

Your blog host lives near one of the least religious cities in America, Seattle. It is ranked 49 and Tampa, is ranked 50 on the Huffington Post Most And Least Religious Cities

Grant Jeffrey, speaker and writer on christian Zionism, passed away this week. In his book Signature of God, he wrote that Ezekiel prophesied the rebirth of Israel in 1948. I am not a christian Zionist, nor dispensationalist.

I am a John 3:16, reformed christian; I am a Calvinist and subscribe to Calvinism.  I do not believe in the rapture theory of dispensationalism, nor do I belive that the Church and National Israel run parallel as vehicles for presenting the Gospel. According to Revelation 12, I believe God will provide a place of safety in a wilderness are , for three and one half years for a select group of saints, who will be raptured after the battle of Armageddon to come forth with the deceased saints to live in a thousand-year reign in rule with Christ over planet earth. Christ opened the first of the seven seals in May 2010 as EF Finance Ministers announced European economic governance and a bail out of Greece.

I believe along the  some of the lines of doctrine of.

1) … Dave MacPherson, Rapture Ready, author of the book The Rapture Plot,  and Sweet Lilberty article  The Greatest Hoax, Cyrus Scofield, Who Was He? and Pro Libery Article A Little History Cyrus I Scofield.

2) … Texe Marrs, author of the book A Truth Tellers  Compendium 

3) … Walther Martin, author of the book Kingdom Of The Cults.

4) … Herb Peters, author of the book, Rise of The Beast from the Sea

5) … Deanna Spingola Timeline Of The Ruling Elite

6) … RC Sproul is author of the Reformed Study Bible and writes in Information Clearing  House, Christian Zionism is the prodigy of Dispensationalism. Dispensationalism is one of the most influential theological systems within the universal church today. Largely unrecognised and subliminal, it has increasingly shaped the presuppositions of fundamentalist, evangelical, Pentecostal and charismatic thinking concerning Israel and Palestine over the past one hundred and fifty years.John Nelson Darby is regarded as the father of dispensationalism and its prodigy, Christian Zionism.   It was Cyrus. I. Scofield and D. L. Moody, however, who brought Darby’s sectarian theology into mainstream evangelical circles.   R. C. Sproul concedes that dispensationalism is now ‘a theological system that in all probability is the majority report among current American evangelicals.’   Today, virtually all the ‘televangelists’ such as Jerry Falwell, Jim Bakker, Paul Crouch, Pat Robertson, Jimmy Swaggart and Billy Graham are also dispensationalists. Probably the most significant Christian organisations to espouse dispensationalism have been the Moody Bible Institute, Dallas Theological Seminary and the International Christian Embassy, Jerusalem. Dispensationalists believe that God has two separate but parallel means of working, one through the Church, the other through Israel.   Thus there is, and always will remain, a distinction, ‘between Israel, the Gentiles and the Church. Christian Zionist teaching, in my experience, springs from the “wild olive branch” viewpoint advocated by Paul, which emphasizes the gentile believer being grafted into God’s olive tree of Israel. (Israel here being the ongoing people of faith within God’s chosen people; not just those who are genetically Israel, but who may still be in rebellion against God)    Within this olive tree, for now, the Jew and Gentile retain a separate identity but are one in God’s love and purposes.

Silver And Gold Rise …. As Banks In Europe, Emerging Markets, Chile, Korea, Argentina, Australia, Brazil, India, And The UK Lead Stocks Lower

May 17, 2012

Financial Market Report for May 17, 2012

Fears of European sovereign insolvency and banking insolvency recreated the investment demand for gold today May 17, 2012.  Prices of precious metals, JPP, rose, taking Silver, SLV, +3%, and Gold, GLD, +2% as well as the Silver Miners, SIL, and Gold Miners, GDX, GDXJ, higher.  Silver Miners rose, PAAS, 8%, SLW, 5%, HL, 4%, CDE 2%. Gold Miners rose, NGD, 7%, GG, 7%, ABX, 7%, EGO 6%, IAG 5%, NEM 5%.

The WSJ reports Greek Leftist Leder Throws Down Gauntlet on Debt. The head of Greece’s radical left party says there is little chance Europe will cut off funding to the country and if it does, Greece will repudiate its debts, throwing down a gauntlet that could increase tensions between Greece’s recalcitrant politicians and frustrated European creditors. (Hat Tip to Gary of Between The Hedges).

The Telegraph reports Fitch Warns of Mass Eurozone Downgrades. Ratings agency Fitch warns that all eurozone countries face a greater than 50pc chance of a downgrade if a stable, pro-bail-out government is not formed following Greece’s second round of elections. (Hat Tip to Gary of Between The Hedges).

Open Europe reports Pierre Moscouici appointed Finance Minister of France.

Emerging Market Banks, EMFN, and European Financials, EUFN, led World Stocks, VT, lower today. Chile Banks, SAN, BCH, Korea Banks, KB, WF, Argentina Banks, BFR, GGAL, BMA, BBVA, Australia Banks, WBK, Brazil Banks, ITUB, BSBR, BBD, India Banks, HDB, IBN, and the UK Banks, RBS, BCS, HBC,LYG, traded strongly lower today.

Bloomberg reports European Stocks Drop as ECB Pauses Greek Bank Lending. European stocks, VGK, declined for a fourth day as the region’s central bank paused lending to some Greek banks and speculation mounted that Spanish banks may have their credit ratings cut at Moody’s Investors Service. Bankia SA (BKIA) sank 14 percent after a report that depositors withdrew 1 billion euros ($1.27 billion) in the past week. Cookson Group Plc (CKSN) rose the most in six weeks after saying it’s considering a separation of its main divisions.  (Hat Tip to Gary of Between The Hedges).

Soon there will be a banking holiday, and a government holiday, in Greece, GREK, and Argentina, ARGT. Banks will be closed, as there will be no money in the National Bank of Greece, NBR, as well as in Argentina banks BFR, GGAL, BMA, and BBVA. The major issue facing the people who live in these countries is that they have no money good. Capital controls are coming soon, and the only money gold will be personal possession and ownership in gold and silver bullion. I recommend that one “dollar cost average” into possession of gold coins, and silver bullion, as well as open up an Internet Bank account at Bullion Vault and Gold Is Money.

The stocks which had seen risk-on momentum investing, traded sharply lower, as the spigot of neoliberal finance has been turned off; these included ITB, XBI,  XRT, XTL, GRID, PKB, RZV, FNIO, RWR, WOOD, PSCD, PSCI, PSCT. The best example of the failure of risk on momentum investing is seen in the trade lower in the chart of Liquidity Services, LQDT, after having risen parabolically on Federal Reserve policies of ZIRP and Quantitative Easing, as well as on funding from the ECB’s LTRO1 and LTRO2.

Risk appetitie is history; risk avoidance caused disinvestment out of the following:

Home builders ….. LEN, SPF, KBH, RYL, MDC, DHI,

Biotech seen in this Finviz Screener ….. GILD, ARIA

Retailers seen in this Finviz Screener ….. ORLY, SBH, ZUMZ, FL, PETM, TJX, PIR, ANF, LIZ, LULU, DKS, MNRO, ARO, EXPR, ULTA, LTD, HIBB, HOT,

Telecom ….. EQIX, SBAC,

US Infrastructure ….. USG, BELN, CTAS, TSCO, EXP, NX, NC, URI, LII, SPW, OC, AX, MAS,  MTRX, APOG, THR, MHK, ARG, LZB, FBHS, SCSC, AWX

Small Cap Value …..  BID, GCA, WTW, MCRS, AVD, AFAM, ABM, POOL, CCO

Vice Stocks ….. SHFL, BYI, MGM, WYN

Industrial Office REITS ….. EXR, BXP

Retail REITS ….. RPT, PEI, SPG,

Hotel REIT …. SHO, FCH

Paper Producers ….. LPX, PATK, VFPI

Auto Dealerships, LAD, PAG,

Small Cap Consumer Discretionary ….. IMAX, FUN, SIX, POOL,

Small Cap Industrial ….. ROLL, FAST, AOS, SPA, SNA, LECO, DXPE

Small Cap Technolgy ….. ALLT, PKT, TRMB, OYOG, TIBX, RTLX, DDD, ROP, ENS, SMTX, ALOG, ULTI, RHT

The Transports, IYT, such as TRN, GBX, and Airlines, FAA, such as ALK, SAVE, LCC, fell more strongly than the Industrials, IYJ, such as IR, TREX, CMI, which includes Auto Parts Manufacturers, such as WPRT, TWI, GPC, seen in this Finviz Screener, Electrical Equipment Manufacturers, such as BCG, ROK, ETN, AIMC, and Chemical Manufacturers such as GRA, HUN, seen in this Finviz Screener

Debt laden firms such as IP, and MTW fell strongly.

The Flattnr ETF, FLAT, rose on a flattening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as some investors took a perceived flight to save haven investment in longer duration US Govrenment Debt, ZROZ, and EDV, as well as longer muturity corporation bonds, BLV, and longer duration TIPS, such as LTPZ. The ongoing 3 month chart of LTPZ  shows it to be a successful investment for capital protection since stocks turned down in March.  

The Interest Rate on the US Ten Year Note, $TNX, traded lower, to 1.70%, causing the 10 Year US Government Note, TLT, to rise parabolically higher today.

Bonds, BND, traded basically unchanged, as Junk Bonds, JNK, traded lower.

The end of credit has commenced. Credit tighting around the world precludes a stock market bounce, and raises the risk of a sudden global financial market crash.

Credit providers AXP and DFS traded strongly lower today.

WSJ reports Fall In Chinese Loans Poses Economic Threat. Banks narrow range of firms they are willing to assist, while companies are wary of borrowing amid unsure prospects.

Bloomberg reports Dollar Funding Costs Jump As Debt Sales Scrapped. The cost to borrow in dollars is rising at the fastest pace in five months as Europe’s debt crisis leads investors to seek shelter in U.S. assets, spurring companies from China to Brazil to cancel bond sales.

Bloomberg reports Chinese Company Debt Is At Alarming Levels. Chinese companies have accumulated “alarming levels” of debt and will have difficulty with payments in an economic downturn, Xinhua News Agency said, citing Li Yang, vice president of the Chinese Academy of Social Sciences. The debt-to-asset ratio of Chinese companies is about 105.4 percent, the highest among 20 countries examined in yearlong study by Li’s team of borrowing by China’s government, corporations and individuals, Xinhua reported. Chinese companies tend to borrow from banks instead of raising funds in capital markets, Li said, as cited by Xinhua

The fall in BRICS shares, EEB, that is the fall in Brazil, EWZ, Russia, RSX, India, INP, China, GXC, and the US to BRICS stock ratio VTI:EEB, as well as the strong sell off in Argentina shares, ARGT, reflects the failure of the world central banks’ monetary authority to stimulate global growth and global trade. The tremendous rise in US Government debt, ZROZ EDV, TLT, IEF, reflects a presumed flight to safety.

The fall in Italy, EWI, Spain, EWP, and Sweden, EWP, reflects the failure of growth as well as the failure of sovereign authority and failure of banking, EUFN, in Europe.

Systemic risk is rising. Risk  assets, that is emerging market infrastructure, PXR, energy, PSCE, IEZ, and material stocks, COPX, have been beaten down together with the growth stocks Steel,  SLX, and Semiconductors, XSD.  The failure of the world economy to grow, precludes not only their rise, but together with the lack of credit and willingness of companies to go into debt precludes a market bounce, and presents the risk of a sudden market crash.

The potential for the bonfire in world financial stocks, IXG, to explode is quite high; these traded strongly lower again today; and would have fallen sharply had it not been for a rally in Japanese banks, SMFG, MFG, MTU, NMR, on a rising Yen, FXY and a rising Australian Dollar, FXA, which caused the US Dollar, $USD, UUP to trade lower.

The stock to commodity ratio, VT:DBC, communicates how grossly overvalued stocks are.

AIG is foolishly investing in Mortgage Backed Bonds, MBB, by buying at a market top.  Bloomberg reports AIG Wagers on Subprime Betting Second Time Different. American International Group Inc., the insurer that needed a $182.3 billion bailout from the U.S. government in 2008 after failed mortgage investments, is betting this time it’s different. Chief Executive Officer Robert Benmosche has increased non-government-guaranteed residential and commercial-mortgage backed securities holdings by $11.1 billion since 2010 to $28.4 billion at the end of March, according to regulatory filings. The New York-based insurer has acquired debt sold by the Federal Reserve that the central bank acquired from AIG when the company was rescued, including $600 million of CMBS last month. AIG, which is also bolstering its unit that insures home loans with low down payments, is wagering that a more than 35 percent plunge in property values, cheaper prices for the securities and fewer competitors justify returning to investments that four years ago required the government to step in when it was unable to meet margin calls to banks. The chart of AIG shows a 5% fall today.

The end of credit means the end of financialization of mortgage debt by Mortgage REITS,  REM, such as Annaly Capital Management, NLY.

Chris Mardsen calls in WSWS for a United Socialist States of Europe. Global financial institutions have a $536 billion exposure to Greek debt, but the Institute of International Finance estimates the true global cost of a Greek exit to be closer to $1.2 trillion, entailing “killer losses”. Wirtschaft Woche magazine says an exit would cost euro zone governments alone $300 billion and would push the continent into a 1930s style depression.

There will be no United Socialist States of Europe, rather the Sovereign Lord God, Ephesians 3:1-21, has ordained a One Euro Government, as part of a Ten Toed Kingdom of regional global government, Daniel 2:30-31, where the Beast regime of totalitarian rule governs in all of mankind’s seven institutions, and the world’s ten regions, this monster is rising up out of the Mediterranean nation state of Greece, GREK, exactly as foretold in bible prophecy of Revelation 13:1-4.

Tyler Durden in Zero Hedge asks Who Blinks First? Greece’s Syriza has bet the farm that the cost from a Greek fallout is just too big to Europe and the terms of the hated “Memorandum” will be adjusted, while to Europe, on the other hand, the outcome to Greece, at least according to Europe and the IIF’s Dallara will be “between catastrophic and armageddon.” So… Who blinks first?

EuObserver reports German Finance Minister Wolfgang Schäuble yesterday said that Europe’s long-term response to the economic crisis must be further political and economic integration, arguing, “I would be for the further development of the European Commission into a government. I am for the election of a European President.”  And FT reports Schäuble calls for closer EU integration. Wolfgang Schäuble, Germany’s finance minister, called on Thursday for the EU to move decisively towards a political union in the face of the eurozone crisis, with a directly elected president in Brussels.In a passionately pro-European speech delivered in Aachen, where he was awarded the annual Charlemagne prize, Mr Schäuble said the economic and financial crisis made it clear that closer European integration was needed.

“We must create a political union now,” he said. But he said that would not mean the creation of a European superstate, or a “United States of Europe”.

A debate was needed on precisely what responsibilities should be transferred to European level, on the principle that whatever tasks could best be done locally, regionally or nationally should not be changed.

One answer would be to give a face to European political union with a directly elected EU president in Brussels.

Mr Schäuble, who is regarded as the most pro-European member of the German government, said the EU urgently needed to improve its negotiating capacity on the world stage, with a more effective common foreign policy, and international treaties signed by all member states together.

“We must have the ambition to do more than simply protect the status quo,” he said.

Christine Lagarde, Managing Director of the IMF, speaks from Aachen Germany. The Legacy of Charlemagne,Wolfgang Schäuble and European IntegrationGood evening. It is a great pleasure to be here to honor Wolfgang Schäuble, who will soon be awarded the most prestigious Charlemagne Prize. Charlemagne is often referred to as the Pater Europae, the leader who forged a cohesive unity out of a divided western Europe, and unleashed an intellectual and cultural revival. He is also famous for his economic reforms—he harmonized and unified a complex array of currencies, introducing a new currency standard, the livre, based on silver. Today, nobody has done more than my dear friend Wolfgang Schäuble to further the cause of European integration, and the destiny of a unified Germany within a united Europe. Nobody is more worthy of the mantle of Charlemagne or more deserving of the Charlemagne Prize.

Euroland will be a totalitarian collective characterized by statism and debt servitude. People living there will no longer be able to call themselves sovereign individuals, as all will be residents living in a region of Global Governance. Greeks, cannot be Germans, but bible prophecy reveals that both will be one, living under the word, will and way of the Sovereign, Revelation 13:5-10, and his banking partner, the Seignior, Revelation 13:11-18.

I am going to visit my payday lender, Ace Cash Express, where I have a $35 loan payment coming due June 1st, and relate and ask: “A global financial collapse is coming, am I still responsible for repaying?” I know what the answer is, “We have collateralized your loan via your debit card”.

A big thank you goes to Finviz for their free charting service.

World Small Cap Shares And Asia Banks Fall Lower On The Failure Of China Growth

May 16, 2012

Financial market report for May 16, 2012

A brief bit of monetary history: Monetization of debt, particularly the world government bonds, BWX, and US Treasuries, ZROZ, EDV, TLT, and IEF, finally started to have an impact in April 2011, as investors rightly became alarmed that debt union had formed in the EU presenting a challenge to global growth and global trade

An inquiring mind asks, what is money? Money is the value of exchange, that is coinage given by governance, to fiat investments such as stocks and bonds, money market accounts, checking accounts, savings accounts, farmland, intellectual property, artwork, antiques, equipment, textiles, vehicles, personal services, real estate, commodities such as corn,  base metals, like lead, and precious metals, like gold and silver, and currencies. After the soon coming Financial Armageddon, that is credit collapse and global financial breakdown, diktat will be considered to be money.    

Some people have money and some do not. I do not have any money, neither do the Argentines, the Greeks, the Cubans, or the Egyptians.  My blog does not feature pictures, as I don’t have money to buy the right to show intellectual property.

Money died with the rise of the US dollar in April 2011, as seen in the ETF, UUP, trading higher, on awareness of sovereign insolvency and banking insolvency in Greece, when investors sold out of the South African Rand, SZR, the Indian Rupe, ICN, the Brazilian Real, BZF, and the Euro, FXE; this stimulated disinvestment out of the BRICS, EEB.

Neoliberalism, that is the Milton Friedman, Free To Choose,  floating currency regime, which commenced in 1971, died in June of 2011, as Angela Merkel and Nicolas Sarkozy, called in joint communique, for “true European economic government”.

Neoauthoritarianism, the Beast regime seen in bible prophecy of Revelation 13:1-4, is rising from the profligate Mediterranean country of Greece, GREK, to rule the world, as the Sovereign Lord God, Ephesians 1:1-21, and 2 Corinthians 5:17-18, has appointed his Heir, Jesus The Christ, to open the seven seals. Look and see in Revelation 6 as a rider on a white horse has been sent to pass the baton of sovereignty from sovereign nation states to regional authorities and bodies, and the rider on the black horse has been sent to bring death, to all existing forms of political and economic life; this so as to reveal the Son’s Kingdom, Revelation 2:26-27.

The Beast regime has seven heads, symbolic of its occupation in all of mankind’s institutions, and ten horns, symbolic of its rule in the world’s ten regions. This is the same monster as the Ten Toed Kingdom of Daniel 2:30-32, where regional global governance comes to replace the global hegemony of the UK and the US, as ten toes of iron diktat and clay democracy, replace crony capitalism and European socialism.

Competitive currency deflation since April 2011, has caused strong deleveraging out of commodities, DBC, such as natural gas, UNG, base metals, DBB, silver, SLV, and gold, GLD.

Credit died in March 2012, when debt deflation, that is competitive currency deflation, caused the US Dollar, $USD, UUP, to rise once again, and falling Major World Currencies, DBV, and Emerging Market Currencies, CEW, caused derisking out of risk assets such as ONN, AMJ, IEZ, URA, ALUM, KOL, COPX, REMX, CHIM, PXR, SLV, GDX, GLDX, SSRI, EUFN, BRAF, EPI, MXI, seen in this Finviz Screener; but came most intensely to China Minerals, CHIM, such as Aluminum Corporation of China, ACH, which has fallen 52% over the last year, as the US Dollar, $USD, UUP, started to rise.

The Apple ecosystem has also died, as witnessed by the sell off of IGN, SKYY, and FONE.

The fiat money system is history, as the seigniorage, that is the moneyness, of the world central banks and sovereign, of nation states and their banks have failed. The global government debt trade, that has given coinage to global growth and global trade, and that has underwritten Neoliberalism, has turned toxic, giving rise to Neoauthoritarianism.

Pleased do not be fooled into thinking by anyone that Greece is going to get kicked out of the EU or leave of its own accord, and return to the Drachma, this is simply dreaming on the part of Austrian economic philosophers who long for the day of a free market money system built on something of sound value such as gold. Angela Merkel is God’s appointed person of the hour and in CNBC interview she told interviewer, Silvia Wadhwa, “I want Greece to stay in the euro. I think that would be good for Greece and for all of us.” God is bringing the current chapter of mankind’s history to a close, and between the Beast regime, and the Four Horsemen of The Apocalypse, he is going to accomplish his ends, one of which is regional global governance.

Credit, that is Total Bonds, BND, cannot be rapid and turned lower today, as Junk Bond, JNK, World Government Bonds, BWX, and Emerging Market Bonds, EMB, turned lower once again.

The diktat money system will be rising, with regional sovereign leaders and bodies abolishing national wage laws, establishing structural reforms, implementing capital controls, providing public private partnerships for overseeing credit, production and human and natural resources, as well as imposing fiscal austerity.

Soon the only money good will be gold bullion as a storehouse of investment value and silver used for bartering. I recommend that cease from all investment trading, and that one live in Panama, Singapore and Blaine Washington, which has excellent airport via Allegiant and Bellingham Airport, and bank with Gold Is Money, and Bullion Vault, and buy and sell gold and silver bullion with a local jeweler.

More fuel was added to the bonfire of world banks, IXG, as the National Bank of Greece, NBG, plummeted, after appears what to have been a run on the bank and as Asian Banks in China, South Korea and Japan fell lower on the failure of China growth. The failure of national sovereignty in Europe, and the failure of the world central bank’s monetary authority has started a global stock, VT, VSS, sell off, with the European Financials, EUFN, India Banks, EPI, Brazil Banks, BRAF, and Argentina Banks, ARGT, leading the global banks, IXG, lower. The world small cap stocks, VSS, are leading world stocks, VT, lower, as they are more credit sensitive than their larger peers.

Today, China Banks, CHIX, South Korea Banks, WF, KB, SHG, Japanese Banks, MTU, NMR, SHG, Argentina Banks, GGAL, BMA, BFR, and the Too Big To Fail Banks, RWW, traded lower, turning world financial institutions, IXG, lower. The bonfire of the world’s banks grew stronger today on reports of the failure of growth in China. The NYT Blog For Europe’s Banks, Pinch of Debt Crisis Intensifies

Tyler Durden writes in Zero Hedge, Global Systemic Risk Soars To 5 Month Highs.  Only two weeks ago, we noted that the 30 most systemically important financial institutions in the world were seeing risk surging to 3-month highs. Today has seen that eclipsed dramatically as the credit risk of these entities soars to the year’s worst levels jumping 22% in the last two weeks alone. At 264bps, we are now close to the 3/9/09 peak crisis levels (of 274bps) and pushing up to the Q4 2011 peaks over 300bps as every region is deteriorating systemically – with the US and Europe worst (US below previous peak levels but Europe at record wides), Asia accelerating wider, and even the Aussie banks now losing it. While markets are staging a mini-recovery this morning, financials are not really participating as this index of global systemic risk has now retraced all of the LTRO benefits

We are witnessing the failure of neo liberal finance, carry trade investing, and POMO stimulus. Such things were part of the Age of Leverage. We have entered into the Age of Deleveraging which will be introducing debt servitude via regionalization, where leaders meet in summits, to renounce national sovereignty and announce regional framework agreements for the region’s security, stability and sustainability.

South Korea, EWY, fell 4%, and South Korea Small Caps, SKOR, fell 3%, China Small Caps, HAO, 2%, Australia Small Caps, KROO.  Asia Shares, EPP, fell 2%, and China Minerals, CHIM, traded lower, becoming the cumulative loss leader among China Stocks, CHXX, CHII, HAO, and CHIX. I expect that it will now be the Small Cap Chinese Stocks, HAO, to be the fastest falling of the China stocks as these are the most leveraged with shadow lending, which is collarteralized with stock piles of copper.

Gold miners, GDX, ralled today, being led higher by AUY, suggesting that the downturn in both gold and gold mining stocks is over. I expect the price of gold, GLD, and silver, SLV, to rise with ongoing falling stock, VT, and bond, BND, prices.  An investment demand for gold will come from the failure of both money and credit.

An inquiring mind asks what is credit? Credit is faith in the debtor’s ability to repay; loans are issued based upon the likelihood of successful return on capital invested. Investors take out loans because they trust they can repay both principal and interest. Under ZIRP, and with investment from Asia, credit has been steadily rising in China, stimulating the economy despite a trade lower in Candian Energy Income, ENY, and Canadian Small Caps, CNDA.

I have no credit, neither do Argentines, Greeks, Egyptians, or Cubans, as we have no ability to repay any debt.

The rise in credit default swaps, CDS, as well as a flight to perceived safety in US Government Treasuries, ZROZ, EDV, TLT, IEF, and US Corporate Debt, BLV, and TIPS, LTPZ, TIP,  reflects an increasing concern about the sustainability of global growth and global trade, as well as concern about sovereign debt in the Euro zone, and also reflects the death of credit.

The WSJ reports Wall Street Journal High-Yield Market Feeling Euro Fears, CDS Spreads Widen. Investors in the European high-yield bond market vented their euro-zone crisis fears Wednesday by buying protection against a default of their companies, but avoided selling their cash bond holdings so far, traders said. (Hat Tip to Between The Hedges)

Both new money and new credit is coming. After the soon coming Financial Armageddon, that is the credit bust and global financial collapse, held forth in Bible prophecy of Revelation 13:3-4, people will place credit in the Beast system of regional global government, and its leader the Sovereign, Revelation 13:5-10, and Revelation 13:12.  John the Revelator relates that people will place such trust in the Beast, that their level of faith can be called worship. Many people will be debt serfs living in regions of global governance such as Euroland, the North American Union, NAU, which I call CanMexAmerica, and eight other regions of global governance as called for by the 300 elite of the Club of Rome in 1972 to 1976 in such publications as Mankind At The Turning Point.

In today’s news 

AFP reports Facebook is as pleasurable as food or sex, Harvard study reveals. I know an addicted Facebook user. One divorced and retired grandmother spends all day on her wall interacting with all of her “friends”. I think she has obsessive compulsive disorder, and should be on a Big Parma drug, like Zoloft, and be in counseling.

EconomicReview Journal reports Non-gay marriage in the US is dying rapidly. The reason is largely a lack of jobs. America use to be a construction and manufacturing nation with all kinds of small manufacturing everywhere and the financial industry with low-interest rates supported home building. But now, those jobs are gone. Young men like to have the sex with young women, who want to have children. But the relationship ends with diapering and the jobless man goes out the door to live with buddies or in the car. I have to ask, why didn’t they guys get a vasectomy? Or it ends when, having no job he turns psychopathic, Yes, lack of employment is a leading cause of turning a person into a psychopath. Needless to say, he gets forced out of the home or leaves because he knows the home is too dangerous a hood for him.  I live in the inner city and I know many, yes many young women who have given up their children for adoption and now live on disability; they qualify because they have “mental issues”. I see them occasionally with their children as they get them on visits.  The marriages that are working, are the ones where both have college or university degrees, and at least one has a job sufficient to pay the bills and put food on the table. It’s most interesting, as there are different parts of town:  the young mommy and daddy hood is where the stroller set lives, the young professional hood is where the whole foods market is located, the upper crust hood is near the financial and boutique district, the single mommy townhouse hood is where the gangs hang out, the blue-collar apartment hood is where rentals abound, the retired living centers vary from nursing homes to upscale communities, the county hood where the business owners live, and yours truly lives in the inner city next to the dog day center and the tobacco store.  I’m convinced that for a family to succeed, there needs to be a father, who teaches boundaries, and who takes the lead in using teachable moments to communicate virtues. Not once did my parents talk to me about virtues or philosophy or religion. And that is why I’ve suffered all of my life with having behavior and health issues galore. It has only been through having many kinds of trouble and the grace and truth of God, plus some kindness by a couple, that I am alive and out of jail.  I pray daily that God will give me a good conscience, protect me from the poneros, and help me put to death my carnal nature inherited from my parents.

Rafael Azul of WSWS reports California governor demands massive new cuts in response to budge revision. On Monday, California’s Democratic Party Mayor Jerry Brown called for drastic cuts in health care and government worker pay, two days after the state announced a projected deficit increase of nearly $7 billion for next year. I comment that Jerry Brown is going to cut health care and education in California, but still it will not be enough as the budget gap is too large. California, and Illinois are our Greece. To many immigrants, yes a flood of immigrants have overwhelmed the state. California should be renamed Azteca and be established as a separate nation, with a separate currency and a separate sovereign debt. Their only salvation is to issue electronic gold coinage where all commerce is based on the gold in one’s electronic  account.

Bloomberg reports China Power Output Shows Deeper Economic Slump. China’s economic slowdown may be worse than forecast as growth in electricity generation, a leading indicator of gdp, was almost non-existent last month. Power generation rose .7% in April from a year earlier, down from 7.2% in March, the National Bureau of Statistics said on its website. Industrial production in the world’s second-largest economy, which accounts for more than 70% of electricity use, rose at the slowest pace in about three years last month. “Power production is one of the coincident indicators of the economy,” said Michael Parker, an analyst in Hong Kong at Sanford C. Bernstein & Co. “To see the number so sharply down, I think the problem of macro issues comes into question.”  I comment that the fall in electricity use establishes a recession.

Wall Street Journal reports China Big Four Banks barely issue new yuan loans.  China’s biggest four banks barely issued any new yuan loans in the first two weeks of May, extending the country’s weak credit growth last month, the state-run Shanghai Securities News reported Wednesday, citing an unnamed source. The four banks–Industrial & Commercial Bank of China Ltd. 1398.HK -2.08% (601398.SH), China Construction Bank Corp. 0939.HK -2.20% (601939.SH), Bank of China Ltd. 3988.HK -2.35% (601988.SH) and Agricultural Bank of China Ltd. 1288.HK -0.60% (601288.SH)–usually account for 30% of new yuan loans issued by China’s whole banking system. The rare and unusually dismal performance by the banks is expected to fuel concerns that despite Beijing’s efforts to step up credit easing, corporate demand for loans remains too weak to reverse the trend. I comment that the fall in demand for loans evidences a recession.

The spiritual thought of the day

Dvinelife writes God’s Sovereignty in Salvation from www.divine-life.org  You see, dear friend, the salvation of sinners dates back to the cycles of eternity, for we are told in Revelation 13:8 and in 1 Peter 1:18-20 that Christ was slain for them before the foundation of the world. Under this blessed subject comes repentance and faith, and the setting free of the condemned sinner by the grace of God through the righteousness of Christ and His substitutionary death upon the cross To whom do you give credit for your salvation? yourself or God?

The Tiny URL for this article,  World Small Cap Shares And Asia Banks Fall Lower On The Failure Of China Growth is  http://tinyurl.com/7mthdge.

Global Bonfire Of Banks Intensifies As World’s Currencies Fall Lower And Dollar Rises

May 15, 2012

Financial Market Report for May 15, 2012

Introduction

Falling Currencies Drive Banking, Mining, and Small Cap Shares Lower … Greece Is Going To Default Within The EU … The Failure Of Utility Stocks To Rise On Lower Interest Rates Means The End Of Profitable Fixed Income Investing 

1) … Ongoing competitive currency devaluation, lifted the US Dollar, $USD, UUP, as the world’s currencies traded strongly lower.

The chart of the US Dollar, $USD, shows a parabolic rise higher to close at 81.22 as Swedish Krona, FXS, -2.3%, South African Rand, SZR, -1.3%, the Euro, FXE, -0.8%, the Swiss Franc, FXF, -0.8%, Emerging Market Currencies, CEW, -0.8%, British Pound Sterling, FXB,-0.6%, the Indian Rupe, ICN, -0.4%, the Brazilian Real, BZF, -0.4%, the Australian Dollar, FXA, -0.4%,  and the Canadian Dollar, FXC, -0.4%.

2) … Stocks, VT, fell lower on falling currencies, DBC, CEW, and on falling oil, USO, gold, GLD, silver, SLV, and copper, JJC, prices.

Emerging Market Financials, EMFN, led by Chile Banks, SAN, BCA, and BCH, and Emerging Market Mining, EMMT, and Emerging Market Infrastructure, PXR, traded lower, as falling currencies, DBV, and CEW, forced World Small Cap Stocks, VSS, and World Stocks, VT, lower.

Country small cap shares experienced more debt deflation, that is currency deflation, than their larger peers today, which is coming as a result of accumulation of monetization of US Treasury debt, which took place as the US Dollar fell lower over the years up until April 2011; and World Treasury Debt, BWX, and Emerging Market Debt, EMB. Country small cap country shares falling lower today included ERUS, GUR, ESR, CEE, LATM, CNDA, KROO, EWZS, HAO, and GMF.

Investors derisked out of mining stocks, MXI, today, on the falling global currencies; these included KOL, REMX, CHIM, COPX, GDX, ALUM, SIL, and SOIL.

Utilities, XLU, such as NEE, and AEP, traded lower, as did International Utilities, IPU, on falling world World Government Bonds, BWX, and Emerging Market Bonds, EMB, as the US Dollar, $USD, UUP rose.

Energy Shares trading lower on falling oil, USO, included, XOP, PSCE, IEZ, IEO, and XES.

Airlines, FAA, fell strongly, despite the lower price of oil, USO.

International Utilities, IPU, fell strongly lower as is seen in this ongoing Yahoo Finance Chart of Intentional Utilities, IPU, Utilities, XLU, Global Infrastructure, PXR, World Stocks, VT, and the Risk On ETF, ONN.  International Utilities up until April 2011, use to be a good fixed income investment, but with the fall in world currencies and emerging market currencies in 2011, as well as today, these are experiencing significant debt deflation.  Emerging Market Infrastructure, PXR, especially in the BRICS, EEB, such as CHXX, INXX, BRXX, is leading the way down into the Second Great Depression.  Nobody wants to be building infrastructure in the BRICS. The fall in global growth, ongoing competitive currency devaluation and the fall in commodities, is causing savage disinvestment in emerging market infrastructure; investment in structural investment things like power plants, roads, bridges, rail lines simply is not being done.  Argentina, ARGT,  fell strongly today as electrical utilities EDN, and PAM, fell strongly. Brazil’s SBS which is terrifically overvalued fell strongly.

Countries falling lower on falling bank shares included Argentina, ARGT, -4.8%, Italy, EWI, -3.5% Chile, ECH, -2.3%, as European Financials, EUFN, and the World Major Banks, IXG, traded lower as Bloomberg reported UniCredit, Intesa Among 26 Italian Banks Cut by Moody’s. UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP) were among 26 Italian banks that had their credit ratings cut one to four levels by Moody’s Investors Service, which cited weakened earnings and the country’s economic outlook. UniCredit, Italy’s biggest bank, had its long-term debt rating lowered one step to A3, Moody’s said in a spreadsheet on its website yesterday. Milan-based Intesa, the nation’s second- largest lender, also was downgraded to A3 from A2. “Italian banks are particularly vulnerable to adverse operating conditions, which are likely to cause further asset quality deterioration, earnings pressure, and restricted market funding access,” Moody’s said in a statement. “These risks are exacerbated by investor concerns over the sustainability of the Italian government’s debt burden, which has contributed to the difficult wholesale funding conditions faced by Italian banks.”

Commodities, DBC, are technically oversold; and are likely to hold steady soon. Yet stocks, relative to commodities, VT:DBC, are still grossly overvalued, and given the state of European sovereign insolvency, and banking insolvency, have a considerable amount of fall left.

Bonds, BND, traded unchanged, as World Government Bonds, BWX, International Corporate Bonds, PICB, Emerging Market Bonds, EMB, and Junk Bonds, JNK, traded lower, as US Governament Debt, IEF, TLT, EDV, ZROZ, as well as Long Duration Corporate Bonds, BLV, and TIPs, LTPZ, and TIP, traded higher.

Greece, GREK, fell strongly lower; it has a number of debt obligations coming due soon, one today on May 15, 2012, and others in June.

3) … Greece is going to default on its debts, within the EU. 

The Daily Bell asks Mike Mish Shedlock, What’s the future for the EU?  No currency union in history has ever survived without there being a fiscal union as well. Since there will not be a fiscal union, the Eurozone must break up. The ideal way would be for Germany and the Northern countries to exit. The painful way will be a piecemeal exit. I expect this to be long and painful.

I have great respect for Mr Shedlock; I find most of his analysis helpful, but is not a devotee of bible prophecy. When Greece defaults it will be absorbed as a client state of a regional global government, as leaders throughout Europe meet in summits, renounce national sovereignty, announce regional framework agreements, which appoint regional sovereign monetary, economic and fiscal leaders, as well as charter the Bundesbank as Europe’s Bank. Existing banks such as Germany’s DB, and Ireland’s IRE, will be nationalized, or perhaps better said, regionalized, and flow-charted into the Bundesbank..

There will be no Greek exit and reestablishment of the Drachma. Instead, after a soon coming Financial Armageddon, that is a global credit bust and worldwide financial system breakdown, foretold in bible prophecy of Revelation 13:3, diktat will come from monetary cardinals working under a monetary pope, mandating structural reforms in Greece doing away with the national wage law, constitutional right to a government job, and restrictions on privatization. Public private partnerships will issue credit and will oversee manufacturing and economic activity. Diktat will come from budget commissioners to enforce austerity, as communicated in Revelation 13:1-4, where a Beast Regime of Neoauthoritarianism, replaces the current Banker Regime of Neoliberalism.

The overall picture is that the dynamos of the global government debt trade, that is securitization of National Treasury debt, traded by the ETFs, BWX, and EMB, that have underwritten global growth, trade and profit of Neoliberalism’s Carry Trade Investing, Crony Capitalism and European Socialism, are winding down on the exhaustion of the world central banks’ monetary authority.

New dynamos of regional security, stability, and sustainability are powering up Regionalization and Regional Global Government, as foretold in Daniel 2:30-32.

Those living in Euroland will know a One Euro Government, with a unified and federal political, monetary, economic, fiscal, banking, and military authority.

Global competitive currency devaluation has been underway since April 2011, when investors became concerned that a debt union had formed in the EU, with the result that investors have been deleveraging out of commodities, DBC, particularly silver, SLV, and natural gas, UNG.

Since March 2012, investors have been derisking out of North American Energy Production, XOP, Energy Service, IEZ, Small Cap Energy, PSCE, as well as global mining stocks, MXI, such as COPX, REMX, URA, KOL, ALUM, and Steel, SLX, and global banks, IXG, particularly in Europe, EUFN, India, EPI, and Brazil, BRAF, with the result that India infrastructure, INXX, and Brazil Infrastructure, BRXX, as well as all of Argentina, ARGT, have been greatly devalued.  Investors have dramatically fled Gold Mining, GDX, and Silver Mining, SIL, particularly Hecla Mining, HL.

And now, we are witnessing the failure of fixed income investing with the high paying dividend providers such as energy partnerships AMJ, leveraged buyouts, PSP, and shipping SEA, selling off strongly.

Just yesterday the shopping center REITS, SPG, the Industrial and Office REITS, FNIO, the Residential REITS, REZ, turned lower.

The failure of Utilities, XLU, such as NEE, SO, DTE, D, to rise on a lower US 10 Year Note Interest Rate, $TNX, establishes the end to fixed income investing and evidences the failure of the seigniorage, that is the coinage, of the US Federal Reserve as well as that of the ECB.

The failure of Neoliberalism’s seigniorage, that is moneyness, evidences the failure of national sovereignty and central bank monetary authority. New sovereigns and sovereign bodies will shortly be appearing in Europe.

With the down turn of fixed income investments, DVY, despite a flattening yield curve, seen in the Flattner ETF, FLAT, rising and the Steepner ETF, STPP, falling, value investing is history. In an era where money and credit is dying, deploying value investing, to buy stocks which seem to have competitive appeal, will only result in catching a falling knife.

Currently there is a bonfire of the world’s banks, IXG, burning quite badly, and it has the stench of death. Literally overnight, investment capital will fall to political capital, and the investment capital of those who have trusted in dividend stocks across the board is going to be literally vaporized, before one can say “boo”.

The fiat money system will be replaced by the diktat money system where diktat will serve as both money and credit.

Euroland will be a totalitarian collective characterized by statism and debt servitude. People living there will no longer be able to call themselves sovereign individuals, as all will be residents living in a region of Global Governance. Greeks, cannot be Germans, but both will be one, living under the authority of a type of revived Roman Empire, where the word, will and way of the Sovereign, Revelation 13:5-10, and his banking partner, the Seignior, Revelation 13:11-18, will rule all and everything.

4) … In today’s news

CNBC reports yesterday’s Asia Crush, it precedes the soon coming Asia Crash!  Where Are the Investors? Turnover in Major Asian Markets Plunges. Trading, measured by the turnover in Hong Kong and Singapore equities, fell in the first four months of the year on concerns over Europe’s debt crisis and as investors seek alternative investments to stocks after recent corporate scandals and the 2008 global financial crisis.

World Government Bonds And Emerging Market Bonds Tumble As Global Banks, Brazil, India, And Commodities Lead Stocks Lower Again

May 14, 2012

Financial Market report for May 14, 2012

Introduction

The tumble lower today in World Treasury Bonds, BWX, and, Emerging Market Bonds, EMB, reflects that the global government finance bubble has burst, and that the debt trade which has supported momentum investing is history.

US Corporate And US Government Debt rose as other debt traded lower on competitive currency devaluation.

US Government Debt rose strongly on a rising US Dollar, $USD, UUP, and safe haven investing, as competitive currency devaluation continued, as a result of monetization of debt by the worlds’ central banks. Debt deflation occurred in the South African Rand, SZR, the Brazilian Real, BZF, the Swedish Krona, FSX, the Indian Rupe, INR, the Euro, FXE, and Emerging Market Currencies, CEW.  Gary of Between the Hedges relates “The chart of the CRB Commodities Index is gapping down below the trading range it has been in since Oct. 2010 having declined 21.7% since May 2nd of last year.” I comment that this is when world currencies started to sell off on fears that a debt union had formed in the Euro zone.

The Zeroes, ZROS, and the 30 year US Government Bond, EDV, rose the most of all bonds, BND, today. Build America Bonds, BAB, and Long Term Inflation Protections Bonds, LTPZ, Inflation Protected Bonds, TIP, rose to new highs. The US Ten Year Note, TLT, rose to its previous highs, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, reflected in the Flattner ETF, FLAT, rising and the Steepner ETF, STPP, falling.

The Interest rate on the 10 Year US Government Note, ^TNX, traded lower to 1.788%, causing the longer duration US Corporate Bonds, BLV, to rise more strongly than the Corporate Bonds, LQD. The high yielding Junk Bonds, JNK, trade lower with stocks, giving absolute confirmation to the end of momentum investing as well as to fixed income investing. Today May 12, 2012, marked the end of the era of successful growth and income investing as most every one of the high paying utilities, seen in this Finviz Screener, traded lower.

Risk on momentum investing is history

The seigniorage, that is the coinage, of the worlds’ central banks is exhausted on the awareness that there will be no QE 3, and that the ECB is unable to support fiscal spending in Greece, GREK, Italy, EWI, or Spain, EWP.  Today’s fall in World Treasuries, BWX, and Emerging Market Bonds, EMB, presents the realization of the loss of debt sovereignty by the PIIGS.

The trade lower in dividend leaders Energy Partnerships, AMJ, Shipping Stocks, SEA, such as TK, and SSW, Leveraged Buyouts, PSP, Utilities, XLU, such as NEE, Residential REITS, REZ, Industrial and Office REITS, FNIO, such as AAT, BXP, Shopping Center REITS, such as SPG,PEI, Hotel REITS, such as FCH, SHO, Regional Banks, KRE, such as RF, and Dividend Paying Stocks, DVY, such as AVY, WSO, PKG, seen in this ongoing Yahoo Finance Chart, evidences also, the end of fixed income investing.

Insolvent sovereigns and insolvent banks cannot support world exports, growth and corporate profit.

Regional Governance as foretold by the prophet Daniel in Daniel 2:30-31, is coming to replace Capitalism and European Socialism. 

The trade lower in sovereign debt globally gives confirmation to the death of fiat money and credit. Greece is going to default; Greece is going to default within the EU. Sovereign nation states will be replaced by sovereign leaders and sovereign institutions, such as the ECB, which will work in Regionalization to produce Daniel’s Ten Toed Kingdom with its ten toes, that is ten regions, of iron dikat and clay democracy.

Regional economic and tracking blocs will be the new global economic paradigm, as investment capital is restricted by capital controls, and is replaced by political capital, where leaders meet in summits to waive national sovereignty and pool regional sovereignty, to effect regional security, stability and sustainability. This is why one should dollar cost average into gold bullion and a very limited amount of silver bullion for bartering, and take physical possession of these or trade them in Internet vaults such as Bullion Vault.

The New Europe will see a new power structure of private public partnerships overseeing credit, production as well as human and natural resources.  Sructural reforms of monetary cardinals and austerity measures of budget commisioners will replace Neoliberalism’s investors choice, bringing forth Neoauthoritarianism to govern the EU.

After a soon coming Financial Armageddon, that is a credit collapse, and global banking breakdown, the diktat money system will replace the fiat money system. The Libertarian hope for a free market money system, built upon something of sound value, whether it be gold or hazel nuts, or whatever, is a wild dream of people who perceive themselves to be sovereign individuals; such do not exist, as there only exists a Sovereign Lord God, Ephesians 3:1-21 and 2 Corinthians 5:17-18, who has appointed all things and determined all things from eternity past, and who does not base his decisions upon any meritocracy, but rather upon divine mercy, as presented in the doctrine of the election of grace.

The growing bonfire of the world’s financial institutions is at the center of a global stock sell off. 

Risk off investing is seen in the trade lower in country shares, Philippines, EPHE, Thailand, THD, Malyasia, EWM, Indonesia, IDX, and Vietnam, VNM, and Japan, EWJ. Today, May 12, 2012, will go down as being the Asian Crush; it preceeds the Asia Crash.

Also, risk off investing is seen in the trade lower, in vice stocks, SHFL, MGM, in value stocks, ORLY, NOF. URI, SBAC, AAP, LQDT, in US infrastrucutre stocks, EXP, OC, USG, MAC, AVD, NX, in growth stocks, DXPE, SXI, in large cap stocks, NVO, INTC, SBUX,  in real estate REITS, EXR, BXP, RLJ, PEI, RPT, in consumer discretionary stocks, HOG, RCL, and in technology stocks, OYOG, TRMB, PDFS.

The parabolic rise, and now trade lower seen in the chart of Liqudity Services, LQDT, evidences the rise and fall of neoliberal finance driven momentum investing.

The World Financial Institutions, IXG, Banks, KRE, the Emerging Market Mining Stocks,  EMMT, such as URA, SIL, ALUM, COPX, Emerging Market infrastructure, EMIF, Small Cap Energy, PSCE, Smart Grid, GRID, Paper Producers, WOOD, Smartfone, FONE, Steel Producers, SLX, and two high paying dividend sectors, Leveraged Buyouts, PSP, and Shipping SEA, together with Commodities, DBC, SLV, GLD, CUT, DBA, DBB, led stocks lower again today as concerns arose over the failure of global growth, global trade as well as banking insolvency, and sovereign insolvency in the Euro zone.

The bonfire of the world’s major banks, IXG, grew more intense today as India’s Banks, IBN, and HDB, as Brazil’s ITUB, and BBD, Argentina’s BRF, BBVA, GGAL, the UK area banks, IRE, BCS, LYG, RBS, traded lower, which turned US Regional Banks, KBE, such as RF, STI, BBT, HBAN, NTRS, BK, USB, FITB, STT, ORIT, GBCI, and the Too Big To Fail Banks, RWW, such as C, lower.

It was the infrastructure stocks that led the BRICS, EEB, lower today; BRXX, RSX, CHXX, INXX all traded strongly today.

It was the small cap shares, VSS, and the emerging market small cap shares, EWX, that led the world stocks, VTI, lower. It was the trade lower in the Real Estate REITS, RWR, that turned Real Estate, IYR, finally, decisively and conclusively lower today.  

Today’s financial events evidence the handiwork of God to introduce the Kingdom of His Son, Jesus The Christ.

John the Revelator wrote of a vision, that is a dream given to him by angels, where a head on a monster is wounded to death, Revelation 13:3. This head wound is an apparent mortal blow to the institution of finance, commerce and trade, that is going to occur very soon as banks implode over the failure of government in the European periphery, as well as the failure of the world central banks’ monetary authority to stimulate global growth and trade, particularly in India and Brazil as well as Argentina.

It was National Bank of Greece, NBG, that led the European Financials, EUFN, lower today; and Reuters reports Influential German magazine calls for Greek exit from euro. But this is not, repeat not going to happen, as God’s word reveals in Revelation 13:1-4, that regional global governance is going to rise up out of thr profligate Mediterranean nation state of Greece, GREK, to occupy in seven heads, that is mankind’s seven institutions, and in ten horns, that is in the world’s ten regions.

This monster of totalitarian collectivism, statism and debt servitude, will be equaled in power by the rise to power of a global leader, a European ruler, Revelation 13:12, perhaps Herman van Rompuy, who will be supported by a European banker, Revelation 13:11-18, perhaps Jens Weidman, who Bloomberg reports as relating More Aid for Greece as Possible, Sueddeutsche Says. European Central Bank council member Jens Weidmann said further financial support for Greece can be considered if the country sticks to its promises, Sueddeutsche Zeitung reported, citing an interview. “If Greece isn’t keeping its word then it is a democratic decision,” Weidmann, who also heads Germany’s Bundesbank, is quoted as saying. “Consequently, it misses the basis for further financial support.”

In today’s news

Fiona Govan in The Telegraph relates Spain’s Most Indebted Village Pays The Price Of Its Profligacy. In the Spanish country just East of Madrid stands the village of Pioz, popuation 3600, which has the dubious titled of most indebted place in the troubled country.

The Mother Of All Short Squeezes Has Commenced

May 13, 2012

Robert Wenzel writes in Economic Policy Journal Details on the Losing JPMorgan Trade Emerge.  Ben Protess, Andrew Ross Sorkin, Mark Scott and Nathaniel Popp at NYT have an exhausting detailed report on the losing trade that is costing JPMorgan Chase billions in losses.

Of note in their report, the point is made which I made in an earlier post:

 the loss is not a huge threat to a bank as large and powerful as JPMorgan.

Still the trade is fascinating. Here’s what went down according to the NYT crew:

 Last summer the chief investment office began calling brokers at several Wall Street banks, the brokers say. The office was offering to sell insurance on an index of big American corporations like General Mills, Alcoa and McDonald’s — known as CDX IG Series 9. If the companies in the index went bankrupt, JPMorgan would have to pay out, but if the companies continued to do well JPMorgan could rake in the fees from financial firms that bought the insurance…

The strategy initially made money for JPMorgan and its position began to grow, as did an appetite for it among a tight-knit segment of hedge funds  focused on credit opportunities. The large scale of the trade was permitted as a result of an expansion in the limits placed on the size and the scope of securities the unit could trade in that were adopted after JPMorgan acquired Washington Mutual in the financial crisis. Those limits have now been scaled back.

By January, these hedge funds were getting calls nearly every day from brokers representing the chief investment office, according to hedge fund managers and brokers on the calls.

The seller’s identity was not supposed to be known, but the sheer volume of the trade made it hard to hide, and soon enough all fingers in the “small, clubby world” of credit hedge funds pointed to Mr. Iksil’s desk at JPMorgan, according to one fund manager.

“A bunch of us started looking at it and talking about it a lot,” the manager said. “There was agreement that Bruno [Iksil, JPMorgan’s London Whale] was selling.”

There were two ways that JPMorgan could win this bet. If the companies in the index did well, the bank’s cost of insuring the index would continue to fall. JPMorgan could also artificially drive the price lower by continuing to issue more and more insurance — a distinct possibility thanks to JPMorgan’s size and stature.

In January and February, as the price of the insurance continued to drop, lunch meetings and casual conversations between hedge fund managers swirled around the ability of JPMorgan to continue financing this bet.

“A lot of people told me it was a foolish trade,” said an official with a hedge fund that bet against JPMorgan. “The naysayers on this trade said, ‘Look, this guy has unlimited firepower, he can just keep selling and selling and make your life miserable.’ ”

Among the hedge funds that began taking positions against JPMorgan were Blue Mountain, a New York fund; Lucidus Capital Partners, a London fund; Hutchin Hill, a New York fund; and Bluecrest, a giant London hedge fund founded by two former traders on JPMorgan’s proprietary trading desk.

The trade did not at first make money for the hedge funds. In the improving economy early in the year, the hedge funds had to make regular insurance payments. But in late March, doubts about the economy began to swirl, and the index jumped.

JPMorgan began seeing losses by the end of the first quarter, on March 31, but they were not enormous, allowing bank executives to shrug off the early criticisms of the trade. But the trade drew increasing attention as the index continued to spike, multiplying JPMorgan’s potential losses if it had to pay out on the insurance…

In the case of the trade that generated the huge loss, the insurance on the contract does not come due until 2017, so JPMorgan could potentially hold off any actual losses until then. If the economy improves, the cost of insuring American companies could drop again. But now that the London Whale’s trade is public, hedge funds could force the cost of this specific insurance contract up, and with it JPMorgan’s paper losses. This is what appears to be happening now.

The list of the 129 companies in the CDX IG Series 9 index is here.

Bottom line: Given the mark-to-market requirements for banks and the capital requirements, this was an impossible trade for JPM to hide, once it started going against them. Now, it could be very tough for JPM to get out, far beyond the additional billion that is speculated it will cost JPM. This is going to be the mother of all short squeezes. What was The Whale thinking? What was Jamie Dimon thinking? As a senior Wall Street executive quoted by NYT put it: “JPMorgan violated the cardinal rule of risk: Don’t become the market.”

 
In answer to the question what was Jamie Dimon thinking? Part of the answer resides in greed; part of answer resides in living and working in a leveraged speculative investment bubble, that is the bubble of Manhattan, another part of the answer is failure to understand risk-on momentum investing driven by ongoing expectation of US Central Bank and ECB ZIRP which ceased in March 2012, another part of the answer is in failure to understand risk, and the appointment of a capable risk management officer who has the authority to say no, nien, no more; but most of the answer lies in an understanding of psychopathy, pyscopathic behavior, and psychopaths, which the Bible describes using the word poneros, meaning unreasonable, wicked, destitute of faith in God, and lacking of any conscience or remorse.
 
The word poneros has broad meaning, it can mean simply bad, or evil, or wicked, depending upon the context. The apostle Paul used the word poneros in 2 Thessalonians, 3:1-2, where he said, “Finally brothers, pray for us, that the word of the Lord may run swiftly and be glorified, just as it is with you, and that we may be delivered from unreasonable, and wicked men,  for not all have faith.” In as much as the Apostle, said “pray for us that the word of the Lord may run swiftly and be glorified”, apparently the apostle was opposed in Thesslonica by men in the community who felt that the city was their territory to manage and did not want any opposition. 
 
Likewise today, there be many psychopaths. Literature suggests that four percent of the population is psychopathic; yet from personal experience, I believe the number is closer to ten percent; in the financial industry I am certain the number exceeds ten percent.
 
As I’ve shared many times on this blog, my entire life has been occupied by psychopaths. For example, in 1999, I desperately wanted a change of scenery, so I left to spend a year in a hunting and fishing lodge in Montana. The lodge was something like in Better Homes And Garden Magazine, located four miles from a celebrity town, one mile from a stream and lake, and situated next to both private and public trails, which were great for walking and cross country skiing. I came in January 1999 and the owner took a liking to me, and invited me to stay for an entire year in the master bedroom with sunken tub, for only $450 a month, even though hunting and fishing guests paid $200 a night to stay for expeditions. He had a servant girl, a young eighteen year old native Ameican girl, who knew how to prepare meals. I never had any of her cooking, as I would come down after the guests had gone to bed to fix my meals for the next day and chat with her. It was in the conversations with little Pocohauntus, that I learned my host was a psychpath. He had been married, but continually fought with his wife, and his angry behavior spilled over into the raising of their two boys. The little saint, who had come to know Christ on the nearby reservation, said that she created hand made decorations to go on the doors of several rooms, as the B&B’s owner had punched and kicked the doors in angry arousal with his teens, and that finally the family broke up; these included Babbling Brook and Peaceful Valley. I kept to my self after that, and got along well with all, and when in town, I would see movie stars all the time who had second homes in the hills, and finally left on good terms after a year. So I understand and observe ponerous individuals; they as God’s grace and truth, omnipresent.       

The End Of ZIRP Means The End Of Fixed Income Investing And The Beginning Of Regional Global Governance

May 12, 2012

Daniel 7:23-24 relates “The fourth beast will be a fourth kingdom on the earth, which will be different from all the other kingdoms, and it will devour the whole earth and tread it down and crush it. As for the ten horns, out of this kingdom ten kings will arise, and another will arise after them, he will be different from the previous ones and will subdue three kings”.

The beginning of the end of the Zero Interest Rate Regime commenced the week ending May 11, 2012. Competitive currency devaluation has been ongoing for over a year and this week, its force was so strong that world government treasury bonds, BWX, emerging market sovereign debt, EMB, and leveraged buyouts, PSP, which are heavily financed through debt, finally traded lower, as bond vigilantes called interest rates higher globally out side of the US, as a safe haven trade in US Government debt, ZROZ, EDV, TLT, flattened the 10 30 US Sovereign debt curve, $TNX:$TYX, as is seen in the Flattner ETF, rising and the Steepner ETF, STPP, trading lower, as the interest rate on the US Ten Year Note, $TNX, fell to 1.841%.

The beginning of the end of ZIRP is also seen in competitive currency devaluation, causing deleveraging out of commodities, DBC, and US Commodities, USCI, beginning in March 2012, with derisking out of commodity stocks, IYM, such as copper mining, COPX, uranium mining, URA, rare earth mining, REMX, aluminum production, ALUM, coal production, KOL,  energy service, IEZ, and energy production, XOP. The risk trade, also known as the growth trade, is history as risk appetite has turned to risk avoidance.

The prophet Daniel, in Daniel 7:23-24, foretells that an end time one world government is coming to rule planet earth. It will be preceded by ten regions of global governance, each with its own king; three of these kings will be vanquished by the Sovereign of Revelation 13:5-10, who will rise to rule Europe as a type of revived Roman empire, where Germany will be preeminent over vassal peripheral states.        

The fiat money system, a production of sovereign nation states, is coming to its close as European nations lose their debt sovereignty and come to cede authority to sovereign leaders in Brussels and Berlin.  The diktat money system, a production of leaders’ regional framework agreements, is rising to provide diktat as both money and credit.

With the failure of the debt trade to stimulate global growth, exports, and profits, and with the collapse of nations states, capitalism will be replaced by regionalization, where regional blocs will provide security, stability and sustainability, as the new paradigm for global economics.   

With the rise of interest rates globally, profitable fixed income investing, is history. Whether it be investing in Leveraged Buyouts, PSP, or in Mortgage REITS, REM, such as Annaly Capital Management, NLY, which invest in Mortgage Backed Bonds, MBB, or in dividend paying telecom stocks such as AT&T, T, or Verizon, VZ, or Utility Stocks, XLU, or Dividend Paying Stocks, DVY, or Retail REITS, such as Simon Property Group, SPG,  or Residential REITS, REZ, or Hotel REITS, such as RLJ, or municipal bonds, MUB, these all are now history of the Age of ZIRP, as the Age of Deleveraging is introducing regional global governance and the destruction of traditional principles of sovereignty.

New sovereignty, coming through regional framework agreements and diktat, is going to cause a swift destruction to both investment principal and interest income, creating a strong need now for a change of investments to physical possession and ownership of precious metals. Soon the only money good will be diktat,  as well as the possession of gold bullion for long term wealth preservation, and silver bullion for bartering

The seigniorage of ZIRP, that is the coinage of the world central banks’ monetary is coming to a close with the rise of sovereign insolvency and banking insolvency. The seigniorage of regional global governance, that is the moneyness of diktat will provide security, stability and sustainability, but no rewards for the fixed income investor.

When zero interest was instituted by the Fed, savers fled to the gold market. Then last year as commodities started to fall, with falling currencies, so did gold; then this year when commodities fell again, as investors became aware of no QE3, gold fell once again; this being seen in this Google Finance Chart of DBC and GLD.

I recommend that beginning immediately, one dollar cost average into having only personal ownership of physical gold coins and silver bullion, as well as ownership of gold bullion stored in trading vaults on the Internet such as Bullion Vault. And that one have this ownership in four locations London, the United States, Panama and Singapore.

Bullion Vault relates Dollar strength “making it difficult” for gold prices to rally

I recommend that one start dollar cost averaging into physical possession of gold even while the price of gold and silver is falling as capital controls are coming globally and regionally which means that one may not be able to transfer fiat investments into hard assets in the very near future; and if one waits to buy gold and silver when it is rising one may be restricted from doing so.

The unimaginable is about to happen, seemingly out of nowhere, a global banking breakdown is ging to occur as the word’s banks assets fall rapidly in value, terminating money and credit as they have been known. 

Life since 1950, with the advent of the Cat In The Hat, as directing economic ethic, has been characterized by fast and hedonistic living, that came with speculative investing.  But just like with the Ice Ages, where mankind went from living carefree, to  overnight seeking warm furry skins to protect from the elements, so it will be when Financial Armageddon, that is a credit bust and global financial breakdown comes, and fiat assets such as stocks and bonds are worthless, and people long for the protection that only gold and silver can provide.

These Two Dozen World Banks Are Leading The Way Forward Into Financial Armageddon As Morgan Stanley Reports Speculative Trading Loss

May 12, 2012

Financial Market Report for the week ending May 11, 2012; the fifth weekly report of entrance into the Second Great Depression.

This five-day ongoing Yahoo Finance Chart shows that a surprise trading loss at Morgan Stanley, turned the World Financial Institutions, IXG, the World Stocks, VT, the World Small Cap Stocks, VSS, and the Emerging Market Small Cap Stocks, EWX, lower today; the New York Times reported today that JPMorgan discloses $2 billion in surprise trading losses.

Gold miners, GDX, GG, ABX, NEM, traded lower as is seen in this ongoing Yahoo Finance Chart as Gold, GLD, and Silver, SLV, traded lower. Small Cap Energy, PSCE, traded lower on lower Oil, USO.  Steel Production, SLX, and Copper Mining, COPX, traded lower on lower Base Metals, DBB.  Commodities overall, DBC, traded lower.

The individual investment charts of these two dozen world’s banks are leading the way forward into Financial Armageddon. These include in Greece, NBG, in Argentina, BMA, GGAL, BFR, BBVA, in Brazil, ITUB, BSBR, BBD, in Ireland, IRE, in Spain, STD, in India, IBN, in Switzerland, CS, UBS, in Japan, NMR, MTU, SMFG, MFG, in the United Kingdom, BCS, RBS, LYG, in China, CHIX, in Germany, DB, and in South Korea, KB.

Biotechnology, XBI, rose 4%, the two North American Telecom Giants, T and VZ, rose 2%, Simon Property Group, and other Retail Shopping Center REITS, rose 1%. Next Era Energy, NEE, and a number of dividend paying electric utilities, such as CNL, WEC, CMS, and DTE, led Utilities, XLU, to a new high. This YTD Google Finance of XLU, together with DVY, RZV, JKE, XRT. and ZROZ, shows that a flight to save haven in the longer duration bonds, ZROZ, beginning in April helped sustain dividend stocks, DVY, drive Utility Stocks, XLU, as deleveraging commodity prices, DBC, caused derisking out of the Small Cap Pure Value Shares, RZV, the Large Cap Shares, JKE and most recently the retail shares, XRT. The Utility Shares, XLU, rose to a new high on a flattening 30 10 US Sovereign Debt Yield Curve, $TNX:$TYX, where as all other shares fell lower on the exhaustion of the world central banks’ monetary authority. The rise in the Telecom Giants, the Utilities and the Retail REITS marks the end to roro, momentum-investing. Risk-on has turned to risk-off, as risk appetite has failed on the failure of neo liberal finance, as well on the death of money and the death of credit. Money died in April 2011, as the US Dollar, $USD, started to rise, and world currencies, seen in this ongoing Google Finance chart of the  200% Dollar ETF, UUP, and currency ETFs, started to trade lower. Credit died on February 1, 2012, as Education Stocks, and Energy Service Company Stocks, IEZ, Small Cap Energy Stocks, PSCE, North American Energy Stocks, XOP, and India Infrastructure, INXX, traded lower on the exhaustion of the world central banks’ monetary authority to sustain global growth and global trade.

The Flattner ETF, FLAT, rose to a new high and the Steepner ETF, STPP, fell to a new low this week as the Interest Rate on The 10 Year US Note fell to 1.841%.  The utility shares, such as NEE, are the final momentum trade and final safe have trade of the Age of Leverage.

With falling commodity prices, coming through monetization of debt, particularly debt deflation, competitive currency deflation is underway, causing strong delveraging out of commodities, and derisking out of interest bearing investments such the following, with weekly losses presented, Leveraged Buyouts, PSP, -3.1%, Energy Partnerships, AMLP, -2.9%, both of which pay a very high rate of interest.

Seigniorage, that is moneyness of fiat investment, is failing, as investors lose confidence that the world central banks’ monetary policies are able to sustain growth and are ineffective in dealing with sovereign insolvency and banking insolvency in Greece and Spain. Seigniorage, that is coinage, of investments has failed to maintain its value, as the global government finance bubble, BWX, has burst. World stocks, VT, and commodities, DBC, are now in downturn, as the debt trade and the global growth, and global export trade, have failed on the exhaustion of the world central banks’ monetary authority. Neoliberal finance of all type has failed. The spigot of carry trade investing has failed.

Also falling lower this week on fundamentals were

Uranium Mining, -7.2%.

Aluminum Production, ALUM, -6.8%

Rare Earth Mining, REMX, -6.2%

Copper Mining, COPX -6.1%

Gold Mining, GDX, -3.7%

Silver Mining, SIL, -7.2%

Silver Standard Resources Inc, SSRI, a once red-hot carry trade investment, -9.6%; yet Hecla Mining, HL, a proven producing company with a PE of 8, rose this week.

Steel, SLX, -3.1%

Networking , IGN, -3.7%,

Cloud Computing, SKYY -3.7%

Mining, MXI, -3.7%

World Financial Institutions,  IXG, -2.1%.

Bonds traded as follows

International Corporate Bonds, PICB, -1.1% on falling major world currencies, DBV, -0.8%

Emerging Market Bonds, EMB, -1.0% on falling emerging market currencies, CEW, -1.4%

World Government Bonds, BWX, -0.7% on falling major world currencies, DBV, –0.8%, and on rising US Dollar, $USD, 1%.

Junk Bonds, JNK -0.1%, Junk bonds have been sustained in value by their high dividend yield even though momentum investing has ceased.

Zeroes, ZROZ +1.7%

30 Year US Government Bonds, EDV, +2.1%

10 Year US Government Notes, TLT, +1.1%

Build America Bonds, BAB, +0.4%.

World stocks, VT, -1.6% and Commodities, DBC, -2.1%, RJA, -3.5%, DBA, -2.0%, DBB, -2.2%, SLV, -4.5%, GLD, -3.7%, USO, -2.7%. The ratio of world stocks to commodities, VT:DBC, is at a current multi week rally high, sustained so by the cessation of, but not reversal of, momentum investing. The Proshares 200% inverse, that is bear market ETFs, rose this week, as follows, EEV 7%, TWM 0%, DUG 3%, SMN 4%, SSG 3%, BIS -8%, REW 4%, TLL 0%, SIJ 3%, FXP 12%.

The U.S. dollar, $USD, rose 1.0% this week. Most all of the worlds major currencies declined this week, the Canadian dollar, FXC, -0.5%, the British pound, FXB, -0.5%, the Mexico peso, FXM,-0.7, the Swiss franc, FXF, -1.3%, the euro, FXE -1.3%, the Australian dollar, FXA, -1.3%, the Brazilian real, BZF, -1.3%, the Swedish krona, FXS, -1.7%, the Mexican peso, and the South African rand, SZR, -2.8%.

Competitive currency devaluation has been ongoing since April 2011, that is for 13 months now, as investors sold out of stocks at that time, in fears that a debt union had formed in the Euro zone.  Wikipedia, as it writes of the European Debt Crisis, correctly uses the words debt union. In the summer of 2011, Angela Merkel and Nicolas Sarkozy issued a joint communique, calling for  “true European economic government”, in other words a political union. Since that time a monetary union has formed in the EU as the ECB has subordinated all debt to itself with LTRO1 and LTRO2.

There only remains for a political union and banking union to form, and these will do so, as political leaders meet in summits, waive national sovereignty, and pool regional sovereignty, as part of regionalization envisioned by the 300 elite of the Club of Rome in 1972 to 1976, through such publications as Mankind At The Turning Point, to provide regional security, stability and sustainability, as investors delever out of commodity positions and derisk out of stock positions. Germany will rise as preeminent over peripheral client nation states of Portugal, Italy, Ireland, Greece and Spain, in a type of revived roman empire as totalitarian collectivism and statism comes to rule Europe, and sovereign authority comes to reside in leadership in Brussels, Paris and Berlin.

Money and credit have died. The fiat money system is going to be replaced by the diktat money system, as the dynamos of capitalism, that being growth and profit, are winding down, and the dynamos of regional global governance, that being regional security, stability and sustainability are winding up.  Prosperity is the epitaph on tombstone of the Age of Leverage. Austerity and debt servitude are de rigueur in the Age of Deleveraging.

With the death of money and credit the safe have trade in US Stock is history, the ratio of US Stocks, relative to India stocks, VTI:INP, will start to shrink.

Having reached the end of the debt supercyle, capitalism will fall to regional global governance.

In the New Europe, diktat will replace both money and credit. After the soon coming Financial Armageddon, that is a credit bust and financial system breakdown, the Wall Of Refinance, that is the Tsunami of Refinance, cannot and will not be met, and will wash over and wipe out business life as it has been known. The massive amount of corporate refinancing coming due, simply will not be met, as credit will not be available.

Monetary cardinals, appointed from government, banking and industry, working under the monetary pope, will provide credit via public private partnerships so that industrial production necessary to the region’s stability, security and sustainability are met. These monetary over-lords will establish structural reforms that abolish national wage contracts. And a budget commissioner, will provide austerity measures enforcing fiscal rules across the region.

When zero interest was instituted by the Fed, savers fled to the gold market. Then last year as commodities started to fall, with falling currencies, so did gold; then this year when commodities fell again, as investors became aware of no QE3, gold fell once again; this being seen in this Google Finance Chart of DBC and GLD.

Soon the only money good will be diktat as well as the possession of gold bullion for long term wealth preservation and silver bullion for bartering. I recommend that beginning immediately, one dollar cost average into having only personal ownership of physical gold coins and silver bullion, as well as ownership of gold bullion stored in trading vaults on the Internet such as Bullion Vault. And that one have this ownership in four locations London, the United States, Panama and Singapore.

Bullion Vault relates Dollar strength “making it difficult” for gold prices to rally

I recommend that one start dollar cost averaging into physical possession of gold even while the price of gold is falling as capital controls are coming globally and regionally which means that one may not be able to transfer fiat investments into hard assets in the very near future; and if one waits to buy gold and silver when it is rising one may be restricted from doing so.

Your blog author has no financial wealth of any kind, no savings, no money market account, no gold and no silver. I’ve lived in poverty for twelve years; I have ongoing bills of rent, dental insurance, gym membership, and Internet service. I have a line of credit at the pay-day loan provider which I use occasionally for unexpected expenses; I repay the loans over a three-month schedule.  Needless to say, the interest rate is exorbitant. My spirit6ual thought of the day is that according to 2 Peter 1:1-10, I live in organic union with God, am part of the Lord’s recovery, and am established in the present truth.  Being of the like precious faith of Jesus Christ, and having identity as the elect of God, I pray consistently for a good conscience, and endeavor to practice the additive process of building upon virtue, knowledge, self-control, perseverance, and practice godliness, brother kindness, and love, so as to partake of the divine nature and experience the divine nature of God, and to receive the exceedingly great promises of God, that I might attain to the person of Christ; and in so doing maintain His word, and live under His authority daily.

In news and commentary

The WSJ reports China industrial output growth slows sharply in April.

AFP reports Indian industrial output shrinks unexpectedly.

Matt Taibbi of Rolling Stone reports How Wall Street killed financial reform: It’s bad enough that the banks strangled the Dodd-Frank law. Even worse is the way they did it – with a big assist from Congress and the White House.

Financial Sense relates Europe’s voters say ‘no’ to economic reality

BBC relates JPMorgan’s loss may cost all banks

Zero Hedge reports The world’s greatest prop trading desk just went bust

The UK Bubble Economy relates Europe’s worst nightmare. Say hello to Alexis Tsipras, president of the Greek Synaspismos political party and head of Coalition of the Radical Left (SYRIZA) parliamentary; and 57 percent of investors think a euro-exit is inevitable.

Reserve Bank of India relates measures to stimulate the demand for credit for export businesses. On a review of developments in the global financial markets and current macro-economic conditions, the Reserve Bank has taken the following measures to ease foreign currency flows as also to enhance the availability of export credit in foreign currency: Interest rate ceiling on Foreign Currency Non-Resident [FCNR (B)] deposits of banks has been raised from 125 basis points (bps) above the corresponding LIBOR/Swap rates to 200 bps for maturity period of 1 year to less than 3 years, and to 300 bps for maturity period of 3 to 5 years.  The ceiling rate on export credit in foreign currency which was constraining the availability of credit to exporters in foreign currency has been deregulated by allowing banks to freely determine their interest rates on such credit. The above measures are aimed at augmenting foreign currency inflows to banks which in turn would facilitate their foreign currency loans to exporters. These measures will come into effect from May 5, 2012. The detailed guidelines are being issued separately

Doug Noland writes in Risk off gains a foothold, The issue of “Target2” (Trans-European Automated Real-time Gross Settlement Express Transfer System) balances now garners considerable attention in the German media.  Recall that “Target 2” refers to the eurozone’s inter-central bank payment system used for settling cross-border trade and financial flows.  This system has not functioned as designed (trades have not fully settled) since the eruption of the financial crisis back in 2007.  Instead of financial flows counterbalancing trade imbalances (the settlement of cross-border obligations), these days trade imbalances and financial outflows from the periphery combine to create enormous and mounting IOUs from periphery central banks to the German Bundesbank.  With euro stability now a serious issue and capital flight out of even “core” banking systems a definite possibility, the Target2 drama is poised to create only greater intrigue.

Stock pundits, economic writers, and stock chartists, each have their own perspective, which comes from a fiat identity, such as commentator, austrian economist, or investor. These are all in agreement that Greece will default on its debt, and will exit the Eurozone.

This view is contrary to God’s foreordained plan to establish regional global governance in all of the world’s ten regions, each area to be ruled by a king, Revelation 17:17; these will give their allegiance to a global ruler, Revelation 13:5-10, who will institute a one world government, Daniel 7:7, and who with a global banker, Revelation 13:11-18, will provide global seigniorage, that is global moneyness, via a one world currency and credit system, Revelation 13:17-18.

I have spiritual identity of the elect of God, and being of the like precious faith of Jesus Christ, I live in the present truth, as described in 2 Peter 1:1-21.

There is the past truth, such as the saints of old, who lived in an old testament, that is an old will of the nation of Israel, the prophets, and the law.

But the present truth is one of a new testament of grace and truth, and of the Revelation of Jesus Christ, which heralds those things which “must shortly come to pass”. Revelation 1:1, as the sovereign authority of Jesus Christ, Revelation 2:26-27, closes the current political cycle of UK and US global hegemony, and introduces the ten toed kingdom of  regional global governance, as foretold in Daniel 2:31-33.

To assure regional global governance, Jesus Christ is shifting the global political and economic tectonic plates, by bringing forth the Beast Regime of Neoauthoritarianism, out of the profligate Mediterranean nation state of Greece, as foretold in Revelation 13:1-4, to replace the Banker Regime of Neoliberalism; and by releasing the first horseman of the Apocalypse to effect investment, political and economic coup d etat in the Eurozone, Revelation 6:1; and by releasing the other horsemen of the Apocalypse to cause bloodshed, illness, famine and death, via a tsunami in Japan.  This is just the beginning of global economic and personal woes.

Zero Hedge relates the UBS report Steps forward for Greece. In the event of a  Greek Lehman.  Contagion could follow quickly, through two channels: the banking sector, and the fear of other countries defaulting on their debt. As recent data show, adjustment in Portugal is proving difficult, particularly due to weak growth. Ireland could also be affected, especially in the context of today’s slower global growth environment. Contagion would imply that Italian and Spanish yields, already under pressure, could rise further.The event of a disorderly default, the euro area would be expected to proceed with forceful policy actions. We believe the euro area would need to use all policy tools at its disposal. Given the contagion risks to large countries, the piecemeal approach with limited commitment would have to be replaced by the “full bazooka.”

  • The ECB could cut rates to 0.50%, and renew its liquidity provisions (most likely in the form of another 3-year LTRO); The ECB would probably have to commit to buy unlimited amounts of Spanish and Italian government debt to stop contagion to these countries. This commitment would have to be supported by all remaining euro area countries to be credible and require a renouncement of the ECB’s effective senior creditor status.
  • Major central banks could open currency swap lines to avoid funding problems in major currencies, as during 2008/09, but possibly at lower costs.
  • Banks would have to be ring-fenced, via deposit guarantees and capital injections, over and above the ECB’s liquidity support described above. This would possibly entail state injection of capital (even if only in the form of promissory notes), ie, nationalization, or European money (euroization). The deposit guarantee would have to be backed jointly by euro area governments to be credible.
  • A European funded bank recapitalization, a European deposit insurance scheme, as well as the ECB’s purchases of government bonds would require further surrendering of fiscal power to the European Commission.
  • Capital controls would potentially need to be introduced between the euro area and the rest of the world. Such controls are allowed under special circumstances that could threaten stability, and the scenario under consideration clearly qualifies.
  • Going forward, the fiscal stance as well as other economic policies (such as industrial policy) would have to be redesigned at the euro area level to ensure growth could kick-start as quickly as possible.

The Bonfire Of The World Banks Is Steadily Consuming Stock Value

May 9, 2012

The bonfire of the global financial institutions, IXG,  is steadily growing more strong, as World Stocks, VT, were led lower today by Spain’s Banco Santander, STD, RBS, LYG, BCS, IRE, DB, which led European Financials, EUFN, and Europe, VGK, lower. Falling commodity prices, DBC, led mining shares, MXI, lower; yet gold mining, GDX, rose, from being oversold, despite falling precious metal, GLD prices.  I recommend ABX and HL as investments at the current time for a six month investment.

India’s ITUB, drew India, INP, lower. Chines Financials, CHIX, drew, China, YAO,  lower. Brizil’s BSBR drew Brazil, EWZ, lower.

It is the Banking Stocks, EUFN, EPI, BRAF, the Infrastructure Stocks, and the Country Small Cap Stocks, VSS, that are leading the major world stocks, VT, lower. These  have experienced debt deflation, that is currency deflation, especially the India Rupe, ICN, the Brazil Real, BZF, and the Australian Dollar.  Small Cap country shares falling  strongly this month include PSCE, SCIF, ERUS, HAO, CNDA, LATM, and KROO. Sweden, EWD, Austrial, EWO, and Poland, EPOL, are trading lower on falling European, VGK, shares.

The fall in Makita Toools,  MKTAY, reflects the failure of the world central banks to sustain growth and contain the European Soveign Debt Crisis.

Charles Hugh Smith of Two Minds writes in Zero Hedge The Death Spiral Of Debt, Risk And Jobs. What we have is a Central State and an economy that has borrowed and squandered trillions of dollars on consumption and malinvestment in unproductive “stranded” assets. The debt and risk pile up, while the labor that results from consumption is temporary and does not create wealth or permanent employment. Figuratively speaking, we’re stranded in a McMansion in the middle of nowhere, a showy malinvestment that produces no wealth or value.

The prophet Daniel communicates that there is waiting in the wings of Europe’s stage, the most capable of leaders. Soon, this one of seemingly little authority, that is the Little Horn, Daniel 7:8, will step into the limelight, and lead Euroland to be a type of revived Roman Empire, where Germany will be preeminent over peripheral client nation states such as Portugal, Ireland, Italy, Greece, and Spain. After a soon coming global Eurasia War, Ezekiel 38, Europe’s leader will set his sights on military occupation of Jerusalem, Daniel 8:9-10.  This individual’s power will be so great that he will dramatically change our times, and even change the scope of law, replacing his word, will and way for constitutional and historical law, Daniel 9:25.  The apostle John in Revelation 13:5-10 presents him as the Sovereign, and in Revelation 13:11-18, presents his partner, the Seignior, meaning top dog banker who takes a cut. Eventually these two will establish a one world government, Daniel 7:7, and provide a global money and credit system, that will provide world wide seigniorage, that is worldwide moneyness, Revelation 13:17-18.


Follow

Get every new post delivered to your Inbox.

Join 94 other followers