With Credit, Stocks, Commodities, And Currencies, Having Failed … People Will Increasingly Trust In The Diktat Of Regional Governance And The Diktat Money System To Provide For Economic Security, Stability, And Sustainability

Financial Market report for the week ending June 14, 2013

 

I … Introduction

The only number that matters is the Interest Rate on the US Government  Note, $TNX, its jump higher in May 2013, constituted a hard frost, that is a quick freezing, causing the death of fiat money.

 

Fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies.

 

The death of fiat money came with a parabolic steepening of the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, seen in the weekly chart of the Steepner ETF, STPP, rising parabolically in value, May 2013. The death of money means the decline of nation state GDP and global economic trading.

 

This weeks financial market action evidences that Jesus Christ acting in dispensation, that is in administrative management of the household of God, Ephesians 1:10, fully completing Liberalism’s democratic nation state, banker regime, and the age of investment choice, and introducing Authoritarianism’s regional governance, totalitarian collectivism, beast regime and age of diktat, as foretold in bible prophecy of Revelation 13:1-4.  

 

II … The failure of Liberalism’s money is seen in this week’s financial market trading.    

 

II A) … On Monday June 10, 2013, the money of Liberalism is seen failing, as global debt deflation gained traction.

Bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, jumped higher yet to 2.21%, turning Aggregate Credit, AGG, lower once again. Emerging Market Bonds, EMB, fell strongly lower on falling Emerging Market Currencies, CEW.  Credit Investments traded lower across the board, with the longer duration trading lower than their shorter maturity peers, as yield curves steepend acros the whole range of debt. Municipal Bonds, MUB, traded sharply lower.      

 

World Real Estate, DRW, and Yield Bearing Instruments based in the Emerging Markets, EEM, such as Brazil Financials, BRAF, India Earnings, EPI, and Emerging Market Dividend, DGS, traded lower.

 

Currency traders sold currencies short once again, continuedtheir successful currency war against the world central banks, with the India Rupe, ICN, the Japanese Yen, FXY, Emerging market Currencies, CEW, the Brazilian Real, BZF, and the Australian Dollar, FXA, traded lower.

 

Competitive currency devaluation is seen in China, YAO, and the Emerging Markets, EEM, trading lower, on a lower Chinese Yuan, CYB, and lower Emerging Market Currencies, CEW.  Emerging Market Infrastructure, EMIF, traded lower. China Industrials, CHII, China Financials, CHIX, China Minerals, CHIM, and China Real Estate, TAO, traded lower.  India, INP, India Infrastruacture, INXX, and India Earnings, EPI, fell strongly lower on a falling India Rupe, ICN.  Brazil, EWZ, Brazil Infrastructure, BRXX, and Brazil Financials, BRAF, traded lower on a falling, Brazilian Real, BZF.  

 

Asia nations, EPP, trading lower included Indonesia, IDX, Malayasia, EWM,  Singapore, EWS, South Korea, EWY, Thailand, THD, the Philippines, EPHE, and Australia, EWZ.  Egypt, EGPT, Greece, GREK, and Russia, RSX, traded lower.  Liberalism’s frailest of nations, Indonesia, IDX, and Egypt, EGPT, are suffering the greatest deflation and investment destruction.    

 

The trade lower in Australia, EWA, KROO, and its yield bearing ETF, AUSE, defines the failure of the monetary policies of world central banks, such as the US Fed, the Bank of Japan, and the Peoples Republic of China, to provide stimulus for ongoing world economic growth and trade.

 

The economic and political paradigam of Liberalism featured Inflationism, but Authorianism features Destructionism. With the Interest Rate on the US Treasury Bond, ^TNX, being called higher by the bond vigilantes, the former construct is now seen as an age of fiat asset inflation, but today’s reality is one of fiat asset deflation.  

 

The Milton Friedman Free To Choose Floating Currency died with the rise of the US Dollar, $USD, UUP, beginning in 2013, causing derisking and deleveraging out of currency carry trade investments world wide, but especially in the Emerging Markets, EEM, and now in Asia, EPP,  on a sinking Australian Dollar, FXA.  

 

Investors are no longer trusting in the monetary policies of Global ZIRP, and as a result Liberalism’s  currencies are no longer a trustworth means of facilitating and sustaining economic activity.  People will increasingly trust in diktat and the diktat money system as the world central bank monetary policies and nation state currencies fail.

 

The diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010 with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin, the diktat money system was unleashed onto the world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW.

 

With the failure of Liberalism’s fiat money, there be many Angry Byrds. The consolation is that the money of Authoritarianism, that is diktat money, is beginning to win people’s faith and trust, a case in point being that those in Cyprus are now trusting in the ECB’s mandates for regional security, stability, and sustainability.     

 

II B) … On Tuesday, June 11, 2013, commodities and stocks gapped down at market open on the failure of Kuroda Abenomics.  

The market turned Risk OFF, OFF, and Volatility, ^VIX, TVIX, rose in the beginning of an Elliott Wave 3 up pattern, as currency traders blasted the Japanese Yen, FXY, higher to strong resistance at 102.99, and the Euro, FXE, higher as well to close at strong resistance at 131.92; which pushed the world’s leading commodity currency, the Australian Dollar, FXA, and the US Dollar, $USD, UUP, lower. MSN Finance charts shows that since May 3, 2013, the Australian Dollar, FXA, has lost 8%, causing disinvestment a 15% disinvestment out of Australia, EWA, as well as out of high yielding Australia Dividends, AUSE, and a 25% disinvestment out of Australia Bank, WBK.  

 

Reuters reports Stocks slump after Bank of Japan disappoints, stoking stimulus jitters. Japan, EWJ, and Japan Small Caps, JSC, both traded strongly lower, on the higher Yen. FXY.  Not only did the Nikkei, NKY, trade lower; but bond vigilantes called the Interest Rate on the Japanese 10 Year Government Debt higher, causing its inverse, JGBS, to rise in value.

 

Global debt deflation is underway, as the monetary policies of Liberalism’s Bankers, Ben Bernanke, Mario Draghi, and Haruhiko Kuroda are failing, and in fact caused the death of the fiat money system on May 24, 2013, when carry trade investment, ICI, and Junk bonds, JNK, trade sharply lower.  Global  ZIRP, has failed, and out of today’s rising interest rates, there is a soon coming global credit bust and financial system breakdown, as foretold in bible prophecy of Revelation 13:3.  Authoritarianism’s new leaders, specifically statist nannycrats, will provide regional governance economic policies, to establish regional security, stability and sustainability, and in so doing establish the diktat money system for one’s trust.  

 

Action Forex mid-day chart shows the EUR/JPY at 128.507, this is seen in the Stockcharts.com chart of FXE:FXY, closing strongly lower, forcing delveraging and derisking out of currency carry-trade investment world wide, especially the S&P High Beta Stocks, SPHB, Semicondutors, SMH, and Global Industrial producers, FXR.   

 

Briefing.com reports Global interest rates continued rising overnight with peripheral European yields coming into focus. In particular, Greece saw its 10-yr yield spike over 100 basis points following the country’s inability to privatize natural gas producer DEPA, which sent Greece, GREK, Ireland, EIRL, Italy, EWI, Spain, EWP, Finland, EFNL, and the Netherlands, EWN, trading lower.  Investment death is seen in the ongoing Yahoo Finance Chart of EWN,EFNL,EWD,NORW, and EIRL. Peru, EPU, fell strongly lower on today’s lower Copper, JJC, price, leading the Emerging Markets, EEM, and Emerging Market Leaders, PIE, lower. Russia, RSX, ERUS, fell strongly lower on lower Commodity, DBC, prices, which sent Emerging Market Infrastructure, EMIF, tumbling lower.

 

Asia excluding Japan, EPP, specifically Thailand, THD, Philippines, EPHE, Indonesia, IDX, IDXJ, Vietnman, VNM, Australia, EWA, KROO, Singapore, EWS, EWSS, Europe, VGK, led the US, VTI, and World Stocks, VTI, lower.   

 

Nation Investment, EFA, and Small Cap Nation Investment, IFSM, traded lower as the Australian Dollar, FXA, and as the US Dollar, USD, UUP, traded lower, and as both the Euro, FXE, and the Yen, FXY, rallied higher.  Major World Currencies, DBV, traded lower largely on the lower US Dollar.  

 

Falling Chinese Financials, CHIX, turned China, YAO, China Infrastructure, CHXX, and China Industrials, CHII, China Small Caps, ECNS, and Hong Kong, EWH, EWHS, lower.

 

Competitive currency devaluation coming from higher interest rates has decimated the banking infrastructure of the nations of Argentina, ARGT, on lower banks, BMA, BFR, BBVZ, and Brazil, EWZ, EWZS, on lower banks, ITUB, BBDO, SBR, BBD, and India, INP, SCIN, on lower banks, IBN, HDB. With hollowed out banks, these countries stand as tomstones on Liberalism increasingly desolate landscape. Under Authoritarianism, diktat will establish new banking, economic, and political infrastructure; this infrastrucutre will consist of statist public private partnerships between regional government superstructures and corporations.

 

I do not call this particularly good news, unless one believes that the purpose of this is to direct one’s hopes out of fiat economic life, and into spiritual economic life in Christ, where one perceives that Christ is dispensing Himself into the believer, completing and fulfilling his life, Ephesians 1:10, so he can experience the divine nature of godliness, that being peace and joy, 2 Peter 1:1-11.

 

Liberalism’s Banker Regime provided the freedom of investment choice establishing a moral hazard based prosperity. Authoritarianism’s Beast Regime provides the diktat of capital controls, new taxes, and debt servitude, establishing austerity as a way of life.  Bible prophecy of Revelation 13:3, foretells that out of Euoprean sovereign insolvency and banking system collapse, regionalism will replace globalism, crony capitalism, as well as socialism.  The Eurozone will be the defining model of totalitarian collectivism, where countries will exist as hollow moons revolving around both Berlin and Brussels, where sovereign nannycrats rule all.  While Greeks cannot be Finns or Germans, all will be one living in a ditkat union, with centralized fiscal, banking, manufacturing, and economic policies.  Given Greek Bailout I, II, and III, as well as the Cyprus Bailin, those living in the EU are no longer citizens of sovereing nation states, but rather residents living in a region of economic governance; welcome to the New Europe.     

 

Financial Investments, IXG, traded lower, as is seen in the ongoing Yahoo Finance chart of IXG, KCE, KIE, IAI, RWW, KRE, EUFN, CHIX, EMFN, FEFN, these include Investment Bankers, KCE, such as JPM, Banks, Insurance Companies, KIE, Stock Brokers, IAI, such as SCHW, ETFC,  the Too Big To Fail Banks, RWW, such as BAC, C, Regional Banks, KRE, such as RF, STI, PBCT, HBAN, European Financials, EUFN, such as IRE, DB, Chinese Financials, CHIX, Emerging Market Financials, EMFN, and Far East Financials, FEFN, Asset Managers, ASMA, such as BLK, WDR, EV, STT, WETF, AMG, IVZ, CNS, AMP, PFG, LM, BX, FNGN and BEN. The trade lower in Financials, in particular, Regional Banks, KRE, drove the credit sensitive US Small Cap Stocks, the Russell 2000, IWM, lower.  

 

Most every equity sector traded lower; these included

Uranium Miners, URA, Rare Earth Miners, REMX, and Copper Miners, COPX, which turned Industrial Miners, PICK, lower, which turned Coal, KOL, and Steel, SLX, lower.  

Solar Energy, TAN, SCTY, CSIQ, JASO, YGE, FSLR, HSOL, TSL, SPWR, ASTI, which tuned Semiconductors, SMH, BRCM, TXN, AMAT, ONNN, TSM, lower.

Gold Mining, GDX, GDXJ and Silver Mining, SIL, SILJ, SSRI

Energy, XOP, PSCE and Energy Service, OIH, IEZ

Small Cap Pure Value, RZV

Gaming, BJK

US Infrastructure, PKB

Homebuilding, ITB. The sharp rise in the Interest Rate on the US Ten Year Note, ^TNX, is now turning home builders and home improvement retailers lower; the business cycle in home sales is being completed, meaning fewer home sales, fewer home improvements, and fewer new home construction starts. Bespoke Investment Group writes At just over 4%, mortgage rates are obviously low compared to historical levels, but they’re a lot higher than they were just a month ago! To grasp just how much of a shock to the system the rise in mortgage rates has been, we’ve just seen the biggest month over month spike on a percentage basis since at least 1998.  Below is a chart showing the rolling month-over-month percentage change of the 30-year fixed mortgage rate.  Last Tuesday, the rate had jumped more than 21% (3.42% to 4.16%) over the past month.  This took out the prior high of 20% seen back in mid-2003.

 

Jesus Christ operating in the economic and political plan of God, Ephesians 1:10, has brought Libealism’s age of clean energy evelopment to its fulfillment and completion. With today’s trade lower in Clean Energy, PBD, and the Agence France Presse repors Siemens to scrap 1,000 energy jobs, the age of investment and development and use of alterntive energy is over.  News Track India reports India can follow Japan’s solar energy harnessing model to end power shortage. But I comment that it does not have nor will it have the money for solar energy infrastrucutre development given its high rate of inflation and banking system collapse with higher interest rates and falling India Rupe currency.    

 

Yield bearing investments are the hardest hit by higher interest rates; today these incluced EMFN, BRAF, EPI, EUFN, DRW, TAO, DGS, DLS, EDIV, SEA, PSP, DBU, AUSE, also, FNIO, KBWD, REM, REZ, turned IYR, and ROOF, lower.  Higher interest rates mean lay offs and diminishing capital improvements at bond intensive infrastructure employers such as Utilities,  DBU.

 

Aggregate Credit, AGG, traded unchanged. Credit investments trading lower included EMB, BABS, PICB, BLV, LQD, JNK. Business Insider reports This is increasingly looking like an Emerging Market Bond meltdown. Dollarization of Emerging Market bonds, is a failed Liberalism credit scheme; emerging market countries will no longer be able to fund fiscal needs, provide for infrastructure development; means of government financing will have to come from inside the country and come from new taxes and integration of government, industry and commerce.

 

Commodities, DBB, USO, BNO, SLV, and GLD, traded lower, turning Commodities, DBC, lower. Silver is proving not, repeat, not to be an investment metal, rather, its nature as an industrial metal and risk investment is being revealed, as Silver Miners, SIL, SILV, and SSRI, traded, along with Gold Miners, GDX, GDXJ, lower.  

 

With the US Dollar, $USD, UUP, trading lower to close at $81.70, the currency which has served as the International Reserve Currency, that is as the backbonme of globalism, has been broken.  The debt monetization policies of the world central banks has finally soured investment trust in both credit and equity investments, as well as currencies.  There be no “money good” investment anywhere; not in Commodities, DBC, nor in Credit, AGG, nor in Stocks, VT.

 

Business Insider reports Government bonds around the world are getting destroyed today.  The monetary sovereignty of liberalism’s democracies and the international banking system no longer provides seigniorage, that is moneynes; and most significantly, the basis of power for ongoing US Dollar Hegemony has been compromised.   

 

Some might call for a new Bretton Woods to stablize investments; but Jesus Christ is at the helm of the economy of God, Ephesians 1:10 introducing regionalism. He has released the four horsemen of the apocalypse, Revelation 6:1-8, to termniate the domination of the US as a global super power, and to assure that authoritarianism rule in ten zones of regional governance and totalitarian collectivism, as presented in bible prophecy of Daniel 2:25-45 and Revelation 13:1-4.

 

IIC) … On Wednesday June 12, 2013, the Interest Rate on the US Ten Year Note, ^TNX, traded higher to 2.23%, pushing the 10 Year US Govenment Bond, TLT, down below support. Both Junk Bonds, JNK, and Aggregate Credit, AGG, traded strongly lower again today.

 

Bloomberg reports Individuals pull most money from bond mutual funds since 2008. Investors pulled $10.9 billion from U.S. bond mutual funds in the past week, the biggest redemption since October 2008. The Google Finance Chart of Aggregate Credit, AGG, and Emerging Market Bonds, EMB, shows that since May 1, 2013, Aggregate Credit has fallen strongly losing 3%, and that the Emerging Market Bonds have fallen even more strongly losing 9%. Taken together, the Bloomberg report and the Google Finance Chart communicate the failure of credit, specifically the loss of trust in the monetary policies of the world central banks to stimulate global growth and trade, as well as trust in the debtor to repay the lender.  Humanity is passing through an epic economic and political point in time.  

 

The death of Liberalism’s credit and currencies is seen in the Google Finance Chart of Aggregate Credit, AGG, together with the Indian Rupe, ICN, the Brazilian Real, BZF, the Australian Dollar, FXA, and the Emerging Market Currencies, CEW.  The death of Liberalism’s money, that is wealth, is seen in the Google Finance Chart chart of World Stocks, VT, India, INP, Brazil, EWZ, and Australia, EWA.  Debt deflation, that is currency deflation, has finally come of age, through the failure of the world central bank policies of Global ZIRP and ongoing debt monetization, with the result that Liberalism’s Milton Friedman Free To Choose floating currency banker regime no longer provides seigniorage, that is moneyness, of investment choice.  Now, Authoritarianism’s diktat beast regime is starting to provide seigniorage of diktat. Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, terminating the fiat money system and introducing the diktat money system.

          

Tyler Durden of Zero Hedge writes “Tapering” From Currency-Wars To Interest-Rate-Wars and relates that Citi’s Steve Englander posts EM and DM bond yields have relatively exploded in recent weeks. The backing up of yields represents an increase in risk premium, so this will likely have negative effects on asset markets and the wealth effect abroad as well. It is difficult to explain the magnitude of the yield backup in terms of normal substitution effects, and broadly speaking, if you were to compare the backing up of bond yields with the beta of the underlying economy and asset markets there would be a good correspondence. So, Englander adds, it is fear, not optimism that is driving bond markets.

 

In Figure1, since May 1 the median increase in 10year local bond yields in 47 major EM and developed markets (DM)  is 39bps. Among major EM economies (light blue) it  is 83bps; among major DM (dark blue) economies it is 29bps. The US 10year Treasury yield increase (red)is only at the median of developed economies and well below the overall median. In both EM and developed economies, the fat tail of rate increases is to the upside, so average increases are even higher. The paradox is that the run-up in US interest rates, which is arguably the primary driver of these global rate increases, is well below  the average and median globally.  

 

Even if we assume that the GDP-weighted average increase in yields is about 30bps, it represents a significant tightening in global economic conditions. The inflation picture has not changed materially in the last six weeks; if anything, it may be more benign than earlier thought. On a global level, exchange rates cancel out and do not affect the effective stance of monetary conditions to a good first order approximation. We may argue that the US rates increase is justified by the improved US economic outlook, and some will debate even that.

 

However, the US represents about 20% of global GDP, and outside the US there have been very few calls for monetary policy tightening. As a consequence roughly 80% of the world has experienced a monetary policy tightening that was neither expected nor desired.

 

There is a rule of thumb  that 100bps of tightening at the short end translated into 20-30bps of tightening at the long end. If we invert that rule and use 30bps as the global average monetary tightening at the long end, then we have experienced the equivalent of 90-150bps of monetary tightening at the short end. If, given the skew, the effective increase at the long is closer to 40bps, we are looking at the equivalent of 120-200bps of short-end tightening. That is a lot, given that EM has been underperforming all year, and euro zone, japan and UK growth on the whole are not registering major upward surprises.

 

The backing up of yields represents an increase in risk premium, so this will likely have negative effects on asset markets and the wealth effect abroad as well. It is difficult to explain the magnitude of the yield backup in terms of normal substitution effects, and broadly speaking, if you were to compare the backing up of bond yields with the beta of the underlying economy and asset markets there would be a good correspondence. So it is fear, not optimism that is driving bond markets.

 

This backing up of yields is spilling over into exchange rates, although the correspondence is less than 1-1. In Figure 2 countries are ordered by the magnitude of their depreciation. By and large countries with bigger depreciations have experienced bigger increased in bond yields, although India and Australia stand out as exceptions on one end, and Hungary on the other. The backing up of yields in the euro zone periphery at some point may become a problem, as this adds to growth headwinds. The fact that this backing up is driven by global forces, not sovereign risk concerns does not make it less negative.

 

It is tempting to say that DM and EM countries facing bond market pressure should just ease monetary policy further and take the hit on the exchange rate, so that effective monetary conditions are eased. Easing in response to the US-bond-market-induced monetary tightening is not feasible for many central banks. The ECB sees itself as having limited policy room now. The impact of BoJ’s easing has been undermined tremendously by the backing up of risk premia and implied volatility, and consequent softening of asset markets. EM is constrained in easing 1) because inflation may respond much quicker than output growth to a significant depreciation, and 2) there is some evidence that depreciations are now translating into further pressure on bond markets, undermining the effectiveness of ease. So bond wars may not be any more pleasant than currency wars.

 

The upshot is that we may continue to see pressure on commodity and EM currencies until asset market conditions stabilize. We continue to distinguish between higher levels of rates and higher levels of rate and asset market volatility. If US bond markets were to stabilize at current or even higher levels, but be accompanied by lower volatility, then other countries may be able to introduce offsetting macro policies. However, as long as the backing up of bond yields is accompanied by the higher volatility in asset markets, they are likely to find their policy options very constrained, and their asset markets under continuing pressure.

 

The chart of the EUR/JPY, seen in FXE:FXY, showed a tiny trade higher, on the Euro, FXE, trading  slightly higher, and the Yen, FXY, trading slighly lower. The Acton Forex EURJPY chart pattern with close at 129.243 suggests a massive unwinding of this currency carry trade is imminent.

 

World Stocks, VT, and most all stocks gapped open higher and fell all day producing a red filled candlestick, sometimes called Red Filled Elder Bar Chart Pattern. World Stocks, VT, and US Stocks, VTI, traded lower to the very edge, that is the precipice of support.  Not a single equity ETF traded higher today, And the only credit ETF trading higher was Emerging Market Bonds, EMB, which have been selling massively lower lately.   

 

Paper Producers, WOOD, traded lower on a lower price of Timber, CUT, with Biotechnology, IBB, Semiconductors, SMH, Clean Energy, PBD, US Infrastructure, PKB, Retail, XRT, Internet Retail, FDN, Global Industrial Producers, FXR, Dynamic Media, PBS, and Small Cap Pure Value RZV, trading lower as well.

 

Investment Bankers, KCE, such as JP Morgan, JPM, Asset Managers, ASMA, such as Blackrock, BLK, the Too Big To Fail Banks, RWW, such as Cititgroup, C, traded lower.  Regional Banks, KRE, traded lower, taking the US Small Caps, the Russell 2000, IWM, lower.  Countries trading lower included Thailand, THD,  and China, YAO, on lower China Real Estate, TAO, and China Industrials, CHII.  Spain, EWP, traded higher, but Greece, GREK, and Italy, EWI, traded lower.  This as Ambrose Evans Pritchard writes Italian showdown with Germany over euro looms closer.  Mexico, EWW, Brazil, EWZ, EWZS, Singapore, EWS, EWSS, traded lower.  And Egypt, EGPT, literally collapsed, falling 4.0%

 

All of the Yield Bearing ETFs, traded lower today. Preferred Financials, PGF, fell strongly lower.  And Small Cap Real Estate, ROOF, Mortgage REITS, REM, Industrial Office REITS, FNIO, Residential REITS, REZ, and Premium REITS, KBWY, traded lower on today’s higher Interest Rate on the 10 Year US Government Note, $TNX.   

 

The chart pattern of Oil, USO, traded higher, in a downward sloping channel, to strong resistance at 34.03, like that of World Stocks, VT, and US Stocks, VTI, portending a likely strong drop tomorrow or later this week; this as Bespoke Investment Group writes Crude oil and gasoline inventories rise more than expected

 

Volatility, ^VIX, TVIX, rose in an Elliott Wave 3 breakout. The market Risk Off ETN, OFF, reads positive, warning investors to be out of long positions.     

 

The Yahoo Finance ongoing one month chart of Utilities, XLU, Real Estate, IYR, and Closed End Equity and Closed End Credit Funds, CSQ, PTY, AWP, PFL, RCS, and EIM, shows that the Interest Rate Sensitive Investments have taken a massive trade lower; and stand as a precursor for a soon coming traded lower in their peers.  

 

Trading today in Closed End Funds, CSQ, PTY, AWP, PFL, RCS, and EIM, was decisively lower.  Closed End Debt, PFL, traded very strongly lower, and Closed End Equity, CSQ, traded strongly lower, showing that the way is now lower for both credit and equities.

 

I am left with a feeling that a massive turn lower in the stock market is imminent. All I can say is “lookout below!”   

 

The Finviz chart of the Gold ETF, GLD, shows a 0.75% rise from a double bottom; Stockharts.com shows that Spot Gold,  $GOLD, traded higher to $1,387.  Fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013, with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies. The investor is left without any reasonable choice of investment vehicles to preserve and grow wealth except personal possession of gold bullion or gold in Internet Trading Vaults such as Bullion Vault.                                  

Matias Vernengo of Naked Keynesianism writes O sacred hunger of pernicious gold! What bands of faith can impious lucre hold? Sociologist Geoffrey Ingham has written a review of David Graeber’s “Debt: The First 5,000 Years”, which can be viewed here (subscription required). According to Ingham, while Graeber’s monumental inquiry is much to be admired, there is quite a bit of room for critical refutation, specifically with respect to the exact nature of money, and its essence as a moral base for economic life.

Money serves as a basis for both economic life and for ethics; as ethics is defined as economic regard for the person and property of another that comes from New Testament doctrine of speech and behavior established by the Apostles.  The elect have both morals, that is virtue which is defined as the praiseworthy attributes of God, and ethics. These come from the life of Christ, Colossians 3:4, where Christ becomes one’s all inclusive life experience, Colossians 3:11, as one grows in experience of God’s will in all wisdom and spiritual understanding. The word spiritual applies to wisdom as well as to understanding, and is more than a collection and mastery of principles, yes more than just letters written in a book, it is a daily experience of receiving God’s breath in one’s life and being renewed, revitalized, and refreshed thereby so one comes to partake of God’s divine nature, and adds to the like precious faith of the Apostles, the seven additives of 2 Peter 1:5-10, so as to make one’s calling and election a genuine thing, and thus not stumble, and have a broad entrance into God’s kingdom.  God is wrapping up not 5,000, but 6,000 years of human governance, as seen in the Statue of Empires prophecy, presented in Daniel 2:25-45, with the US as a global super power, and its Dollar Hegemony, coming to and end on the death of fiat money; and the rise of the ten toed kingdom of regional governance coming out of Eurozone sovereign insolvency and global credit collapse and financial system breakdown.

 

Leonor Coutinho a PHD Economist, and member of the Euro-Mediterranean Economists Association, in asking How soon can the capital controls on Cyrpus be lifted and whether the recapitalisation plans will be sufficiently convincing to allow the Cypriot banking sector to regain the trust of the public, is just one of many of Liberalism’s economists who fails to comprehend the nature of economy, and that the fiat money system died, and the diktat money system is now in force globally, and will involve a growing use of capital controls.

Please consider that God’s idea of economy is one of empire, specifically a territory where a sovereign or sovereigns rule in dominion providing seigniorage, that is moneyness, as well as ethics, that is regard for the person or property of another, or alternatively, iniquity, where poneros, that is bad, evil, and wicked influence is exercised over people. Economy comes via and is based upon the promises of God, such as the one of Genesis 35:11, where God said to Jacob, that is Israel, “I am God Almighty. Be fruitful and multiply; a nation and a company of nations shall proceed from you, and kings shall come from your body”.  The promised nation is the United States, the company of nations was the British Empire, and the kings are the saints, ruling in heavenly places with Christ.

America’s reign of Empire ended on May 24, 2013, with the rise of the Interest Rate on the Ten Year, Note, ^TNX, to 2.01, and the steepening of the Steepner ETF, STPP.  Tyler Durder of Zero Hedge relates In Chapter 12 of David Stockman’s new book The Great Deformation, the outspoken truth-sayer discusses the realities of the end of the gold standard (in 1971 via) Nixon and Bretton Woods. The combination of free markets and freely printed money gave rise to a toxic financial deformation; namely, the vast financialization of the world economy and the rise of endless carry trades, massive arrangements of speculative hedging, and monumental daisy chains of debts, owned by debts, owned by still more debts.  I comment that the US Federal Reserve Monetary Policy of QE1 as well as the BoJ Kuroda Abenomics monetary policies, were the most significant deformations of money amongst all the world central banks monetary expansion policies; these literally debased money, and warped money so badly, that money finally became untrustworth, as bond vigilantes called interest rates higher, terminating Global ZIRP, and deleveging investors out of currency carry trade positons and derisikng others out of stock investments. Financialization of the world economy as well as equity and credit investments of all types engendered investor trust creating Empire United States. And Aljazerra communicates a Dollar Hegemonic Military Empire with a globe spanning American archipelago of bases surrounding the Middle East. Bill Van Auken writes It is estimated that the US “liberation” of Iraq cost a million lives, turned millions more into refugees and lay waste to the country’s infrastructure and social institutions. Voice Americ relates American Empire, rest in peace. And David Kaiser writes The fall of the American Empire.

The Apostle Paul relates in Ephesians 1:10, that Jesus Christ, God’s Son, has been appointed to rule over God’s economy bringing every age, epoch, era and time period to completion producing fullness therein.  

God’s paradigm for the past age was Liberalism; it was based upon the fiat money system, which governed from the creation of the Creature from Jekyll Island, that is the US Federal Reserve in 1913, to May 24, 2013, when fiat money died, on the failure of carry trade investing and credit, on the rise of the Interest Rate on the US Government Note, ^TNX, to 2.01%, providing an age of investment choice, as well as clientelism and dependency, where people trusted in central bank intervention, based upon the rule of law of democratic nation states, to provide credit liquidity, for carry trade based wealth making opportunities, such as nation investment, ie the Philippines, EPHE, Thailand, THD, the Russell 2000, IWM, or leveraged buyouts, PSP, IEP, DLPH, or regulatory capture, PJP, JNJ, or housing development, ITB, DHR, or retail sales, XRT, COST, KIRK, the list of these goes on, and on.   Predators, that is those with animal spirits of a bear, lion or leopard, preyed on people; examples include Jimmy Baker, who served five years in prison for his crimes; my mother loved him, and invited him into our home, saying “its time to watch our show”, and sent him a donation monthly.

Under Liberalism, Crony Capitalism, Socialism, and Greek Socialism, provided economic and political governance, which was based upon sovereign democratic nation states, where sovereign bankers held preeminence, and waived wands of credit, producing a moral hazard based prosperity, where inflationism was in effect through interventionist schemes of the Banker Regime which provided free trade, financial deregulation, Federal Reserve POMO, lowering of central bank interest rates, Quantitative Easing, and Global ZIRP.  Political parties had movements and worked their agendas.  Liberalism’s dynamo was profit from banking, investment banking, corporate global growth and trade.

Thought leaders establishing Liberalism’s knowledge set have been left leaning journalists such as Paul Krugman, and left leaning economicsts such as Donald Markwell, who Wikipedia relates maintains that the absence of an effective international approach in the spirit of Keynes, would risk allowing the return to play of the economic causes of international conflict which Keynes had identified back in the 1930[52].  And Brad DeLong, who Wikipedia relates that along with Joseph Stiglitz and Aaron Edlin, is co-editor of The Economists’ Voice[2].  As well as Lawrence Summers, who Wikipedia relates that upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled “The Great Liberator” arguing that “any honest Democrat will admit that we are now all Friedmanites.”

Yet Jesus Christ, operating at the helm of the economy of God, as presented in Ephesians 1:10, in one fell swoop, killed all existing economic and political life by destroying fiat money, on May 24, 2013, by stirring the bond vigilantes to call the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, and the currency traders to start a currency war of competitive currency devaluation against the world central banks, forcing investors to deleverage out of currency carry trade investments.

God’s paradigm for the current age is Authoritarianism; it is based upon the diktat money system, which has been governing ever since the collapse of Aggregate Credit, AGG, specifically Junk Bonds, JNK, and Carry Trade Investing, ICI, on May 24, 2013 when fiat money died, introducing the age of diktak, where people trust in the diktat of sovereign regional nannycrats, such as, Klaus Regling, Jeroen Dijsselbloem, and Michel Barnier, and sovereign regional bodies such as the ECB, based upon the word, will and way of whoever rises, biting, ripping and tearing others apart, to become the top dog leader and top dog banker, to provide diktat schemes, such as bank deposits bailins, additional taxes, privatizations, sale of a country’s central bank’s gold reserves, capital controls, and measures of debt servitude, all with the aim of enforcing austerity. Mike Mish Shedlock reports Infighting is everywhere in Italy now.  

Under Authoritarianism, regional governance provides both economic and political governance, and is based upon the rule of sovereign regional nannycrats and regional bodies such as the ECB, as presented in Daniel 2:25-45.  The Banker Regime has been replaced by the Beast Regime, which has characteristics of a bear, lion and leopard and preys on people, overseeing totalitarian collectivism in each of humanity’s seven institutions, and rules in each of the world’s ten regions, as foretold in Revelation 13:1-4.  There are no citizens of nation states, rather there are only residents of regional panopticons. Political parties have been replaced by statist public partnerships, where economic cardinals oversee the factors of production and regional economies.   Thought leaders providing Authoritarianism’s knowledege cage include Olli Rehn, Wolfgang Schäuble, Jens Weidmann, Jörg Asmussen, and Werner Hoyer. Authoritarianism’s dynamos are regional security, stability, and sustainability.

Jesus Christ, acting in dispensation, Ephesians 1:10, has completed Liberalism by terminating floating currencies of democratic nation states. With the introduction of Authoritaranism, and after the soon coming financial apocalypse, that is a global credit bust and world wide financial system collapse,  diktat will be the currency of regional governance and its totalitarian collectivism.  Diktat will produce Authoritarianism’s wealth of debt servitude.    

To effect the complete transfer out of Liberalism and into Authoritarianism, Jesus Christ has unleashed the Four Horsemen of the Apocalypse. The First, is the Rider on the White Horse, who has a bow without any arrows, whose mission commenced in May of 2010 with Greek Bailout I, to pass the baton of sovereignty from nation states to regional governance; something called for by the 300 elite of the Club of Rome, organized in 1968 by the Morgenthau Group, and presented in prophetic writing with publications, World Dynamics, Limits to Growth, and Mankind at the Turning Point.        

Got Questions.org relates that God’s end time economy will be enforcd through judgements upon mankind with the seven seals (Revelation 6:1-17, 8:1-5), seven trumpets (Revelation 8:6-13; 11:15-19), and seven bowls/vials (Revelation 16:1-21) being three succeeding series of end-times judgments from God. The judgments get progressively worse and more devastating as the end times progress. The seven seals, trumpets, and bowls are connected to one another. The seventh seal introduces the seven trumpets (Revelation 8:1-5), and the seventh trumpet introduces the seven bowls (Revelation 11:15-19, 15:1-8).

IID) … On Thursday, June 12, 2013, the Plunge Protection Team, PPT, bought S&P High Beta Stocks, reversing the failure of the Bank of Japan’s Kuroda Abenomics that came on Tuesday. The Reuters report Japan machine orders down suggests that the world central banks’ monetary policies have failed to provide stimulus to global growth and trade. Japan’s core machinery orders fell in April from the previous month, down for the first time in three months as companies remain hesitant to boost capital spending despite Prime Minister Shinzo Abe’s sweeping stimulus policies. Cabinet Office data showed core machinery orders, a highly volatile series regarded as a leading indicator of capital spending, fell 8.8 percent, compared with a 8.5 percent decline in a Reuters poll of analysts.

 

The failure of Bank of Japan’s Kuroda Abenomics monetary policies sent World Stocks, VT,  plummenting on Tuesday, June 11, 2013.  But today, June 12, 2013, the Plunge Protection entered the markets buying the S&P High Beta Stocks, SPHB, despite a strong rally by the currency traders in the Japanes Yen, FXY, this being seen in the ongoing Yahoo Finance Chart of the Nikkei, NKY, together with the Japanese Yen, FXY, the Euro, FXE, S&P High Beta, SPHB, US Stocks, VTI, European Stocks, VGK, and Asia Excluding Japan, EPP. Turkey, TUR, Chine, ECH, Peru, EPU, traded higher. Poland, EPOL, rose to a new rally high; while Argentina, ARGT, traded lower.

 

High Beta ETFs, seen in this Finviz Screener, soared; these included SPHB, XRT, SMH, PKB, RZV,  PSP, IXG, PSCE, RWW, KRE, RXI, KCE, IAI, PBS, IYC, IGN, XLI, XTN, OIH, WOOD, ITB, and PJP.  And yield bearing ETFs rising strongly included REM, TAO, IYR, KBWD, ROOF, AUSE, REZ, FNIO, DRW, and KBWY. Major Airlines, seen in this Finviz Screener, rose strongly.  

 

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.17. Aggregate Credit, AGG, rose strongly.  The US Dollar, $USD, UUP, traded lower.

 

Today’s news reflects the growth and pursuit of the Broadcasting Industry, PBS, STRZA, the Retail Sector, XRT, PLCE, and the Shopping Mall, GGP, SPG, in the US, defining corporate interest in media control, as well as the total absence of Broadcasting, Retail, and Shopping Sectors in Greece.

 

The only reason why Greece was allowed into the Euro Comm Currency Group, was that it was simply an investment play by bankers. As the days of the introduction of the Euro approached, Greek Treasury Interest rates consistenly decreased, providing a windfall for bondholdres. God designed Greece and its Greek Socialism, as the very definition of clientelism, dependency, and anti-competitiveness, to be the  far left economic and political experience under Liberalism. There is not a speck of capitalism, or meritocracy in Greece. There was only a pipeline of money flowing from Greek Treasury Bond sales to those who had a constitutionally guaranteed right to employment as state workers.  In fact just about the only workers in Greece have been Government workers.  Fom the pharmacy technician to the hospital gardner, all have been participants in a system described by the Economist Magazine as pork and patronage.  As a result the Greek economy is not an innovative consumer society, IYC, and PBJ, such as the United States.  As presented in Revelation 13:1-4, God purposed from eternity past to bring the Beast Regime of regional governance and totalitarian collectivism out of sovereign and baking insolvency of the Mediterranean nation states of Portugal, Italy, Greece, and Spain, that is out of the collapse of the profligate PIGS.  Needless to say there will be many Angry Byrds.  Of note, Jack Duffy of MarketNews International reports France and Germany are on a collision-course with the European Commission as EU leaders approach a crucial summit that could decide key questions about the future of the Eurozone. With leaders scheduled to meet in Brussels on June 27-28 to decide details of the EU’s proposed banking union, the Eurozone’s two largest economies are determined to ensure that final decisions over when and how insolvent banks are shut down remains with national governments. The Commission is putting forth its own plan to consolidate such power in Brussels. ‘There is a real confrontation here,’ said Zsolt Darvas, research fellow at think tank Bruegel. ‘While it may make sense to do this at the European level, nothing is going to happen without the participation of France and Germany,’ he said.”    And Tom Stoukas and Sherine El Madany of Bloomberg report Greece became the first developed nation to be cut to emerging-market status by MSCI Inc. after the local stock index plunged 83% since 2007. Greece failed to meet criteria regarding securities borrowing and lending facilities, short selling and transferability, said MSCI.

 

Jeremy Bowman reports Why Gannett and Belo Shares jumped.  And Reuters report Greeks strike over state TV closure as backlash grows. Greek workers stage a nation wide strike on Thursday, forcing hospitals to work on emergency staff and disrupting transport, in protest against the “sudden death” of state broadcaster ERT, switched off in the middle of the night by the government. Screens went black on state broadcaster ERT, cutting newscasters off mid-sentence only hours after the decision was announced, in what the government said was a temporary measure to staunch a waste of taxpayers’ money. The 75-year-old Hellenic Broadcasting Corporation ERT has shed viewers since the rise of commercial television and radio, and its three statewide stations had just a 13 percent combined audience share when it was switched off. Its 2,600-strong staff include 600 journalists. Many Greeks cite the broadcaster as an example of inefficiency, overspending and jobs given in return for political favors. Nevertheless, in a country where nearly two thirds of young people are now unemployed after years of relentless cuts and tax hikes, there is a visceral public belief that the government should not slash jobs. Greeks were stunned by the speed with which the closure was executed. “It had to happen. ERT was a big fat feast for the political parties,” said Maria Panagiotou, a 65-year-old retiree. “But the way they did it is unacceptable. How can this happen in Europe?” A senior government official said Athens was under pressure to show visiting EU and IMF inspectors that it had a plan to fire 2,000 state workers as required under its bailout, and the ERT shutdown was the only option available to meet the target. The ERT crisis overshadowed MSCI’s reclassification of the country as an emerging market. The chart of Greece, GREK, shows a 7.6% fall in value so far this week.  

 

IIE) … On Friday, June 12, 2013, World Stock, VT, traded slighly lower from Thursday’s rally, on lower Global Financials, IXG, Investment Bankers, KCE, such as JPM, The Too Big To Fail Banks, RWW, such as C, STI, KEY, BK, Stock Brokers, IAI, such as EFTC, Regional Banks, KRE, such as RF, HBAN,  and Asset Managers, ASMA, such as BLK, and on a slide in the EUR/JPY, seen in the Stockcharts.com chart of FXE:FXY, with Action Forex reporting a close of the EURJPY lower at 125.527, as well as another strong trade lower in the Far East Financials, FEFN, at support, on a rally Yen, FXY, to close at103.75, reflecting the failure of Kuroda Abenomics. The chart of the S&P 500, $SPX, SPY, shows a 0.6% trade lower on the day, and a 1.0% trade lower for the week; and that of the Dow, $DJW, DIA, shows a 0.1% trade higher on the day and 0.6% trade lowe for the week.

 

The Interest Rate on the US Ten Year Note, ^TNX, closed the week at 2.13%, and Aggregate Credit, AGG, rose slighly for the week, up from its significant breakout on May 24, at 2.01%.  

 

Volatility, ^VIX, TVIX, VIXY, rose for the day and the week.

 

Both Brent North Sea Oil, BNO, and Oil, USO, popped higher in what are likely to turn out to be evening star chart patterns.

 

Sectors trading lower included, Automobiles, CARZ, Clean Energy, PBD, Energy Service, OIH, Energy Production, XOP, and Small Cap Energy, PSCE, on a glut of oil, despite the rise in theprice of oil, USO, S&P High Beta, SPHB, Semiconductors, SMH, Paper Producers, WOOD, Softare, IGV.

 

Credit Services, seen in this Finviz Screener, traded lower … Automobile Dealerships, seen in this Finviz Screener, traded lower … Chemical Manufacturers, seen in this Finviz Screener, traded lower.

 

Doug Noland reports The U.S. dollar index declined 1.2% to 80.67. (up 1.1% y-t-d). For the week on the upside, the Japanese yen increased 3.5%, the New Zealand dollar 2.0%, the Swedish krona 1.9%, Swiss franc 1.6%, the euro 1.0%, the British pound 1.0%, the Danish krone 0.9%, the Norwegian krone 0.9%, the Australian dollar 0.8%, the Mexican peso 0.4%, the Canadian dollar 0.3% and the South African rand 0.2%. For the week on the downside, the Brazilian real declined 0.9%, the South Korean won 0.8%, the Taiwanese dollar 0.3% and the Singapore dollar 0.2%.

 

Nation Inestment, EFA, and Small Cap Nation Investment, IFSM, traded lower, on Friday June 14, 2013, as well as for the week, as the Emerging Markets, EEM, and their Infrastructure, EMIF, their Financials, EMFN, such as CIB, BCH, BAP, BSMX, and their Bonds, EMB, have traded lower. Mike Mish Shedlock writes Fierce selloff in emerging market currencies The economies of the emerging countries, such as Vietnam, VNM, Malayasia, EWM, Philippines, EPHE, Indonesia, IDX, Chile, ECH, Peru, EPU, and developing countries, such as Thailand, THD, Mexico, EWW, Brazil, EWZ, Russia, RSX, India, INP, and China, YAO, have abruptly disintegrated on debt deflation, that is on falling currency values associated with higher interest rates, on the collapse of credit, AGG, as the debt monetization policies of the World Central Banks have failed to stimulate global growth and trade and have turned “money good” investments bad.  The Milton Friedman Free To Choose scheme of floating currencies, has failed.  God, through Jesus Christ, Ephesians 1:10, is sending a new scheme of diktat and diktat money to establish regional security, stability, and sustainability, through regional governance and totalitarian collectivisim, enforcing debt servitude.      

 

Doug Noland of Prudent Bear writes in Safehaven.com The King of EM, It is not easy to explain exactly why the subprime Bubble began to lose air when it did. Today, it’s not easy to pinpoint exactly why the “developing” Bubble has begun to falter. But in both Bubbles, leverage and speculation played integral roles. From my perspective, there reaches a point of acute excess where the most sophisticated market operators recognize trouble on the horizon and begin to reverse their leveraged positions (and/or begin building speculative bearish bets) and exit the Bubble. This move by the sophisticated speculators works to change the market liquidity backdrop at the margin, leading to higher financing costs and waning Credit Availability.  

 

Importantly, it is the nature of major Bubbles to become acutely dependent upon ongoing cheap finance and rapid Credit expansion. As such, the marginally higher costs and tightened finance engendered by the reversal of speculative activities begins to weigh on asset prices, financial flows and general Credit Availability.

 

Few in the spring of 2007 appreciated the ramifications for the market reversal in subprime finance. Very few recognized the significance of this initial crack in the mortgage finance Bubble. I believe the more sophisticated hedge fund and global market operators are beginning to appreciate the importance of what is unfolding in the global marketplace. On the margin, de-risking and de-leveraging dynamics have commenced with an immediate impact on marketplace liquidity.

 

Meanwhile, the “developing” market Bubble continues to unwind. And leverage comes out the commodities, currency “carry trades” and developing stocks and bonds. And as capital flight becomes a more serious issue, the marketplace must ponder the consequences not only of what a faltering Bubble means for scores of markets and economies, there is as well the issue of developing central banks having to sell from their trove of Treasuries and bunds and such to finance a surge in outflows (“hot” and otherwise).

 

I suspect that the global jump in yields (and CDS and risk premiums) has more to do with de-leveraging than it does with tapering worries. This dynamic has caught many by surprise. The speculators anticipated cleverly exiting their leveraged MBS and other trades based on their expectations for Fed policy. Now, there’s a tremendous amount of unanticipated market uncertainty.

 

The yen “carry trade” (sell yen and use proceeds to buy higher-yielding instruments globally) is doling out painful losses – forcing the unwind of leveraged trades across many markets. I wouldn’t be surprised if the yen short is the largest short position in modern history. The yen bears are now running for cover – causing all kinds of havoc in the currencies and securities markets.

 

China, the King of Emerging Markets. I have posited that China is in the midst of an historic Credit Bubble. I have over the years tried to explain how interrelated their Bubble is to ours. Our mismanagement of the world’s Reserve Currency led to 20 years of huge Current Account Deficits. A large portion of the Trillions of associated IOU’s have made it onto the balance sheet of the People’s Bank of China. And no Credit system and economic system has gone to greater excess during the post-2008 global reflation. It was the “fledgling” Credit Bubble spurred to “terminal phase” excess over the past five years.

 

Over the coming weeks and months, China will be an analytical focal point. If the “developing” Bubble has passed an important inflection point, then China is vulnerable. If “hot money” is leaving EM, then China should be susceptible. And, let there be no doubt, when China finally succumbs global economic prospects really dim – and prospects for some fellow EM economies turn downright dismal. Recall how the tightening of subprime finance gravitated to “Alt-A” and then worked its way to “conventional.” And when housing in general began to falter the bottom fell out of subprime.

 

This week provided a bevy of notable China-related headlines: From the Financial Times: “China Debt Auction Failure Raises Liquidity Fears;” From Bloomberg: “China Debt Sale Fails for First Time in 23 Months on Cash Crunch;” “China Local Debt Audit ‘Credit Negative,’  ”China State Auditor Warns Over Local Government Debt Levels.” The price of Chinese sovereign Credit default swap (CDS) “insurance” jumped from 92 to 113 in three sessions, before dropping back down to 98 on Friday. Chinese interbank lending rates have recently spiked higher – and there were even reports of several borrowers forced to pay up for increasingly scarce liquidity. There were debt auctions that did not go smoothly. The currency forwards market is showing some atypical downward pressure on the renminbi.

 

Ambrose Evand Pritchard writes China braces for capital flight and debt stress as Fed tightens. A front-page editorial on Friday in China Securities Journal – an arm of the regulatory authorities – warned that capital inflows have slowed sharply and may have begun to reverse as investors grow wary of emerging markets. “China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens.” it wrote.

 

The journal said foreign exodus from Chinese equity funds were the highest since early 2008 in the week up to June 5, and the withdrawal Hong Kong funds were the most in a decade.

It also warned that total credit in Chinese financial system may have reached 221pc of GDP, jumping almost eightfold over the last decade. Companies will have to fork out $1 trillion in interest payments alone this year. “Chinese corporate debt burdens are much higher than those of other economies and much of the liquidity is being used to repay debt and not to finance output,” it said.

 

There have been signs of serious stress in China’s interbank lending markets, with short-term SHIBOR rates spiking violently. Bank Everbright missed an interbank payment last week in a technical default.

 

“Liquidity conditions have tightened severely due to the crackdown on shadow banking activities,” said Zhiwei Zhang from Nomura. “We believe the series of policy tightening measures in the past three months have reached critical mass, such that deleveraging in the banking sector is happening. Liquidity tightening can be very damaging to a highly leveraged economy,” he said, warning that local government finance vehicles may have trouble rolling over debts.

 

Also, International Debt Statistics, from the World Bank, World Development Indicators reveal that China has the largest domestic debt as a percent of GDP of any developing and emerging market at 160%.

 

Ambrse Evans Pritchard writes Fitch says China credit bubble unprecedented in modern world history. And Reuters reports Fitch warns on shadwo banking in China.  And Benton te writes China’s debt markets suffers from cash squeeze

 

And John Rubino asks in commenting on the Doug Noland article, So can the US stay placid when the rest of the world turns chaotic?  Highly doubtful. There’s a market phenomenon in which one investment play blows up and forces those on the wrong side of the trade to dump their liquid assets to raise cash, which causes the high-quality assets to fall as much or more than the junk. As Noland notes, the world’s premier liquid asset is the Treasury bond. If the developing world’s need to raise cash is a factor in the recent spike in US interest rates, this implies a feedback loop in which rising US rates further destabilize emerging markets, forcing the sale of more Treasuries, and so on. Can the Fed stop this? Not unless it wants to buy up not just all the newly-issued Treasuries as it does now, but the trillions of dollars of bonds that might be dumped once things really get going.

 

It’s important to understand that we’re here because for years the developed world in general and the US in particular have been exporting their problems to the developing world via monetary policy. We fund our overspending by creating a bunch of new dollars,  many of which flow beyond our borders looking for higher yields. They land in, say, Brazil, pushing up both local asset prices and the exchange rate of the real. So individual Brazilians see their cost of living rise while Brazilian exporters are priced out of global markets. This is the currency war that Brazil’s government has been complaining about.

 

Then the hot money flows back out, causing a different set of problems for a country that has spent the past decade trying to adjust to excessive capital inflows. The result: some seriously fragile banks and over-leveraged companies and investors, any of which could trigger a nationwide crisis.

 

The same general process is at work in other major emerging markets, with each in its own way now posing a threat to the global financial system — at the pinnacle of which sit the S&P 500 and the Treasury market, looking an awful lot like Southern California real estate circa 2007

 

China Financials, CHIX, traded lower, forcing China, YAO, Chin Industrials, CHII, China Small Caps, ECNS, alllower on the week.

The Nikkei, NKY, traded lower on the week. The Philippines, EPHE, Thailand, THD, Hong Kong, EWH, EWHS, South Korea, EWY, Taiwan, EWT, and Vietnam, VNM, Malayasia, EWM, Singapore, EWS, EWSS, all traded lower lower on the week.  

India, INP, SCIN, and Brazil, EWZ, EWZS, both traded lower on the week.

Poland, EPOL, traded lower from its rally high; and Mexico, EWW, and Egypt, EGPT, traded lower on the week. Spain, EWP, Germany, EWG, Ireland, EIRL, and Italy, EWI, traded lower.

 

Indonesia, IDX, rose this week as Lilian Karunungan and Kyoungwha Kim of Bloomberg report Indonesia is consuming foreign currency reserves at the fastest pace in Asia as policy makers struggle to contain the rupiah’s plunge, a sign to PT Mandiri Sekuritas that the central bank will pare intervention. Reserves dropped 5.7% in a year to $105 billion in May as Bank Indonesia sold dollars to bolster the rupiah. The rupiah fell to 5.6% below the local spot rate in the offshore non-deliverable forward market yesterday. Defending the currency helped reduce reserves to the equivalent of 6.6 months of imports, the worst ratio in Asia after India.

 

III) … The Surveillance State with its surveillance infrastructure comes of age as Obama recognizes the NSA Programs.  

The Apostle Paul reveals that Jesus Christ heads up the economic and political plan of God for the completion and fulfillment of every age, epoch, era and time period, Ephesians, 1:10.

With the Edward Snowden revelations through Glenn Grenwall of The Guardian, and confrimation of NSA Programs by President Obama, its is clearly evident that Jesus Christ has terminated Liberalism’s democracy, and is introducing Authoritarianism’s Surveillance State.

Zero Hedge reports AT&T, Verizon & others have been providing NSA with phone records since 2001. NSA Intelligence public private partnerships are an integral part of the creeping emergence of Authoritariansism. It is Edward Snowden who has revealed some of the details of Authoritarianism’s new form of governance, which is termed the Surveillance State, which terminates Liberalism’s traditional democratic governance.

Under the Obama administration there has been a proliferation of private government contractors who store, sift and manage information on people. Siobhan Gorman of The Wall Street Journal writes thousands of workers employed by government contractors sit side by side with federal workers and hold security clearances that provide access to intelligence databases. The result is a system so enmeshed that government and contract workers are often indistinguishable. Agency Edward Snowden has said he worked for consulting giant Booz Allen Hamilton as an ‘infrastructure analyst.’  

Mr. Snowden, an employee of the consulting behemoth Booz Allen Hamilton, has said he leaked highly classified information because he felt Americans should know more about NSA surveillance programs. Director of National Intelligence James Clapper said a “crimes report” was filed with the Justice Department and government officials are pursuing an investigation. Mr. Snowden, a former Central Intelligence Agency employee, apparently checked out of a Hong Kong hotel and his whereabouts weren’t known Monday.

The size and scale of private contracting for intelligence goes “well beyond the scope of anything the public is aware of or even imagines,” said Peter Singer, director of the Center for 21st Century Security and Intelligence at the Brookings Institution. About 1.2 million Americans hold top-secret clearances, the Director of National Intelligence reported this year. More than a third of those, 38%, are private contractors.

Such companies as Booz Allen Hamilton had the most ample supply. Mr. Snowden has said he worked for Booz Allen as an “infrastructure analyst” at an NSA facility in Hawaii. His security clearance for the job would have been approved by the NSA, which also would have determined the systems he could access from his desktop, said contractors familiar with the process. Government contracts have been lucrative for Booz Allen. In a government filing last month, Booz Allen said that nearly a quarter of its most recent annual revenue, about $1.3 billion, came from its work with the intelligence community and that another 55%, about $3.2 billion, came from its defense business. More than two-thirds of Booz Allen’s 25,000 workers hold government security clearances, and more than a quarter of those hold the highest security clearance. In 2008, Booz Allen separated its commercial business from its government consulting work and sold the latter to Carlyle Group—another politically connected firm, for $2.54 billion. The Carlyle-owned government business, Booz Allen Hamilton Holding, sold shares to the public in a November 2010 IPO. On Sunday, Booz Allen moved quickly to tamp down news of Mr. Snowden’s breach. The firm’s chairman, Ralph Shrader, sent a memo to Booz Allen employees just hours after the revelation, advising them to keep quiet. The public statement “will be our only external communication on this issue for the time being,” he wrote.

Facing congressional criticism in 2007, intelligence agencies promised to cut back on private contractors but few have made substantial headway, former officials said. “Yes, there were initiatives to reduce contractors, but at the end of the day, the budget goes up another billion dollars, and what do you do?” said a former U.S. official. Mr. Snowden had specialized technical skills that are frequently outsourced because the U.S. government doesn’t have enough employees with such training. Contractors defended the government’s reliance on private companies, arguing there often are few distinctions between a federal worker and a contractor. They cited Pfc. Bradley Manning as a counterargument to the idea that contractors pose more of a security risk than government workers.The Army private is currently on trial and facing life in prison after admitting to providing WikiLeaks with a trove of classified documents.

Kenneth Cukier and Viktor Mayer-Schoenberger relate in Foreign Affairs, The rise of Big Data. Acxiom and Experian are amassing vast amounts of information on everyone and everything. Big Data is poised to reshape the way we live, work and think.

MaddMedic in Freedom Is Just Another Word Blog provides 27 quotes from Edward Snowden which presents the powers of the NSA Surveillance State.

America Blog writes Edward Snowden explains his actions. Via the Washington Post, which he was also in contact with, in addition to the Guardian: I asked him, at the risk of estrangement, how he could justify exposing intelligence methods that might benefit U.S. adversaries. “Perhaps I am naive,” he replied, “but I believe that at this point in history, the greatest danger to our freedom and way of life comes from the reasonable fear of omniscient State powers kept in check by nothing more than policy documents.” The steady expansion of surveillance powers, he wrote, is “such a direct threat to democratic governance that I have risked my life and family for it.”

FLL comments Snowden’s basic premise is sound: Policy, rather than law, controls the surveillance state, which means that any change in leadership could trigger tyranny. The scope of domestic government surveillance really should be defined by law, and those laws, like any laws, should be subject to the constitutional oversight of the federal judiciary. The NSA, as part of the Department of Defense, is answerable only to the president, rather than being bound by any set of laws. One of the definitions of being civilized is the rule of law. The scope of domestic surveillance should be determined by the people through their legislators and federal judges, rather than a president (United States) or a warlord (Somalia), depending on the individual country.

Matthew Weidner writes The American Surveillance State surrounds and imprisons us all. The NYT wrote A 29-year-old former CIA computer technician went public on Sunday as the source behind the daily drumbeat of disclosures about the nation’s surveillance programs, saying he took the extraordinary step because “the public needs to decide whether these programs and policies are right or wrong.”

From MyBlogDammitNet Excerpts from the Greenwald Snowden interview. Greenwald: “Talk a little bit about how the American surveillance state actually functions. Does it target the actions of Americans?” Snowden responds: “NSA and intelligence community in general is focused on getting intelligence wherever it can by any means possible. It believes, on the grounds of sort of a self-certification, that they serve the national interest. Originally we saw that focus very narrowly tailored as foreign intelligence gathered overseas.”

“Now increasingly we see that it’s happening domestically and to do that they, the NSA specifically, targets the communications of everyone. It ingests them by default. It collects them in its system and it filters them and it analyses them and it measures them and it stores them for periods of time simply because that’s the easiest, most efficient, and most valuable way to achieve these ends. So while they may be intending to target someone associated with a foreign government or someone they suspect of terrorism, they’re collecting you’re communications to do so.”

“Any analyst at any time can target anyone, any selector, anywhere. Where those communications will be picked up depends on the range of the sensor networks and the authorities that analyst is empowered with. Not all analysts have the ability to target everything. But I sitting at my desk certainly had the authorities to wiretap anyone from you or your accountant to a Federal judge to even the President if I had a personal e-mail.”

The Liberty Crier presents Ron Paul NSA’s PRISM is an awakening call  Ron Paul speaks with Anderson Cooper in video interview about the NSA’s PRISM spy program and the value of privacy.

Rutherford Institute writes America’s new normal: mass surveillance, secret courts.

Elaine Meinel Supkis writes Zionist neocons demand more spying and punishment of US citizens blowing the whistle on this spying and communictaes that the US is no longer a representative democracy in the traditional sense of the word, but is an authoritaran state, molded by Zionism, and dominated by the Zionist State of Israel and its leaders.

In audio broadcast The Scott Horton show relates Truth is treason in the Empire of Lies, as Ron Paul comments on the Snowden revelations.

Amy Goodman write in Truthdig Edward Snowden and the Architecture of Oppression

Thomas Drake of The Guardian Snowden saw what I saw: Surveillance criminally subverting the Constitution  

Rasmussen reports 57% fear Government will use NSA data to harass political opponents

The Guardian reports Utah: The NSA’s desert home for eavesdropping on America

IV) … The Government Entitlement Complex will soon be coming to a screaching halt.    

Jason Hartman writes Enter the Government-Entitlement Complex. During the time in which defense spending has been contracting as a percentage of GDP, it is impossible to ignore the extent to which non-defense government spending has expanded. This perpetual increase in transfer payments from entitlement programs and interest on the debt that has compounded from perpetual deficits driven by this binge of entitlement spending has created a new paradigm. The “Military Industrial Complex” has been effectively dead for nearly 40 years, and was replaced with a “Government Entitlement Complex” that is continuing to grow and expand.                                                                                                     

Analysis of total transfer payments and interest payments as a percentage of GDP paints an undeniable picture of the extent to which this pervasive phenomenon has come to dominate American life. In total, 18% of US GDP is driven by either entitlement payments or owed by the government as interest on debt from past entitlement spending. The importance of this Government-Entitlement-Complex™ is that it controls so much money and hold so much political influence that it dwarfs the supposed “Military Industrial Complex” in size, scope, and impact. The staggering amount of money controlled by the Government-Entitlement-Complex™ makes it the single most dominant force in American electoral politics. As more people become dependent on the government for their livelihood either from subsidies or subsistence, the more resistance there will be against reforms that are necessary to develop a healthy economy. As individual investors, we do not have the power to reverse this destructive trend, but we do have the capacity to structure our income and investments in such a way that the likely actions of a Government-Entitlement-Complex™ will help us become wealthy instead of sending us into destitute poverty.

The economic paradigm known as Liberalism was one of investment choice, as well as clientelism, and was centered around the US Federal Reserve monetary policy of credit liquidity, which created a historic credit bubble, AGG, which provided a moral hazard based prosperity, and was facilitated by financial system intervention in QE, the pursuit of ZIRP,  the securitization of credit such US Treasury Notes, TLT, which funded entitlements of all types, such as social security disability.

Increasingly many qualified for Social Security Disability, and either ceased to work or never did work, and starting living as clients of the state. The development and use of the Euro, FXE, established Greek Clientelism, where many in Greece have state employment as a constitutional guarantee, which the Economist Magazine described as a system of pork and patronage.                                                      

I differ from Mr. Hartman, as individual investors now have no power as fiat money, consisting of Aggregate Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, seen in their ongoing Yahoo Finance Chart, died on May 24, 2013, with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, as bond vigilantes called the Interest Rate on the US Government Note, ^TNX, higher to 2.01%, on the failure of the world central banks’ monetary authority, and especially the failure of Bank of Japan’s Kuroda Abenomics monetary policies. The investor is left without any reasonable choice of investment vehicles to either shape the destiny of the Government-Entitlement-Complex™  or to preserve and grow wealth except personal possession of gold bullion or gold in Internet Trading Vaults such as Bullion Vault of Gold Is Money.                                                                                                               

Out of a soon coming global credit bust and financial system breakdown, as foretold in bible prophecy of Revelation 13:3, there will be no money to fund any Government-Entitlement-Complex™

V) … Saturday night proved to be gaudy just as the Lord prophecied.                         While out walking on Saturday night, I encountered two groups from the leading Oneness Pentacostalism church here in Bellingham, both of which told me that their church was going to be in revival at Depot Market Square, seen in this photo.

The words of the Lord came to mind, who said, “As it was in the days of Noah, so it will be in the days of the coming of the Son Of Man” Matthew 24:37.

How was it then in Noah’s time? Well, it was gaudy; that is, outrageously festive.  Wikipedia relates that the word gaudy comes from latin. The origin of the term may be connected to the traditional student anthem, Gaudeamus. Gaudies generally involve a celebratory formal dinner, generally in black tie and academic gowns (scarlet festal robes for doctors), and may include events such as chapel services, lectures or concerts beforehand.

When in ministry, and when in public revival, this church group, dresses gaudy and acts gaudy.   I asked for one of their pamphlets, and engaged a young man in conversation, asking if any at their church had someone interested in bible prophecy; he didn’t want to discuss that at all; he communicated that the church was in revival, and then proceeded to communicate his church doctrine to me. Well for me it was a dead end. The gaudies have a church agenda of preeminence which I do not want any part of, and I have a prophetic ministry and seek another to discuss bible prophecy.     

VI) … The Ezekiel 38 War beigns as Putin warns the US against arming Syrian rebels. 

Please consider that Turkey will serve as the gateway for NATO troops, particularly from Germany, entering into Syria for a global war, foretold in Bible Prophecy, as the Ezekiel 38 war.  Jack Kelley provides the details here

Jason Ditz of Antiwar reports Lets not arm those organ eating Syrian rebels, Putin says.

Bill Van Auken writes The White House spokesman Jay Carney writes After making it clear that Obama would make no statement nor would he speak to Erdogan about the repression, the spokesman concluded: “Turkey is a very important ally. And look, all democracies have issues that they need to work through,  I think that we continue to work with Turkey on a range of issues—as a NATO ally and as a key player in the region, and we look forward to doing that.”

In calling Turkey a “key player in the region,” Carney was obviously referring to its role as a safe haven and forward base for the Islamist militias that Washington has unleashed on Syria. Foreign fighters from as far away as Chechnya, the Balkans and Western Europe are funneled across the Turkish border; Turkey also hosts a CIA station that coordinates the flow of billions of dollars in money and arms provided by Qatar and Saudi Arabia to fuel the slaughter across the border.

Washington thus hypocritically claims that its war for regime change in Syria is driven by its horror at Assad’s repression of armed Islamist opposition groups, but supports Erdogan’s repression of peaceful protests that could interfere with US war plans.

The events in Turkey and Syria, however, are intimately connected. Erdogan’s participation in the US-led war against Syrian President Bashar al-Assad is immensely unpopular with the Turkish people. Polls indicate that between 70 and 80 percent of Turkish citizens oppose this intervention.

There is widespread concern that the war being promoted by Erdogan in Syria will engulf Turkey itself. Twin car bombs killed 50 people in the town of Reyhanli on the Turkish border last month, followed by the arrest in the same region of 12 members of the Al-Qaeda-affiliated Al-Nusra Front, who initial reports said had a quantity of deadly sarin gas.

The Turkish government’s war policy is particularly unpopular among Turkey’s major religious and ethnic minorities, such as the Alevis. Erdogan’s backing for Al Qaeda-linked Sunni Islamist fanatics in Syria is an extension of his domestic policy of imposing Islamist social policies in Turkey. His decision to name a new bridge over the Bosporus Strait after a 16th century Ottoman sultan who slaughtered tens of thousands of Alevis heightened these concerns.

In a more fundamental sense, the Turkish developments mirror those within the United States itself, with the turn towards militarism and intervention abroad feeding the growth of attacks on democratic rights and police state measures at home. In both countries, both foreign and domestic policies are pursued in the interest of ruling corporate and financial cliques at the expense of the broad masses of working people.

The moral charades performed by the Obama administration and its pseudo-left assets about “human rights” and “democracy” in Syria are, as the case of Turkey makes clear, completely hypocritical. They are designed to deceive the public about the criminal nature of Washington’s escalating campaign of military aggression to secure US hegemony over the oil-rich regions of the Middle East and Central Asia—a campaign that threatens to drag the people of Turkey, the entire region and beyond into a bloody conflagration.

The struggle for the democratic and social rights of working people in Syria, Turkey and throughout the planet can be conducted only on the basis of the independent political mobilization of the working class in struggle against imperialism and the capitalist profit system.

VII) … In the news                                                                                                                                       The Economist reports Action Women: President Obama appoints two interventionsists; these being Susan Rice and Susan Power, described as one with enthusiasm for UN led invterventionism  The departure of Tom Donlin removes a voice of caution from White House Debate on Syria.

The Australian reports Jordan key to Pentagon plan for no-fly zone

The Economist in Scratching a living in the Missippi River Delta, highlights the depopulation of the rural south, in particular Lake Village, Chicot Country, AR, and Greenville, MS, that has come as agricultural laborers have been replaced by mechanization, leaving the hubris of a liquor store and pawnshop economy.   

The WSJ reports Skyscraper prices head north

 

Reuters reports Obama to name Jason Furman as Chief Economist    

 

Bespoke Investment Group reports Most short sellers dan’t catch a break. Given the new downward trend in stocks, things should finally be looking up for the short-sellers.  Unfortunately, though, they cannot seem to catch a break.  The table below lists the most heavily shorted stocks in the Russell 1000 (as a percent of float) as of the end of May.  For each stock, we also calculated its performance so far in June.  As shown, the average stock in the table is down 0.93%, which is worse than the average return of all Russell 1000 stocks so far in June (-0.59%).  However, were it not for one stock in the list (Walter Energy – WLT), the average return would be a gain of 0.62%!  Granted, you can’t pick and choose which stocks to use when looking at performance, but one would have thought that these stocks would be performing a lot more poorly given the overall market environment. I comment that it seems to me that the following are good short selling prospects at this time include Specialty Retailer, GME, Movie Production Theater, DWA, Footwear Manufacturer, DECK, and the world leader in high power Fiber Lasers and Amplifiers for material processing, IPGP.

 

Other short selling opportunities abound such as Florida Real Estate Developer, JOE, of which Interactive Buyside in Seeking Alpha reports  JOE’s overhyped asset base consists of secluded rural land in Northwest FL, undeveloped residential lots in vacant communities, and primarily empty commercial acreage that is dependent on the success of a relocated Panama City airport

Only The Elect Believe And Experience Very Best Things Of The Mystery Of The Economy Of God … Obama Relates Mass Surveillance Protects Civil Liberties … The Conflict In And About Syria Escalates And Commences To Become The Prelude To The Ezekiel 38 War

Financial Market report for the week ending June 10, 2013

 

I … Introduction: Only the elect have basis in reality and from it have the possibility to receive grace, truth, and mercy.  

The apostle Paul reveals that reality is found in Jesus Christ, Ephesians 4:21, which according to the Apostle John has facets of truth and grace, John 1:17. This beloved of the Lord, reveals that mercy is available to those who keep Christ’s word of endurance and shrink not from his name, Revelation 3:8-10.    

 

II … In this week’s financial market trading

II A) … Dispensationalism presents the concept that Liberalism was an age of nation state, investment choice based inflationism, producing a moral hazard credit experience of prosperity. Jesus Christ acting in dispensation, that is in the administrative plan of God for the fullness and completion of all things in every age, Ephesians 1:10, terminated liberalism in May of 2013, and is establishing Authoritarianism, as the age of statist regional governance, diktat based destructionism, producing a debt servitude experience of austerity.

 

II B) … On Monday, June 3, 2013, Turkey, TUR, plummeted, Japan, EWJ, and Japan Small Caps, JSC, and the Philippines, EPHE, traded lower, as the intraday chart of the S&P 500, SPY, manifested a parabolic rise, as Risk Assets, in particular the Small Cap Pure Value Stocks, RZV, such as the Junior Gold Miners, GDXJ, the Junior Gold Miners, GDXJ, Apparel Retailers DEST, CTRN, NWY, BEBE, BODY, BKE, PSUN, MW, WTSL, EXPR, GES, CBK, the Automobile Retailers, LAD, SAH, KMX, Recreational Vehicles, DW, WGO, and the Financial Services, such as WRLD, EEFT, ENV, GFIG, FXCM, rose, on higher Major World Currencies, DBV, and higher Emerging Market Currencies, CEW, as the US Dollar, $USD, UUP, traded lower, to close at 82.68, down from its recent high of $84.40, ignoring the WSJ report Weak signs for US output:  Factories suffer worst slump since end of recession. US factories in May posted their worst month since the end of the recession, as weakness overseas overwhelmed a still-shaky manufacturing recovery at home.  

 

Three signs of a stock market top.

1) Risk Assets peaking out. The rise in the Small Cap Pure Value Stocks, RZV, relative to the Small Cap Pure Value Stocks, RZV:RZG, has risen to a two year and six month high    

2) Screencast reports that the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years meaning that lots of “smart money” has been getting out of the market and lots of “dumb money” has been pouring in.

3) Market Oracle reports Margin debt on the New York Stock Exchange has set a new all-time high. Margin debt is the amount of money borrowed to purchase stocks reached its all-time high in April 2013. Margin debt registered at $384.3 billion as the key stock indices hit new record highs. The highest margin debt ever reached prior to this was in July of 2007, when it stood at  $381.0 billion.

 

The chart of the 200% Dollar ETF, UUP, shows that the price objective of the US Dollar is being achieved; that is the topping out of the US Dollar is coming in around 82.95 to 84.40, as it will be pushed a little higher as Major World Currencies, DBV, and Emerging Market Currencies, trade lower in ongoing competitive currency devaluation, at the hands of currency traders exiting Yen based currency carry-trades, such as the EUR/JPY, and as bond vigilantes call interest rates higher and go short the most toxix of debt, such as Junk Bonds, JNK, on a steepening of the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, rising in value.  Soon even the US Dollar, $USD, will be falling lower into the pit of financial abandon, as all forms of fiat wealth, Major World Currencies, DBV, Emerging Market Currencies, CEW, Stocks, VT, and Credit, AGG, trade lower on the exhaustion of the world central banks’s monetary authority.

 

Christopher Quigley writes in Financial Sense,  Get ready to be “Cyprused” at a bank near you.  From an investors perspective it is time to exit both equity and credit investments and start to dollar cost average into the physical possession of gold, both in bullion form and in Internet trading vaults such as Bullion Vault, and for Institutional Investors to do likewise as well as to start short selling.

 

Bloomberg reports American International Group AIG, Prudential Financial, PRU, and a unit of General Electric, GE, were named systemically important by a panel of US Regulators. The companies were  identified by US regulators as potential risks to the financial system in a step toward putting the firms under tighter government scrutiny.

 

Bloomberg reports Assad’s Hezbollah ally prepares northern attack, opposition says. Thousands of troops loyal to Syrian President Bashar al-Assad and allied Hezbollah militiamen are preparing to enter the province of Aleppo, a rebel stronghold close to the Turkish border, activists said. Assad’s forces will seek to enter the province’s northern region, Al-Jazeera television said, citing unidentified rebels

 

CNBC reports Two-thirds of Americans don’t know if they will insure under Obamacare. There’s no assurance folks will be buying insurance under Obamacare, and that could spell trouble for the Affordable Care Act

 

Pater Tenebrarum of Acting-Man blog writes in Zero Hedge, Merkel to Brussels on Fiscal Union: “Nein”. A German election is drawing close and it is evident in many small things that are happening lately. The latest is that Mrs. Merkel is now apparently distancing herself from her erstwhile demands to create a ‘fiscal union’ and give the eurocracy in Brussels more powers. Incidentally, her change of heart comes shortly after her summit with France’s president Hollande, which indicates that the latter has probably let her know that France is none too happy with the idea either. Since this means that the drive toward more centralization will be slowed down, we take it as good news.  “German Chancellor Angela Merkel has come out against handing the European Commission more powers, in the clearest sign yet that she is reining in her ambitions to create a “fiscal union” in which euro members cede control of their budgets to Brussels.

 

The comments, made in an interview with weekly Der Spiegel, come days after Merkel held talks with President Francois Hollande in Paris and the two unveiled joint proposals for the future shape of the euro area, including the creation of a permanent president of the Eurogroup forum of finance ministers.

 

Merkel spoke out strongly in favour of closer fiscal integration last year, but France and some other euro members have deep doubts about ceding sovereignty, a step which would require politically sensitive changes to the EU treaty, and Berlin appears to have realized that this resistance is too great to overcome for now.

 

With a German election looming in September and a new anti-euro party threatening to eat into support for her conservative bloc, Merkel may also be adjusting her message for voters at home, many of whom are leery about ceding national powers.

 

“I see no need in the next few years to give up more powers to the Commission in Brussels,” Merkel said in the interview, adding that she agreed with Hollande on EU member states cooperating more on economic issues.

 

“We are thinking for example of the labour and pension markets but also of tax and social policy. Economic policy coordination in Europe is far too weak, it must be strengthened and this is rather different to giving more competences to Brussels,” she said.”

 

Bloomberg reports EU seeks role in bank shutdowns that goes against German Plan. The European Commission is seeking to give itself the power to shut down failing euro-area banks as part of a draft crisis blueprint that defies German calls for a more decentralized approach. The Brussels-based authority is set to propose that decisions to force losses on crisis-hit lenders’ creditors, as well as other steps to prevent a disorderly collapse, should be taken largely out of national hands, according to a document obtained by Bloomberg News. While the system would include a “newly-created central resolution body,” final decisions would be taken by the commission itself

 

II B) … On Tuesday June 4, 2013, World Stocks, VT, Emerging Markets, EEM, and Aggregate Credit, AGG, both traded lower, as Reuters reports Wall Street ends down on fears Fed may scale back stimulus.    

 

Volatility, ^VIX, rose, as is seen in the charts of TVIX and VIXY.

 

The Steepner ETF, STPP, rose, as the Interest Rate on The US Ten Year Note, ^TNX, traded at 2.14%, as Zeroes, ZROS, and the 30 Year US Governemnt Bonds, EDV, fell more than the US Ten Year Note, TLT. Long Term Corporate Debt, BLV, fell more than Corporate Debt, CSQ, inducing Aggregate Credit, AGG, lower.  

 

Gary Dorsch writes of the rise in the Interest Rate on the 10 Year Government Bond, ^TNX, relating  Dangerous divergences betweens Bonds and Stocks, James Carville, a former political adviser to President Clinton famously remarked at the time that “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody,” he remarked. However, the so-called T-bond vigilantes appeared to be dead and buried over the past few years, as the US-Treasury was able to borrow trillions of dollars, largely financed by the Fed at the lowest interest rates in history. Keeping the T-bond vigilantes on ice, is a key linchpin of the Fed’s Ponzi scheme, that’s used to inflate the value of the US-stock market and keep it perched in the stratosphere.

 

However, last month, (May ’13), something very strange began to happen. It looked as though the long dormant T-bond vigilantes were suddenly beginning to awaken from their slumber. Indeed, – the long-end of the US Treasury bond market suffered its worst monthly decline in 2-½-years, as yields jumped to their highest levels in 13-months. Ticker symbol TLT.N, – the iShares Barclays 20+ Year Treasury Bond fund lost -7% of its market value. It looked as though Wall Street’s bond dealers were whittling down their holdings of T-bonds, – acting upon insider information from the New York Fed, – that the biggest buyer in the T-bond market could soon reduce the size of its monthly purchases and thereby cause T-bond prices to fall

 

The Bernanke Fed is coming under increasing criticism. On May 29th, the 85-year old icon of central banking, – the greatest warrior against inflation in US-history, – former Fed chief Paul Volcker waded into the debate over when the Fed should start unwinding its radical QE operation, arguing that the “benefits of bond-buying are limited and is like pushing on a string.” Volcker launched a scathing critique of the Bernanke Fed, inferring the central bank had become a serial bubble blower. “The Fed is effectively acting as the world’s largest financial inter-mediator. The risks of encouraging speculative distortions and the inflationary potential of the current approach plainly deserve attention,” he warned.

 

Volcker reminded the new breed of Fed lackeys that the central bank’s basic responsibility is to maintain a “stable currency,” and that it should unwind its reckless scheme of massively increasing the US-money supply and blowing bubbles in the stock market. “Credibility is an enormous asset. Once earned, it must not be frittered away by yielding to the notion that a little inflation right now is a good a thing, a good thing to release animal spirits and to pep up investment. The implicit assumption behind that siren call must be that the inflation rate can be manipulated to reach economic objectives. Up today, maybe a little more tomorrow and then pulled back on command. Good luck in that. All experience demonstrates that inflation, when fairly and deliberately started, is hard to control and reverse,” Volcker warned. Last week, the Treasury’s 10-year yield climbed above the 2%-level, following Volcker’s remarks.

 

Yields on 10-year T-Notes increased by a half-percent in the month of May, including a jump of +16-bps on May 28th, – seen as a signal that the Fed’s would scale back its QE-injections.“A slowing in the pace of purchases could be viewed as applying less pressure to the gas pedal, rather than stepping on the brake,” said Kansas City Fed chief Esther George on June 4th. “It would importantly begin to lay the groundwork for a period when markets can prepare to function in a way that is far less dependent on central bank actions and allow them to resume their most essential roles of price discovery and resource allocation. I support slowing the pace of asset purchases as an appropriate next step for monetary policy. Waiting too long to prepare markets for more-normal policy settings carries no less risk than tightening too soon,” Ms George added.The Kansas City Fed chief cited signs of overheating markets, including margin loans at broker-dealers at a record $384-billion in April.

 

Minor Earthquake in Tokyo Bond market. The recent sharp slide in US T-Notes was preceded by a tremor in the world’s second largest bond market in Tokyo. On April 4th, the Bank of Japan’s (BoJ) new governor, Haruhiko Kuroda, unveiled the most radical scheme ever, – designed to “shock and awe” Japanese bond traders into complete submission. The BoJ said it would double the amount of yen in circulation over the next two years, in order to whip-up inflation in the world’s third largest economy. The BoJ said it would trump the Fed, by printing ¥7-trillion each month, to be used to buy Japanese government bonds (JGB’s).

 

The BoJ was certain that it could continue to arm-wrestle Japanese banks and persuade its loyal citizens into buying 10-year JGB’s at yields of less than 1%, even as the BoJ says its aim is weaken the value of the Japanese yen, increase the costs of imports, and increase the consumer inflation rate to +2%. In other words, the BoJ expects investors to lock in negative yields for the next ten years. However, the gambit began to backfire, when yields on 10-year JGB’s rebounded from a historic low of 0.315% and surged to as high as 1% on May 23rd, – triggering a -7.3% crash in the Nikkei stock index. It was the Nikkei’s biggest one-day fall in 2-years, and kicked off an extended -17.5% slide to 13,050 by June 3rd.

 

It was later revealed on May 30th, that Japan’s biggest banks decided to slash their holdings of JGB’s to ¥96.3-Trillion, in the month of April, – a sign that their selling played a major role in pushing up yields to 1%. Japanese banks were unusually rebellious, – they dumped 11% of their JGB’s holding onto the BoJ’s balance sheet, fearing a major rout in the future. For the BoJ, trying to force JGB yields lower, when its trying to weaken the value of the yen and whip-up inflation, – is like trying to submerge a helium balloon under water.

 

If this exodus from the JGB market continues, it could blow apart the BoJ’s Ponzi scheme. Japan’s outstanding debt is equivalent to 245% of its annual economic output, and 92% of the debt has been financed by domestic savings. But this may not continue. A government panel’s draft report has reportedly warned that there is “absolutely no guarantee” that domestic investors will keep financing government debt. The BoJ has calculated that a rise in JGB yields of just 1% would lead to market losses equivalent to 10% of the core capital for the top Japanese banks, and 20% losses for the smaller regional banks.

 

Stock markets are under the spell of QE. In fact, both the BoJ and the Fed are in the crosshairs of the Bank for International Settlements (BIS), which warned on June 2nd, about the dangers of their ultra-cheap money policies that are driving up stock prices, despite worsening economic news. “Investors have ignored poor economic news as stocks have risen, leaving markets vulnerable to unsettling volatility and potential losses. Excessive monetary easing helped market participants to tune out signs of a global growth slowdown. But the rapid gains left equity valuations vulnerable to changes in sentiment, as witnessed in the recent bout of volatility in Japan,” the BIS warned.

 

Today, US Fed stimulated Homebuilding, ITB, led Risk Assets, Clean Energy, PBD, Wind FAN, Solar Energy, TAN, Biotechnology, IBB, Pharmaceuticals, PSP, Small Cap Pure Value, RZV, US Infrastructure, PKB, Leveraged Buyouts, PSP, and Mobile Home Construction, CVCO, lower. Of note Industrial Miners, PICK, Interent Retail, FDN, and Global ZIRP Induced Paper Products, WOOD, traded lower. Gold Mines, GDX, GDXJ, traded lower Bullion Vault reports Gold price falls as India blocks gold imports.

 

Premium REITS, KBWY, Water Resources, PHO, and Real Estate, IYR, led Yield Bearing Investments, lower.  

 

Semiconductors manifested a blow off top as High Beta, STM, Netherlands based, NXPI, France Based, ALU, and US based, MPWR, ONNN, INTC, TXN, AMAT, XLNX, TQNT, AMBA, SMI, IMOS, INTT, CYMI, DIOD, PLAB led Semiconductors, SMH, seen in Finviz Screener, higher; while Netherlands based ASML, traded lower.   

 

Countries trading lower included Greece, GREK, Egypt, EGPT, the Philippines, EPHE, Emerging Market Technical Leaders, PIE, India, INP, Veitnam, VNM, Sweden, EWD, Australia, EWA, Asia Excluding Japan, EPP, Indonesia, IDX, the Russell 2000, IWM, and China, YAO, China Small Caps, ECNS, China Financials, CHIX.

 

The failure of Credit, AGG, in particular Junk Bonds, JNK, and the derisking and deleverging out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM, on currency carry-trade disinvestment, seen in the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, trading lower, and the Japanese Yen, FXY, trading higher, is a defining characteristic, of Jesus Christ, working in the Economy of God, Ephesians, 1:10, to pivot the world out of the economic and political and economic paradigm of Liberalism and into that of Authoritarianism. The fiat money system introduced by Milton Friedman in 1971, based upon floating currencies died in May 2013; it is being replaced by the diktat money system, where diktat serves as credit, money, power and wealth.    

 

The failure of nation investment is seen in Turkey, TUR, the Philippines, EPHE, Australia, EWA, New Zealand, ENZL, Thailand, THD, Greece, GREK, South Africa, EZA, Peru, EPU, and Chile, ECH.      

 

Japan, EWJ, and Japan Small Caps, JSC, closed higher by as traders gobbled up shares ahead of tomorrow’s speech by Prime Minister Abe, in which he discusses Part III of Abenomics, with financial stocks such as MFG, SMFG, NMR, MTU, and IX, being strong gainers.

 

Tyler Durden reports in Zero Hedge The Debt Of Nations. Following on from our annual update on the wealth (re)distribution of nations, we thought it important to look at the other side of the household balance sheet – that of ‘debt’ to see just how much ‘progress’ has been made in the world. In the aftermath of the credit crisis (and the ongoing crisis in Europe), government debt levels continue to rise but combining trends in household debt highlights countries that have sustainable (and unsustainable) overall debt levels  - and thus the greatest sovereign debt problems. Whether the ‘number’ is from Reinhart & Rogoff or not, the reality is that moar debt is not better and the nations with the highest debt-per-capita may surprise many. Critically, despite the rise in ‘wealth’ from 2000-2008, the ratio of debt-to-net-worth rose on average by about 50% (and in many nations

continues to rise). With the regular occurrence of sovereign debt crises, relatively little attention has been given to the parallel issue of personal debt. Yet household debt has transformed over the past 30 years from low level borrowing mostly securitized on housing assets into wholesale credit seemingly available to anyone for any purpose

 

II C) … On Wednesday, June 5, 2013, the economic supercycle that began in the late 1940s came to an end, as the mother of all bear markets began on the Abenomics crash in Japan, EWJ, JSC, which hit Asia Excluding Japan, EPP, and the Emerging Markets, EEM, quite badly, and turned US stocks, VTI, lower.

Japan’s Nikkei 225, NKY, fell 4% bringing the benchmark index’s losses to ten percent in the last ten trading days since its market peak and adding to pressure on Emerging Market Stocks, EEM, US Stocks, and World Stocks, VT, from both economic data and fears of Fed tapering, commencing the mother of all bear markets.

 

It was the Far East Financials FEFN, Asset Managers, ASMA, such as WETF, BLK, BEN, EV, AMP, WDR, LM, AMG, CNS, IVZ, Investment Bankers, KCE, such as JPM, European Financials, EUFN, such as IRE, Financials, IXG, the Too Big To Fail Banks, RWW, such as BK, C, BAC, Chinese Financials, CHIX, such as SHG, Emerging Market Financials, EMFN, such as BBD, BCH, Regional Banks, KRE, such as RF, ZION, CATY, CPE, SIV, HBAN, GBCI, PACW, SNV, FITB, OSBC, FULT, TRMK, ORIT, BOH, and Stock Brokers, IAI, ETFC, SCHW, TRO, AMTD, ITG, that led the markets lower.    

 

The twin spigots of Liberalism’s Finance, these being trust in the most toxic of debt, as well as currency carry-trade financing failed, on May 24, 2013, transitioning the world from the Liberalism’s Banker Regime into Authoritarianism’s Beast Regime, thus terminating the fiat money system, and birthing the diktat money system.

 

The nation of Greece, traded by the ETF, GREK, is the very linchpin in the Economy of God, Ephesians, 1:10, as the sovereign Lord God, has designed it as a part of a collection of Mediterranean Sea states, known as the PIGS, for their profligacy, to be the beachhead for the rise of the Beast Regime of Revelation 13:1-4, to rise to rule the world in ten regions of totalitarian regional governance, and occupy in all of mankind’s seven institutions, to replace the Banker Regime that has governed the world since the introduction of the Milton Friedman Free To Choose Floating Currency System in 1971.  

 

Fiat money died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, on the failure of the world central banks’ monetary authority, and especially the Bank of Japan’s Kuroda Abenomics monetary policies. The monetary stimulus, credit liquidity, and monetization of debt initiatives of the US Federal Reserve and other central banks,  have crossed the Rubicon of sound monetary policy, turning “money good” investments bad.  

 

While the diktat money system was conceived by Herman van Rompuy acting together with the EU Finance Minsters, in early May 2010 with the provision of Greek Bailout I, as well as the more recent Greek Bailouts II and III, and the Cyprus Bank Bailin, the diktat money system was unleashed onto the world by the bond vigilantes calling the Interest Rates on the US Ten Year Note, ^TNX, higher, and the currency carry traders calling the Yen, FXY, higher, on May 24, 2013, inducing investors out of currency carry-trade, yield bearing investments, such as Electric Utilities, XLU, Mortgage REITS, Global Real Estate, DRW, and Premium REITS, KBWY, and then this week, inducing investors out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM, as well as risk assets such as Biotechnology, IBB, and Small Cap Pure Value Stocks, RZV, which were the loss leader style of the day.

 

Yield bearing stocks trading lower included, DRW, TAO, KBWY, ROOF, AMJ,  AUSE, BRAF, PHO, DBU, and SEA. Dividend Growth, VIG, leader McDonalds, MCD, fell 2.0%.

 

All most all of Asia, Exluding Japan, EPP, traded strongly lower; this included CAF, THD, EWA, KROO, EWH, EWHS, EPHE, IDX, IDXJ, ENZL, EWS, EWSS, EWY, and VNM.

 

Other nations trading lower included, EGPT, EWW, EZA, RSX, ERUS, EWD, EFNL, EWN, EWZ, RSX, ERUS, EFNL and EWN.

 

Sectors trading lower included, IBB, CARZ, PKB, BJK, FXR, IHF, RXI, PSP, PBS, ITB, PJP, SMH, and WOOD.

 

Automobile Dealerships, PAG, SAH, ABG, KAR, AN, KMX, LAD, seen in Finviz Screener, traded lower … Industrial Equipment, ROK, AB, ETN, LFUS, traded lower … Regional Airlines, RJET, JBLU, ALK, LUV, SKYW, seen in Finviz Screener, traded lower … Foreign Airlines, ASR, PAC, CPA, RYAAY, seen in Finviz Screener, traded lower … Advertising Agencies, IPG, WPPGY, OMC, and LAMR, seen in Finviz Screener, traded lower.

 

Aggregate Credit, AGG, traded somewhat higher but Junk Bonds, JNK, UJP, and the Euro Yen currency carry-trade, EUR/JPY, continued lower, a trend that developed Friday May 24, 2013.

 

The Australian Dollar, FXA, plummeted, turning Major World Currencies, DBV, lower, and Emerging Market Currencies, CEW, traded lower, as the Japanese Yen, FXY, traded strongly higher, unwinding carry-trade investments worldwide.    

 

Jesus Christ is carring out the economic plan of God, Ephesians 1:10, and is unraveling the Four Apocalyptic Seals, Revelation 6:1-8, to destroy all economic and political life, as well as to take peace from the world, introduce scarcity, and unleash death by all types of bad actors.

 

Turkey, TUR, traded lower again as Bloomberg reportys Lira weakens as Turkish yields climb on sixth day of protests. The lira weakened and bond yields rose as anti-government demonstrations in Turkey continued for a sixthday. Shares slid, with Akbank TAS among the decliners as Bank of America Merrill Lynch cut the lender to underperform. Markets swung to negative after a record rally in two-year bonds yesterday followed the biggest plunge a day earlier. Protesters accusing Prime Minister Recep Tayyip Erdogan of autocratic governance and citing grievances, including alleged police brutality and curbs on alcohol sales, clashed overnight with police, who responded with tear gas and water cannons in about 10 cities.

 

Dow Jones reports IMF to publish paper admitting lapses in Greece bailout. IMF says own projections on Greece too optimistic. Says EU commission weak in crisis management.

 

Dow Jones reports Rehn hits back at IMF over Greece. European Union Economics Chief Olli Rehn had harsh words for the International Monetary Fund Friday as he responded to a report by the IMF criticizing the European Commission over the Greek bailout. “I don’t think it’s fair and just that the IMF is trying to wash its hands and throwing the dirty water on European shoulders,” Mr. Rehn said using unusually tough language.

 

Zero Hedge reports ECB To launch EU-wide audit of Bank’s balance sheets. Under Liberalism, wealth was generated by the world central banks, and was coined by the Too Big To Fail Banks, such as JP Morgan, JPM, via programs such as POMO, as well as by Asset Managers, such as Blackrock, BLK,  via securitization of ETFs, such as RZV, PSP and PJP, for one’s investment gain.  Under Authoritarianism, wealth is generated by the word, will and way regional sovereign bodies, such as the ECB, and is coined by the diktat of sovereign regional nannycrats and statist public private partnerships, such as Macquarie Infrastructure Company, MIC.  

 

II D) … On Thursday, June 6, 2013, World Stocks, VT,  US Stocks, VTI, and Emerging Market Stocks, EEM, bounced higher, as the US Dollar, $USD, UUP, traded strongly lower, to 81.52, taking Major World Currencies, DBV lower, as the Japanese Yen, continued strongly higher. The Swiss Franc, FXR, the British Pound Sterling, FXB, and the Euro, FXE, rose parbolically higher to new rally highs. Today was a risk on currency carry trade day driving a number of sectors higher; these included, ITB, IBB, IGN, PKB, and PJP. Aggregate Credit, AGG, rose, on higher Junk Bonds, JNK.

 

Chris Nichols of The Exchange reports Smucker slumps 4.3% as sales growth comes to a  halt. Smucker, SJM, joins other big name staple producers such as CMP, HRL, GIS, and K, seen in combined Yahoo Finance chart, in a sell off as world cental bank monetary authority has failed to stimulate global growth and trade    

 

Despite  today’s stock market rally, the chart of the EUR/JPY, seen in ratio of FXE:FXY, communicates that the direction of the stock market is inexorable down. The significance of today’s stock rally action is that the plunge protection team and currency traders joined in a rally of the Euro, FXE, despite the WSJ report In Europe, angst fills sovereign bond gap. The cost of insuring some European government debt against default hit a record after regulators issued proposed rules on bank bailouts that would hurt bondholders. The move higher reflects a widening gap between what the market is saying and how the major ratings companies judge these countries. “Further downgrades are certain, and we have not seen the last screen shot of this movie yet,” said Lena Komileva, head of G-7 market economics at Tullett Prebon, a brokerage firm in London. The costs of insuring against a default by Western European sovereign borrowers in the credit default swap market surged, briefly touching a record on Thursday, according to data provider Markit. Swaps prices for Spain, Belgium and Ireland closed at records, according to Markit. The gap between yields on most European sovereign bonds and relatively safe German debt also widened. The angst among investors seemed inspired by a European Union proposal that bondholders should share the future cost of bailing out European banks.  

 

A day is coming soon, when the currency traders will gain the upper hand and call the Euro, FXE, significantly lower, and the Yen, FXY, higher, resulting in deleveraging investors out of currency carry trade risk investment and junk bonds.   

 

Bloomberg reports Draghi acts to expand credit to banks, Doesn’t signal more ECB bond buying. European Central Bank President Mario Draghi cut interest rates and offered banks unlimited cash for three years while damping speculation the ECB will buy more government bonds to stem the region’s debt crisis. Policy makers meeting in Frankfurt today reduced the benchmark rate by a quarter percentage point to 1 percent, matching a record low. They also loosened collateral rules so that banks can borrow more from the ECB and announced two unlimited three-year loans. The measures “should ensure enhanced access of the banking sector to liquidity,” Draghi said at a press conference. Hours before European leaders meet in Brussels, Draghi kept the onus on them to solve the two-year debt crisis by repeating his call for a “fiscal compact” and denying he had hinted the ECB would automatically support such an initiative with more bond purchases. Draghi’s comments roiled markets, with stocks and the euro rising on the bank-lending measures before falling after he damped expectations of more ECB bond buying. The euro sank more than 1 percent and traded at $1.3310 at 6:30 p.m. in Frankfurt. “All euro-area governments urgently need to do their utmost” to deliver fiscal sustainability, Draghi said.

 

Bloomberg reports Weidmann says ECB bond plan tantamount to state financing. Bundesbank President Jens Weidmann criticized the European Central Bank’s bond-buying plan, saying it is “tantamount to financing governments by printing banknotes.” “Monetary policy risks being subjugated to fiscal policy,” Weidmann said in a statement issued by the Frankfurt based Bundesbank today. “The intervention purchases must not be permitted to jeopardize the capability of monetary policy to safeguard price stability in the euro area.” While Weidmann represents Germany, the euro area’s largest economy, he was the only objector on the ECB’s 23-member council, where each national central bank governor has one vote. The Bundesbank, which is required to carry out ECB policy decisions, didn’t say it would stand in the way of bond purchases. “If the adopted bond-purchasing program leads to member states postponing the necessary reforms, this will further undermine confidence in the political leaders’ crisis-resolution capability,” Weidmann said. “The announced interventions in the government bond market carry the additional danger that the central bank may ultimately redistribute considerable risks among various countries’ taxpayers,” Weidmann said. “Such risk-sharing, however, can be legitimately authorized solely by democratically elected parliaments and governments.

 

Alex Barker of FT Brussels Blog reports Arise the Brussels Bank Resolution Authority. After months of deliberation and some not-so-private sparring with Berlin, the European Commission has pretty much anointed who it wants to be the all-powerful bank bailout and clean-up authority for Europe’s banking union: the European Commission. There is no sign of Brussels bowing to pressure from Berlin. At the heart of the Commission’s proposed system is a powerful central authority, which has access to a single bailout fund and the clout to shut down a bank even against the wishes of its home state’s government. Brussels wants it operating by 2015.

What about those German concerns that this would breach the EU treaties? Michel Barnier, the EU commissioner responsible for financial issues, concedes in the paper that “only an EU institution” has the legal authority to take important decisions with European effect. Given there is no legal basis to give the European Central Bank this role, the Commission concludes that the only option is to anoint itself as the top resolution authority.

This goes well beyond the network of resolution authorities — or “board” — that Berlin prefers until the treaties can be changed. The Commission blueprint would create a separate resolution body to prepare decisions for the Commission to take, which is steered by a powerful executive board, dominated by Commission and ECB appointees. Member states could appoint a “limited” number of board members:

In each specific case, an executive board would take all operative decisions regarding what resolution action to propose to the Commission for its adoption. It would also decide autonomously on less discretionary actions involving for instance information gathering from banks and on-site inspections. The executive board would include permanent members appointed by the Commission (as final decision-making authority) and the ECB (as bank supervisor), as well as a limited number of members appointed by directly affected Member States.

To spell it out: the Commission is empowered to independently decide when to close down a bank. It can pull the trigger even when the bank’s parent state thinks it is solvent or disagrees with the form of resolution. Indeed Brussels has the power to shut down the bank even when the ECB as bank supervisor has not said it is in trouble. The only concession to member states seems to be that national authorities would be responsible for discharging the resolution and allocating losses among creditors  but only under the “oversight” of the resolution body. Alongside this legal authority, the resolution body needs access to money. Berlin thinks this should be provided through building up national funds and perhaps knitting them together over time. Barnier goes for a more ambitious option: a single fund for the banking union, built up through private sector contributions: This would provide substantial synergies and enhance financial stability, compared to a mere network of national resolution funds, by pooling resources from and for all participating banks. Furthermore, this would prevent coordination problems arising in the deployment of national funds. Finally, it would be instrumental in breaking the link between sovereigns and banks. It is also the preference of the ECB, as it would strengthen the credibility of the whole mechanism. Banks would contribute “according to their risk” and those countries with existing resolution funds would gradually transfer those to the single pot. Even so it would take time to build up a serious fund. The Commission’s thinks that if the pot proves too small in a crisis, extra money could be raised after the event. The fund could also be empowered to “borrow from the market or for third parties”. “The backstop and the guarantee of the fund would thus be the assets of the euro area banks,” it says.

One interesting omission in this section is any mention of the European Stability Mechanism, the eurozone’s €500bn permanent bailout fund. In their joint letter France’s François Hollande and Germany’s Angela Merkel agreed that the ESM should provide a credit line to the resolution fund. But before any loans are extended the ESM would need Bundestag approval, of course, which is perhaps why the Commission gives the resolution body a wider range of borrowing options. The Commission blueprint, taken as a whole, far outstrips what Merkel and Hollande were able to agree in their letter. The Franco-German plan left a lot of blank spaces in key areas, not least in the exact balance of power between the centre and member states. The Commission’s response is to assume that silence meant centralisation. It’s vision much closer to the pure French (and ECB) view of resolution and pays little more than lip service to Berlin’s legal and political concerns.

There are details still to be settled and of course this is only a discussion paper to the college of EU commissioners — in theory there could be enough objections to overhaul the plan before it is published later this month. But that is unlikely. It looks like Brussels will set a high bar for the talks, which realistically need to be concluded between member states by December

 

Irish Times reports ECB wants changes to bill tackling banking crisis. The ECB wants the Government to change legislation that gives the Minister for Finance broad powers to intervene in the banking sector. The ECB, one of the three institutions backing the €85 billion bailout agreed with the Government last month, has criticised the Credit Institutions (Stabilisation) Bill, which is designed to give the Government the powers it needs to tackle the two year old banking crisis. The ECB has published a legal opinion which states that it fears the law as it stands could usurp its rights over collateral given as security for liquidity it has provided to Irish banks, which owe it €136 billion.

 

Ambrose Evans Pritchard writes Hard-line ECB washes hands of jobless crsis; sees no Japanese deflation. The European Central Bank has refused to take any further measures to lift the eurozone out of recession and curb rising unemployment, counting on spontaneous recovery later this year to do the job. Mario Draghi, the ECB’s president, said the wild moves in currencies and global stock markets over the past two weeks do not change the fundamental picture, though the bank has downgraded its economic forecasts and expects a deeper contraction of 0.6pc this year. “It is not enough to justify immediate action,” he said.

“The ECB seems to have given up. It is as if they have decided that there is not much more they can do and will simply allow events to run their course,” said David Owen from Jefferies Fixed Income.

The Governing Council held interest rates steady at 0.5pc, and discussed a range of measures to alleviate the credit crunch across Southern Europe and boost lending to small business, without reaching any conclusion. “People don’t have definitive ideas yet,” said Mr Draghi.  “What worries us is that the eurozone is moving ever closer to a Japanese deflation trap where animal spirits die and trend growth falls. It is something that a central bank should avoid at all costs,” said Mr Owen.  “Greece, Spain and Cyprus are already in deflation if you strip out tax rises, and Portugal will be soon, and that makes it even harder to stop the debt burden rising. The ECB should have launched quantitative easing a long time ago,” he added.

 

Eurozone core inflation has fallen to a post-EMU low of 0.6pc once adjusted for austerity levies, one shock away from outright deflation that could prove hard to reverse.

“The eurozone is already in a Japan-trap,” said Lars Christensen from Danske Bank. “What we are seeing in the money supply data and falling monetary velocity is exactly what happened in Japan in the 1990s, yet the ECB seems to think everything is fine.”

Mr Draghi said there is no sign of systemic deflation across a wide range of commodities and all sectors. “We don’t see it,” he said.

The German bank Berenberg said Mr Draghi is constrained from taking any action before a crucial decision next week by Germany’s constitutional court on the legality of the ECB’s rescue policies, including its pledge to back-stop the Italian and Spanish debt markets, known as Outright Monetary Transactions (OMT).

“This is now the most important risk to watch in the eurozone,” said Holger Schmeiding, the bank’s Europe economist. “We cannot fully rule out an awkward verdict in which the court may, for instance, attach conditions to any Bundesbank/German participation in ECB actions.”

While the court does not have jurisdiction over the ECB, the OMT would die instantly if judges ruled that Germany may not take part. This would knock away the central prop of EMU crisis strategy over the past year, leaving Italy and Spain once again at the mercy of skittish markets.

Bundesbank chief Jens Weidmann told the court last December that the debt pledge entails huge risks, breaches ECB independence, and violates fundamental principles. “It is not the duty of the ECB to rescue states in crisis,” he wrote, adding that the ECB has no mandate to uphold the “current composition of monetary union”.

Mr Draghi said yesterday that the OMT had been the “most successful monetary policy in recent times”, citing equity rallies and a reversal of capital flight from southern Europe. German exposure to crisis countries through the ECB’s internal Target2 payments system has fallen by €160bn. “It brought stability to markets worldwide,” he said.

Marc Ostwald from Monument Securities said Mr Draghi’s hands are tied. He is being forced to bluff because he cannot secure backing for further stimulus from the Bundesbank or a bloc of northern hawks. “There is complete disagreement on the ECB council. Draghi’s policy of ‘jawboning’ markets with platitudes is dead in the water,” he said.

 

Gary of Between the Hedges posts Handelsblatt reports ECB acting outside mandate, ZEW’s Fuest says. ECB has signaled to financial markets that it will guarantee govt debt without limits, and that’s not within the bank’s mandate, Clemens Fuest, head of Germany’s ZEW Center for European Economic Research, says in an interview. ECB is operating in “grey zone”, he said. Reasoning of ECB is faulted, while bank hasn’t proven wrong the assertion that all it does is ensure cheap credit for countries in crisis. The ECB should step aside and let governments prevent a potential collapse of the euro zone, he said

 

The WWJ reports Austerity Isn’t Europe’s Only Burden. Arguments continue in Europe over whether governments should relax budgets to encourage growth. But some analysts argue this debate is drawing attention from something more important that is generating serious headwinds for the region’s economies: Europe’s broken financial sector. António Borges, a former European director of the International Monetary Fund who is now at the Católica Lisbon School of Business and Economics, says arguing about austerity misses the point. In most of Europe, he says, governments have no scope for expansionary budgets because there is no market appetite for more of their debt.

 

MarketWatch reports Euro zone periphery bond yields spike on ECB comments

 

Business Insider reports Draghi sell off worsens:Peripheral Eurozone sovereign bonds are getting destroyed.

 

The above news reports communicate that the European nations, such as Portugal, Italy, Greece, and Spain, and the European Financial Institutions, EUFN, are insolvent sovereigns and insolvent banking institutions, sustained solely by the monetary authority of the ECB providing seringiorage, that is moneyness, for the fiscal spending of the EU.

 

The Apostle Paul writes that Jesus Christ at the helm of the economy of God, Ephesians 1:10, that is He operating in dispensation for the fullness and completion of every age, era, epoch and time period. The seigniorage, that is the moneyness, of fiat money system in supporting and financing Credit, AGG, Major World Currencies, DBV, Emerging Market Currencies, CEW, is for all practical purposes  exhausted. The seigniorage of the fiat money system, has come to an end. Noow, the seigniorage of its replacement, the diktat money system, is rising to rule mankind’s economic and political economic activity.

 

II E) … On Friday, June 7, 2013, The Plunge Potection Team, PPT, took World Stocks, VT, US Stocks, VTI, and European Stocks, VGK, up strongly as the Euro, FXE, firmed, rising to strong resistance, and the Japanese Yen, FXY, traded lower, after hitting strong resistance. The Action Forex chart of the Euro Yen currency carry-trade, EUR/JPY, seen, in FXE:FXY, shows a trade lower to 50 day support at 97.54 after having fallen from its May 22, 2013 peak. The chart of the S&P 500, $SPX, SPY, shows a trade 1.3% higher on the day, and 0.8%, on the week.  The Australian Dollar, FXA,  lower, and the Indian Rupe, ICN, traded lower, driving Major World Currencies, DBV lower.

 

Emerging Market Stocks, EEM, and Asian Stocks Excluding Japan, EPP, traded lower, as China Stocks, YAO, slid in front of the Monday June 9th, China economic report.  

 

Volatility, ^VIX, traded by TVIX, and VIXY, traded lower, as high beta ETFs traded higher, recovering from the Abenomics Crash. These included SPHB, XRT, FPX, SMH, PKB, RZV, IBB, CSD, PPA, FDN, PSP, IXG, PSCE, RWW, KRE, RXI, KCE, IAI, PBS, IYC, FDN, IGN, IGV, XLI, XTN, and OIH, presented in Finviz Screener.

 

Asset Managers, such as BLK, seen in this Finviz Screener traded higher.

 

Semiconductors, SMH, which have received ongoing currency carry trade seigniorage through a rising EURJPY, and include those seen in this Finviz Screener, traded higher.

 

The chart of US Infrastructure, PKB, shows a rise to the middle of a multiweek and mulitmonth broadening top pattern; and as Street Authority relates when you see the broadenin top, the market will eventually drop.     

 

Aggregate Credit, AGG, traded lower as the Zeroes, ZROZ, the 30 Year US Government Bond, EDV, the US Ten Year Note, TLT, traded lower.

 

In commodities, Gold, GLD, and silver, SLV, traded lower, as Oil, USO, traded higher to strong resistance on the higher Euro, FXE, and the lower Yen, FXY. Silver Mining Stocks, SIL, and Gold Mining Stocks, GDS, traded lower, on their lower commodity counterparts.  

 

IIF) .. Summary of this week’s financial trading   

Friday’s strong rally was simply a short selling opportuntiy, as in a bear marekt one sells into pips, just as in a bull market, one buys into dips. This week Small Cap Pure Value, RZV, rose 1.1%, US Stocks, 0.7%, with the chart of the S&P 500, $SPX, SPY, up 0.8%, Europe,VGK, 0.6, with EIRL, 1.7%, and EWG, 1.2%, World Stocks, 0.3%, China, YAO, -1.2%, while Emerging Markets, EEM, -1.2%, with EMFN, -2.4%, and Asia Excluding Japan, EPP, -2.1%, with FEFN, -1.8, EPHE, -3.2, IDX -3.1, EWH, -2.5, EWA -2., 1 EWY, -2.0, EWS -1.1, THD, -1.1 and ENZL, -1.0.  And EWJ, +1.5, and JSC, -1.2. on the rising Yen, FXY. Countries trading lower included, EGPT, -5.4, EWZ, -2.2,  ARGT, -2.1, INP, -1.6, EZA, -1.5. Yield bearing sectors trading lower included, BRAF,- 4.0, AUSE -2.2, and EPI -1.1.

 

Despite this week’s rally, Stocks, VT, seen for example in the chart of  the S&P 500, $SPX, SPY, have turned lower on the failure of credit, AGG, during May 2013. Fiat money died on May 24, 2013 with the failure of currency carry-trade investing, ICI, and disinvestment out of Junk bonds, JNK, on the failure of the world central banks’ monetary authority, and especially the Bank of Japan’s Kuroda Abenomics monetary policies. Yes, a hard killing frost, has come to the credit market, with a parabolic  steepening of the 10 30 US Sovereing Debt Yield Curve, $TNX:$TYX, seen in the weekly chart of the Steepner ETF, STPP, rising parabolically in value.

 

Gabrielle Coppolaof Bloomberg reports Foreign investors are dumping Brazilian real-denominated bonds sold overseas after the currency posted the second-biggest plunge in emerging markets. Yields on the country’s real-linked debt due in 2028 have jumped 1.12 percentage points in the past month, touching a record 8.73% on June 3. The bonds lost 13.4% in dollars in the period, the worst among local-currency government notes issued abroad after Peruvian debt. That exceeds the 12.3% loss in real-denominated bonds issued locally.

 

India Earnings, EPI, and Brazil Financials, BRAF, have been leading the Emerging Market Financials, EMIF, lower since early 2013, as is seen in ongoing Yahoo Finance chart.  Nation Investment in India INP, SCIN, failed in January, and Nation Investment in Brazil, EWZ, EWZS, failed in March, and Nation Investment, failed in Asia, EPP, and Japan, NKY, failed in May, leaving Euorpe, VGK, supported by a higher Euro, fXE, and US, VTI, supported by safe haven investment. Yet World Stocks, VT, tradedlower, on the failure of Credit, AGG, -1.8%, in the last month, and Junk Bonds, JNK, -3.5%, in the last month, with Major World Currencies, DBV, and Emerging Market Currencies, CEW, both now trading strongly lower, reflecting that bond vigilantes have control of interest rates, and that the sovereignty and seigniroage of democratic nation states has failed.

 

Blake Schmidt and Josue Leone of Bloomberg report Brazil’s real fell to a four-year low after Standard & Poor’s cut the government’s credit-rating outlook to negative amid an economic slump that’s threatening to drive up the country’s debt levels. The currency depreciated 0.3% to 2.1351 per U.S. dollar. The benchmark Ibovespa stock index, EWZ, tumbled 2.2% to  the lowest level on a closing basis since October 2011. Prices on the nation’s dollar bonds due in 2023 fell, driving yields up 0.07 percentage point to 3.62%.

 

Liberalism’s credit is being replace by Authoritarianism’s debt servitude and austerity. And Liberalism’s currencies are being replaced by the diktat of regional governance.

 

Wealth can no longer be preserved by investing in stocks, but can only be preserved by taking physical possession of gold bullion or by owning and trading it on Internet trading vaults such as BullionVault or Gold Is Money.                 

 

The Risk On Trade, ONN, leaders of the week were the Small Cap Pure Value Stocks, RZV, rising 1.1%, such as those in this Finviz Screener, as  well as the Automobile Dealerships seen in this Finviz Screener, the Restaurants seen in this Finviz Screener, and the Apparel Retailers seen in this Finviz Screener.  Sectors trading lower included, CARZ, -2.7%, US Infrastraucture, PKB, -2.5%, Home Building, ITB, -2.1%,  and Coal, KOL, -2.0%.    

 

Doug Noland in Safehaven.com article Twenty year anniversary of market backstops reports The U.S. dollar index dropped 2.0% to 81.67 (up 2.4% y-t-d). Seen in Stockcharts.com chart, $USD, which closed at $81.69, and Finziz Chart, UUP. For the week on the upside, the yen increased 3.0%, the British pound 2.4%, the Swiss franc 2.0%, the Canadian dollar 1.8%, the Norwegian krone 1.7%, the euro 1.7%, the Danish krone 1.7%, the South African rand 1.3%, the Singapore dollar 1.2%, the South Korean won 1.2%, the Swedish krona 0.9%, the Taiwanese dollar 0.6%, the Brazilian real 0.4% and the Mexican peso 0.3%. For the week on the downside, the Australian dollar declined 0.8% and the New Zealand dollar fell 0.7%   

 

Mr. Noland relates the massive credit swell that began with US Federal Reserve Stimulus of QE1: The Fed’s balance sheet surpassed $1 Trillion for the first time back in 2008. Fed assets are now on track to reach $4.0 TN near year-end.  The dominance of Washington finance has similarly long overstayed its welcome. When the Fed was aggressively expanding its balance sheet in 2008/09, its purchases were essentially accommodating financial sector de-leveraging (i.e. the Fed providing a liquidity backstop for troubled banks, leveraged hedge funds, securities firms, REITs and such). Federal Reserve buying (monetization) over the past six months has been of an altogether different kind. Instead of accommodating de-risking/de-leveraging, the Fed purchases have instead incited risk-taking and leveraged speculation. There’s a heck of a dilemma developing. The Fed has been using its balance sheet to stoke the asset markets, in the process incentivizing risk-taking and leveraging. If the Fed does at some point decide to restrict asset purchases, where will the markets look to for their coveted “liquidity backstop?”

 

“Flow of Funds” data tell the story pretty well. GSE assets surged an unprecedented $148bn in 1994, or 23%, to $782bn. With little fanfare, Fannie and Freddie had morphed from insuring mortgage securities to highly leveraged holders of mortgages and debt that were more than happy to buy huge quantities of securities (at top dollar) in the midst of acute market turbulence. And the GSEs were anything but finished in 1994. GSE assets increased $115bn in 1995, $92bn in 1996 and another $112bn in 1997. When markets were rocked by the collapse of LTCM and attendant speculative deleveraging, the GSE’s expanded holdings an unprecedented $305bn in 1998 – followed by another $317bn in Bubble year 1999. The GSEs added another $822bn during the tumultuous 2000-2002 period. By the end of 2003, GSE assets had inflated to $2.4 Trillion, in the process having transformed the marketplace for mortgage finance, market-based Credit and speculative finance more generally.

 

In the late-nineties, I was explaining to anyone that would listen (basically no one) that the GSEs had evolved into quasi central banks. With the revelation of accounting fraud and malfeasance at Fannie and Freddie, the leveraged speculating community had lost their liquidity backstop. By then, however, the mortgage finance Bubble had gained such powerful momentum that a euphoric marketplace saw no reason to fret. But as mortgage Credit came to so dominate the financial and economic systems, with each quarterly analysis of the Z.1 in the 2006/07 period I would contemplate how the system might function during the next period of market de-risking/de-leveraging. There was no doubt in my mind that the backstop function would rest exclusively with the Federal Reserve.

 

I look at 2013 as nearing the “Twenty-year Anniversary of the Liquidity Backstop”. Well, this is year five of the “global government finance Bubble.” This Bubble encompasses the world’s securities markets. Having played such a profound role in fueling this Bubble. (One can visualize this with the ongoing Yahoo Finance chart of credit investments of MBB, FAGIX, JNK, and equity investmentts of  TLT, KRE, PSP, IAI, KCE, RWW, and BLK)

 

It’s not easy for me to conceptualize how central bank balance sheets will now be looked upon to backstop global markets in the next major de-risking/de-leveraging episode. A serious global de-leveraging would require multi-trillions of liquidity support, which I fear at this point might unleash currency and market chaos.

 

The liquidity backstop issue becomes especially pertinent to the MBS marketplace. Pressure is (again) mounting for Fannie and Freddie to further shrink their holdings. It would appear they’re out of the market backstop business for good. Moreover, pressure mounts for the Fed to wind down its foray into mortgage support (“Credit allocation”). Meanwhile, as the Fed apparently prepares to back away from its historic experiment in suppressing market yields, the situation becomes only more intriguing. MBS are a particularly problematic security in a rising yield and extraordinarily uncertain market environment. Perhaps this helps explain why MBS yields are up 74 bps since May 1st and mortgage borrowing costs this week jumped to a 14-month high.

 

U.S. homebuyers are not alone in confronting rising borrowing costs, while MBS investors have plenty of global company when it comes to contemplating prospective market liquidity backstops. Bloomberg’s William Pesek titled his most recent article “Specter of Another Bond Crash Is Spooking Asia.” “Developing” markets were this week showing heightened instability – bonds, currencies and equities. The thesis of problematic underlying financial and economic fragility is coming to fruition.

(One can visualize this via the ongoing Yahoo Finance chart of JGGS, NKY, EPP, VGK, VTI, DBV, and CEW)

 

Nowhere did the perception of boundless Japanese buying power boost market sentiment more than in peripheral Europe. Notably, when the yen launched its Thursday melt-up, Spanish, Italian and Portuguese bonds were taken out to the woodshed (yields up 25, 23 and 27 bps, respectively). For the week, Portuguese 10-year yields jumped 54 bps to a six-week high (6.14%) – having now reversed the entire “BOJ” rally. Italian and Spanish yields ended the week slightly higher, while their equities markets came under pressure. Notably, Italian stocks were hit for 3.0%. It is worth noting that European financial Credit default swap (CDS) prices jumped higher again this week – and it appears this important risk market has turned increasingly unstable.

 

I have posited that the Greek/European debt crisis was the first crack in the “global government finance Bubble”. Well, we are now witnessing the next important crack unfold in the “developing” markets and economies. And I don’t think it’s a stretch to suggest that another very important crack is emerging in the U.S. bond market (MBS, Treasuries and corporates). U.S. equities markets have shown resilience, not a shocking occurrence with sentiment so bullish and QE effects so powerful.

 

The surge in market yields (and widening spreads) in the face of the Fed’s $85bn portends future liquidity issues.

 

I noted above the “Twenty-year Anniversary of Market Backstops.” I wonder if historians will look back at this period as a strange aberration in financial history. If the Fed really plans on reining in its bloated balance sheet, then the markets will at some point have to contemplate a world without liquidity backstops. From my perspective, that would ensure higher global yields, wider Credit spreads and larger risk premiums generally. In such a world, I would expect corporate profits, inflated by enormous deficits and further inflated by Fed monetization and financial engineering, would deserve higher discount rates and significantly lower equities market valuations. But for now, the focus will be on how the emerging markets dislocation and the unfolding global “risk off” play out

 

Lyubov Pronina of Bloomberg reports The worst month in a year for emerging market currencies, CEW, with South Africa’s Rand leading declines. This was accompanied by a strong sell in Emerging Market Bonds, EMB, and Emerging Market Financials, EMFN; all taking Emerging Markets, EEM, lower, which included the Philippines, EPHE, Thailand, THD, New Zealand, ENZL, Indonesia, IDX, Egypt, EGPT, Mexico, EWW, South Africa, EZA, Chile, ECH, Peru, EPU.

 

EcPiFi reports The M2 Money Supply declined 0.35% on two weeks ago, was up 6.95% on the same period last year and remains largely unchanged from the end of last year (up 0.14%). Perhaps the most interesting development during the previous two weeks is the climb in the 10-year treasury yield which closed the week on 2.01%, up a not insignificant 17 basis points on two weeks ago. The spread between the 10- and the 1-year treasury yield widened by 16 basis points as the latter only increased by 1 basis point. The spread is currently 189 basis points, substantially higher than the long term average of 147 basis points (series starts in 1984), 36 basis points higher than the same period last year and 26 basis points higher than the end of last year. The yield curve, as measured by this spread, has therefore steepened. (This is seen in the weekly chart of Steepner ETF, STPP, steepening for six weeks.) Two weeks ago in this bi-weekly report we wrote: The declines in the growth rates for both M2 and bank credit are, as stated before, important to the extent that money supply and credit help drive stock prices (e.g. see here and here). Paying close attention to the growth rates in the two is perhaps especially important now as we believe the U.S. stock market is expensive in a historical perspective. Readers who are stock market investors can take a look at the following reports (more reports are available at both this website and the economicsnexus.com, just search for “stock market”):

 

Debt monetization on steroids has finally caused the death of credit, money and wealth. Bond vigilantes have called the Interest Rate on the US Ten Year Government Note, ^TNX, higher to 2.16%. And currency traders have successfully sold Major World Currencies, DBV, and Emerging Market Currencies, CEW, driving them lower. The Milton Friedman Free To Choose Floating Currency System has failed, as currencies are no longer floating, they are sinking. Debt deflation, that is currency deflation, currency volatility, unwinding currency carry-trades, and the sale of Junk Bonds, JNK, have turned Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as World Stocks, VT, strongly lower.

 

Lisa Abramowicz of Bloomberg reports Losses on junk-bond exchange-traded funds are outpacing the broader U.S. speculative-grade market by the most in three years, signaling a deepening slump for debt that traded at record-high prices less than a month ago. After reaping returns of 127% since 2008, junk-bond buyers are demonstrating concern that rising interest rates will erode future gains as Federal Reserve policy makers consider a pullback from stimulus measures. While ETFs hold less than $40 billion of the $1.15 trillion U.S. high-yield bond market, they act as a quicker gauge of market sentiment because their shares trade more frequently than most corporate bonds.

 

Bloomberg reports on liquidity evaporation, that is liquidity squeeze The rate China’s lenders charge one another on overnight loans jumped the most in almost two years as shrinking capital inflows led to a cash squeeze before a three-day holiday. Yuan positions at local financial institutions, an indication of money pouring into Asia’s largest economy, rose 294 billion yuan ($48bn) in April and China International Capital Corp. estimates the gain slowed to around 100 billion yuan last month.

 

Liberalism’s credit schemes, such as the ponzi scheme of securitization of Mortgage Backed Bonds, MBB, by Mortgage REITS, REM, such as IVR, and the acquisition of Distressed Investments, by the US Federal Reserve, under QE1, like those traded by Fidelity Mutual Fund FAGIX, for US Treasuries, and Japan’s Kuroda Abenomics, have run their course and have resulted in making “money good” investments, in Japan, EWJ, JSC, and Australia, EWA, KROO, “bad”.

 

Charles Stein of Bloomberg reports U.S. bond funds suffered their second-worst withdrawals last week in more than two decades after speculation about an eventual end to the Federal Reserve’s bond purchases sent fixed-income markets lower. Investors pulled $9.1 billion from fixed-income mutual funds and exchange-traded funds in the week ended June 5, Lipper said. That’s the second-biggest redemptions for a week since the company started tracking the data in 1992. Corporate high-yield funds saw redemptions of $3.2 billion, the largest weekly withdrawal on record. Global bond markets posted their biggest monthly losses in nine years in May, as the more than $40 trillion of bonds in the Bank of America Merrill Lynch Global Broad Market Index fell 1.5% on average.

 

Sridhar Natarajan and Mary Childs of Bloomberg report US high-yield funds recorded their biggest outflow on record this week, according to Bank of America. Investors pulled an unprecedented $4.8 billion from funds that purchase notes sold by companies rated below investment grade. That was accompanied by outflows from high-grade funds, the first weekly decline this year, even as leveraged loans attracted about $1 billion, bringing this year’s gains to $28.5 billion, a 38% increase in assets since the start of the year.

 

The banking system, IXG, RWW, EMFN, FEFN, EUFN, KRE, seen in combined ongoing Yahoo Finance Chart, as it is has been known, is starting to collapse, on the bursting of the bubble of Aggregate Credit, AGG. The money of Liberalism is no longer a trustworthy thing. The money of Authoritarianism, that is diktat money, is beginning to win people’s faith and trust, a case in point being that those in Cyprus are now trusting in the ECB’s mandates for regional security, stability, and sustainability.     

 

Liberalism was an age of prosperity and credit that came by trust in the monetary schemes of World Central Bankers such as Ben Bernanke and Hiroki Kuroda with their monetary policies of ZIRP, and Wall Street Bankers with their credit underwriting policies of Dollarization.

 

Under Liberalism, Dollarization facilitated securitization of emerging market bonds, EMB, as the debt monetization of the US Federal Reserve, continually caused a decline of the US Dollar, $USD, UUP; but with the rise of the US Dollar, $USD, beginning in January 2013, the Dollarization scheme, literally blew up, causing deleveraging out of Emerging Market Currencies, CEW, and derisking out of Emerging Market Bonds, EMB, Emerging Market Financials, EMFN, and Emerging Market Stocks, EEM, driving investors into safe haven investment in the most risk of stocks, the Small Cap Pure Value Stocks, RZV.

 

Some might call for a new Britton Woods Agreement, and others such as Robert Wenzel are calling for gold backed currencies, such as a gold backed Chinese Yuan. With Jesus Christ at the helm of the economy of God, Ephesians 1:10, there are three chances of such happening: slim, none, and no way. God from eternity past has purposed that there be five empires to rule mankind, Daniel 2:25-45, before the final one world government, Daniel 7:7; these five are Babylonian, Greek, Roman, then the British Empire and the United States, and then Regional Governance in the world’s ten regions.

 

Authoritarianism is an age of austerity and debt servitude where one complies with and trusts in the schemes of new taxes, bank deposit bailins, and capital controls of regional statist sovereign nannycrats such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, all for regional security, stability and sustainability. Market Oracle reports France imposes cash and gold capital controls

 

III) …  The Conflict In And About Syria Escalates And Constitutes The Prelude To The Ezekiel 38 War.

Battles to move into Lebanon, Syrian rebel leader says

 

Patriot missiles, warplanes sent at Jordan’s request, US says

 

Fall of Qusayr big blow to US and Israel, Hezbollah says

 

In Syrian victory, Hezbollah risks broader fight

 

Unacceptable for Syria to retake Qusayr from rebels, White House says

 

Israel prepares as Syria war nears border

 

Golan Heights seen as becoming dangerous hotspot in escalation of Syrian war

 

Israeli tanks move to Golan Heights’ border

 

EU commits another 400 million euros of aid to Syria

 

Arab League condemns Hezbollah’s role in Syria

 

Putin orders crackdown on Islamists, police detain 300 people

 

Foreign Islamists head to Syria to face Hebollah

 

Hezbollah unites clans to raise border force

 

The Lebanon Daily Star reports Fighting renews in norrthern Lebanon Two rival families, one supporting the Hezbollah-led March 8 coalition and the other pro-Salafists,  fought fierce clashes once more Friday in Tripoli, Lebanon’s second largest city which has been rocked by daily violence linked to the crisis in Syria. Evening rocket attacks between the Salafist Heijar clan and the pro-March 8 Nashar family in Talat Ar-Rifaia wounded at least two people, including Omar Nashar, prompting the Army to intervene to end the fighting, security sources said. The two sides had fought in Tripoli’s Old Souk area Thursday into Friday, the sources said, leading to the wounding of three people. Machine gunfire and rocket-propelled grenades had been used in the fighting between the two families and Army efforts to end the clashes were hampered by the narrow alleyways leading to the clash point. The renewed fighting between the two sides came after the military cautioned citizens of plots against Lebanon and warned them against being dragged into the Syria war. “The Lebanese Army, as much as it’s going to be resolute in its security measures, urges citizens to be aware of the plots aimed at taking Lebanon back and dragging it into a futile war,” the military said in a statement. It called on Lebanese to express political views regarding the Syria conflict “democratically and peacefully and without provoking anyone.”

 

IV)  … What underlies the failure of the economy in Turkey?

Aljazeera asks What inspires Turkey’s protest movement which resulted in unprecedented country wide demonstrations and riots against the Turkish government and its Prime Minster Recep Tayyip Erdogan commencing on May 30, 2013, two days after one hundred activists started a sit-in protest in Gezi Park. Turkish youth, who have often been regarded as apolitical since a military coup in 1980 and its subsequent restoration in 1983, have flowed into the streets, clashing with police across the country.

 

“It is the first time I join a demonstration and I am not affiliated to any political group,” Kerem Gencay, a 28-year-old marketing employee, told Al Jazeera. Like many demonstrators, he stressed that he joined the protests in an individual capacity. “I came here on Friday after the police crackdown on people who were passively resisting to demolition of Gezi Park. I am happy with what it has evolved into because it is right; the government seeks to interfere with people’s lifestyles.”

 

Another protester, 26-year-old publicist Nihan Dinc, said she is worried about the direction of the country under the governing AK Party. “We are here for our freedom, for a space to breath. We are here to be able to kiss in public, consume alcohol, read without any censorship. We are here for a life without any pressure from the state,” Dinc said. Others say the prime minister, who was democratically elected with a large mandate, is acting like an authoritarian. “Prime Minister Erdogan thinks that he is a sultan, he does not listen to anybody, consult with anybody,” said Yesim Polat, a 22-year-old student. “He thinks he can do whatever he wants.” Those views are shared by most protesters. A recent poll by Istanbul Bilgi University researchers who talked to 3,000 activists revealed that the demonstrators’ anger is directed strictly towards Erdogan, not his aides nor his political party; 92.4 percent of the participants said that they have taken to the streets because of Erdogan’s “authoritarian” attitude. Fuat Keyman, a professor of political science at Sabanci University in Istanbul, told Al Jazeera that the recent social backlash was specifically directed at the prime minister. “Five or six years ago there was social reaction against the AK Party. Today Erdogan is the only target,” he said, adding the riots have broken out because there was no response to democratic action. Before the protests erupted, recent developments had worried and frustrated many secular Turks.

 

Erdogan has publicly criticised the content of some TV shows, made frequent statements opposing alcohol consumption, and spoken out against public displays of affection. He recently called all people who consumed alcohol “alcoholics” but then changed his definition to “the ones who drink on a regular basis”. The prime minister also supported an announcement calling on young couples to act “in line with moral values” and not to kiss at a subway station in Ankara. And Erdogan responded to the unrest saying “No one has the right to increase tensions with the excuse that trees are being demolished.” In his references to the issue, he often referred to the economic and environmental success of the government, calling himself “the servant of the nation”. In its almost 11 years of AKP governance, Turkey has achieved unprecedented economic success, transforming a crisis-hit economy into a quickly growing one fuelled by trade and foreign investment.

 

Other voices respond. Meanwhile, other voices in the government as well as Turkish President Abdullah Gul tried to ease tensions. Gul asked the protesters to go home, saying: “The message has been taken. Democracy is not only about [the] ballot box.” Deputy Prime Minister Bulent Arinc apologised for the police’s actions against the initial protests in Gezi Park, though he added the government did not “owe anything to those causing harm”.

 

Liberalism has failed in Turkey, that is investment choice no longer provides reward to those invested in Turkey  Not only has nation state investment, failed in Turkey, but its economy has failed as well, as Turkish government Treasury bonds, its currency, the Lira, and the Istanbul stock market, traded strongly lower. The Turkey ETF, TUR, lost 9.7% this week, taking its value back to the beginning of the year, with a week of social protests by Liberalism’s nonparticipants, who lack a forum for their agenda, a place of gathering to exercise their movement, and an opportunity to exercise personal freedom in kissing and consuming alcohol. CNN reported that Gezi Park, the last green space in central Istanbul, had been scheduled to be replaced with a replica of 19th century Ottoman Empire barracks, which would include a shopping mall. Turkey, like Egypt, EGPT,  is now a failed nation state; both of which document the transition out of Liberalism and into Authoritarianism.   

 

Please consider the idea of the Apostle Paul, writing in Ephesians 1:10, that Jesus Christ is at the helm of the economy of God, and as such, He completed Liberalism in Turkey with the implosion of its economy, terminating all investment choice, and is now introducing diktat.  There is no human action as conceived by the Austrian economists, rather the economic and political events in Turkey are Christ’s handiwork.  He is pivoting the economy 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, 3) from the banker regime of US Dollar hegemony to the beast regime of statist regional governance, totalitarian collectivism, debt servitude and austerity, Revelation 13:1-4, also known as the ten toed kingdom of regional governance, Daniel 2:25-45, where eventually ten kings will come to rule in each of the world’s ten regions, Revelation 17:12.

 

V) … Some be psychopaths.

There be antisocial people; these are three types of beastly people, bears, lions, and leopards. These psychopaths are people who are driven by the need to confront, to be preeminent, or to be busybodies ruling in the lives of other people with rude, preeminent, and even derogatory speech and behavior. Perhaps as much as fifty percent of the population is psychopathic at times, with the other fifty percent in denial of the others psychopathy. Many psychopaths are intermittent, yet some are continual practicioners either in speech and behavior, and become distant from responsible and regardful relations with others, and exist in total denial of reality.  I know some here in the inner city where I live, who have consistently crossed the rubicon of economic regard for others and trespassed so frequently and so aggressively into the personal life of others, that they have become criminally insane resulting in them making death threats upon others; all very chilling really; it’s all part of God’s end time termination of human economic and political experience, as presented in Revelation 6:1-8, where God, beginning with Greek Bailout 1, has released the Four Horsemen of the Apocalypse; and power was given to them over a fourth of the earth, to kill with sword, with hunger, with death, and by the beasts of the earth.   

 

VI) …  Obama relates mass surveillance protects civil liberties.

Jason Ditz of Antiwar reports Obama relates mass surveillance protects civil liberties.  

 

Jason Dits of Antiwar reports US Spy Chief slams reprehensible leak of NSA surveillance

 

Forbes reports Top US intelligence officials repeatedly denied NSA spying on Americans

 

Politico reports NSA targets credit card transactions

 

CNet asks Exactly what is Prism. Billions of calls mined by the USG.

 

The Exchange reports Behind surveillance flap, plunging trust in government

 

Glenn Greenwald of The Guardian reports Boundless Informant: NSA’s secret tool to track surveillance data

 

Lawrence Hurley and Joseph Menn of The Guardian report Few options for companies to defy US intelligence demands

 

Bloomberg reports  Obama surveillance defies campaign civil liberty pledge.

 

Jay Stanley & Ben Wizner of Reuters Blogs Why the Government wants your metadata

 

Conor Friedersdorf of The Atlantic All the Infrastructure a tyrant would need, courtesy of Bush and Obama  

 

Glenn Grewwall of The Guardian writes Boundless Informant: NSA’s secret tool to track surveillance data.

 

Joel Mathis of Philly Mag President Obama’s etrayal of vivil liberties is vomplete

 

Liberty Crier Ron Paul: NSA’s PRISM is an awakening call

 

National Journal reports NSA spying appears to stem from 550 word section of PATRIOT Act

 

Slate writes The foundation of the surveillance state

 

The Washinton Post Intelligence leaders push back against leakers, media

 

Glenn Grenwall of the Guardian reports Edward Snowden: the whistleblower behind the NSA surveillance revelations. The individual responsible for one of the most significant leaks in US political history is Edward Snowden, a 29-year-old former technical assistant for the CIA and current employee of the defence contractor Booz Allen Hamilton. Snowden has been working at the National Security Agency for the last four years as an employee of various outside contractors, including Booz Allen and Dell.

 

Washington Post reporter Barton Gellman writes Code name ‘Verax’: Snowden, in exchanges with Post reporter, made clear he knew risks. Edward Joseph Snowden disclosed some of the most sensitive secrets of a surveillance apparatus he had grown to detest. I asked him, at the risk of estrangement, how he could justify exposing intelligence methods that might benefit U.S. adversaries. “Perhaps I am naive,” he replied, “but I believe that at this point in history, the greatest danger to our freedom and way of life comes from the reasonable fear of omniscient State powers kept in check by nothing more than policy documents.” The steady expansion of surveillance powers, he wrote, is “such a direct threat to democratic governance that I have risked my life and family for it.”

 

Robert Wenzel of Economic Policy Journal reports Ari’s Freedom Switch reports on a Bilderberg attendee and his direct connection to the surveillance state. Bilderberg attendee Alex Karp’s Palentir Technologies works on the integration and analysis of large quantities of data, or as Palantir likes to say, helping to solve the world’s biggest problems. According to the NewYorker, Palentir’s software “helps government agencies track down terrorists, fraudsters, and other criminals, by detecting subtle patterns in torrents of information.” .Palentir Technologies was co-founded by another Bilderberger Peter Thiel. Palentir means “seeing stone” and its niche is cyber security, offense and defense. It’s likely on the case for this Bilderberg meeting.

 

In apocalyptic vision, referencing bible prophecy of Revelation 13:1-4, I relate that under authoritarianism, many of Liberalism’s leaders and their corporations will merge into government to form a cohesive statist panopticon of economic and political experience where all live in totalitairan collectivism under the mandate of soveign regional leaders and regional bodies which govern the use of natural resoures and manage the factors of production for regional security, stability, and sustainability.

 

VII) … The Ethopia Dam

Reuters reports ‘No Nile, No Egypt,’ Cairo warns Over Ethiopia Dam

 

VIII) … Summary: The elect comprehend and have resource, experience, life, virtues and ethics within the economic and political  plan of God.

Only the elect of God believe, know and experience the very best things of God, as his Son, Jesus Christ, reveals the administrative plan of God for the fullness and completion of every age, epoch, age and time period, Ephesians 1:10. This unknown known, is a complete mystery to the fiat.  Liberalism was the age of investment choice. Authortarianism is the age of dikat, an era in which the elect are called to have full knowledge of God’s Will, which provides all spiritual wisdom and understanding, Colossians 1:8-9, in the kingdom of the Son of God’s love, Colossians 1:13; leaving the fiat in the kingdom of darkness, as they flounder in the worship of their own will, in human philosophy and religion, Colossians 2:23.

 

God’s spiritual wisdom goes far beyond heartfelt emotion or a coordinated insight of bible doctrine to be the experience of the very breath of God, reproducing His nature and likeness in the believer.  In other words, spiritual wisdom is not of letters of comprehension, but an immersion in God’s divine nature, providing peace and joy, in a world of hurt and suffering.   

 

Thus motivation comes from the indwelling spirit of God and a mind renewed by the Spirt, so one can understand and interpret what one receives in one’s soul, Colossians 1:9, and thus speak and conduct onself in a manner pleasing to God in all things, bearing fruit in every good work, and growing by the full knowlege of God.  The result of this is that one lives a life of ascendency and becomes a self transcendent individual and lives in the divine nature, adding to ones faith the seven addivites of 2 Peter 1:5-7, so as to make one’s calling and election a genuine thing, so as not to stumble, and to have broad entrance into the kingom off Gods Son, 2 Peter 1:10; such be the economy of God, Ephesians 1:10.   

 

Liberalism’s thought leaders have largely been left leaning economists; these have included Donald Markwell, who Wikipedia relates maintains that the absence of an effective international approach in the spirit of Keynes, would risk allowing the return to play of the economic causes of international conflict which Keynes had identified back in the 1930s.[52] And Brad DeLong, who Wikipedia relates that along with Joseph Stiglitz and Aaron Edlin, is co-editor of The Economists’ Voice[2] And Lawrence Summers, who Wikipedia relates that upon the death of libertarian economist Milton Friedman, Summers wrote an Op-Ed in The New York Times entitled “The Great Liberator” arguing that “any honest Democrat will admit that we are now all Friedmanites.”

 

And Liberalism’s greatest, that is most influential, president was Lyndon Banes Johnson, father of the LBJ Great Society Programs, featuring the War On Poverty and an escalation of the Vietnam War. He was succeeded by Richard Nixon who accepted the recommendation by Milton Friedman that the US go off the gold standard, which enabled even greater expansion of the Vietnam War, and development of the Industrial Military Complex. Wikpedia relates that Johnson signed the Immigration Act of 1965. Since the liberalization of immigration policy in 1965,[72] the number of first-generation immigrants living in the United States has quadrupled,[73] from 9.6 million in 1970, to about 38 million in 2007.[74]  Johnson had a lifelong commitment to the belief that education was the cure for both ignorance and poverty, and was an essential component of the American Dream, especially for minorities who endured poor facilities and tight-fisted budgets from local taxes.[77] He made education a top priority of the Great Society, with an emphasis on helping poor children. After the 1964 landslide brought in many new liberal Congressmen, he had the votes for the Elementary and Secondary Education Act (ESEA) of 1965. In 1964, upon Johnson’s request, Congress passed the Revenue Act of 1964 and the Economic Opportunity Act, which was in association with the war on poverty. Johnson set in motion bills and acts,[80] creating programs such as Head Start, food stamps, Work Study, Medicare and Medicaid. During Johnson’s administration, NASA conducted the Gemini manned space program, developed the Saturn V rocket and its launch facility, and prepared to make the first manned Apollo program flights. His legacy includes Interstate 635 in Dallas is named the Lyndon B. Johnson Freeway.

 

Benton te posts 10 things economists won’t tell you (why you shouldn’t listen to them). The above can be restated as “10 reasons why you shouldn’t trust economists”. From Marketwatch.com (hat tip Professor Mark Thornton); I highlight numbers #7 and #8.

 

#7. “We lean to the left.”

As of 2008, nearly half of members of the American Economic Association said they were registered Democrats, while only 17% said they were Republicans. Furthermore, in the same survey (commissioned by Scott Adams, the “Dilbert” cartoonist), 60% of the economists said that among the presidential candidates at the time, they thought Barack Obama would make the most progress on important economic issues if elected. (The survey was managed by The OSR Group, a national public opinion and marketing research company.) A similar survey of members carried out that same year of the NBERfound that 46% identified themselves as Democrats and 10% as Republicans.

Those surveys, the most recent on the topic, suggest that economists skew further Democratic than most of the population—even compared to people with advanced degrees, who have long been skewered as “the liberal elite.” Among people with education beyond a bachelor’s degree, self-described Democrats had a 14 percentage point lead over Republicans among college graduates — with 39% identifying themselves as Democrats and 25% as Republicans, according to a 2012 study by Pew Research Center.Left-leaning political views can even be seen in economists’ reports, some experts say. A 2008 article in the journal American Economist argued that economists over the past half-century have helped sell voters on bigger government. “We find that the increased role of economists in society and in policymaking has led to an increase in favorable attitudes toward government intervention,” wrote the authors, economists Scott Beaulier, William J. Boyes and William S. Mounts. (Boyes describes himself as more libertarian than right or left wing and Beaulier describes himself as a “free enterprise” economist.) Mounts did not reply to requests for comment.)

#8. “We might have an agenda.”

 

The economic paradigm known as Liberalism was one of investment choice, as well as clientelism, and was centered around the US Federal Reserve monetary policy of credit liquidity, which created a historic credit bubble, AGG, which provided a moral hazard based prosperity, and was facilitated by financial system intervention in QE, the pursuit of ZIRP,  the securitization of credit such as Build America Bonds, BAB, and Municipal Bonds, MUB, as well as equities, such as Nation Investment, EFA, in countries, such as Japan, EWJ, and the US, IWM, in the Emerging Markets, EEM, such as Egypt, EGPT, Indonesia, IDX, Chile, ECH, Peru, EPU, and Brazil, EWZ, Leveraged Buyouts, PSP, Mortgage REITS, REM, Residential REITS, REZ, Homebuilding, ITB, Biotechnology, ITB, and Small Cap Pure Value, RZV, by Asset Managers, such as Blackrock, BLK, the issuance of Junk Bonds, JNK, by corporations, the support of housing agencies with mortgage backed bonds, MBB, the encouragement of floating currencies by Milton Friedman, the establishment of a liberal economic knowlege cage by liberal economists, and the stirring of the public mind in Liberalism by liberal journalist Paul Krugman. Those living in the rust belt cities such as Detroit, Chicago, Cleveland, St. Louis and Cincinnati, were participants in Liberalism only to the extent that took out and defaulted on subprime loans. And many young people today are participants in Liberalism to the extent that they took out and/or take out student loans. Many qualified for Social Security Disability, and either ceased to work or never did work, and lived as clients of the state. The development and use of the Euro, FXE, established Greek Clientelism, where many in Greece have state employment as a constitutional guarantee, which the Economist Magazine described as a system of pork and patronage.   

 

Now debt deflation, that is currency and credit deflation, is stalking the globe, devouring who ever it may, destroying both the investment value of credit investments, such as US Government Bonds, GOVT,  and also stocks investments, such as Electric Utilities, XLU, as well, and most importantly nation investment, EFA, especially in the Emerging Markets, EEM, such as South Africa, EZA, Peru, EPU, and Chile, ECH.  

 

It’s only a matter of time before the national sovereignty of democratic states totally gives way, and regional alliances form, fully establishing Authoritarianism, as foreseen by the 300 illuminaries of the Club of Rome in 1968, as organized by the Morgenthau Group, for the purpose of establishing ten regional zones for mutual security, stability, and sustainability.  Such a development is presented in the bible prophecy of the Statue of Empires, Daniel 2:25-45, where a ten toed kingdom of regional governance forms to rule mankind, with toes of iron diktat and clay democracy, where the paradigm is  one of debt servitude and austerity.     

 

Governance and moneyness will no longer be exercised rewarding investment choice as it was under Liberalism. Now, under authoritarianism, rule will come from regional statist leaders exercising diktat.

 

During May 2013, Jesus Christ pivoted the world from the old economy to the new economy; that is 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, and 3) from the banker regime of US Dollar hegemony to the beast regime of statist regional governance, totalitarian collectivism, debt servitude and austerity, as foretold in Bible Prophecy of Revelation 13:1-4, also known as the ten toed kingdom of regional governance, as presented in Daniel 2:25-45. The world is passing into Authoritarianism’s wildcat governance, where leaders will bite, rip and tear one another apart, to become top dog leader, Revelation 13:5-10, and top dog banker, Revelation, 13:11-18.

A See Saw Destruction Of Fiat Wealth Begins With Credit, Currencies, Nation Investment, And Yield Bearing Stocks Falling Strongly Lower On The Exhaustion Of The World Central Banks’ Monetary Authority … The Age Of Investment Choice Has Ended And The Age Of Diktat Has Commenced

Milton Friedman’s seigniorage failed the week ending May 31, 2013; the seigniorage of dikat is coming to govern mankind’s economic affairs.

An Introduction

On Friday May 31, 2013, the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.16%, and as a result, credit died in May of 2013, causing the death of fiat wealth.  Debt deflation, that is currency deflation, currency volatility, and unwinding currency carry-trades, turned Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as World Stocks, VT, strongly lower.

FT Alphaville chart article relates Suddenly, a bad last day of May for the stock market.  I comment that the great reflation trade, that is the EUR/JPY, seen in Action Forex EURJPY Weekly Report, as of June 1, 2013, and seen in the chart of FXE:FXY, is history, as the mother of all bears markets has started. Imagine the global economic chaos that is coming as this carry-trade unwinds.

Of great significance, the chart of Aggregate Credit, AGG, shows a strong trade lower, being led so by the toxic credit that gave seigniroage to Liberalism’s grand finale rally; this included High Yield Junk Bonds, UJB, Junk Bonds, JNK, Emerging Market Bond, EMB, and Distressed Investments, FAGIX, such as those taken in by the US Federal Reserve under QE 1 to restart the global economy after the 2008 Financial System Crash. The ongoing steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, together with the rise in the Interest Rate on the USTen Year Note, ^TNX, to 2.16%, communicates that the bond vigilantes have gained control of interest rates.

With Aggregate Credit, AGG, trading lower, credit as a political and economic experience, is history. Credit was a pleasant economic experience of the age of Liberalism. With Aggregate Credit’s pivot lower in value, Authoritarianism’s unpleasant experience of debt servitude commenced. In May 2013, the Interest Rate on the US Ten Year Note, ^TNX, entered an Elliot Wave 3 Up, which will utterly serve to destroy credit forever. Not only have Stocks, VT, and Credit, AGG, traded lower, but,  Oil, USO, BNO, Gold, GLD, Silver, SLV, Cotton, BAL, Timber, CUT, Natural Gas, UNG, led Commodities, DBC, lower. All forms of fiat wealth traded lower at the end of May.

Dispensationalism presents the concept that liberalism was an age of nation state, investment choice based inflationism, producing a moral hazard credit experience of prosperity. Jesus Christ acting in dispensation, that is in the administrative plan of God for the fullness and completion of all things in every age, Ephesians 1:10, terminated liberalism in May of 2013, and is establishing authoritarianism, which is the age of regional governance, diktat based destructionism, producing a debt servitude experience of austerity.

Wealth can only be preserved by dollar cost averaging into the physical possession of gold in the form of gold bullion and in tradeable form on Internet trading vaults such as Bullion Vault and Gold Is Money.

1) … Debt deflation, that is currency deflation, came to nation investment and dividend bearing stocks as the seignorage of the world central banks failed during May 2013; a new seigniorage of regional lords and their economic popes is coming to rule the world’s ten regions.

1A) … On Tuesday, May 28, 2013, a see saw destruction of fiat wealth got strongly underway as Aggregate Credit, AGG, literally collapsed, falling 0.6%, as US Stocks VTI, surged, topping out in value.

Aggregate Credit, AGG, traded lower to levels seen in September 2012, on a steepening ot the 10 30 US sovereign debt yield curve, $TNX:$TYX, as is seen the chart of the Steepner ETF, STPP, steepening, as the Interest Rate on the US Ten Year Note, ^TNX, closed higher at 2.13%.

Ultra High Yield Bonds, UBJ, traded sharply lower, and Junk Bonds, JNK, continued lower.

The longer out US Government Debt, GOV, fell the most, with ZROZ, EDV, TLT, suffered strong declines; Municipal Bonds, MUB, and Mortgage Backed Bonds, MBB, fell sharply.

Longer maturity Corporate Debt, BLV, fell more than Corporate Debt, LQD.

International Corporate Bonds, PICB, World Treasury Debt, BWX, and Emerging Market Bonds, EMB, traded strongly lower.

The collapse of credit means that the monetary policies of the world central banks have crossed the Rubicon of sound monetary policy and have soured investment trust, specifically the trust in the ability of debtors to repay creditors, as well as the ability of the world central banks to stimulate global growth and trade, FXR, and corporate profitability, as well as the ability of Ben Bernanke, Mario Draghi, and Haruhiko Kuroda, to stimulate nation investment, EFA, and small cap nation investment, IFSM.

Richard Hubbard of Reuters reports Pledges from the BoJ and ECB for support boosted stocks world wide, and strengthened the US dollar as well. Investors seized on clear signs of policy support from Japanese and European central banks on Tuesday to drive world shares higher, denting appetite for safe-haven German bonds. The better sentiment also put Wall Street on course for a higher open when trading resumes after Monday’s holidays in the major centers. All three major stock indexes ended last week in negative territory for the first time since mid-April.  Heightened expectations the U.S. central bank could soon taper its stimulus program unleashed turbulence across the markets last week, leaving it to central banks in Japan and Europe to reassure investors their liquidity taps remain open.

Peak Fiat Wealth was attained Tuesday May 28, 2013, as World Stocks, VT, surged 0.7%, but stands below its recent high.  US Stocks, VTI, rose 0.7%, to a new high. Euorpean Stocks, VGK, rose 0.6%, and Asia Stocks, EPP, rose 0.3%.  Indonesia Small Caps, IDXJ, rose 3.3%, Vietnam, VNM, 2.9%, Chinese Small Caps, ECNS, 2.7%, Poland, EPOL, 2.4%, EWHS, 2.3%, Germany Small Caps, GERJ, 1.8%, UK Small Caps, EWUS, 1.3%, Finland, EFNL, 1.2%, Netherlands, EWN, 1.0%, and Ireland, EIRL, 0.9% , all ten to new rally highs. Today was Liberalism’s last stock rally to new highs.

Small Cap Pure Value Stocks, RZV, rose a stunning 2.1% to a new high, which includes Rental and Leasing Services, CAR, HTZ, Casinos, PNK, Specialized Health Care, HLS, ACHC, Personnel Services, TBI, TMH,  Financial Services, CATM, Automobile Dealerships, LAD, Jewelry Stores, TIF,  Consumer Discretionary, POOL, Business Services, EEFT, MDSO, SSTK, POWR, VSEC, WNS, ENV, REIS; and Small Cap Growth Stocks, RZG, rose a strong 1.8%, near their previous high.

The ongoing one month Yahoo Finance of Small Cap Pure Value, RZV, (showing a rally of 10%) World Stocks, VT, Nation Investment, EFA, Us Stocks, VTI, Japan, EWJ, and US Infrastructure, PKB, communicates the surge in wealth coming to the Small Cap Pure Value Stocks as  a blow off market top from speculative investing and short sell covering coming at the end of Liberalism’s world central banks’ credit financed “age of investment”. Authoritarianism’s new era, that being the “age of diktat” is commencing on the failure of the fiat money system.

Stock Brokers, IAI, rose 2.2%, Investment Bankers, KCE, 2.1%, Chinese Financials, CHIX, 2.1 AssetManagers, seen in this Finviz Screener, such as BLK, 1.7%, The Too Big To Fail Banks, RWW, such as JPM, BAC, and C, 1.6%, the European Financials, EUFN, 1.2%, Regional Banks, KRE, 1.2%, and World Financials, IXG, 1.0%.  Nick Barrickman of WSWS writes US banks post record profits in first quarter. US banks posted a record $40.3 billion in the first quarter of 2013, according to a report by the Federal Deposit Insurance Corporation. The surge in bank profits is due to accumulated stimulus coming from ongoing Federal Reserve monetary stimulus, and credit liquidity coming from Global ZIRP.

Other sectors rising strongly included, Clean Energy, PBD, Health Care Providers, IHF, Dynamic Media, PBS, US Infrastructure, PKB, Automobiles, CARZ, IPOs, FPX, Small Cap Energy, PSCE, SpinOffs, CSD, Biotechnology, IBB, Gaming, BJK, Aerospace, PPA, Software, IGV, Networking, IGN, Small Cap Industrials, PSCI, Leveraged Buyouts, PSP, and Pharmaceuticals, PJP.

The Russell 2000, IWM, rose 1.3%, to a new high, with the US Small Cap Growth Stocks, IWO, rising more than the the US Small Cap Value Shares, IWN, on a strong 1.2% rise in Regional Banks, KRE. Automobile Dealers, PAG, SAH, ABG, KAR, AN, KMX,and LAD seen in this Finviz Screener rose strongly.   The Dow, DIA, rose 0.7% to a new high.  The S&P 500, SPY, rose 0.8%.

Monday’s May 28, 2013, collapse lower in Aggregate Credit, AGG, coupled with the surge higher in US HomeBuilding, ITB, US Infrastructure, PKB, and Small Cap Pure Value Stocks, RZV, evidences the grand finale stock market blow off top that has come from the termination of Global ZIRP, that is the final fiat asset inflationary monetary policies of the world central banks, which produced an epic cresting of leverged speculative investing coming from the monetization of debt, carry-trade investing, and the securitization of the most toxic of debt. The multi-generational risk-on hedging of moral hazard is finally coming to an end. David Stockman writes in timely reminder in Economic Policy Journal Fannie Mae: The Deforming Monster.

The pursuit of yield bearing investments is definitely history, it was part of the bygone era of investment choice; this being seen in the turn lower of Electric Utilities, XLU, Global Utilities, DBU, Mortgage REITS, REM, IVR, Residential REITS, REZ, ACAS, AVB, Premium REITS, KBWD, Small Cap Real Estate, ROOF, Global Real Estate, DRW, and Dividends Excluding Financials, DTN, all trading lower on higher interest rates globally and the start of competitive currency devaluation, on the excesses of Global ZIRP.

The daily chart of the 200% US Dollar ETF, UUP, shows the US Dollar, $USD, rising in an ascending wedge pattern, that is a topping out pattern, suggesting that its price objective either has been achieved or will be achieved soon; it has been rising since September 2012, and February 2013, and May 2013 as well.

The rise of the US Dollar, $USD, and the trade lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, together with the trade lower in Aggregate Credit, AGG, marks the end of the Milton Friedman Free To Choose Floating Currency Banker Regime, and the beginning of the Diktat Beast Regime of Revelation 13:1-4, as Jesus Christ is in dispensation, Ephesians 1:10, pivoting Liberalism to Authoritarianism.

This comes as bond vigilantes are now successful in calling interest rates higher, and currency traders are successful in calling currency values lower in competitive currency devaluation. World Stocks, VT, are now trading lower, as debt deflation is now underway, destroying fiat wealth. All forms of fiat money, that is, major world currencies, DBV, emerging market currencies, CEW, credit, AGG, and stocks, VT, are trading lower on the exhaustion of the world central bank’s monetary authority.

With Jesus Christ at the helm of the economy of God, Ephesians 1:10, the seigniorage, that is the moneyness, of fiat money system has failed; the seigniorage of its replacement, the diktat money system, is rising to rule mankind’s economic and political economic activity.

1B) … Wednesday May 29, 2013, was an epic day in economic and political life, with Stocks, VT, Commodities, DBC, Major Currencies, DBV, and Emerging Market Currencies, CEW, trading lower, as Reuters reporting marketplace fears that the US Fed may start to ease up on its economy boosting stimulus program.

Volaltility , ^VIX, traded by TVIX, VIXY, rose, continuing its rise since May 17, 2013, as the World Stocks, VT, traded 0.9%, lower, Global Producers, FXR, -0.9 ,US Stocks, VTI, -.07, Asia Excluding Japan, EPP, -0.7.  The Russell 2000, IWM, -0.9 and the S&P 500, SPY, -.7. And more significantly, Nation Investment, EFA, -1.0, Emerging Markets, EEM, -1.5, Emerging Market Infrastructure, EMIF, -1.0, and the Emerging Market Financials, EMFN, -1.5.

Countries trading lower included Turkey, TUR, -3.1, Thailand, THD, -2.4, Brazil, EWZ -3.5, Brazil Small Caps, -3.4, on a collapsing Brazilian Real, BZF, which fell 2.7%, South Africa, EZA, -2.6, Hong Kong, EWH, -2.0, EWHS, -1.3, Singapore, EWS, -1.6, EWSS, -1.1, Russia, RSX, 1.6, ERUS, -1.6, Greece, GREK -1.6, Vietnam, VNM -1.6, Indonesia Small Caps, IDXJ, -1.1, Japan, EWJ -1.7, JSC -05. and China, YAO, -0.9

Sectors trading lower today included, Home Building, ITB -3.1, Paper Products, WOOD -1.8, US Infrastructure,  PKB -1.8,  Consumer Discretionary, IYC -1.4, IPOs, FPX -1.2, Small Cap Energy,  PSCE -1.2, Spin Offs, CSD -1.2, and Small Cap Industrials, PSCI -1.1

Home Builder DHI, fell 4.5%; and US Infrastructure Stocks, PKB, trading lower include, Drywall Manufacturer, USG, -4.2%, Wood Trim Manufacturer, AMWD, -3.5%, Building Supply, MAS, -3.4%, Flooring Manufacturer, MHK, -2.6%, Home Interior Supplier, FBHS, -2.5%, Concrete Manufacturer, EXP, -2.5%, Housewares Producer, NWL, -1.9%, Frame Manufacturer, TREX -1.6%, Appliance Manufacturer, WHR, -1.5%, Water Equipment Manufacturer, MWA, -1.2%, Roofing Supplier, BECN -0.9%,

Yield bearing sectors trading lower included Industrial Office REITS, FNIO -3.0, Premium REITS, KBWY -2.9, Chinese Real Estate, TAO -2.8, Residential REITS, REZ -2.5, Energy Partnerships, AMJ -2.4, EMLP, -2.1, Small Cap Real Estate, ROOF, -2.1, Emerging Market Dividend,  EDIV -1.7, Emerging Market Financials, EMFN, -1.6,  European Financials, EUFN -1.6,  Chines Financials, CHIX -1.1, Real Estate, IYR -1.1, Global Real Estte, DRW -1.2, Utilities, XLU-1.5, Telecom, IST, -1.1, and Dividend Excluding Financials, DTN -1.0.

Junior Gold Mines, GDXJ, rose 5.4%, TRX, 11.5%, Gold Miners, GDX, 4.0%, Silver Miners, SIL, 3.4%,  SSRI, 9.2%, as Gold, GLD, rose 1.0%, and Siler, SLV, 0.8%.

Commodities, DBC, traded 0.7% lower

Of profound significance, Major World Currencies, DBV, traded 0.7%, lower, and Emerging Market Currencies, CEW, traded 0.5%, lower, being led so by a sharp decline in the Brazilian Real, BZF; this as Bloomberg reports Brazil raises rates more than estimates as inflation saps GDP.

Mike Mish Shedlock writes Book supporting euro exit becomes instant bestseller in Portugal.The book, “Why We Should Leave the Euro” by João Ferreira do Amaral, has helped ignite a public debate in Portugal about the real cause of the country’s economic pain: Is it only the hated austerity needed to secure European bailout loans, or is the euro? Public lectures, TV debates, newspaper columns and some politicians are starting to explore a question that until recently was confined to university seminars: whether the country has a realistic path to recovery inside the euro.

Along this line of analysis, Libertarian Dr. Richard Ebeling at the Northwood University Blog, writes Mises and Rand, especially, emphasized the importance of man’s use of his reasoning ability to understand and master the world in which he lived, and the importance of reasoned reflection for conceiving rational rules and institutions for a peaceful and prosperous society of free men.  Mises and Rand considered the entire political trend of the 20thcentury to be in the direction of a “revolt against reason.”

Even Hayek, who is sometimes classified as an “anti-rationalist” due to his emphasis on the limits of human reason for designing or intentionally constructing the institutions of society, should also be classified as an advocate of man’s proper use of his reasoning powers when reflecting on man and society. While the phrasing of his arguments sometimes created this confusion, in various places Hayek went out of his way to insist that he was never challenging the centrality of man’s reasoning and rational faculty. Rather, he was reminding central planners and social engineers that one of the important uses of man’s reasoning ability is to understand the limits of what man can and cannot know or hope to do in terms of trying to remake society according to some preconceived design.

Thirdly, all three firmly believed that there was no societal arrangement conceivable for free men and human betterment other than free market capitalism. Only a private property order that respects and protects the right of the individual to his life, liberty, and honestly acquired possessions give people control over their own lives. Only the voluntary associative arrangements of the marketplace minimize the use of force in human relationships. Only the market economy allows each individual the institutional means of being free from the power of the government and its historical patterns of plunder and abuse. And only the market economy gives each individual the latitude to live for himself and use his knowledge and abilities to further his own ends as he best sees fit.

I respond, please consider bible revelation as being both relevant and authoritative, and that thus that faith and sound bible doctrine should be used as a starting point for conversation of economics.

The Apostle Paul wrote that reality is in Jesus Christ, Ephesians 4:24, and that He is sovereign over all things, Colossians 1:15-17, and that He is in charge of the economic and political plan of God, for the fulfillment and completion of every age, epoch, era and time period, Ephesians 1:10. It is on this scriptural reference, that the Dispensationalist Manifest  … http://tinyurl.com/lt8jjgg … serves as the basis of Dispensationalist Economics and establishes the best prism and outline for economic and political thinking as well as virtuous character and ethical relationships.

European economic collectivism came through the adoption of the Euro as a currency on January 1, 1999.  Now fourteen years later, Eurozone nations are insolvent sovereigns. Portugal News reports Public debt soars 250% in just over 2 years. And Reuters reports Italy places 50-year bond, eases refinancing pressure.  Mike Mish Shedlock writes Spain records largest first quarter deficit in history. Insolvent sovereigns cannot provide governance or seigniorage.

The bible is very specific regarding Europe’s future.  The Apostle John, in Apocalyptic Vision, given to him by angels while in exile on the Isle of Patmos, in roughly 90 AD, foretells that statist regional governance will be established in each of the world’s ten regions, as well as totalitarian collectivism, debt servitude, and austerity, in all of mankind’s seven institutions, commencing from the sovereign default and banking system crash of the profligate Mediterranean nation states of Portugal, Italy, Greece and Spain, Revelation 13:1-4.

There will be no escaping for Portugal, or for Germany, as that manner. The periphery indebted nations will soon be revolving as hollow moons about planet Germany. While the Portuguese cannot be Germans, both will be one, living in a diktat union of economic, political, and banking governance. This being confirmed in the bible prophecy of the Statue of Empires, seen in King Nebuchadnezzar’s dream, where ten toes of iron diktat and clay democracy, form as ten regional empires, out of the iron hegemony of the former British Empire and today’s US Dollar Hegemonic Empire, the Unites States of America, Daniel 2:25-45 as Scott Horton relates in audio post America’s World Empire.

The introduction and use of the Euro brought tremendous wealth and a significant increase the standard of living to certain countries and to certain econmic segments within countries, both to those using the Euro, and to those nations using their own national currencies.

The Euro generated wealth was a sugar-high, grand finale blow-off topping and completion, that is fulfillment, coming at the end of a sixty year business cycle, that originated with the creation of Liberalism, beginning with the US Federal Reserve between 1910 to 1913, and which was very much the fulllfillment of bible prophecy of Genesis 35:9-11:  “And God appeared unto Jacob again, when he came out of Padan-aram, and blessed him. And God said unto him, Thy name is Jacob: thy name shall not be called any more Jacob, but Israel shall be thy name: and he called his name Israel. And God said unto him, I am God Almighty: be fruitful and multiply; a nation and a company of nations shall be of thee, and kings shall come out of thy loins”.  God’s promised nation is the United States of America, and the company of nations was the British Empire, and the kings are those ruling and reigning spiritually today with Jesus Christ. The economic segments benefiting from the development and use of the Euro included:

1) Dexia, the French Belgium financial institution active in public finance, specifically the securitization of municipal bonds.

2) French metropolitan governments, and their career politicians such as Francois Hollande, which sold municipal bonds to interest rate hungry US money market funds

3) French vineyands and agricultural businesses.

4) Greece public employees. In a stunning socialist achievement, most all Greeks became “public servants” and had high paying unionized jobs, from which until recently, were protected by the Greek constitution from being terminated.  The Economist Magazine characterized the Greek economy as clientelism, using the words pork and patronage to describe its operation. Ad the United Nations characterizes it as one of the most anticompetitive in the world.  And it is a very closed and highly politicized far left wing society, having only fascist, communist and socialist political parties; there are no centric or right wing parties in Greece; countervailing parties do not exist.

5) Spanish construction companies and home builders.

6) Norway energy development and fish harvesting companies; the list could go on, and on, and on.

A collectivized Europe is the grand design of God, a working of destiny, to produce the failed economic structure, out of which will come Authoritarianism’s Beast Regime to replace Liberalism’s Banker Regime.

New sovereignty and new seigniorage is coming. Out of a soon coming global credit bust and financial system collapse, Revelation 13:3, EU leaders will meet in summits and workgroups to waive national sovereignty and pool sovereignty regionally for regional security, stability and sustainability.  Pooled sovereignty is the EU’s future. Democratic nation states, and traditional banking, along with globalization is history. Through regionalization, regional nannycrats will act in public private partnerships, that is in statist combines of banking, commerce, and trade, will provide the seigniorage, that is the moneyness of diktat.  Diktat will serve as credit, currency, money and wealth.

Jack Ewing of the New York Times reports The European Central Bank warned on Wednesday that the euro zone’s slumping economy and a surge in problem loans were raising the risk of a renewed banking crisis, even as overall stress in the region’s financial markets had receded. In a sober assessment of the state of the zone’s financial system, the E.C.B. said that a prolonged recession had made it harder for many borrowers to repay their loans, burdening banks that had still not finished repairing the damage caused by the 2008 financial crisis. Last year ‘was not a good year for banks at all,’ Vítor Constâncio, the vice president of the E.C.B., said. A similar snapshot of the state of the euro zone economy was issued. by the Organization for Economic Cooperation and Development in Paris. It warned of the dangers posed by weakly capitalized banks, a problem it said underlined the need for European Union leaders to push through with a so-called banking union that would include centralized supervision of lenders. The limited ability of European banks to absorb losses and the lack of a full banking union are potential threats to achieving a lasting stability.

Robert Wenzel of Economic Policy Journal writes President Obama to name Jason Furman as next Chairman of the Council of Economic Advisers.  Jason Furman is a Robert Rubin insider. Wikipedia points out. In 1996, while he was a graduate student at Harvard, Furman was hired by economist Joseph Stiglitz to serve a one-year stint as Special Assistant to the President for Economic Policy in the Clinton Administration and on staff of the Council of Economic Advisers. He later worked with Stiglitz at the World Bank. In 2004, he took a position as Director of Economic Policy for the John Kerry Presidential campaign in 2004. Furman received an MSc from the London School of Economics and a Ph.D. in economics from Harvard University. Also at Harvard, Furman earned a bachelor’s in social studies and a master’s in government. He has worked with former Clinton Treasury Secretary Robert Rubin. In recent years, Furman has worked as a budget expert at the Brookings Institution. There, he directed the Hamilton Project, an economic policy research group founded by Rubin.

Robert Wenzel provides the Juey Morris report  A Guide to understanding the Middle East, Syria, The West and Oil.

Americans tend to think that the Middle East is a basket case and fiery cauldron of evil because it’s Muslim and that those Muslims are terrorists who want to kill us and rain terror upon us.  Is it true?  The answer is an emphatic no! Read the rest of the story here>>

1C) … On Thursday May 30, 2013, rising gold and silver prices blasted Silver Mining Stocks, SIL, 5.6%,  SILJ, 6.6%, and Gold Mining Stocks, GDX, 5.5%, GDXJ, 6.7%, higher. Gold, GLD, rose 1.4%, and Silver, SLV, 1.2%, as the US Dollar, $USD, UUP traded sharply lower, as the Swedish Krona, FXS, the Euro, FXE, the Swiss Franc, FXR, the Brazilian Real, BZA, and the British Pound Sterling, FXB, rose, taking World Stocks, VT, higher, but well below their recent highs. On the other hand, the Indian Rupe, ICN, traded sharply lower,

Clean Energy, PBD, and its solar energy stocks, rose to a new high, taking Semiconductors, XSD, up to its previous high. US Healthcare Providers, IHF, rose to a new high. Indonesia Small Caps, IDXJ, rallied to a new high. The Too Big To Fail Banks, RWW, such as BAC, C, JPM, BK, STI, and PNC,  rose to new highs on continued enthusiasm on recent profitability reports; while the National Bank of Greece, NBG, fell 42%, to close at 7.07, just above its April 8, 2013 value of 6.40; Greece’s major financial institution has collapse. In shart contrast, Stockbrokers, IAI, such as SCHW, and Regional Banks, KRE, such as RF, rose to new highs, taking the Russell 2000, IWM, up near its previous high. Aerospace, PPA, Networking, IGN, and Small Cap Value, RZV, rose to previous highs.

Sweden, EWD, Italy, EWI, Germany, EWG, GERJ, the Netherlands, EWN, and Ireland, EIRL, and Vietnam, VNM, rallied to new highs. European Financials, EUFN, traded higher. On the other hand, Far East Financials, FEFN, The Philippines, EPHE, and Greece, GREK, traded sharply lower. New Zealand, ENZL, Thailand, THD, South Africa, EWZ, and Japan, EWJ, JSC, traded lower.

Benton te writes The real force (for driving the Nikkei, NKY, lower) has been climbing JGB yields or Japan’s crashing bond markets. I comment yes, rising Japanese Treasury rates is seen in the Inverse of the Japanese Treasury Bonds, JGBS, rising in value.  He continues, “It is unclear if the BoJ will be able to cap their interventions, given the repeated attempt by the 10 year JGBs to break the 1% threshold. I believe that the BoJ will be using up much of their programmed asset purchases just to stabilize the bond markets, which won’t be enough to cover her deficits.”  And he adds, “One surprising consoler of today’s Japan’s crash has been the Philippine Phisix, EPHE.  Many have been surprised at such selling violence despite the announcement that the Philippines posted the “best” economic growth in almost 3 years. The mainstream overlooked that today’s Phisix sympathy crash coincides with today’s spike in the yields of the Philippine 10 year bonds. This serves as an example of how interest sensitive stock markets are whether the Nikkei or the Phisix.”

Small Cap Pure Value Stocks, RZV, rose to its previous high on rising STMP, ENV, ROL, FLT, LACO, FHCO, MD, UNTD, WRLD, WWE, SFLY, and ENV. For the most part, these stocks have no real economic value; their moneyness has come largely from investors seeking safe haven from European debt contagion, and from the monetary stimulus of the world central banks and from global carry-trade investing. The Small Cap Pure Value Stocks, RZV, no longer receive moneyness from currencies per say, but rather from speculative leveraged investing.

Global Real Estate, DRW, US Real Estate, IYR, Residential REITS, REZ,  Small Cap Real Estate, ROOF, Chinese Real Estate, TAO, and Energy Partnerships, EMLP, AMJ, traded lower. Natural Gas, UNG, traded sharply lower. The Indian Rupe, ICN, traded sharply lower. Major World Currencies, DBV, and Emerging Market Currencies, CEW, continued lower today.

Economic Policy Journal posts The mayor of Rahmaland makes the cover of TIME. First, Rand Paul appears on the cover of TIME, now Rahm Emanuel. TIME writes: Chicago Mayor Rahm Emanuel left his job as White House Chief of Staff to run a broke, violence plagued city. He has been dubbed “Mayor 1%” by his enemies for cozying up to corporations, and the “murder mayor” for closing 50 public schools, some of which were in gang-troubled neighborhoods. In this week’s TIME cover story, editor-at-large David Von Drehle writes that Chicago “has budget problems and crime problems, problems of inequality and racial division, problems of mutual suspicion and failing schools, of high unemployment and aging infrastructure. And behind it all, special interests so deeply entrenched you need spelunking gear to go after them.” Yet in spite of all those daunting challenges, Emanuel tells Von Drehle, ”This is the happiest I’ve ever been in public life. I’ve always wanted to be mayor.”

1D) … On Friday May 31, 2013, the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.16%, and as a result, credit died in May of 2013, causing the death of fiat wealth.  Debt deflation, that is currency deflation, currency volatility, and unwinding currency carry-trades, turned Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as World Stocks, VT, strongly lower

Volatility, ^VIX, as seen in the charts of TVIX, an VIXY, rising, showed that it was a pivotal day of derisking out of Stocks, VT, and deleverging out of Commodities, DBC.

Nation Investment, EFA, Small Cap Nation Investment, IFSM, and Emerging Markets, EEM, slid sharply lower today, with Japan, DXJ, EWJ, JSC, Asia Exluding Japan, EPP, Far East Financials, FEFN, such as NMR, IX, MTU, SMFG, MFG, WBK, European Financils, EUFN, such as IRE, Emerging Market Financials, EMFN, such as BAP, CIB, Emerging Market Dividend, EDIV, Chinese Financials, CHIX, Global Financials, IXG, leading lower.

Sectors trading lower included, Steel, SLX, Copper Mining, COPX, Industrial Mining, PICK, Coal Mining, KOL, China Industrials, CHII, Energy Service, OIH, IEZ, and Energy, XLE, XOP, PSCE, on a glut of oil, Biotechnology, IBB, Clean Energy, PBD, and Leverged Buyouts, PSP, on risk off investing, Emerging Market Infrastructure, EMIF, and Global Consumer Discretionary, RXI, on unwinding currendy carry-trade investing, Paper Products, WOOD, on a falling price of Timber Commodity, CUT, and Home Building ITB, on the exhaustion of the US Fed’s Monetary Policies.

Krista Giovacco of Bloomberg reports Private-equity firms from Bain Capital to Onex Corp. are raising loans through companies they own to pay themselves dividends at a pace that exceeds even the frothy days leading to the worst financial crisis since the Great Depression. Borrowers controlled by buyout firms are on pace to raise more than $11.5 billion this month through dividend deals, a record and up from $3.6 billion in April, according to Standard & Poor’s Capital IQ Leveraged Commentary & Data.  An increasing number of borrowers are taking advantage of investor demand for relatively high yields as the Federal Reserve keeps benchmark interest rates at about zero for a fifth year. Rather than refinancing debt at lower interest rates or funding expansion, dividend loans do little more than add leverage.

Stephen Foley of Financial Times reaports Investors are giving up many of the protections that have traditionally accompanied lending to risky companies, with the hunt for high-yielding assets shifting the balance of power towards borrowers. Many of the world’s most highly-indebted companies have been able to issue new loans without covenants, which limit the amount of debt they can take on or which give lenders a major say in the business if its results start to lag. The proportion of so-called ‘cov lite’ loans has soared to more than 50% of all leveraged loan issuance so far this year, twice the level seen during the credit boom in 2007. Leveraged loans are issued by high-risk companies, such as those owned by private equity firms, and sold to investors through the credit markets. Some strategists argue that ‘cov lite’ lending could be a ‘new normal’, the wisdom of which will be tested in the next downturn.

All of the yield bearing sectors trading lower included. Australia Dividend, AUSE, India Earnings, EPI, Brazil Financials, BRAF, Emerging Market Dividend, EDIV, International Small Cap Dividend, DLS, Shipping, SEA, Telecom, IST, Global Utilities, DBU, Electric Utilities, XLU, Mortgage REITS, REM, Global Real Estate, DRW, Chinese Real Estate, TAO, Residential REITS, REZ, and Dividends Excluding Financials, DTN, Energy Partnerships, AMJ, EMLP, traded lower.

Kuroda Abenomics, the BoJ program to end deflation and revitalise the Japanese economy, is failing as Japan, EWJ, JSC, which traded parobolically higher on its anticipation, is now trading verticaly lower on its implementation. In as much as Japanese Financial Institutions, NMR, IX, MTU, SMFG, MFG, hold, according Benton te, 42.7% of all the outstanding JGBS, I consider them to be insolvent financial institutions. Japan’s monetary program induced the failure of Aggregate Credit, AGG, and has started a global currency war by currency traders who are short selling currencies, starting a tidal wave of global competitive currency devaluation, as well as starting derisking out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM.

Of note Monami Yui and Shingo Kawamoto of Bloomberg report Japan’s government bond yields have climbed to levels near lending rates, reducing the incentive for banks to make loans and undermining the effects of the nation’s unprecedented monetary stimulus. The average rate on new long-term loans was 0.9% in April, bringing the gap with yields on benchmark 10-year sovereign notes to 9 1/2 basis points.

Country investment destabilized by Abenomics includes Russia, RSX, ERUS, on a slide in its currency; Thailand, THD, on currency turmoil; India, INP, SCIN, following the  trade lower in the Indian Rupe, ICN; Finland, EFNL, Spain, EWP, Italy, EWI, Netherlands, EWN, Ireland, EIRL, Greece, GREK, on volatile Europen Financials, EUFN;  Peru, EPU and Chile, ECH on falling commodity prices; Turkey, TUR, as its trade gap ballooned in April sending its bonds and the Lira lower; Canada, EWC, on a lower Canadaian Dollar; Brazil, EWZ, EWZS, on a falling Brazilian Real, BZF; Australia, EWA, on a falling Australian Dollar, FXA; South Africa, EZA, on a falling South Africa Rand; New Zealand, ENZL, on a falling New Zealand Dollar; Singapore, EWS, EWSS, Hong Kong, EWH, Malyasia, EWM, Indonesia, IDX, the Philippines, EPHE, on lower Far Far East Financials, FEFN; and Emerging Markets, EEM, on lower Emerging Market Currencies, CEW.

Three weeks ago Bengt Saelensminde wrote Abenomics will eat itself. Japan’s new prime minister hit the floor running. Shinzo Abe came in at the beginning of the year and his new economic plan gave rise to the term ‘Abenomics’. It’s been frighteningly successful in terms of its aims: lowering the value of the yen and introducing a bit of inflation. I say frightening, because they haven’t even reached the peak of the money printing onslaught yet. To put it in perspective, Japan is set to print around $74bn each and every month. In proportion to the size of the Japanese economy, that’s a lot more than the Fed is attempting with QE3. Not only that, but the Japanese aren’t just buying bonds with the cash. They’re investing in the stock market too… even in real estate funds. Of course the stock market is going up!

And there’s another powerful effect. Japan is an export-led economy… so as the yen dives, it’s giving a serious boost to its exports. Yesterday, Sony reported a massive turnaround in fortunes, reporting an annual profit for the first time in five years. That’s because the yen is off some 20% since last November, taking with it about a fifth off Sony’s export prices. No wonder sales are up!

That’s why the stock market is sizzling. Now, I’m sure you don’t need me to tell you that this is a lot of smoke and mirrors. For a start, the falling value of the currency means that your investment wouldn’t have risen by the full 35%. In sterling terms, you’d knock about 15% off that figure. Now, I’m not saying you wouldn’t be happy with a rise of about 20% in just four months.

One of the express aims of Abenomics is to re-acquaint Japan with inflation. Inflation’s perceived importance is a complex issue. But there’s no doubt that it’s largely to do with the nature of debt. Because inflation helps debtors by reducing the real value of their debts. According to Campbell Gunn, a fund manager at T.Rowe, Japan’s ongoing deflation means that real wages are down some 12% since 1997. Imagine that! If your income is falling, then, of course, you’re not terribly motivated to take out a big loan to do anything. And modern economies need new suckers to take on new debts.

But of course, this only helps anyone that wants more debt and anyone that’s heavily borrowed (namely, the banks). It doesn’t help savers (because interest rates aren’t going up) and it doesn’t help the man on the street. I mean, the other day I read that the price of a McDonald’s burger has just gone up by 20% in downtown Tokyo. That’s hardly fantastic news for the average punter. Deflation is not bad for everyone!

And consider that all of this inflation is going to hit the large corporations pretty soon too. Yes, sales have been boosted by the falling yen… but pretty soon, inflation is going to increase costs. The cost of all foreign inputs are going to go up… on average, probably something like 20%. Of course, this takes time to feed through. The firms are currently working off old inventory, and they’re probably currently renegotiating new rates with suppliers. In due course, these cost increases will feed through. Don’t be gored by the bull.  For real economies, this is all a zero sum game. In fact, if anything, all the confusion caused by changing prices and relative currency values will only serve to weaken trade and economies. But the real point I want to make is that this is all good news for stock markets. There’s quite a bit of momentum behind this raging bull now.

FT Alphaville chart article relates Suddenly, a bad last day of May for the stock market.  I comment that the great reflation trade, that is the EUR/JPY, seen in Action Forex EURJPY Weekly Report, as of June 1, 2013, and seen in the chart of FXE:FXY, is history, as the mother of all bears markets has started. Imagine the global economic chaos that is coming as this carry-trade unwinds.

Back on April 7,2013, Gordon Long, with John Rubino wrote in Safehaven.com ABE-nomics has all the ingredients of igniting a global crisis but with the already 25% YTD devalued YEN, Japan has established a new front in the raging global currency wars. Well most definitely, that is the case as the Major World Currencies, DBV, and Emerging Market Currencies, CEW, are selling off, on the failue of Aggregate Credit, AGG, causing derisking and delveraging out of Nation Investment, EFA, and Small Cap Nation Investment, IFSM.

Ambrose Evans Pritchard weighs in relating South Africa is leading nation investment lower on competitive currency devaluation. South Africa’s rand punched through the psychological barrier of 10 to the dollar as investors flee countries with big current account deficits, deemed most at risk. The country’s central bank said it would take action to stem the fall in the rand if moves became “abrupt and disorderly”. The Johannesburg Stock Exchange says foreigners have withdrawn €1.1bn (£940m) from South African bonds over the past 10 days. The Turkish lira fell to the lowest in 17 months against the dollar, though it has just been upgraded to “investment” quality by Moody’s. The Thai baht (THB) fell to a one-year low, a pattern seen in much of emerging Asia. Bond yields have spiked sharply in Turkey, South Africa, Mexico and Hungary, rippling through down corporate spreads.

And back on April 3, 2013, Russ Winter wrote in Seeking Alpha South Africa facing economic, sovereign, currency and mining collapse.  The current situation in the Union of South Africa, EZA, is ominious. Exposure of its currency (ZAR) to large amounts of foreign “hot money” further adds to the impact. Since 2009, gross South Africa public debt grew by about $80 billion, with half picked up by foreign creditor “yield chasers.”  Currently, South Africa only has $40 billion in forex reserves. Given the country’s ballooning trade deficits at 6.3% of GDP, that’s enough to cover about three or four months of import (similar to Egypt: see Economic Collapse in Egypt).  But unlike Egypt, South Africa’s currency is relatively well traded, making it especially vulnerable to a currency-speculator attack. Such an attack is increasingly likely as the country runs out of rope. The rand decline against another second-rate currency, the U.S. dollar, has been steady. South Africa’s fundamentals are overwhelming and getting worse. The country faces inflation, labor unrest, lack of investment and a decaying infrastructure. Electricity costs in the country have jumped an average of 25% over the past three years, hurting its key mining industry. Education is a disgrace. According to the World Economic Forum, South Africa ranks 132nd out of 144 countries for its primary education, and 143rd in science and math. The unemployment rate, officially 25%, is probably nearer 40%. Half of S. Africans under the age of 24 are looking for work and have none. Among those who have jobs, a third earn less than $2 a day. Crime and murder is among the highest in the world and is believed to be under-reported. Typifying the worldwide yield-chasing bubble, South African sovereigns pay only 6.5% This is barely enough to cover inflation in the country, which is reported at around 6%, let alone the credit risk. The rating agencies are once again behind the curve, but late last year they cut the rating to BBB.  From an investor actionable perspective, S. Africa is important for several reasons. A blow up in the currency and sovereign debt will have an impact on the inflated, crowded, emerging bond bubble. Of additional importance to precious metal investors, in particular the PGMs and gold, is that South Africa’s mining decline is not cyclical. It is a collapse. This is removing considerable supply to the market. To my thinking, this makes miners and deposits in the safer jurisdictions that I favor even more valuable. The former No. 1 in production saw gold output fall by 8.1% in terms of volume in January. This comes just months after the agency released numbers revealing an even more drastic output drop of 32.2% in November of last year. Platinum exports were particularly hard hit, falling 18.5% last year. Russia and South Africa produced the great majority of palladium. This ties in directly with South Africa’s rapidly worsening trade deficit issues. Just two decades ago, South Africa led the world in gold production. The country’s output peaked at an average of 1,000 tons in 1970; but by 2012, that outstanding amount had dwindled to a meager 190 tons.

A well known investment principle is that carry-trades depreciate funding currencies while they last, and appreciate them when they unwind. With the rise in the Japanese Yen, FXY, over the last two weeks, Large Cap Growth Stocks JKE, finally was the style loss leader of the day. Investors delveraged out of carry-trade investment in Japan’s HMC, NSANY, KUB, CAJ, SNY, France’s SNY, Switzerland’s ABB, NVS, RIG, WFT, SYT, Ireland’s COV, JHX, Netherland’s PHG, ASML, UN, Brazil’s SID, Taiwan’s TSM, Germany’s SI, SAP, and America’s PPG, AMGN, MU, AMAT, IP, MON. Investors are no longer able to profit from investing in large cap growth companies. The chart of the S&P 500, $SPX, shows a decline of 1.4% on Friday May 31, 2013, and a 1.1%, decline for the week. The era of profitable investing in the S&P 500, SPY, which came via currency carry-trade investing and supported by junk debt, JNK, is done and over.

Of great significance, the chart of Aggregate Credit, AGG, shows a strong trade lower, being led so by the toxic credit that gave seigniroage to Liberalism’s grand finale rally; this included High Yield Junk Bonds, UJB, Junk Bonds, JNK, Emerging Market Bond, EMB, and Distressed Investments, FAGIX, such as those taken in by the US Federal Reserve under QE 1 to restart the global economy after the 2008 Financial System Crash. The ongoing steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, together with the rise in the Interest Rate on the USTen Year Note, ^TNX, to 2.16%, communicates that the bond vigilantes have gained control of interest rates. With Aggregate Credit, AGG, trading lower, credit as a political and economic experience, is history. Credit was a pleasant economic experience of the age of Liberalism. With Aggregate Credit’s pivot lower in value, Authoritarianism’s unpleasant experience of debt servitude commenced. In May 2013, the Interest Rate on the US Ten Year Note, ^TNX, entered an Elliot Wave 3 Up, which will utterly serve to destroy credit forever. Not only have Stocks, VT, and Credit, AGG, traded lower, but,  Oil, USO, BNO, Gold, GLD, Silver, SLV, Cotton, BAL, Timber, CUT, Natural Gas, UNG, led Commodities, DBC, lower. All forms of fiat wealth traded lower at the end of May.

Lisa Abramowicz of Bloomberg reports Junk bonds are headed for their first monthly loss in a year as dealers take on more of the debt amid rising yields and a record pace of issuance. Dollar-denominated speculative grade bonds have declined 0.3% in May after returning 15.4% the previous 11 months, according to Bank of America Merrill Lynch index data. The 21 primary dealers that do business with the Federal Reserve boosted positions in the debt by $2.7 billion in the three weeks ended May 22 to $8.35 billion, as companies sold $44.1 billion of the debt, an unprecedented pace for the period. The losses are prompting a pullback by investors from funds that buy junk debt.”

The chart of the US Dollar, $USD, UUP, shows a trade up for the day to close the week up at $83.30, as Major World Currencies, DBV, and Emerging Market Currencies, CEW, traded lower as competitive currency devaluation picked up speed, with the currency traders able to sell a number of currncies at will on the credit excesses of the world central bank leaders. Monetization of debt has finally led to the destruction of fiat currencies, turning “money good” investments bad. At one time money had value, because it was scarce, but the Inflationistas, the Credit Giants, have inflated money so much, that it no longer has value. The global credit bubble, and the fiat money bubble has finally burst. The age of fiat wealth appreciation is over, and the age of fiat asset deflation has commenced.

About a century ago competitive currency devaluation policies emerged ago as a means of taking over export wealth from other nations. Today, competitive currency devaluation comes at the hands of currency traders calling and selling currencies lower.  With the Brazilian Real, BZF, the Australian Dollar, FXA, the Indian Rupe, ICN, the Canadian Dollar, FXC, and Emerging Market Currencies, CEW, trading lower, on the failure of Aggregate Credit, AGG, Liberalism’s fiat money system is dying and is being replaced by Authoritarianism’s diktat money system. The Telegraph relates No saviour in sight as world credit cycle rolls over.

Yes, with the rise of the $US Dollar, $USD, beginning in February 2013, the Milton Friedman Free to Choose Floating Currency System (which came on line supporting and defining Liberalism as an economic paradigm beginning in 1971 with the replacement of the gold standard) is in an accelerated state of decay, induced by the collapse of Aggregate Credit, AGG, in May 2013.  EU Observer reports on the destruction of money relating Capital flight continues as savers flee Cyprus banks.

Dispensationalism presents the concept that liberalism was an age of nation state, investment choice based inflationism, producing a moral hazard credit experience of prosperity. Jesus Christ acting in dispensation, that is in the administrative plan of God for the fullness and completion of all things in every age, Ephesians 1:10, terminated liberalism in May of 2013, and is establishing authoritarianism, which is the age of regional governance, diktat based destructionism, producing a debt servitude experience of austerity.

The world central bankers, together with The Too Big To Fail Bankers, RWW, The European Financials, EUFN, and the Far East Financials, FEFN, defined Libealism’s money; and the Asset Manager, BLK, WDR, EV, STT, WETF, AMG, IVZ, CNS, AMP, PFG, LM, BX, FNGN, and BEN, seen in this Finviz Screener, coined Liberalism’s money.

The Economist reports China’s shadow banks, the credit kulaks. The growth in wealth management products reflects deeper financial distortions.  I comment that many are starting to distrust bankers and the institution of banking. Tthe very nature of credit and money has become so inflated and so warped, and so distorted, that they no longer can serve as the basis for economic and political activity.

Please consider that those who set the rules for the formation of the new money will determine everything else. The diktat money system is rising establishing Authoritarianism as mankind’s economic and political paradigm. Diktat money is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, and the austerity schemes that are experienced, such as heavy losses on large bank deposits via bailins, levying additional taxes, privatizations, and sale of a country’s central bank’s gold reserves, when sovereign regional leaders such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as the ECB, invoke mandates for regional security, stability, and sustainability. The chart of Thailand, THD, shows a weekly loss of 6.3% and Quartz reports Threat of capital controls looms over Thailand as it loses currency war.

2)  … In Political News

Liberty Crier writes The real meaning of President Obama’s national security speeches.  And Dr Worden writes of nullification. As of May 2013, about half of the states, including Kansas, Wisconsin, Texas, Florida, Alabama, Louisiana, Mississippi and Georgia had refused to expand Medicaid as permitted in the federal legislation. Individuals in those states who have incomes from the poverty level ($11,490) to $45,960 will still be able receive federal tax credits to subsidize the purchase of private health insurance. Childless adults below the poverty line, however, will be unable to receive the tax credit or enroll in Medicaid. In those states, those people make too little to qualify for assistance. For example, the Kansas Medicaid program provides no coverage for able-bodied childless adults, and adults with dependent children are ineligible if their income exceeds 32% of the poverty level. A family of three, for example, with an income between $6,250 and $19,530 “will have no assistance,” Sandy Praeger, the insurance commissioner of Kansas, said early in 2013. Nationwide, 5.7 million uninsured adults with incomes below the poverty level were estimated at the time by the Urban Institute to be uninsured under the upcoming Obamacare because they live in states without the expansion in Medicaid. From one vantage point, this is a price of federalism (i.e., semi-sovereign states). From another standpoint, it is an opportunity to live in a society with a small-government, self-reliance philosophy that is more fully actualized into law. It should be noted that that philosophy does not necessarily mean leaving the poorest of the poor to fend for themselves. In Wisconsin, Gov. Scott Walker, who turned down the federal expansion in Medicaid, proposed a plan in February 2013 that would allow extremely poor adults without dependent children to enroll in Badgercare (Wisconsin’s Medicaid program) while shifting those adults in the program with somewhat higher incomes (excepting elderly and the disabled) into the federal marketplace. An estimated 87,000 Wisconsinites would be dropped from Badgercare while 82,000 would become eligible for the program. Even though 5,000 fewer would be in Badgercare, those pushed out would be able to access insurance policies through the federal exchanges. Essentially, Badgercare would shift downward, picking up the most vulnerable while figuring that those on the upper end of Badgercare could afford to pay a small premium for health insurance. A single person with income at the federal poverty level ($11,490) would pay a maximum premium of $228, or just $19 a month, in 2014. “Nineteen dollars a month isn’t an unreasonable amount,” Walker said. “Any reasonable conclusion shows that it’s extremely affordable.” A family of four with an income just above the poverty level ($23,550) would pay an annual premium of $468. Of course, that family would have the freedom to pick among different policies. “Some people will portray this as not caring about people. I think it’s just the opposite,” Walker said as he was unveiling his proposal. “I care too much about the people of this state not to empower them to control their own destiny.” This is vintage “limited government” thinking.

In short, federalism enforced by the U.S. Supreme Court makes it possible for Wisconsin and other states with “small government, personal liberty” majorities as expressed through representation to devise approaches to health insurance that are consistent with the political philosophy even as the governments of other states expand Medicaid. In fact, one state, Massachusetts, had already enacted a law of universal health insurance that has resulted in an astounding 98% of the population being covered. Were it not for Obamacare, it would be possible for a state to adopt a single-payer approach, preferring it to competition, while another state treats health-insurance as a market commodity sans subsidies. In other words, while federal legislation establishes a floor that is in theory a minimum standard for everyone living in the United States, that floor restricts the extent to which the states can diverge in fulfilling their respective political beliefs. Given the interstate diversity, Congress should take care not to put the floor too high.

3) … In Syria News

Reuters reports Assad says Syria received Russian missile shipment. Syria has received the first shipment of a sophisticated air defense system from Russia, President Bashar al-Assad was quoted as saying, sending a signal of military strength days before an EU arms embargo on the country lapses. Russia had promised delivery of the S-300 missile system to the Syrian government despite Western objections, saying the move would help stabilize the regional balance at a time of insurgency in Syria waged by Western-backed rebels. Moscow is a staunch ally of Assad and it has appeared to grow more defiant since the European Union let its arms embargo on Syria expire as of June 1, opening up the possibility of the West arming the Syrian rebels.  Jason Ditz of Antiwar writes Syria missile defense acquisition a Red Line for military action, Israel says.  And Business Insider reports An Israeli attack on new Syrian missiles would kill a lot of Russians.

Wikipedia relates The Russian S-300 Rocket, NATO reporting name SA-10 Grumble, is a series of initially Soviet and later Russian long range surface-to-air missile systems produced by NPO Almaz, all based on the initial S-300P version. The S-300 system was developed to defend against aircraft and cruise missiles for the Soviet Air Defence Forces. Subsequent variations were developed to intercept ballistic missiles.  The S-300 system was first deployed by the Soviet Union in 1979, designed for the air defence of large industrial and administrative facilities, military bases, and control of airspace against enemy strike aircraft. The project-managing developer of the S-300 is Russian Almaz corporation (government owned, aka “KB-1″) which is currently a part of “Almaz-Antei” Air Defence Concern. S-300 uses missiles developed by MKB “Fakel” design bureau (a separate government corporation, aka “OKB-2″). The S-300 is regarded as one of the most potent anti-aircraft missile systems currently fielded.[3] Its radars have the ability to simultaneously track up to 100 targets while engaging up to 12. S-300 deployment time is five minutes.[3] The S-300 missiles are sealed rounds and require no maintenance over their lifetime.

Robert Wenzel of Economic Policy Journal posts What it is like to have green tea with war monger Bernard-Henri Lévy. Katie Rophie writes in NYT writes It is very likely that if you sit with Bernard-Henri Lévy over green tea in the lobby of the Carlyle hotel and he explains his wildly ambitious new exhibition at the Fondation Maeght in the South of France, you will not entirely understand the concept. You will worry that you are being airheaded for not following all the Kant and Goethe thrown around, but you will nonetheless be entirely persuaded that the exhibit is fascinating and important, because Lévy is nothing if not a truly great talker, a creator of excitement, a seducer of more cautious or less resourceful minds, even in his English, or maybe especially in his English, which he apologizes for with panache.

When he isn’t having tea at the Carlye, he is quite the war monger. Wikipedia details some of it Lévy was one of the first French intellectuals to call for intervention in the Bosnian War in the 1990s. In March 2011, he engaged in talks with Libyan insurgents in Benghazi. He prompted and then supported Nicolas Sarkozy’s seeking to persuade Washington, and ultimately the United Nations, to intervene in Libya. … Lévy argues for military intervention in Syria

I comment that the Ezekiel 38 war is coming soon to Syria. This confligration, is one of the most heavily written about subjects in bible prophecy; it will be matched in size and in destruction only to the Battle of Armeddon. Jack Kelley writes on this soon coming war here

4) … The Credit Giants who have stalked the land of promise and prosperity, Genesis 35:9-11, the modern day Nephelim, that is the Giants of Banking, Ben Bernanke, Mario Dragi, and especially Hiroki Kuroda, in going to Zero, have crossed the Rubicon of sound monetary policy, and have spoiled investment trust, with the result that bond vigilantes, are calling interest rates higher, and currency traders are selling currencies lower, destroying money, that is accumulated wealth, beginning first with the yield bearing stocks, especially Utilities, and Real Estate Stocks, and now with Nation Investment, and Small Cap Nation Investment.  

In reference to the pre-deluge days, Scripture reveals that the Nephilim were on the earth in those days, and also afterward. They were the heroes of old, men of renown, Genesis 6:1-4.  And as foretold, as it was in the days of Noah, so it will be in the days of the coming of the Son of Man, Matthew 24:17, and Luke 17:26, communicating that the giants would return doing epic things. No greater thing has been accomplished than the inflation of fiat wealth by the world’s central bankers, making and preparing for the imminent return of Christ.

Please consider that Jesus Christ, God’s Son, has been appointed the sovereign of all sovereigns; He is the head of all sovereign authority, Colossians 1:15. He is before all things, and all things cohere in Him, Colossians 1:16. He is preeminent in all things, Colossians 1:17 … And God has tasked Him with the administrative oversight of all things; specifically He is at the helm of the economy of God, Ephesians1:1, producing Liberalism’s Peak Experience in all of its various facets, bringing them to both fullness and completion.

In February 2013, Jesus Christ pivoted the Emerging Market Miners, EMMT, the Emerging Market Financial Institutions, EMFN, and the Emerging Market Infrastructure, EMIF, lower, only to revive the latter two, to turn them lower again in May 2013, together with with the Emerging Market Bonds, EMB, and the Emerging Market Currencies, CEW, largely fueled by an Abenomics carry-trade.  Industrial Metal Mining, PICK, countries, Peru, EPU, and Chile, ECH, have steadily declined in value.  Mexico traded lowe as its bond yields rose to their highest level since January, sending the Mexico Peso lower. South Africa, EZA, a hotbed of labor difficulties, and a dependent on mining, has plummeted rather steadily since February 2013. Australia, EWA, KROO, and new Zealand, ENZL, turned lower in May on falling currencies.  Now Brazil, EWZ, EWZS, has turned sharply lower on a lower currency as well.  This week Turkey, TUR, traded lower on fears that the Syria war, will become a global conflagration, as Selcan Hacaoglu and Benjamin Harvey of Bloomberg report Steps by the European Union and Russia to arm opposing sides in Syria’s conflict are aggravating tensions over the border in Turkey and increasing investor risk. The cost of protecting Turkish debt against default has risen 21 bps to 133 since car bombings on May 11 killed 52 people in Reyhanli, a town near the Syrian border; and as Turkey’s trade gap ballooned in April sending its bonds and the Lira lower. Thailand, THD, is trading lower on currency turmoil. Mexico, EWW, turned sharply lower in May on a lower Mexico Peso. The Philippines, EPHE, has sold off very sharply, along with the failure of the carry-trade juicke, that is the Far East Financials, FEFN.  This week, Hong Kong, EWH, EWHS, and Singapore, EWS, EWSS, sold off steeply, largely on the trade lower in the Far East Financials, FEFN.  Steel, SLX, Coal Miners, KOL, Uranium Miners, URA, began to sell off right at the first of 2013, and now continued lower again.

Competitive currency devaluation, seen in the Major World Currencies, DBV, and Emerging Market Currencies, CEW, pivoting lower, is part of the great ZIRP unwind, as the monetary policies of the world central banks have finally resulted in turning “money good” investments bad.

The failure of the monetary policies of the world central banks means the death of both credit and money as they have been known. Falling currencies and rising interest rates means the fast destruction of wealth and the banking system as it is has been known.

Please consider the tweets of Lisa Abramowicz credit reporter at Bloomberg as evidence of the pivoting of the world from inflationism to destructionism with the result that the destruction of bonds is now underway ….. On May 30, 2013, Biggest challenge to banks is “not credit risk, its interest-rate risk,” acc’ding to Wells Fargo’s Stumpf at investor conference …..  And tweets on May 30, 2013, Investment grade bonds due in 7-10 yrs have lost 2.6 percent this month, the most since October 2008 ….. And tweets on May 30 2013, Bond buyers are hiding from rising rates in shorter-duration debt ETFs, with the funds seeing a record $17.1 billion of deposits in 2013 ….. And the retweet on May 29, 2013, of Lawrence McDonald ‏@Convertbond QE = Thirst for Yield = One Crowded Trade ….. And the tweet on May 28, 2013, You know the market’s hot when companies sell record volumes of debt to pay their PE owners dividend ….. On May 28, 2013, Investment grade corporate bonds are poised for their biggest monthly loss since November 2011, declining 1.15 percent in May.

And please consider that the tweets of Lisa Abramowics credit reporter at Bloomberg as evidence that the very nature of banking as it has been constructed is coming to an end ….. On May 13, 2013, Wall Street starting to forecast a reduction in U.S. Treasury debt auctions for first time in 3 years.

Debt deflation, is now stalking the globe, devouring who ever it may, destroying both the investment value of credit investments but also stocks investments as well.  It’s only a matter of time before the national sovereignty of democratic states gives way, and regional alliances form, as forseen by the 300 illuminaries of the Club of Rome in 1968, as organized by the Morgenthau Group, for the purpose of establishing ten regional zones for mutual security, stability, and sustainability.

Governance and moneyness will no longer be exercised rewarding investment choice as it was under Liberalism. Now, under authoritarianism, rule will come from regional statist leaders exercising diktat.

Credit, that is trust, collapsed in May 2013, as is seen in the chart of Aggregate Credit, AGG, trading lower parabolically lower in value. The debt laden Electric Utilities, XLU, which were carry-trade darlings, were left abandoned on the dance floor, as investors rushed to the exit doors, on a rapidly steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the chart of the Steepner ETF, STPP, steepening, on the sharp rise in the Interest Rate on the US Yen Year Note, ^TNX.  The interest rate sensitive, Mortgage REITS, REM, such as IVR, traded strongly lower in value. The pursuit of yield, which came with the blow off top in Liberalism’s grand finale rally, and which was in large part seigniorage, that is moneyness of the US Federal Reserve, exhausted in May 2013, turning Retail REITS, O, NNN, GGP, Residential REITS, REZ, Small Cap Real Estate, ROOF, Premium REITS, KBWY, Real Estate, IYR, Global Real Estate, DRW, Industrial REITS, FNIO, and Chinese Real Estate, TAO, sharply lower. Doug Noland reports Freddie Mac 30-year fixed mortgage rates surged 22 bps to 3.81%, with a four-week gain of 46 bps (up 6bps y-o-y). Credit is literally evaporating as Kristine Aquino of Bloomberg reports Asia outside of Japan is poised for its first week in eight without any corporate bond sales denominated in U.S. dollars as regional bond risk and Treasury yields jumped. The drought this week comes after companies raised a record $81.4 billion since the start of 2013, the most for any first five months of the year in Bloomberg compiled figures going back to 1999. The Bond market has turned from risk appetite to risk aversion.

And in yield bearing stocks, Risk on Investing, ONN, has turned to Risk off Investing, OFF, as High Dividend Paying Australia Dividends, AUSE, traded lower on the sharp trade lower in the Australia Dollar, FXA, as well as the Australia Bank, WBK and as Kristine Aquino of Bloomberg reports Reserve Bank of Australia Governor Glenn Stevens has gone an interest-rate cut too far for Mrs. Watanabe, as Japan’s households look closer to home for returns. Aussie uridashi sales slumped 71% to A$1.8 billion ($1.7bn) this year, even as A$9.4 billion in such debt matures in 2013. Japanese investors cut Aussie debt holdings by a record 1.7 trillion yen ($17bn) in the five months through March. Japanese individual investors, a group often nicknamed Mrs. Watanabe because many are housewives, are piling into local assets as unprecedented Bank of Japan monetary easing drives the best equities gains in the developed world.”  Also, India Earnings, EPI, traded lower on the strong trade lower in the Inidan Rupe, ICN. And Brazil Financials, BRAF, traded sharply lower on the trade lower in the Brazilian Real, BZF. And Investors derisked out of higher yield bearing Telecom Stocks, IST, Energy Partnerships, AMJ, EMLP, and Emerging Market Dividends, EDIV.

The souring of investment trust, has terminated Nation Investment, EFA, as well as Small Cap Nation Investment, IFSM.

Corey Rosenbloom posts The crude oil compression continues into June relating “I used a line chart to highlight the compression in price about the $34 central value area or midpoint. We can clearly see a compression in the larger picture but perhaps more importantly for short-term traders in the July 2012 to present activity. “

I comment, the monthly chart compression shows a consolidation triangle with pivot point at 34. This week, the daily chart of Oil, USO, shows a pop higher from last week’s sell off to strong resistance at 34; but then a continual decline, throughout the week to close at 32.61. The direction for oil is now down, as it failed to rise through strong resistance. Massive consolidation triangles, or compressions are akin to broadening top patterns where prices fluctuate, only to fall through the middle point. Bespoke Investment Group reports Record high crude oil inventories. Given such massive supply, the only way for price to go is down.

During May 2013, Jesus Christ, acting in the administrative plan of God for the fullness and completion of the age of Liberalism, Ephesians, 1:10, produced Peak Democratic Freedom, Peak Nation State Sovereignty, Peak Seigniorage, seen in Peak Money, VT, Peak Currencies, DBV, CEW, Peak Credit, AGG, and Peak Clientelism and Dependency as well; all of which came through what Doug Noland terms wildcat finance, that is through speculative leveraged, toxic credit, carry-trade investment, producing Peak Peace and Peak Prosperity, all based on ever increasing moral hazard, and coming with great libertine and ponerous living.

Doug Noland reports what is likely Peak Sovereign Wealth, that is the topping out of the wealth of the Sovereign Money Lords stating  Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $672bn y-o-y, or 643%, to a record $11.145 TN. Over two years, reserves were $1.288 TN higher, for 13% growth …  And it appears that Peak Accessible Wealth of Amreicans has been achieved as he relates  M2 (narrow) “money” supply declined $11.9bn to $10.542 TN. “Narrow money” expanded 6.4% ($637bn) over the past year. For the week, Currency increased $1.4bn. Demand and Checkable Deposits added $3.3bn, while Savings Deposits fell $12.3bn. Small Denominated Deposits declined $1.5bn. Retail Money Funds fell $2.8bn.

Liberalism commenced with the planning and establishment of the Creature from Jekyll Island, that is the US Federal Reserve, between 1910 and 1913; that economic and political experience terminated on the credit excesses of the world central banks in May 2013. Now Authoritarianism is rising as mankind’s economic and political experience.

Jesus Christ, in his task of completing the dependent life experience in Liberalisms’s scheme of clientelism and dependency, as presented in Ephesians 1:10, is suggested in the details of the Robert Wenzel Economic Policy article 7 newly classified mental illnesses. If you can get something declared a “mental disorder,” the money flows, government money and insurance money, to treat the “disorder.”.   The American Psychiatric Association has just released its revised fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, or DSM for short. Below are 7 new “mental illnesses” listed in DSM (via MarketWatch)

1. Premenstrual Dysphoric Disorder;  Symptoms include depression, “feelings of hopelessness” and bloating sensations at specific times during a woman’s menstrual cycle—severe enough to interfere with people’s ability to function at work or school.

2. Hoarding Disorder; MarketWatch says Some DSM critics believe the creation of hoarding disorder could be driven by pharmaceutical interests: “All they are saying is, we think hoarding should be made an illness that we can get paid for,” says McHugh, who believes psychiatrists should investigate the root causes of the hoarding in order to formulate a treatment plan that could involve behavior therapy instead of drugs.

3. Caffeine Withdrawal

4. Rapid Eye Movement Sleep Behavior Disorder. The phenomenon became particularly problematic for comedian Mike Birbiglia after he jumped through a second-story hotel window in a dream about escaping a missile, landing him in the emergency room with glass wounds, says MW.

5. Restless Legs Syndrome

6. Disinhibited Social Engagement Disorder. Children with disinhibited social engagement disorder can be “inattentive and impulsive,” says MW.

7. Central Sleep Apnea and Sleep-Related Hypoventilation. Having trouble breathing at night? You are mentally ill.

I comment that it is likely that the new DSM V definitions of mental illness will serve as a basis for receiving social security disability; this at a time when he number of people receiving SSD is swelling.

Those qualifiying for and receiving SSD, garner $700 Cash, $200 Food Stamps, and up to $700 Rent Assistance via Public Housing or Section 8 Housing, for a total of up to $1,600 a month, which is $19,200 a year. Considering that there are roughly 2000 working hours, that is 52 weeks at 40 hours a week, this government dole is equivalent to working at $9.00 a hour. And those on SSD receive Federal DSHS Obamacare, which provides one doctor visit a month, referral to specialists of all types, no charge prescriptions, and no charge surgery. I know people living on SSD, who have had numerous surgeries and stand as the model of prime health, after having blown out their health on a lifetime of crashing and smashing in bars, as well as after having spent years in prison locked away for antisocial behavior. One individual I know has the jail house tattoos all over him, and bears the name Jesus Christ on his knuckles; he recently told me at a free community meal that he is a libertarian; I wanted to tell him no, you are a libertine, but I did not dare to do so. An inquiring mind asks, has not Jesus Christ awesomly completed his mission of fulfilling Liberalism’s Clientelism and Dependency.

Benton te writes How the Welfare State promotes violence: The Swedish Edition A society that depends heavily on welfare state produces both political and income inequality as revealed by the brewing frictions between natives and foreign born residents in Sweden. Yet the welfare state has been enabled and facilitated by debt and inflation which are the pillars of the paper money system. Today’s global polices have clearly been designed to favor the debtors over creditors. Such been primarily meant to boost the insolvent welfare states, their clients, patrons (political agents, banking system) and other related interests (cronies).

And Benton te writes a fascinating article More signs of the end of easy money? Brazil raises rates amidst stagflation. Tight competition for scarce resources from the sector’s underpinning the property bubble which has been compounded by the burgeoning growth of government spending, all of which has been financed by credit expansion, has led to higher price inflation amidst stagnant growth. In essence, Brazil endures from both stagflation and asset bubbles. Yet the actions of Brazil’s authorities if sustained will put enormous strains on these wealth consuming activities over the near term. This will come with nasty repercussions/ Every boom eventually turns into a bust, as the great Ludwig von Mises warned: But the boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances. Such applies to Brazil’s boom bust cycle.  I comment that Brazil Financials, BRAF, that is BBD, and ITUB, plummeted 5%, Brazil, EWZ, 4%, and Brazil Small Caps, EWZS, 3%; and the Brazilian REAL, BZF, plunged 2.4%, in immediate reaction to the news.

David Biller and Juan Pablo Spinetto of Bloomberg repaort The second-biggest depreciation among major currencies has failed to stop the deterioration of Brazil’s current account, signaling the real may need to weaken further to restore competitiveness. Brazil’s current account gap surpassed 3% of gross domestic product in April, the widest in almost 11 years. The Brazilian currency lost 25% since reaching a 12-year high on July 26, 2011, the worst performance among major currencies after the South African rand. In the medium-term ‘the currency would have to weaken to equilibrate somehow this current account balance,’ Paulo Vieira da Cunha, a former Brazil central bank director, said. ‘If you’re running into these very large current account deficits, there’s something the matter.’”

Brazil suffers from the Twin Crises of Dollarization, that is price inflation and stagflation, as a result of what Matias Vernengo terms Dollarization.

And Benton te writes another interesting article Fitch defies S&P on China’s credit bubble.  Defying the consensus, US Credit rating agency Fitch ratings says China’s bubble is unsustainable. In short, current inflationist policies by the Chinese government motivates the public to speculate on housing and other financial packages rather than invest on productive enterprises. Such housing bubble has likewise drawn in hot money as shown by the chart from Zero Hedge.  The Chinese government has recently moved to curtail hot money flows using copper imports to facilitate “carry trades” based on “interest rate arbitrages”. Going back Fitch. Ms. Chu says China’s statistical data has been unreliable. Importantly she says that much of what I call Ponzi finance may have found a channel in the burgeoning “Shadow Banking Sector”. The Moody’s estimates that China’s Shadow Banking System have reached 29 trillion yuan or  $4.7 trillion  compared to 17.3 trillion yuan in 2010. Shadow banks are manifestations of regulatory arbitrages or the circumvention of regulations. China’s shadow banks has been mainly through Wealth Management Products (WMP) which have mainly been about short term financing. Quoting Ms. Chu from another article: WMPs are vehicles that can borrow/lend, and banks engage in transactions with their own and each other’s WMPs. This makes the pools of assets and liabilities tied to WMPs in effect second balance sheets, but with nothing but on-balance-sheet liquidity, reserves, and capital to meet payouts and absorb losses. These hidden balance sheets are beginning to undermine the integrity of banks’ published balance sheets.

Bloomberg reports Chinese banks are adding assets at the rate of an entire U.S. banking system in five years. To Charlene Chu of Fitch Ratings, that signals a crisis is brewing. Total lending from banks and other financial institutions in China was 198% of gross domestic product last year, compared with 125% four years earlier, according to calculations by Chu. ‘There is just no way to grow out of a debt problem when credit is already twice as large as GDP and growing nearly twice as fast,’ Chu, 41, said. Chu’s view puts her in a minority among those charting the future of the world’s biggest nation. She questions how long China can maintain the model of growth driven by bank lending that has allowed its economy to sidestep the global financial crisis. Her views have struck a nerve. ‘Everyone is talking about credit, about the credit cycle, leverage and credit-quality problems,’ said Stephen Green, head of Greater China research at Standard Chartered Plc in Hong Kong, adding that there’s not enough good data available. ‘It’s a big black box, and it’s quite scary.’”

Real Estate Investment is now in a bear market. Chinese Real Estate, TAO, with only the exception of Residential REITS, REZ, has led real estate investing over the last five years, as is seen in the ongoing combined Yahoo Finance chart of DRW, REZ, TAO, IYR, FNIO, and ROOF. US Federal Reserve Quantitative Easing, was primarily oriented to the restoration of bank owned real estate investments; it accomplished its goal in May of 2013 as Nick Barrickman of WSWS writes US banks post record profits in first quarter. US banks posted a record $40.3 billion in the first quarter of 2013, according to a report by the Federal Deposit Insurance Corporation. Real Clear Markets weighs in relating Financialization of the economy suffocates living standards.

Peter Schiff writes The great reflation (Some take) the strong housing data is taken as proof that the economy has turned around and that a recovery is under way. Cooler heads may simply see how government policies have channeled money into real estate in order to reflate a bubble that has been collapsing for the last five years. Although the money is entering the market through slightly different paths than it did in 2005 and 2006, its effects on housing, and the broader economy, are the same as they were before the bubble burst. When the inevitable happens again, the ensuing damage will be eerily familiar. The truth is that most buyers cannot afford today’s prices without the combination of government guarantees and artificially low mortgage rates. The Federal Reserve has been conducting an unprecedented experiment in economic manipulation. By holding interest rates near zero and by actively buying more than $40 billion monthly of mortgage-backed securities and $45 billion of Treasury bonds, the Fed has engineered the lowest mortgage rates in generations. At the same time, Federal control of the mortgage industry has become nearly complete, with government agencies Fannie Mae, Freddie Mac, and the FHA buying or guaranteeing virtually all new mortgages. In addition, a variety of Federal programs, such as the Home Affordable Modification Program (HAMP) are in place to help keep underwater homeowners in homes that they could not otherwise afford. Taken together, these programs create far more favorable terms for home buyers than those that existed before the crash. The “wealth effect’ from rising home prices combined with the similar influence of rising stock prices creates an aura of recovery. In fact, this week’s revisions to first quarter GDP revealed that consumer confidence and spending are up despite real discretionary per capita incomes plunging at a 9.03% annualized rate. That is worse than the largest plunge during the 2008-2009 crisis (7.52%). Additionally, the household savings rate fell to an abysmal 2.3%, the lowest since the 3rd quarter 2007. Debt-financed consumption supported by inflated asset prices is what led to the financial crisis of 2008. It’s amazing how willing we are to travel down that road again.

The European Financials, EUFN, have been a great reflation trade, as Viral Acharya, Sascha Steffen of write in Vox The banking crisis as a giant carry trade gone wrong A pernicious aspect of the Eurozone crisis is the ‘doom loop’ linking European banks and governments. This column argues that poor European policy choices in the wake of the 2008 Global Crisis worsened the problem. Rather than being forcefully recapitalised as in the US and UK, many Eurozone banks were left undercapitalised and free to gamble for redemption. In what may be the greatest carry trade ever, they borrowed cheap, first in short-term debt markets and then from the ECB, to invest in high-yield but risky sovereign debt. Substantial bank recapitalisations against sovereign-bond losses is the way forward.

And the Financial Times reports BIS warns of dangers of cheap money driving up stock prices. Markets are “under the spell” of the world’s central bankers, with cheap money driving stock prices to record highs despite a lack of good economic news, the Bank for International Settlements has said.

Ambrose Evans Pritchard reports BIS records startling collapse of eurozone interbank loans. Cross-border lending is falling drastically across the western world as banks slash exposure to Europe and bend to tougher capital rules, according to data from the Bank for International Settlements.

Economic Times reports Thousands protest Europe crisis in Spain.

A collectivized Europe is the grand design of God, a working of destiny, to produce the failied economic structure, out of which will come Authoritarianim’s Beast Regime to replace Liberalism’s Banker Regime.

New sovereignty and new seigniorage is coming. Out of a soon coming global credit bust and financial system collapse, Revelation 13:3, EU leaders will meet in summits and workgroups to waive national sovereignty and pool sovereignty regionally for regional security, stability and sustainability.  Pooled sovereignty is the EU’s future. Democratic nation states, and traditional banking, along with globalization is history. Through regionalization, regional nannycrats will act in public private partnerships, that is in statist combines of banking, commerce, and trade, will provide the seigniorage, that is the moneyness of diktat.  Diktat will serve as credit, currency, money and wealth.

According to Investopedia, credit means borrowed money “must be paid back to the lender at some point in the future.” Liberalism’s  credit will be paid back by Authoritarianism’s debt servitude and austeity. Benton te writes Abenomics, will Japan face a debt crisis soon? Given the constrained options of the Japanese government, I think that they could or most likely resort to the Cyprus bail-in model. They may be targeting part of the ¥1,230 trillion for bank deposits haircuts. Poor households [8] (as of December 2012). I hope I am wrong about all these. But it pays to take the necessary precaution.

The failure of the high yielding nation investment dividend paying ETFs, during May 2013, such as AUSE, BRAF, and EPI, communicates the end of credit as it has been known. The seigniroage of both developed and developing countries and their banks has failed, terminating credit as a profitable economic experience. The end of yield chasing means the end of Liberalism’s QE scheme. The seigniorage of regional nannycrats and regional bodies such as the ECB is commencing Authoritarianism’s schemes of ditkat such as bailins, new taxes, and diktat enforcing debt servitude. Under Liberalism, credit was often secured to investors via individual responsibility. But under Authoritarianism, all debt owed will be served and shared by common currency owners, ie all those in Sweden, using the Swedish Krona, will be on the hook for the debt of all Swedes. In other words, under Authoritarianism, debt servitude for all, regardless if they were not responsible for its orgination.

During May 2013, Jesus Christ pivoted the world from the old economy to the new economy; that is 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, and 3) from the banker regime of US Dollar hegemony to the beast regime of regional governance, totalitarian collectivism, debt servitude and austerity, as foretold in Bible Prophecy of Revelation 13:1-4, also known as the ten toed kingdom of regional governance, as presented in Daniel 2:25-45. The world is passing into Authoritarianism’s wildcat governance, where leaders will bite, rip and tear one another apart, to become top dog leader, Revelation 13:5-10, and top dog banker, Revelation, 13:11-18.

5) … In Apocalyptic Vision, the Apostle John writes that Jesus Christ is coming to terminate the double entry bookkeeping system and all other bipolar sigularities as well,  Revelation 1:1, that He might be The Universal Singularity, providing life, virtue and ethics.

5A) … Jesus Christ is The Universal Singularity, Colossians 1:17-18, who provides the experience of the riches of His glory via the Mystery of Christ in you, the hope of glory, Colossians 1:27; this contrasts with the Mystery of Iniquity, which is at work in the unbelievers 2 Thessalonians 2:7. And in Dispensation, Ephesians 1:10, that is the in the operation of the economoy of God, He is coming to provide Himself as life, and to terminate all existing economic and political life, which is based upon the double entry bookkeeping system, and to terminate all other bipolar sigularities as well, that He might be The Universal Singularity, manifesting everywhere, especially as virtue and ethics in the elect, 2 Peter 1:1-11.

Halden Doerge.of  Inhabitatio Dei writes The singularity of Jesus and the mission of the church.  My contention is that the focus upon the singularity of Jesus Christ forces us to rethink what we mean by the task of theology as being both dogmatic and missionary in today’s context. By dogmatic I mean to say that Christian theology is to be given to the confession of the praise of the doxa, the glory of the Lord, that shows forth in the apocalyptic singularity of Jesus Christ. And that glory is that Jesus, as the eternally sent One, has liberated the world from its oppressed laboring under the powers and principalities and, by way of this liberation, has reconciled the world to Godself. That is the gospel; that is the good news. By missionary I mean to stress that theology can only be faithfully dogmatic insofar as it is forged in the ongoing encounter and solidarity with the world’s hearing of and response to this singular gospel.

This, it seems to me, means two things primarily for how theology is to be rethought and practiced today. First, it means to insist upon the apocalypse of Jesus Christ as the singular dandum from which all theological thought must emerge. Second, we must not forget that the singular identity of Jesus Christ as the resurrected crucified one is the identity of that one who was not afraid to lose himself in abandonment to and in identity with the marginalized and oppressed of this world. Mission, as such, thus becomes that movement of self-giving whereby we are given ever-anew to receive that one Christ who gives himself precisely by giving himself ever-anew in what Bonhoeffer calls the “strangeness” of the other.

5B … Christ is one’s life enabling one to have life, Colossians 3:3-4, and live in virtue and ethics, 2 Peter 1:1-11.

From the Dispensational Manifest, I present Corollary Number 14 … Jesus Christ is providing a New Reality, transitioning one from human experience to the experience of the divine nature; where the elect are called to live in godliness, 2 Peter 1:6, mainly manifest in the fruits of the spirit, and experience Christ as one’s life, Colossians 3:3-4, and one’s all inclusive life experience, Colossians 3:11.

Christ dispenses faith, Ephesians 1:10, specifically He allots faith equally precious, as that of the apostles, which comes from the righteousness of Himself, 2 Peter 1:1.

The faith provides grace, that is spritual resource, as well as peace, that is acceptance 2 Peter 1:2.

And the faith provides all things which pertain unto life and godliness.  Ones’ calling is not dependent upon ones meritocracy, but rather one’s calling is based soley upon God’s glory and virtue, that is His excellency and strength. 2 Peter 1:3.

It is God’s promises that one is able to partake of the divine nature and escape corruption that has entered the world by lust, 2 Peter 1:4.

Withnes Lee on page 1148, of the Recovery Version of the Bible, in footnote four, pertaining to verse 3 communicates that spriritual life is defined as the inward energy and strength that comes from the dispensation of Christ to bring forth outward godliness which leads to and results in glory.

Through the exercise of virtue and its companion, ethics, one makes one’s calling and election sure, that is a genuine thing, and one avoids stumbling, and one is assured of a broad entrance into the Kingdom of God, 2 Peter 1:10-11..

Christ is one’s life, Colossians 3:3-4, enabliing one to manifest virtues and ethics. Virtue is defined as praiseworthy attributes and ethics is defined as the economic regard in speech and behavior, for the person and property on another.

Scripture presents biblical ethics: 1) when Paul said, I have defrauded no one, 2 Corinthians 7:2, and 2) when the author of Hebrews instructed, one to pursue peace with all men, Hebrews 12: 14-17, and 3) when John wrote, unto the church: but Diotrephes, who loves to have the preeminence among them, receives us not, 3 John 9, and 4) when Paul instructed, not to a busybody in the affiars of another, 2 Thessalonians, 3:11, and 5) when Paul instructed, to keep away from all who walk disorderly. 2 Thessalonians 3:6

5C … The elect contrast with the fiat who have will worship in philosphy or religion, Colossinans 2:23, which fails to prevent indulgence in carnality and iniquity, which is the opposite of virtue and ethics; many of the elect be libertine or worse psychopathic.  

There is no choice on the part of the believer as all things are of God, 2 Corinthians 5:18 . There is no exercise of ones’ will as it died in gaden with Adam.  There is only God exercising his will, Ephesians 1:11, making one accepted in the beloved, Ephesians 1:6.  Only those whe have been appointed uno eternal life believe, Acts 13:48. These God chose from before the foundation of the world, Ephesiasn 1:4, and are motivated by the indwelling Spirit of God, as well as by a mental comprehension and understaning of Him Collosians: 1:9-10.

Competitive Currency Devaluation Commences Turning Aggregate Credit And The Emerging Markets Lower …. Higher Interest Rates Turn Electric Utilities Lower

Financial Market Report for the week ending April 10, 2013

(After having taken a break, I have decided to resume posting) 

1) … On Monday April 6, 2013, Electric Utilities, XLU, traded 1.4% lower, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, breaking out above 200 day moving average. A steepening yield curve, seen in the chart of the Steepner ETF, STPP, steepening, is deleterious to electric utility stocks, as they are loaded with debt, especially long term debt.

The electric utilities which had been doing better than their peer group traded strongly lower; these utilities, with their Long Term Debt to Equity Ratio, and yield are presented below:

AEP, 1.0 and 3.8% yield, -1.2%

DTE, 1.0 and 3.5% yield, -1.6%

NEE, 1.4 and 3.3% yield, -1.4%

D, 1.5 and 3.7% yield, -0.7%

PNW, 0.8 and 3.6% yield, -1.3%

WEC, 1.1 and 3.1% yield, -1.7%

CMS, 2.1 and 3.5% yield, -1.4%. This heavily indebted electric utility stock was one of the best performing utility stock in the last six months, as is seen in this ongoing Yahoo Finance chart. Under the development of Global ZIRP, seen in the trade higher of the Euro Yen Currency Carry Trade, EUR/JPY, that is FXE:FXY, beginning in August 2012, as well as an ongoing rise of Aggregate Credit, AGG, investors favored stocks that were debt laden, as the pursuit of yield ensued.

Action Forex, in its May 10, 2013, weekly chart article of the EURJPY is calling this carry trade pair higher, yet the detailed Elliott Wave count shows a Elliot Wave 5 high has been achieved.

David Fabian, Fabian Capital Management, writes in Seeking Alpha, that the iShares 20+ Yr Treasury Bond Fund TLT traded 2.36%, lower on Friday April 6, 2013, as the yield on the 10-Year Treasury Note, ^TNX, rose 7.42%, to close up at its 200day average of 1.75%.

Financial Times reports US junk debt yield hits historic low.

The trade lower in Electric Utilities, XLU, suggests that chasing yield is over; look for all of these yield bearing equity and debt investments, seen in this Finviz Screener, PSP, UJB, KBWY, ROOF, DRW, AUSE, DBU, XLU, REM, IST, SEA, BRAF, FNIO, REZ, PGF, IYR, KBWD, DTN, TAO, FLOT, to trade lower on the exhaustion of the world central banks’ monetary authority to continue to stimulate global growth and trade and to prevent sovereign default in the Eurozone.

Scott Grannis writes Fund flows show investors still cautious. With data as of last week, ICI’s tally of equity fund flows shows no net inflows for the past two months, even as equity prices have hit new all-time highs. Bond funds, meanwhile, continue to enjoy strong inflows, even as bond yields remain very near all-time lows. Mutual fund flows thus reflect a market that is still dominated by caution.

Many should have been optimistic, and invested in a Global ZIRP, Risk On, ONN, currency carry trade, ICI, and Aggregate Credit, AGG, driven Crack Up Boom in equity investment in Nation Investment, EFA, specifically in Ireland, EIRL, the Philippines, EPHE, New Zealand, ENZL, and Thailand, THD, as well as sector investment in Homebuilding, ITB, Consumer Services, IYC, Biotechnology, IBB, Dynamic Media, PBS, and Global Financials, IXG, as well as credit investment in Junk Bonds, JNK, Ultra High Yield Bonds, UJB, Senior Bank Loans, BKLN, and Distressed Investments, FAGIX, which commenced in July 2012 on ECB OMT, and surged in November 2012 on BoJ Abenomics.

Over the last six months, Leveraged Buyouts, PSP, (yielding 3.7%), Premium Yield Equity REITS, KBWY, (yielding 4.1%), Small Cap Real Estate, ROOF, (yielding 4.1%), and Australian Dividends, AUSE, (yielding 4.1%) , were the the best paying dividend equity investments, as is seen in their combined ongoing Yahoo Finance Chart. Their seigniorage, that is their moneyness, came from Global ZIRP, as well as from the US Fed continuing to buy Mortgage Backed bonds, MBB, which has fallen parabolically lower in value, when World Stocks, VT, blasted higher on Friday May 3, 2013, on excitement that the ECB had lowered its interest rate.

As World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, traded higher, Aggregate Credit, AGG, and Government Bonds, GOVT, World Treasury Bonds, BWX, and all forms of credit traded lower except for Junk Bonds, JNK, Ultra High Yield Bonds, UJB, Junk Bonds, JNK, Senior Bank Loans, BKLN, and Distressed Investments, FAGIX. The latter trades like those investments, taken in by the US Fed under QE1, and which were exchanged for “money good” US Government Treasuries, GOVT, in order to stimulate the global economy after the 2008 financial collapse.

Liberalism featured a global currency carry trade, and aggregate credit, financed, investment scheme of trust in toxic of debt as related above, and Liberalism’s scheme of ever increasing moral hazard of securitization of US Government Bonds, GOVT, by the Too Big To Fail Banks, RWW, and securitization of mortgage backed bonds, MBB, by Mortgage REITS, REM, which continually invigorated risk-on trade in Nation Investment, EFA, and Small Cap Nation Investment, IFSM, whereby Ireland, EIRL, the Philippines, EPHE, New Zealand, ENZL, and Thailand, THD, were the investors favored countries of investment, as is seen in their combined Yahoo Finance Chart.

Homebuilding, ITB, Consumer Services, IYC, Biotechnology, IBB, Dynamic Media, PBS, and Global Financials, IXG, were the leading sector investments, as is seen in their combined Yahoo Finance Chart.

Now with the trade lower in Aggregate Credit, AGG, a see-saw destruction of wealth has commenced, where World Stocks, VT, and Aggregate Credit, AGG, will alternatively turn ever lower, on competitive currency deflation, which will be seen in Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading lower in value, as all forms of fiat wealth, equity, credit, currencies, will join commodities, falling into the pit of financial abandon, as the dynamos of global growth, and corporate profitability wind down Crony Capitalism, European Socialism, Greek Socialism; and the dynamos of regional security, stability, and sustainability, wind up Regionalism.

The combined policies of the world central banks to pursue debt deflation has finally resulted in a steeping of the US 10 30 Sovereign Deb Yield Curve, STPP, and a rise in the US Ten Year Interest Rate,^TNX, thereby making “money good” investments, such as Electric Utility Stocks, XLU, bad.

The chasing of yield, that is the pursuit of yield, came on ever increasing moral hazard. Soon actual hazard will come of age, as investors derisk out of all forms of fiat wealth, that is out of Stocks, VT, Credit, AGG, Major World Currencies, and Emerging Market Currencies, CEW. This will stimulate an investment demand for physical possession of gold bullion and trading in gold bullion in Internet Vaults, such as Gold Is Money and Bullion Vault.

One can follow the exhaustion of credit investments by using this Finviz Screener … http://tinyurl.com/cug8ot8 … of credit ETFs.

And one can follow the exhaustion of equity investments by using this Finviz Screener … http://tinyurl.com/cpnloj3 … of equity ETFs.

Of note, Malaysia, EWM, blasted terrifically higher, and Small Cap Pure Value Stocks, RZV, rallied to its previous high on the trade higher in HTZ, CAR, STAN, and URI. The rise in these is surprising in as much as the World Major Currencies, traded slightly lower. Gaming Stocks, that is Resorts and Casinos, BJK, rose strongly higher. Vice Stocks, such as those maintained in Fidelity Investments, VICEX, Mutual Fund, rose higher; this mutual fund has been one of the best performing mutual funds, and has outperformed the S&P 500 for the last two years.

In dispensation, that is in the administration plan of God for the fullness and completion of every age, era, epoch and time period, presented in Ephesians 1:10, Jesus Christ, the Son of God, is terminating the pursuit of yield, which created the very last upward burst in fiat wealth in Liberalism’s age of investment choice.

Authoritarianism’s age of diktat is commencing, as the wold is pivoting out of Peak National Sovereignty, Peak Seigniorage, that is peak moneyness, Peak Yield, Peak Credit, AGG, Peak Wealth, VT, Peak World Major Currencies, DBV, Peak Emerging Market Currencies, CEW, and Peak Prosperity. The global reflation trade that began in July 2012, with Mario Draghis’ OMT coming on line is over, through and done. Jesus Christ has completed the task given to him by the Father for producing Peak Everything in Liberalism’s age of investment choice.

At the hands of the Son of God, Inflationism is now turning to Destructionism.

Specifically with the dismissal of 15,500 Greek state workers, and the announcement of a likely termination of 30,000 Portugal state workers, Jesus Christ is terminating both Greek Socialism, which was the most extreme form of clientelism and anti competitive economics, as well as European Socialism, introducing the age of diktat. He is doing this via the release of the First Horseman of the Apocalypse, that is the rider on the white horse, who has a bow without any arrows, Revelation 6:1-2, to effect coup d etat, transferring the baton of sovereignty from nation states to regional nannycrats, such as the EU Finance Ministers, and regional bodies, such as the ECB.

Liberalism featured the Banker Regime founded on the Milton Friedman Free To Choose fiat money system, providing schemes which underwrote investment choice, such as free trade agreements, and the repeal of the Glass Steagall Act.

Authoritarianism features the Beast Regime of Revelation 13:1-4, founded on the regional governance, totalitarian collectivism, debt servitude, and austerity, and features the diktat money system, providing schemes which underwrite diktat, such as new taxes, bank bailins, capital controls, and labrinthian austerity measures.

Diktat Money was born out of the Cyprus Bank Deposit Bailin and is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, and the austerity that is experienced, such as heavy losses on large bank deposits via bailins, levying additional taxes, privatizations, and sale of a country’s central bank’s gold reserves, when sovereign regional leaders such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as the ECB, invoke mandates for regional security, stability, and sustainability.

2) … On Tuesday April 7, 2013, Transports, XTN, and Industrials, XLI, rose practically vertically higher. The Australian Dollar, FXA, traded lower for the second day forced Australia, FXA, and also Australia Dividends, AUSE, lower. The trade lower in the Australian Dollar, forced Major World Currencies, DBV, lower.

William Bennett in Daily Ticker interview relates Alternatives to a traditional four-year college include entering the workforce prior to college, joining the military, or going to a 2-year community college. Bennett discovered, for example, graduates of Jefferson College of Health Science and Nursing in Virginia make more after two years than those from the prestigious University of Virginia in Charlottesville.

Economic Policy Journal relates The Obamacare nightmare will officially start October 1, 2013. Ezekiel Emanuel, a former health-care adviser to President Obama and brother of Chicago Mayor Rahm Emanuel, spills the beans in WSJ. In less than five months, on Oct. 1, the Affordable Care Act’s insurance exchanges will go live online. Millions of Americans will suddenly be able to log on to a website and choose their own heath-care coverage from a menu of subsidized options for prices and coverage levels. As the opening day gets closer, anxiety is increasing over how well these online exchanges will function. Seventeen states and the District of Columbia are operating their own exchanges, seven states are operating exchanges in partnership with the federal government, and the federal government is running exchanges for the remaining 26 states that opted not to create their own. All are rushing to ensure that their systems get up and running on time, and nobody is forecasting a glitch-free rollout, not even the president. Transforming the U.S. health-care system—which is larger than the economy of France—is one of the most daunting administrative tasks government has ever confronted. There will be bumps in the road; this is inevitable. Setting up the exchanges will pose a host of technological challenges, such as digitally linking an individual’s IRS information (which determines a subsidy level) to the insurance offerings in the individual’s home area and to employment data—while simultaneously factoring in Medicaid eligibility … more here

Benton te writes, bank depositors beware, Cyprus model of deposit haircuts spread to Brazil.

Ulrich Rippert of WSWS writes Europe on the eve of mass working class struggles. Against the background of the greatest economic crisis since the 1930s, the European Union is showing its true face, that of a dictatorship of finance capital.

3) … On Wednesday April 8, 2013, World Stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, Global Producers FXR, Large Cap Growth, DNL, Semiconductors, XSD, rose strongly with European Financials, EUFN, and Emerging Market Financials, EMFN, leading World Financials, IXG, The Too Big To Fail Banks, RWW, and China Financials, CHIX, higher.

The National Bank of Greece, NBG, and Ireland’s IRE, European Financials, EUFN, led Europe, VGK to a new rally high. Greece, GREK, Italy, EWI, and Spain, EWP, rose strongly. Asia, EPP, rose near its previous rally high. The Too Big To Fail Banks, RWW, led US Shares, VTI, to a new rally high, and Emerging Market Financials, EMFN, led Emerging Markets, EEM, to a new high, on a new high in Emerging Market Currencies, CEW. Major World Currencies, DBV, traded slightly lower, falling a small amount under trend line support.

Small Cap Value Shares, RZV, rose to a new high.

It was the European Financials, EUFN, blasting 1.8% higher that led all of the yield bearing equities, higher. Notable the value shares International Small Cap Dividend, DLS, and Emerging Market Small Cap Dividend, DGS, rose strongly. The regulatory capture Pharmaceuticals, PJP, and the truly debt impaired Utilities, XLU, did not rise with other yield bearing stocks.

Countries rising strongly included GREK, Italy, EWI, Spain, EWP, Finland, EFNL, and the Netherlands, EWN. The Russell 2000, IWM, Sweden, EWD, The UK, EWU, UK Small Caps, EWUS, Germany, EWG, Germany Small Caps, GERJ, Turkey, TUR, Japan, EWJ, Japan Small Caps, JSC Hedged Japan, DXJ, as well as Thailand, THD, Taiwan, EWT, Emerging Asia, GMF, Sinagpore EWS, Singapore Small Caps, EWSS, China Small Caps, ECNS, and India, INP, rallied to new highs. Ireland, EIRL, The Philippines, EPHE, and New Zealand, ENZL, rallied near their recent highs.

The chart of the S&P 500, $SPX, showed a rise of 0.4% to close at 1,632.

Liberality of credit supported the strong rise in equity. Junk Bonds, JNK, Senior Bank Loans, BKLN, Ultra High Yield Bonds, UJB, rose to new highs. International Corporate Bonds, PICB, World Treasury Bonds, BWX, rose near their previous highs. Government Bonds, GOVT, and Aggregate Credit AGG, rose slightly.

The world central banks’ monetary policies of Global ZIRP have so inflated equities, that unprecedented investment mania has blasted stocks higher. The traditional meaning of investment has been not only warped, but has been totally corrupted by what amounts to free money entering the stock markets, enabling the speculative leveraged investment community to blow unprecedented bubbles in most all stock sectors.

Growth stocks that have no growth potential are terrifically bloated; these include NASDAQ Biotechnology, IBB, Dynamic Media, PBS, Clean Energy, PBD, Semiconductors, XSD, and Pharmaceuticals, PJP.

Nations that have no investment merit are the investor’s darlings; an example is Greece, GREK.

Banks are valued not because they have candidates for profitable lending returns, but because they are loaded to gills with debt that investors have been pursuing with the greatest of ambition; examples include NMR and NBG.

Risk assets, are trading like yield bearing stocks which have no risk at all, these include, the Small Cap Value Stocks, RZV; BPOP, POOL, BKE, SSI, ENV, STAN, EEFT, BGFV, TMH ,SIX, CNK, TMH

Stocks are not being pursued because they have investment merit, but simply because of their inherent credit dynamics, as well as the seigniorage, that is the moneyness, given to them by Ben Bernanke, Mario Draghi, and Haruhiko Kuroada.

These nephilim, giants of our times, have so warped wealth and so distorted wealth, that it is no longer reliable; fiat wealth has become truly that, fiat, having value simply by the mandate and decree of credit lords.

Jesus Christ said “As it was in the day’s of Noah, so it will be in days of the coming of the Son of Man.” In Noah’s time the nephilim, the offspring of the worldly god, were mighty men of renown. Men whose deeds were so beyond the normal deeds of men that legends arose marking that age of one of greatness, yet, they were destroyed in the global deluge. An inquiring mind asks, might the giants of world credit, be washed away in a soon coming awesome breakdown of excessive credit? Yes, that is what the bible reveals. Just as eight souls survived to regenerate mankind; eventually ten kings will rise to rule in ten regional zones.

4) … On Thursday April 9, 2013 Nation Investment, EFA, traded 1.0% lower with Europe, VGK, -1.0% and Asia Excluding Japan, EPP, -1.0%. Malaysia, EWM, -1.7, India, INP -1.6, India Small Caps, SCIN, 1.9, Poland, EPOL, -1.6, Turkey, TUR -1.5, Australia, EWA, -1.6, Thailand, THD, -1.2, Italy, EWI, -2.2, Spain, EWP, -1.7, Finland, EFNL, -1.2, Netherlands, EWN, -1.0, Sweden, EWD, -1.0, Mexico, EWW, -1.0

Sectors trading lower included Automobiles, CARZ, -1.5, Global Financials, IXG, -1.1, Global Consumer Staples, KXI, -1.0. Yield bearing sectors trading lower included Utilities, XLU, -1.5, Global Utilities, DBU, -1.3, Australia Dividend, AUSE, -1.1, World Real Estate, DBW, -1.0, Leveraged Buyouss, PSP, -1.0. Small Cap Reak Estate, ROOF -0.9.

The chart of the US Dollar, $USD, UUP, shows a 0.9% rise to close at 82.75.The chart of Major World Currencies, DBV, shows a rise to the lower edge of support, as well as to the apex of a massive consolidation triangle, portending a fall lower. And the chart of Emerging Market Currencies, CEW, shows a 0.6 trade lower from what is an evening star pattern, terminating its recent rally. Individual currencies trading lower included the Japanese Yen, FXY, -1.7%, the Swiss Franc, FXF, -1.4., the Euro, FXE, -1.0, the Australian Dollar, FXA, -0.9, the Swedish Krona, FXS, -0.8, the British Pound Sterling, FXB, -0.6, the Canadian Dollar, FXC, -0.5, the Indian Rupe, ICN, -0.3, and the Brazilian Real, BZF,- 0.3.

Credit trading strongly lower included on lower currencies included, International Corporate Bonds, PICB, and World Treasury Debt, BWX,.

5) … On Friday, April 10, 2013, Reuters reports Wall Street ends up for third straight weekly gain, with the chart of the S&P 500, $SPX, showing a rise of 0.4% to close at 1,634, with Nasdaq Biotech, IBB, Semiconductors, XSD, Retail, XRT, Dynamic Media, PBS, Small Cap Industrial, PSCI, Internet Retail, FDN, Software, IGV, Clean Energy PBD, Small Cap Purve Value, RZV, and Home Building, ITB, rising strongly. Yield Bearing Sectors rising strongly included Pharmaceuticals, PJP, and Telecom IST.

The chart of the US Dollar, $USD, UUP, shows a 0.9% rise to close at 83.17 as the chart of Major World Currencies, DBV, shows a continuing slight rise to stand just above the apex of a massive consolidation triangle, portending a fall lower. And the chart of Emerging Market Currencies, CEW, shows a parabolic 0.6% trade lower from a previous evening star pattern, terminating its recent rally.

On Friday, May 10, 2013, competitive currency devaluation entered its second day this week on the death of credit, as is seen in Aggregate Credit, AGG, trading parabolically lower. Distrust in the ability of debtors to pay back creditors has finally come of age, as investors rally World Stocks, VT, to a blow off market top. Bill Gross, manager of Pimco’s monster Pimco’s Total Return Fund ($292 billion under management) tweeted correctly today stating “The secular 30-yr bull market in bonds likely ended 4/29/2013”.

Individual currencies traded lower again today; these included the Swiss Franc, FXF, -1.0, the Indian Rupe, ICN, 1.0, the Japanese Yen, FXY, -0.9, the Brazilian REAl, BZF, -0.7, the Australian Dollar, FXA, -0.7, the Swedish Krona, FXS, -0.7, the British Pound Sterling, FXB, -0.6, the Euro, FXE, -0.4, and the Canadian Dollar, FXC, -0.3. Gold, GLD, is both a currency and a commodity, it traded 0.8% lower, which turned Commodities, DBC, 0.5%, lower.

Debt deflation, that is currency deflation, commenced the week ending May 10, 2013, most notably causing individual currencies the Australian Dollar, FXA, to trade lower, and driving up the interest rate on Global National Treasury Debt, BWX, which includes US Government Debt, GOVT, in particular the Interest Rate on the benchmark US Ten Year Note, ^TNX, which rose to 1.90%, which in turn induced the debt laden Electric Utilities, XLU, to turn lower; investors had been hotly pursuing these investments because of their high yield, but chasing of yield ended as bond vigilantes called interest rates higher across the board, which turned Aggregate Credit, AGG, lower.

The world central banks’ monetary policies of Global ZIRP, have finally turned “money good” investments, bad. A case in point is Australia’s Westpac Banking, WBK; in contrast, currency carry trade endowed, Lloyds Bank, LYG, rose strongly in a Global ZIRP grand finale finish. Failing of Global ZIRP, stimulated investors to derisk out of Nation Investment in Australia, EWA; in contrast Malaysia, EWM, rose strongly on Global ZIRP cool aid. And souring Global ZIRP, in particular the debt dynamics of Australia Dividends, AUSE, turned this investment lower, while investors pursued Pharmaceuticals, PJP, to its zenith. Another example of investors derisking on excessive credit policies, is the trade lower in Japanese Treasury Bonds, as seen in their inverse, JGBS, trading higher, (as Doug Noland reports that the 10-year government bond yield jumped 13 bps to the highest level since February), in contrast Japan, EWJ, and Japan Small Caps, JSC, rallied higher.

At the first of the year, on fears of global growth slowing and corporate profits falling, investors derisked out ot the Emerging Markets, EEM, in particular Peru, EPU, and its Copper Mining, COPX, Southern Peru Copper Corporation, SCCO, as is seen in their combined chart, only to be reinvigorated by Kuroda Abenomics in mid April.

Abenomics has greatly spurred investment in SNE, KUB, NMR, IX, IIJI, SMFG, MTU, ATE, NTT, as is seen in their combined chart.

Peru and Japan are polar opposites in Liberalism’s wildcat finance, a Doug Noland term, with rewards going to short sellers of the former, up until mid April 2013, and investors in the latter. Jesus Christ operating through Liberalism’s Schemes, such as leveraged buyouts, currency carry trade investment and moral hazard, has produced investment gains to those exercising wise discernment in investment choice.

As of the week ending May 10, 2010, Jesus Christ fully completed the dispensation, that is the economic and political plan of God, Ephesians 1:10, for Liberalism’s era of investment choice producing prosperity. And He is successfully introducing Authoritarianism’s age of diktat producing austerity, which will be characterized by wildcat governance, where sovereigns and seigniors, bite, rip and tear one another apart in the desperate attempt to be the top dog ruler and banker, who operate in Authoritarianism’s Schemes of new taxes, bank deposit bailins, capital controls, and labyrinthine austerity measures.

Barry Grey of WSWS writes The task is not to “occupy” Wall Street; it is to shut it down, redirect the vast resources that are squandered in the operations of this gigantic gambling casino to meeting social needs, and take the banks and corporations out of private hands so they can be run democratically for the benefit of society.

I respond, that Jesus Christ is busy chiseling out the tombstones for the Banker Regimes’ Asset Managers, such as BLK, WDR, EV, STT, WETF, AMG, IVZ, and is weaving the banners of sovereignty for the Beast Regime’s nannycrats such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm. And He will not finish His endeavors until all current forms of political and economic life are terminated and every man, woman, and child on planet earth is yoked into the Beast Regime of regional governance, totalitarian collectivism, and debt servitude as seen in Revelation 13:1-4.

Emerging Market Infrastructure, EMIF, had been a massive carry trade darling under Global ZIRP, it turned Emerging Markets, EEM, lower, all on Emerging market Currencies, CEW, trading lower.

Electric Utilities, XLU, closed the week sharply lower on a steepening 10 30 US Sovereign Debt Yield Curve, as is seen in the Steepener ETF, STPP, steepening and the Interest Rate on the US Ten Year Note, ^TNX, closing at 1.90%. And Mortgage REITS, REM, traded strongly lower, as Aggregate Credit, AGG, failed for the second time in two weeks, this time on falling individual currencies. Notable fallers included BWX, ZROZ, EDV, TLT, MBB, MUB, GOVT, PICB, BLV, LQD, EMB, UJB, and JNK. The Global Credit Bubble has finally burst.

With stocks, VT, Nation Investment, EFA, Small Cap Nation Investment, IFSM, and Global Producers, FXR, peaking higher this week, and individual currencies, such as the Australian Dollar, FXA, and Aggregate Credit, AGG, trading lower, Liberalism’s peak money, peak wealth and peak prosperity has been achieved.

And in as much as some 15,500 Greek state workers, and some 30,000 Portugal state workers are to be laid off at the behest of the EU Finance Ministers, peak democratic experience and peak nation state sovereignty has been achieved. Liberalism’s peak seigniorage, that is peak moneyness from the Milton Friedman, Free to Choose Banker Regime, has been achieved as well.

Authoritarianism’s Regionalism is replacing Liberalism’s Crony Capitalism, European Socialism, and Greek Socialism, and will be the basis for the Ten Toed Kingdom of Regional Governance, seen in Daniel’s 2:25-45, Statue of Empires, where ten toes consisting of a miry and non cohesive mixture of iron diktat and clay democracy form as ten zones of regional governance. This structure of sovereignty and seigniorage will eventually crumble, and out of it, the Sovereign, Revelation 13:5-10, and the Seignior, Revelation 13:11-18, will rise to establish a one world government, and a one world religion, based in Jerusalem, Daniel 9:25.

Signposts Of The Times relates We continue to believe that a European Superstate will arise soon and will fulfill the prophecy of Daniel, (Daniel 7:23-24), which will then morph into a world wide system of government with 10 similar economic entities administering the planet, (Revelation 17:12-13).

In CBS Video EU Leader: Federal Europe to become a Reality. Jose Manuel Barroso, the most powerful leader in the European Union, says Europe will become a united political federation within the next few years. The European Commission president is laying out plans for an “intensified political union” that matches the economic cooperation in the EU. That includes plans for an elected “president of Europe.” “This is about the economic and monetary union but for the EU as a whole,” The London Telegraph quoted Barroso as saying. “The commission will, therefore, set out its views and explicit ideas for treaty change in order for them to be debated before the European elections.”

6) … In commentary from around the web

Doug Noland reports weekly on the wealth of the sovereigns, that is of the world central banks; he relates Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $629bn y-o-y, or 6.0%, to a record $11.102 TN. Over two years, reserves were $1.282 TN higher, for 13% growth.

And he reports on discretionary wealth of the people reporting M2 (narrow) “money” supply jumped $33.6bn to a record $10.535 TN. “Narrow money” expanded 6.5% ($645bn) over the past year.

And he reports The U.S. dollar index jumped 1.2% to 83.14 (up 4.2% y-t-d). For the week on the upside, the Norwegian krone increased 0.2%. For the week on the downside, the Australian dollar declined 2.9%, the New Zealand dollar 2.7%, the Japanese yen 2.6%, the South African rand 2.3%, the Swiss franc 2.2%, the Swedish krona 1.4%, the British pound 1.4%, the Danish krone 1.0%, the euro 1.0%, the South Korean won 0.8%, the Brazilian real 0.6%, the Taiwanese dollar 0.4%, the Singapore dollar 0.4%, the Canadian dollar 0.2%, and the Mexican peso 0.1%.

Jack Chan of JC’s Buy and Sell Signals in his Stockcharts.com chart site, presents the chart of the Euro FXE, manifesting a dramatic rise in mid April 2013, only to manifest a severe breakdown on Friday May, 10, 2013 to close at 128.67.

Scott Grannis writes What’s good for Japan is good for everyone. As I mentioned last January, one of the biggest things happening on the margin is the decline of the Japanese yen. It has now fallen to 101 yen/$, a level not seen since late 2008. The big decline of the yen marks what will most likely prove to be the end of Japan’s deflation affliction, and it is causing a significant improvement in the economic fundamentals of the Japanese economy

I respond that rather than the being the end of Japan’s deflation affliction, the value of both its Treasury Debt, JGB and the value of its Stocks, NKY, EWY, JSC, DXJ, will be going into strong deflation as investors are derisking on Japan’s excessive credit policy. Japanese Treasury Bonds are trading lower, as seen in their inverse, JGBS, are trading higher, as Doug Noland of Prudent Bear reports the 10-year government bond yield jumped 13 bps to the highest level since February and as Tyler Durden of Zero Hedge reports JGB Futures halted limit down; which stands for now, in contrast with Japan Equity, EWJ, and Japan Small Cap Equity, JSC, rallying higher.

Austrian Economist Ludwig von Mises wrote In the eyes of cranks and demagogues, interest is a product of the sinister machinations of rugged exploiters. The age-old disapprobation of interest has been fully revived by modern interventionism. It clings to the dogma that it is one of the foremost duties of good government to lower the rate of interest as far as possible or to abolish it altogether. All present-day governments are fanatically committed to an easy money policy.

I comment, well, Déjà vu, Liberalism’s scheme of Quantitative Easing was pushed aggressively in Europe in August, 2012, and pushed aggressively in Japan in October 2012, with strong results showing in European Financials, EUFN, at those times, and then again, in mid April 2013.

Benton te writes Central bankers have been pushing for the same debt based consumption growth model even when most of the world has now been satiated with debt. Central bankers from most countries appear to have synchronized their actions. In short everyone seems as doing the same thing or singing the same tune. Central bank policies serially blow asset bubbles. Price distortions in the real economy from central bank policies and from other financial repression measures as well as other interventions reduce incentives for productive activities. On the other hand, central bank’s cheap money AND guarantees (explicit and implicit) on the financial markets encourage rampant speculations, thus driving up unsustainable bubbles. So money shifts to speculation on financial markets rather than on investments. Thus the parallel universe: booming financial markets amidst near stagnant economies. Yet bubbles from zero bound rates will reduce savings and capital accumulation. Such diminishing growth will impel for more easing. This means that central banks will keep pushing zero bound rates and asset buying programs to the limits.

I comment that the pursuit of Global ZIRP has produced all the fiat asset inflation that can be attained: the world stands at peak seigniorage, that is peak moneyness from the world central bankers interest rates cuts and other intervention initiatives.

Benton te continues, Central bankers have come to believe that a new order exists. The new paradigm: Sustained credit and money expansion under today’s modern central banking will have little effects on price inflation. So there are no limits for inflationism. Because of this policy making nirvana, they have even hailed as Superheroes and demigods by media.

I comment that today’s central bank leaders are modern day Nephelim, that is giants amongst us. Trust in their Liberal Schemes of Quantitative Easing has produced great gains for the speculative leveraged investment community, and has produced a fantastic moral risk enduced prosperity supporting a blossoming recreational consumer driven consumptive economy, seen in Consumer Discretionary Wealth, IYC, and Retail Wealth, XRT, soaring in value, and seen in a huge amount of disposable wealth existing in savings accounts as evidenced by the awesome rise in the chart of M2 Money.

Benton te adds Central banks don’t realize of the micro effects of their policies, particularly that each bursting of the bubble shrinks the real economy and makes them vulnerable to price inflation. The coming crisis will likely reveal more signs of this.

I comment that a number of nations are already evidencing price inflation because of the misguided policies of their central banks, these include Brazil, EWZ, China, YAO, and Argentina, ARG. And now India, INP, in an attempt to cut off price inflation, is attempting to restrict gold imports.

Benton te remarks So central bank policies will keep inflating on more asset bubbles that will become systemically bigger until the system cracks

I comment that the global government credit bubble, that is Aggregate Credit, AGG, burst this week, the week ending May 10, 2013, with ZROZ, EDV, TLT, MUB, MBB, GOVT, and BLV, LQD, and

BWX, PICB, and JNK, trading lower. And as a result, competitive currency devaluation commenced, in the leading individual currencies, FXA, FXY, FXS, ICN, FXF, FXB, FXE, BZF, and the emerging market currencies, CEW, as well.

A rising US Dollar, $USD, UUP, up this week near its late March high, and a Steepening 10 30 Yield Curve, $TNX:$TYX, beginning this month, that is May 2013, seen in the Steepner ETF, STPP, steepening, means that the monetary authority of the world central banks, has crossed the Rubicon of sound monetary policy, and is starting to make “money good” investments bad.

Investors deleveraged out of commodities, DBC, in particular, Gold, GLD, which is both a commodity, and a currency, as well as Oil, USO.

And at the end of the week, once again investors are derisking out of the Emerging Markets, EEM. Of note investors sold out of Korea, EWY, largely on fears of a possilbe war with North Korea. And investors sold out of New Zealand, ENZL, which as been a currency carry trade darling largely on the basis of the dynamics of debt held in its banks. Yield bearing investment trading lower this week included Australia Dividends, AUSE, Global Utilities, DBU, and Electric Utilities, XLU.

Benton te concludes Central banking bureaucracy have assumed political supremacy over the elected governments through the intensification of monetization of government debts. As Chicago University John Cochrane aptly notes: (italics original) Modern financial systems are fine. Modern political systems have abandoned rule of law in favor of a monarchic rule by discretion of appointed bureaucrats. That is incompatible with any financial system. Since actions of governments of crisis stricken nations have partly been shackled from too much debt, the next phase will not only be central bank easing but will soon include direct confiscation of savings (pensions and depositors).

Mike Mish Shedlock writes ECB ponders buying toxic debt of the periphery; Don’t worry, it will be be fiscally neutral and temporary. In an effort to stimulate small and medium, SME, lending the ECB considers acquiring banks toxic debt of the periphery. Via Mish translate from Spanish Libre Mercado.

The European Central Bank could “soon” start buying bad debts of Southern European countries in an attempt to end the fragmentation in the eurozone and boost funding to SMEs, as confirmed by the German ECB representative Jörg Asmussen.

“It’s part of the debate on lending to SMEs,” Asmussen said when asked about the measure, which was unveiled by the German newspaper Die Welt. The ECB has an “open mind” to do everything “within our mandate” to solve this problem, Asmussen explained in an appearance before the Economic Affairs Committee of the Parliament.

The goal, the German banker continued, is “revive the market asset-backed securities, particularly those backed by loans to SMEs, of course with strict supervision.” In any case, the ECB representative stressed that “liquidity is not what is preventing banks from lending” but “the lack of capital.”

For his part, Vice President of the Commission responsible for Economic Affairs, Olli Rehn, has said that in “many parts of southern Europe” live SMEs “financial trap”. “We are facing severe financial fragmentation in Europe, where similar types of companies must pay for credit interest rates significantly higher in southern Europe compared to the core countries,” said Rehn.

“It is very important that each European institution, within its mandate, work to overcome this funding and liquidity trap in southern Europe,” he insisted. “We have to complete the repair of the banking system as soon as possible, ensure its capitalization, build a banking union and resolve the liquidity trap,” stated the economic vice.

Asmussen seeks a complete banking union “as soon as possible” to break the “negative interaction” between banks and states and prevent recurrence of crises such as Cyprus.

“The Cypriot case has been a salutary reminder of the importance of establishing a banking union as soon as possible. Only then will we be able to break the negative interaction between states and their banking systems,” said the representative of the ECB during a hearing in the Economic Affairs Committee on Cypriot case.

The German banker also stressed that the EU must “urgently” a framework for resolution of financial institutions that include “a set of clear and known in advance” about how the losses will be shared among the different creditors, establishing a “preference for depositors”.

“The new framework should put depositors at the top of the hierarchy of creditors and ensure that the role of deposit insurance funds in the settlement is limited to guarantee to depositors” with less than 100,000 euros.

The ECB also wants a unique mechanism of resolution “with a strong central authority to take impartial decisions to minimize time and costs of the resolution.” This authority should have a resolution fund that has temporary public support and is “fiscally neutral”.

Scary Stuff! Talk of “temporary public support” ought to scare everyone in Germany to death. Heck, this kind of talk should scare the UK to death as well. It serves as a warning signal for the UK to exit the EU while it can.

Fiscally Neutral? Supposedly the proposal will have a “resolution fund” that is “fiscally neutral”. Hmm… Neutral to who? Taxpayers?

Banking union? Who does that benefit? Within Mandate? Asmussen says the ECB has an “open mind” to do everything “within our mandate” to solve this problem. Since when is it under ECB mandate to buy toxic debt of Southern European countries to stimulate SME lending?

Uncertainty Principle Yet Again. Seems to me banks lent too much money already to SMEs and are chocking on losses. Is it within ECB mandate to provide capital to failing institutions? I think not. Nonetheless, the Fed Uncertainty Principle is at play once again. Simply substitute ECB for Fed in the following corollary. Uncertainty Principle Corollary Number Four: The Fed simply does not care whether its actions are illegal or not. The Fed is operating under the principle that it’s easier to get forgiveness than permission. And forgiveness is just another means to the desired power grab it is seeking

I comment, moving beyond the Three Bailouts of Greece, and the Bailin of Cyprus, new Schemes of Authoritarianism’s Diktat Money System are being developed to further the Debt Union that came via LTRO 1, LTRO2, and OMT. The new Leaders’ Initiatives would develop both a credit union and a banking union, where the ECB, not the markets provide seigniorage, that is moneyness. This would be a transformation out of capitalism as investment risk would be terminated. It privatizes any profit and socializes the losses to all living in the Eurozone which are significant in amount, thus solidifying and expanding a debt union. The traditional concept of trust will be relegated to the dustbin of history; and a new trust, that being trust in regional sovereigns will be commanded for one’s observance.

In dispensationalism, that is in the political and economic plan of God for the completion of Liberalism and the introduction of Authoritarianism, Ephesians 1:10, Jesus Christ is developing Regionalism and is terminating Crony Capitlaism, European Socialism, and GreekCapitalism; the new framework, specifically one of diktat not treaty, is a scheme of regional integration.

This is the working of the First Horseman of the Apocalypse, Revelation 6:1-2, who is effecting a Eurozone Coup d etat, passing the baton of sovereignty from nation states to sovereign regional leaders and sovereign regional bodies. The integration of banks and states with the ECB would establish a defacto One Euro Govenment. Such a banking scheme places depositors’ funds at risk, and estabishes a regional political and monetary authority, with a monetary pope, and with monetary cardinals soon to follow. Surely nannycrats from banking, government, and industry would emerge to form councils of wise men to form statist public private partnerships to oversee regional factors of production and regional economic activity.

Germans cannot be Greeks, yet all will be one living in a zone of regional governance, totalitarian collectivism, debt servitude, capital controls and austerity measures. The periphery nations will be zombified dead hollow moons, revolving around planet Germany.

7) … Worship is the basis of virtue and economics is the basis of ethics.

Either one be elect or one be fiat.

The elect are individuals who worship God’s will and have experience and identity out of the divine nature.

The fiat are individuals who worship their own will, Colossians 2:23, and have experience and identity out of philosphy or religion.

The New Testatment presents God as a mysterious unity of three devine persons. God works through mysteries, that is through known unknowns to the glory and praise of His Name. Of course there be unknown unknows; these are the secret thing of God, Deuteronomy 29:29; but to the elect He gives wisdom and knowledge of his mysteries that one might feel after him and have concept of Him.

The presentation of the mystery of Christ comes via the apostles, that is God’s sent ones. The Apostle Paul communicates that Jesus Christ is God’s son and has appointed Him heir of all things. He being sovereign is the sole agent of the economy of God, Ephesians 1:10, and it is by His fateful working that one can exercise in virtue and ethics. or by His fateful destiny, live debased in carnality and in abject iniquity. Such have seared their conscience, and have lost all empathy, live without remorse, and be libertine or worse psychopaths.

Amongst the fiat, there be those known as Austrian Economists, who do live a life of discernable virtue. These believe themselves to be sovereign individuals, having economic agency working out their affairs and having ethics in human action, quoting Ludwig Von Mises, Human action is purposeful behavior. Or we may say: Action is will put into operation and transformed into an agency, is aiming at ends and goals, is the ego’s meaningful response to stimuli and to the conditions of its environment, is a person’s conscious adjustment to the state of the universe that determines his life. Such paraphrases may clarify the definition given and prevent possible misinterpretations. But the definition itself is adequate and does not need complement of commentary.

The Austrian Economists have a genuine and reliabe understanding of the principles of money, that is wealth, currrency, and credit, that is debt. These conservatives contrast sharply with Liberals such as Paul Krugman.

The elect have consciounness of Christ and endeavor to develop a good conscience. John McArthur of Grace To You writes in The Conscience Revisisted, Drugs, therapy, entertainment, they’re all used to silence a guilty conscience. But for the Christian, the conscience is the key to freedom.

A good conscience will deliver one out of temptation and establish one in heartfelt spriritual union wth Christ and will develop a keen understanding of His person. A good conscience will deter on from

• the carnal experience of retribution

• engaging in poneros self pleasing activities

• manifesting in intrusive, preeminent, mischevious, condescending or mean and crazy behavior and speech.

Simply through indwelling carnal nature, that is sin nature, or through repeated disregard of conscience, one stumbles in sin, that is doubt.

The elect are called to live in godliness, 2 Peter 1:6, mainly the fruits of the spirit, and experience Christ as one’s life, Colossians 3:4, and one’s all inclusive life experience, Colossians 3:11. They keep the word of His endurance, and shrink not from His Name, and thereby live in His presence and authority. They live a live of biblical seperation. They practice the New Man in Christ, mortifying that is putting to death the carnal desires that come up through temptation, so as to prevent the pain and dislocation that comes from stumbling and falling in sin. And live a life of ethical regard; for example, they pursue peace with all men, defraud no one, and do not make merchandise out of others.

In dispensation, Ephesians 3:10, Jesus Christ is working the mystery of righteousness to breathe life into His elect, and is working the mystery of iniquity to breed psychopaths to destroy the unsuspecting, the gullible and the disbedient to His Will that one avoid these destructive agents.

I reside in the inner city, its the very pit of psychopathy, and I see daily in Promethius Predator manner and in Alien Predaor like manner, that Jesus Christ is developing pychopaths to rule over others in every way they can.

Psychopaths are people who do not have multiple personality disorders, yet are people who manifest in different persons; these chameleons present different persons depending upon the situtation.

Liberalism’s situational ethics and values clarification, have been the fertilizer that have enabled pscyhopaths to flourish.

Psychopaths are people who

• have no real understaning of important concepts, or who twist, and pervert all understanding of critical ideas to suit their whimsical fantasies.

• cannot be reasoned with.

• have life satisfaction that comes from being preeminent or from being mean and crazy.

• practice predatory speech and behavior intermittently, and come out most visciously when opportunity presents.

• live for today, and have no regard for eternal things as they disregard the concept of a Judgement Day by God.

• often appear witty, charming, a nice gal, or a good guy; its all pure “show”.

• have social flare, that is they are intrusive, preminent, gossipy, complimentary, mishcevious, devious, loud, condescending or derogatory, as they feel an urge to suit their ambitions; they are fully adept at manifesting in all forms of iniquity.

8) … The United Church of Godhas new president

I am a John 3:16 Christian, and not of any denomination, and most definitely not a Sabbatarian.

My interest in bible prophecy started when I started listening and viewing the radio and television personality Garner Ted Armstrong. Wikipedia relates that in the fall of 1989, he travelled to Berlin to do on the spot radio broadcasts covering the fall of the Berlin Wall. This was coming full circle, as he had been in Berlin in 1961 as well. The CoG has long presented that a United States of Europe would one day become a reality. Soon, in glory, I look forward to meeting Garner.

CoG Writer relates Victor Kubik is UCG’s new president.

The World Achieves Peak Sovereignty, Prosperity, Money, And Currencies …. Soon The Diktat Money System Will Arise Out Of A Financial Apocalypse Stemming From Europe’s Nordic Latin Ethical Divide

Financial Market Report for the week ending Friday March 8, 2013

1) … On Tuesday, March 5, 2013, World Stocks, VT, rose largely on US based stocks; sectors rising strongly included:
Solar Energy, TAN, 2.3%
Small Cap Energy, PSCE, 2.1%
Semiconductors, XSD, 2.1%
Too Big To Fail Banks, RWW, 2.0%, a new high
Automobiles, CARZ, 1.9%
US Infrastructure, PKB, 1.8%, a new high, includes companies such as those in this Finviz Screener.
Transportation, XTN, 1.8%, a new high
Small Cap Industrials, PSCI, 1.8%,
Home Construction, ITB, 1.7%
Global Producers, FXR, 1.6%
Energy Service, OIH, 1.6%
Industrial Office REITS, FNIO, 1.6%
Global Engineering, Design, and Build, FLM, 1.6%,
Aerospace and Defense, PPA, 1.6%,
Business Services, seen in this Finviz Screener, 1.4%
Airlines, FAA, 1.4%, a new high
Retail, XRT, 1.3%, a new high
North American Software, IGV, 1.2%, a new high
Biotechnology, XBI, 1.1%, a new high
Networking, IGN, 1.0%
World Banks, IXG, 1.0%
Internet Retail, FDN, 0.9%, a new high
Consumer Discretionary, IYC, 0.8%, a new high
IPO’s, FPX, 0.7%, a new high
Paper and Wood Producers, WOOD, 0.7%, a new high
Consumer Staples, KXI, 0.6%, a new high
Utilities, XLU, 0.5%, a new high

Brian Louis of Bloomberg reports Prices for U.S. commercial property are expected to climb in the next six months, extending a rebound that has sent values close to levels reached at the market’s peak in 2007, according to Green Street Advisors. Prices climbed 1% in February and are within 1 percentage point of their August 2007 high. The chart of Office REITS, FNIO, shows a 1.6% gain on the day, 9% gain y-t-d, and 18% gain in the last year.

North American Software, IGV, rising included MSFT, INTU, CRM, CDNS, N, WDAY, ADBE, N, PLUS. CVLT, MANH, ADSK, ORCL. Internet Retail, FDN, rising included EQIX, YHOO, GOOG, AMZN, TRIP, GSOL, OPEN, AOL, WWWW, SFLY, VCLK. Biotechnology, XBI, rising included, CELG, AMGN, GILD, BIIB.

Yield bearing sectors rose strongly; these included Dividend Appreciation, VIG, 0.9%, Dividend Excluding Financials, DTN, 0.8%, Mortgage REITS, REM, 0.7, US Real Estate, IYR, 0.7%, Small Cap Real Estate, ROOF, 0.6%, Utilities, XLU, 0.5%; Dividend Growth, VIG, all of these to new highs.  Dividend paying large cap growth industrial stocks rising strongly included Verizon, VZ, Disney, DIS, Boeing, BA,General Electric, GE, 3M, MMM, United Technologies, UTX, Whirlpool, WHR,  Chevron, CVX, Cisco Systems, CSCO,

Utilities rising strongly included DUK, XEL, WEC, LNT, POR, DTE, AEP,  PNW, CNL, UNS, BKH, NEE.  Chinese Utility, HNP, whose price is supported by the PBOC jumped to a new high.

Despite World Stocks, VT, and Small Cap Nation Investment, IFSM, rising to new highs, Nation Investment, EFA, Emerging Markets EEM, also rose, but closed below their recent highs.

2) … On Wednesday, March 6, 2013, World Stocks, VT, traded unchanged, sectors rising included:
Creditor Services, seen in this Finviz Screener, 0.6%
Business Services, seen in this Finviz Screener, 0.3%. Companies that have performed well in the last six months include USAT, ENOC, FLT, FNGN, TISI, ICGE, DLX, MMS, and ADS
Steel, SLX, 2.4%,
Mining. PICK, 1.4%
Copper Mining, COPX, 1.3%
Small Cap Energy, PSCE, 1.1%
Automobiles, CARZ, 1.0%
Networking, IGN, 0.7%,
Pharmaceuticals, XPH, 0.5%, new rally high
Leveraged Buyouts, PSP, 0.4%, new rally high
Small Cap Industrials, PSCI, 0.4%, new rally high
Homebuilding, ITB, 0.2%, new rally high
Regional Banks, KRE, 0.3%, new rally high
To Big To Fail Banks, RWW, 0.2%, new rally high

The chart of US Stocks, VTI, shows a 1.2% blast higher; and Global Producers, FXR, rose 0.3%, as US Based Companies, Banks and Asset Managers rallied strongly; these included:
Investment Banking, JPM,
Industrial Textiles, MHK
Industrial Gases, ARG,
Communications Equipment, QCOM, MSI, ARRS
Home Improvement Stores, HD, PIR, FBHS, LEG, LL,
General Building Materials, APOG, TREX, BECN, MAS
Railroads, ARII, WAB,
Heavy Construction, MTZ,
Contractors, EME
Small Tools, SNA, LECO, SWK, TTC
Industrial Equipment Distributors, DXPE, WCC, AIT,
Industrial Equipment, WTS, NPO, HEES, CIR, B, PH,
Industrial Electrical Equipment, AOS, AME, ETN,
Metal Manufacturing, WOR, VMI
Semiconductors, TXN, MU
Paper, BZ, KS, CLW, IP,
Packaging, MWV, PKG, GPK, SEE
Timber, PCL,
Aerospace, BA, BEAV
Appliances, WHR, LII
Diversified Machinery, CFX, IEX, MIDD, BGG, GE, FLS, XYL, ITT, AVY, PLL,
Energy, COG, MPC, TSO, HFC, LNG, PSX,
Consumer Discretionary, VMED, TWX, CMCSA, VIAB, AOL, DISCA,
Recreational Vehicles, WGO
Cement, TXI, EXP
Toys, MAT
Advertising Agencies, LAMR, IPG, OMC
TV Broadcasting CBS, NXST,EVC, BLC, GTN, FSCI
Radio Broadcasting, SIRI
Data Storage, SNDK
Information Technology, CSC, VRTU, IT
Chemical Manufacturers, GRA, ECL
Scientific Instruments, ROP, BMI, BRKR, AFFX, FEIC
Dig and Dirt Moving Stocks, CR, MTW
Restaurants, KKD, LUB, JMBA, SONC, JACK, DPZ, DENN, DNKN, EAT, DFRG, BKW, RUTH, AFCE,

Gold and Silver Mining Stocks, GDX, GDXJ, SIL, SILJ, seen in this Finviz Screener rose strongly as Gold, GLD, rose, 0.6%, and Silver, SIL, rose 3.6%.

LED Manufacturer, CREE, blasted higher as GreenTech Media reports Lighting milestone: Cree unveils warm white LED for less than $10

Japan Small Caps, JSC, Japan, EWJ, and Hedged Japan, DXJ, rose strongly highe; and Phillippines, EPHE, and Thailand, THD, rose to new highs, as UltraShort the Yen, YCS, rose vertically.

Major World Currencies, DBV, rose, to its former high, being taken higher by the US Dollar, $USD, UUP, and being taken higher by World Stocks, VT, and US Stocks, VTI, which both rose higher. Emerging Market Currencies, CEW, continued lower from its recent high.

Under liberalism debt became money, that is wealth, and debt was used to create even more money.  The Liberty Crier presents the YouTube Paul Grignon’s 47-minute animated presentation of “Money as Debt” which tells in very simple and effective graphic terms what money is and how it is being created. It is an entertaining way to get the message out. The Cowichan Citizens Coalition and its “Duncan Initiative” received high praise from those who previewed it. I recommend it as a painless but hard-hitting educational tool and encourage the widest distribution and use by all groups concerned with the present unsustainable monetary system in Canada and the United States.

PowerShares Leveraged Buyouts, PSP, is an example of how Liberalism’s Asset Managers, which also includes Blackrock, BLK, Waddell and Reed, WDR, Eaton Vance, EV, State Street, STT, and Wisdom Tree Investments, WETF, coined debt as wealth. A current LBO example is seen in the Reuters report KKR to Acquire Gardner Denver for $3.74B.

Sridhar Natarajan of Bloomberg reports U.S. loan funds recorded $1.1 billion of inflows this week, extending their position as the best-performing asset class of 2013, according to Bank of America Corp.  Investors added to record-setting deposits into funds that purchase floating-rate debt in January and February. The holdings have seen assets expand by 14% this year. The price of leveraged loans climbed to 97.85 cents on the dollar yesterday, the most since July 2007.

Kristen Haunss of Bloomberg reports Collateralized loan obligations paying the lowest rates in five years are being snapped up by investors, providing the fuel that’s contributing to the biggest surge in corporate buyouts since before the financial crisis.  The top-rated portion of a $420 million CLO sold by a unit of Prudential Financial Inc. paid interest at 110 bps more than the London interbank offered rate, the least offered on slices rated AAA since February 2008. About $19 billion of CLOs have been sold this year, following sales of $52.6 billion in 2012 that were the most since the peak of $94 billion in 2007.

Another example of debt becoming wealth is carry traded investment leveraging up of corporations with high Long Term Debt To Equity Ratios, these include DENN, CPSS, HEES, ADS, CAR, LBTYA, FUN, ETE, SBAC, MAS, DNKN, AIV, KBH, NEE, TAL, CLX, FSM, PKOH, OI, SPG, RJET, NMR, SFI, TSLA, PT, CYH, HMA, S, SPB, NXPI, MTW, AEPI, TEF, ANGI, RCI, BYI, EAT, GMT, CIT, CAP, HSH, BKW,  GE, BLX, NEWS, LAMR, R, GPK, IGTE, KOP, CMS, SCTY, MBT, PCL, TGH, RM, AFCE, CNP, CACC, CSV, CSU, AL, JAH, VIP, HOG, CZZ, ROC, IP, SLH, JPM, BA, NCR, DLX, TRN, HSY, GWR, WM, MIC.

High Yield Corporate Bonds, HYG, traded higher; these have been issued with ever increasing frequency to buy corporate shares, and thus create wealth, that is money.  Holly Ellyatt of CNBC asks Credit boom warning? Buybacks hit $1 Trillion.  Corporate buybacks have surpassed the $1 trillion mark for the first time since 2009, a sign the credit boom is reaching new heights, Brian Reynolds, chief market strategist at Rosenblatt Securities said on Wednesday. “Buyback announcements for the S&P have now topped the trillion dollar mark for this credit boom. And even though this boom is about to begin its fifth year, this past month has seen the fastest growth for buyback announcements, as if CEOs are making up for lost time,” Reynolds said in a note. (Read More: Is Corporate Behavior Too Bubblicious in Bond Market?) He said buybacks, where a company repurchases its own outstanding shares to reduce the number of shares in the market, have helped boost share prices. “Buybacks have been the main driver of higher equity prices during the current credit boom, which began in 2009, as all other major stock market participants combined have been net sellers.”

3) … On Thursday, March 7, 2013, World Stocks, VT, and US Stocks, VTI, continued higher with Long Term Care Facility, CSU, Capital Senior Living, leading its competitors higher as is seen in the ongoing combined Yahoo Finance chart. Sectors trading higher included Networking, IGN, Small Cap Energy, PSCE, Semiconductors, XSD, US Infrastructure, PKB, Energy Production, XOP, Airlines, FAA, Retail, XRT, Biotechnology, XBI, and Aerospace and Defense, PPA, seen in this Finviz Screener, being led higher by Boeing, BA.

Nation Investment, EFA, rose but remained below its recent high as Sweden, EWD, Norway, NORW, Finland, EFNL, Netherlands, EWD, Ireland, EIRL, led Italy, EWI, Spain, EWP, and Germany, EWG, higher. Thailand, THD, and Australia, EWA, led Asia, excluding Japan, EPP, higher. Taiwan, EWT, rose higher. Brazil, EWZ, EWZS, Russia, RSX, ERUS, India, INP, SCIN, traded higher. Mexico, EWW, and Argentina, ARGT, traded higher.Stefan Steinberg of WSWS reports European economy contracts as stock markets soar. Japan Small Caps, JSC, and Japan, EWJ, traded lower from their vertical rally.

Major World Currencies, DBV, traded unchanged at yesterday’s new high of 27.02. The Swedish Krona, FXS, the Swiss Franc, FXF, the Indian Rupe, ICN, the Euro, FXE, and the Brazilian Real, BZF, traded higher, as the Japanese Yen, FXY traded lower. The chart of the EUR/JPY showed a 2.0% blast higher to 124.38.

4) … On Friday, March 8, 2013, the world has most likely achieved peak money and currencies.
Marc Jones reports World shares hit their highest level since June 2008 and the dollar touched a fresh 3-1/2-year high against the yen on Friday, ahead of U.S. jobs data expected to point to a continuing pick up in the world’s biggest economy. China also gave markets a boost as official data showed February exports grew 21.8 percent versus a year ago, more than double the expected rise. European shares, VGK, which have rebounded strongly this week after last week’s Italian election and U.S. spending cuts-related wobble, opened up 0.5 percent. That put them on track for their biggest gains since the opening week of the year. In Asian trading Japan’s Nikkei had hit a 4-1/2 year high. “There appears to be a strong risk-on mood in the market at the moment,” said Ken Wattret, co head of European market economics at BNP Paribas. “The negativity from the Italian elections was shrugged off pretty quickly, the Fed has made it clear that its policy will remain accommodative. If we get a get a good set of payrolls numbers, that will further fuel that sentiment.”
Mark Santoli of Yahoo’s Unexpected Returns Blog writes Upbeat jobs data won’t sway a wait-and-see Fed The news on jobs was good, and the market discussion quickly pivoted to whether the U.S. economy was ready to be weaned from the Fed’s extra easy monetary nourishment. In related article, Jonathan Spicer of Reuters reports Fed mulls putting a “not for sale” sign on its assets. The Daily Ticker in video report relates Unemployment hits four year low: Time to break out the confetti?  Jobs growth in February beat expectations and the unemployment rate hit a four-year low of 7.7%.
Peak Money, that is Peak Stock Wealth, was likely established today February 8, 2013, as World Stocks, VT, rose 0.4%, to close at a new high of 52.45, manifesting a three white soldiers candlestick chart pattern suggesting that the rally in stocks globally is over. The Phillippines, EPHE, Thailand, THD, Australia, EWA, Australia Small Caps, KROO, Australia Dividend, AUSE, and Indonesia, IDX, rose to new highs.
US Stocks, VTI, rose 0.5%, to close at a new high of 80.27. Global Producers, FXI, rose 1.4%, to close at a new high 21.89, manifesting what may turn out to be an evening star candlestick. Sectors rising strongly included the following, all rising to new rally highs: Airlines, FAA, 1.5%, US Infrastructure, PKB, 1.4%, Small Cap Industrials, PSCI, 0.9%, Transportation, XTN, 1.3%, Retail, XRT, 0.9%, Home Building, ITB, 1.0% Consumer Discretionary, IYC, 1.0% Small Cap Energy, PSCE, 1.3%, Aerospace and Defense, PPA, 0.9%, Pharmaceuticals, XPH, 0.6%, Paper and Wood Producers, WOOD, 0.4%, IPOs, FPX, 0.4%,  Internet Retail, FDN, 0.4%, LBOs, PSP, 0.4%.
World Banks, IXG, traded higher.  Bank of America, BAC, led C, KEY, BK, higher taking the Too Big To Fail Banks, RWW, to a new high. Regions Financial, RF, led Regional Banks, KRE, seen in this Finviz Screener, to a new high. JP Morgan, JPM, led Investment Bankers, KCE, to a new high. The AP reports Fed says 18 biggest US banks in stronger position. The nation’s largest banks are more prepared to withstand a severe U.S. recession and a global downturn than at any time since the 2008 financial crisis, the Federal Reserve said Thursday following its annual “stress tests.”

The Too Big To Fail Banks are declared by Attorney General Eric Holder to be too big to hold accountable. Bloomberg reports Too-Big-To-Fail Banks limit prosecutor options, Holder testifies. The size of the largest financial institutions, RWW, has made it difficult for the U.S. Justice Department to bring criminal charges, Attorney General Eric Holder said. Criminal charges against a bank, something that could threaten its existence, may also endanger the national or global economies in the case of the largest ones, because of their size and interconnectedness. That has “made it difficult for us to prosecute” some of those institutions, Holder said today at a Senate Judiciary Committee hearing. And Bloomberg reports AIG betting on homeowners as Benmosche chases yield. American International Group, AIG, the insurer that was rescued by the U.S. government in 2008 after soured bets on mortgage securities, MBB, is building a unit to buy individual home loans amid a rebound in the housing market. AIG plans to buy loans, MBB,  backed by its United Guaranty Corp. unit, the largest seller of traditional private mortgage insurance last year, according to Donna DeMaio, 54, the unit’s chief executive officer. The debt, MBB, will be held as long-term investments by AIG insurance companies. AIG has boosted investment in U.S. property markets less than five years after real-estate wagers forced the government to rescue the insurer, once the world’s largest. The Fed had to step in after AIG sold derivatives to banks protecting them against losses on housing debt, with the U.S. bailout reaching $182.3 billion.

China stocks, YAO, gained 0.9%, this week, which compares with Sweden, EWD, which gained 1.8%, and world stocks, VT, which gained 2.1%, both rising to new highs.  Deutsche Welle reports Sweden’s State Owned Utility Vattenfall to cut 2,500 jobs

Bloomberg reports China’s property stocks, TAO, plunged the most since June 2008 after the government intensified a three year campaign to cool the real estate market, ordering higher down payments and stricter enforcement of sales taxes. The Shanghai Stock Exchange Property Index lost 9.3% at the close of trading, its biggest drop since June 19, 2008. China’s cabinet on March 1 told cities with ‘excessively fast’ price gains to raise down-payment requirements and interest rates on second-home mortgages and ordered individuals selling properties to ‘strictly’ pay a 20% tax on the sale profit when the original purchase price is available, a levy that is being easily avoided.

Bloomberg reports Bloomberg China’s property curbs in the past decade have been unsuccessful and the new round of measures will slow property sales, said billionaire Vincent Lo, also a member of the government’s advisory board.  ‘Certainly they haven’t been,’ said Lo, chairman of Shui On Land Ltd., a Shanghai-based developer. ‘Had they been successful, home prices wouldn’t have risen higher the more the government curbed.’  China on March 1 imposed its toughest curbs in a year, ordering the central bank to raise down-payment requirements and interest rates for second mortgages in cities with excessive price gains, enforcing a property sales tax and telling local governments with the biggest price pressures to tighten home-purchase limits.

Aaron Back of Dow Jones reports Chinese policy makers sent signals that Beijing is preparing to tighten monetary policy, as inflation risks rise along with a recovering economy.  At the annual meeting of the country’s legislature Tuesday, Chinese Premier Wen Jiabao set a lower target for money-supply growth, a clear sign authorities want to rein in lending and liquidity in the financial system. And Wednesday, a vice governor of the central bank and one of its external advisers both argued that excess liquidity needs to be mopped up to stop inflation from rising. Inflation in 2012 was subdued, but economists widely expect it to be rising again this year on higher food prices. Inflationary pressures also are showing up in the property market, prompting Beijing to unveil new taxes and restrictions on apartment sales last week.
The S&P 500, $SPX, traded by SPY,  jumped 0.4% on the day, 2.2% on the week, and 9.2% y-t-d.
Bonds, BND, traded strongly lower, being led so by US Government Treasuries, GOVT, such as Mortgage Backed Bonds, MBB, from their peak on December 6, 2012, as World Stocks, VT, continued rising. Municipal Bonds, MUB, traded lower on the Sequester.
Monetization of debt by the World Central Banks, that is monetary policies of Quantitative Easing by the US Fed, Open Monetary Transactions by the ECB, Monetary Injections by China’s PBOC, and Abenomics by the Bank of Japan, has resulted in a strong sell of World Treasury Bonds, BWX, US Government Debt, GOVT, and Mortgage Backed Bonds, MBB; and has created a demand for the most toxic of debt, such as Senior Bank Loans, BKLN, Junk Bonds, HYG, and distressed investments taken in by the Fed under QE1, and traded by Fidelity Mutual Fund, FAGIX, and which accounts for a great deal of the debt held by investment banker JPMorgan, JPM, and which  closed at an all time high of 9.69.
Closed End Stocks, CSQ, rose, as Closed End Debt, PFL, traded lower, suggesting that the Risk On Debt Drive Rally is coming to an end, with confirmation coming from the Risk On ETN, ONN, trading at strong resistance at 28.25 this week.

The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, has been steepening since December 6, 2012, when Aggregate Credit, AGG, traded lower. A Steepening Yield Curve, seen in the Steepner ETF, STPP, rising, reflects that bond vigilantes have loose control of interest rates, which will result soon in turning “money good; investments bad, when currency traders start a global currency war by introducing competitive currency devaluation, causing derisking out of World Stocks, Nation Investment, EFA, Small Cap Nation Investment, IFSM, Emerging Markets, EEM, and Global Producers, FXR, and deleveraging out of  US Commodities, USCI, and Global Commodities, DBC.

Doug Noland reports what is likely to be peak Sovereign Wealth. Federal Reserve Credit jumped another $7.2bn to a record $3.085 TN.  Fed Credit expanded $299bn over the past 22 weeks.  In the the past year, Fed Credit expanded $220bn, or 7.7%.  Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $682bn y-o-y, or 6.6%, to $10.951 TN.  Over two years, reserves were $1.586 TN higher, for 17% growth.

It is likely that Peak Consumer Wealth has been achieved as Doug Noland reports M2 (narrow) “money” supply fell $22.6bn to $10.390 TN.  ”Narrow money” expanded 6.4% ($622bn) over the past year.  For the week, Currency increased $2.5bn.
Peak Currencies was likely achieved today February 8, 2013. The US Dollar, $USD, UUP, continued higher, as the Japanese Yen, FXY, traded strongly lower. Major World Currencies, DBV, of which the US Dollar is a component, traded to a new high of 44.26, manifesting a dark cloud covering candlestick in its chart pattern, suggesting that competitive currency devaluation is about to commence with world currencies selling off and carry trades unwinding, causing derisking out of stocks and deleveraging out of commodities.  Emerging Market Currencies, CEW, topped out on February 5, 2013. Look for Yen, FXY, based carry trades, such as the EUR/JPY, featured in Action Forex Report with a close at 124.82, to trade lower.  Ira Iosebashvili of the WSJ reported “Did China just lambaste Japan over its weaker yen, or did we witness an example of carefully crafted diplomacy?  Gao Xiqing, president of the China Investment Corporation, minced few words in his interview with the Wall Street Journal.  He warned Japan, which has seen its yen fall by 20% against the dollar since September, against treating its neighbors like a ‘garbage bin,’ and that starting a currency war would ‘not only be dangerous for others but eventually be bad for yourself.’  Mr. Gao’s words made a bold contrast with a statement issued by the Group of 20 nations, which includes China, last month.
The U.S. dollar, $USD, UUP, rose 0.6% to close at 82.77, up 3.8% y-t-d.  For the week on the upside, the Brazilian Real, BZF,  increased 2.3%, the Indian Rupe, ICN, 1.7%, the Mexican Peso 1.0%, the Swedish Krona, FXS, 0.5%,, the Norwegian Krone 0.5%, the Australian Dollar, FXA, 0.4% and Emerging Market Currencies, CEW, 1.7%. For the week on the downside, the Japanese Yen, FXY, declined 2.6%, the Swiss Franc, FXF, 0.9%, the British Pound Sterling, FXB, 0..6%, the Singapore Dollar 0.6%, the New Zealand Dollar 0.4%, the South African Rand 0.3%, the Canadian Dollar, FXC, 0.2%, the Danish krone 0.2%, the Euro, FXE, 0.2% and the Taiwanese dollar 0.1%.
The ratio of World Stocks, VT, to Commodities, DBC, VT;DBC, and the ratio of US Stocks, VTI, to US Commodities, USCI, VTI:USCI, are at all time highs indicating the overvalued and manic nature of today’s stock market.
Alex Kowalski of Bloomberg reports:Former Federal Reserve Chairman Paul Volcker said U.S. central bank officials may find it difficult to rein in their historic stimulus at the appropriate time because ‘there is a lot of liquor out there now.’ … ‘At some point when the worm turns and the party is getting under way, to use that old analogy, at what point do you begin retreating?’ Volcker said ‘You can make a mistake and go too quick, but the much more frequent mistake in my judgment is you go too slow, because it’s never popular to take the so-called punch bowl away or to weaken the liquor.’
Vivien Lou Chen of Bloomberg reports Benefits of Fed adopting a ‘no asset sale’ approach are ‘compelling enough’ that central bank has ‘good chance’ of adopting strategy, JPMorgan’s chief U.S. economist Michael Feroli writes. [The] move would provide ‘some modest’ further near-term     stimulus, reduce concerns about financial instability risks, limit future losses on Fed balance sheet.

Bloomberg: reports China’s foreign currency reserves, which have surged more than 700% since 2004, are enough to buy every central bank’s official gold supply — twice. China’s foreign reserves surpassed the value of all official bullion holdings in January 2004 and rose to $3.3 trillion at the end of 2012. The price of gold increased 263%percent from 2004 through Feb. 28, with the registered volume little changed. By comparison, China’s reserves rose 721% through 2012, while the combined total among Brazil, Russia and India rose about 400% to $1.1 trillion.  Dollars brought into China are sold to banks, which in turn sell the greenbacks to the central bank, increasing the reserves.”

5) … Commentary from Doug Noland in article Q4 2012 Flow of Funds. The quarter was noteworthy for the big jump in Credit growth and the even wider divergence between strong Credit and Financial markets and weak economic performance.  A jump in (non-financial) Credit expansion to a 6.2% pace equated with a barely positive (0.1%) real GDP reading.  It would be easier to dismiss this as an anomaly if it wasn’t such a prominent global dynamic (i.e. China, India, Brazil, etc.).  As for the maladjusted U.S. economy, we’ve reached the phase were it requires exceptionally strong Credit expansion (and overheated markets!) to attain what most economists would view as “normal” growth.
Most of the ongoing inflation in asset prices and incomes is either directly or indirectly related to Washington’s extraordinary policymaking.  Since mid-2008 (18 quarters), publicly held Treasury market debt has increased 120% to $11.569 TN.  Federal debt (includes some other obligations) doubled to $13.469 TN, increasing over this period from 46% of GDP to 85%.  State & Local debt increased 33% in 18 quarters to a record $3.732 TN.
Huge federal expenditures and deficits coupled with the Fed-induced collapse in borrowing cost have lavished inflated earnings and cash-flows upon corporate America.  Despite these inflated earnings, ultra-loose financial conditions have nonetheless incited a mini boom in corporate borrowings.  Corporate bonds increased SAAR $719bn during Q4 to a record $12.511 TN.  For the year, Corporate bonds jumped $527bn, or 4.4%.
A few years back I opined that it would take roughly $2 TN of annual system Credit growth to more fully reflate the deeply maladjusted economy.  After four years of outrageous fiscal and monetary stimulus, our Credit system is poised to possibly reach this milestone in 2013.  The good news is that jobs are growing at a decent clip (as one would expect with ultra-loose financial conditions and strong corporate borrowings).  The bad news is that this reflation has required a doubling of federal debt coupled with incredible Bubble-inducing monetary measures.
The government finance Bubble has significantly inflated household incomes and corporate earnings, a Bubble dynamic that has worked to incite speculation and inflation throughout equities and corporate debt markets.  The reflation in securities and, increasingly, real estate markets has again inflated Household Net Worth.  Perceived gains in wealth and ongoing (government policy-induced) income growth have spurred boom-time spending levels, in the process sustaining the consumption and services-based U.S. economy.  Ignore the underlying Credit dynamics and things almost look OK.
Importantly, the government finance Bubble has succeeded in sustaining the U.S. “Bubble Economy” structure that evolved over the prolonged Credit Bubble period.  This has ensured unending Current Account Deficits and endless dollar liquidity; historic global financial and economic imbalances; and attendant myriad Bubbles around the world.  Desperate global central bankers, meanwhile, are content to disregard precarious Bubble excess throughout global risk markets – fixated instead on acute economic and financial fragilities.  Flawed economic doctrine, analytical frameworks and policies over years fostered deep economic maladjustment and market Bubbles.  Resulting fragilities these days ensure even more aggressively “activist” policy measures viewed as necessary to bolster an acutely vulnerable global “system.” Two of the savviest “macro” analysts of this era – Stan Druckenmiller and Marc Faber – this week separately warned that this central banker-induced boom will end badly.

6) … The world has achieved peak sovereignty.  News reports illustrate that political chaos is developing in Italy.  The diktat money system will arise out of a Financial Apocalypse stemming from political and economic chaos in Portugal, Italy, Greece and Spain, more specifically out of Europe’s Nordic Latin ethical divide.
This week the National Bank of Greece, NBG, -5.6%, led Greece, GREK, -4.9%, lower as Robert Stevens of WSWS writes Austerity demands provoke Greek government crisis. The primary demand of the Troika is that there be no retreat on plans to slash the number of civil service employees.

Ambrose Evans Pritchard writes Italy’s Bersani on collision course with Germany and ECB over austerity.  Italy’s Pier Luigi Bersani vowed to break free of the country’s austerity regime as he laid out plans for a centre-Left government, risking a serious clash with Germany and the ECB.

We must leave the austerity cage,” he told leaders of his Democrat Party (Pd), responding to Italy’s electoral earthquake by tearing up his pre-election programme.
“A change of course is absolutely necessary given that five years of austerity and attacks on workers have pushed up public debt levels across Europe,” he said.
“The vicious circle between belt-tightening and recession is putting representative government at risk and making it impossible to govern. The immediate emergency is the real economy and joblessness,” he said.
The pledge puts Mr Bersani on a collision course with the ECB, which is constrained from helping to shore up the Italian bond market unless Rome complies with Europe’s austerity agenda.
“Italian voters may have effectively voted away the ECB safety net,” said Christian Schulz from Berenberg Bank. The central bank cannot activate its bond purchase programme (OMT) unless Italy requests a rescue from the EMU bail-out fund, and that in turn requires a vote in Germany’s Bundestag

“The ECB cannot – and will not want to – do anything to help Italy after the inconclusive election result, even if borrowing costs spiral out of control,” he said.
Mr Bersani’s Democrats (Pd) and its allies control the lower house but failed to win the senate. He is hoping for tacit support on a law-by-law basis from the Five Star Movement of comedian Beppe Grillo.
Mr Grillo has responded with a volley of anathemas, calling Mr Bersani a relic from a defunct political order that must be swept away by civic revolution. Yet many of his 163 senators and deputies say the movement should seek common ground with the Pd.
Mr Bersani said Italy should mobilize its EU voting weight to push for an EU-wide change of course. He has natural allies in Paris.
French finance minister Pierre Moscovici warned EMU colleagues on Monday that current policies “risk a loss of social and political confidence across Europe. We must not pile austerity on top of recession”.
Mr Moscovici said France would need an extra year to meet its deficit target of 3pc of GDP and called for action to tackle the root of the crisis with an EMU-wide growth strategy.

Italy, France, and Spain toyed with a Latin bloc alliance last year to confront Germany over EMU’s contractionary policy mix, but the initiative faded.
Mr Hollande pulled back from a showdown with Berlin and ultimately pushed through further fiscal cuts and reforms, while Italy’s Mario Monti was never willing to jeopardise the European Project that he served for ten years as a commissioner.
Critics says Mr Monti, whose Civic Choice list won just 10pc of the vote, went native in Brussels long ago and has been slow to understand the deeper political crisis unfolding in Italy.
The outgoing premier gave them fresh ammunition today, saying that it would be better to hold fresh elections than to see an anti-EU government to take power.
It is unclear whether a second vote would achieve what he intends. The latest snap polls show that Mr Grillo’s support is still rising, jumping from 25pc to 28pc.
Ominously, nostalgia for Fascist leader Benito Mussolini has started to emerge as the post-War order crumbles. Two key figures have praised elements of Fascist rule over the last two days.

A leader of the Five Star Movement professed “fascination” with the Fascist sense of the Italian state and the family, while the deputy state secretary of the economy said Mussolini “governed well until 1935.” The taboos are falling one.

Bloomberg reports Draghi confronts Italy impact as ECB seen keeping rates on hold. The European Central Bank has to decide how big a threat Italy poses to Europe’s recovery. A rejection of austerity in the euro area’s third-largest economy has produced a political stalemate that’s driven up bond yields and undermined confidence in ECB President Mario Draghi’s scenario of a gradual economic upturn. While that’s prompted some observers to bring forward expectations for lower interest rates, economists from Nomura International Plc to ABN Amro Bank NV say the ECB is more likely to hold fire and keep the pressure on governments to enact reforms. “The Italian election has brought the centrifugal force of dysfunctional politics back into focus, but rate cuts are not the answer,” said Richard Barwell, senior economist at Royal Bank of Scotland Group Plc in London. “The ECB cannot save governments and countries that do not want to save themselves.”

Bloomberg reports Monti won’t back Italian government that threatens EU reforms. Italian Prime Minister Mario Monti said he won’t back a new government that would threaten his country’s commitments to the Europe Union and that Italy should hold a new vote rather than install an administration that could reverse fiscal discipline. In his most detailed comments since Feb. 24-25 elections produced a hung parliament and saw his coalition win less than 10 percent of the vote, Monti said none of Italy’s political parties is capable of addressing the country’s problems. “If the alternative is a government oriented to interrupting Italy’s European path or the way of reforms, I believe it would be better to hold new elections,” Monti said at a press conference in Rome today

Bloomberg reports Napolitano girds for battle to resolve Italy election impasse. President Giorgio Napolitano, a former communist resistance fighter who negotiated Silvio Berlusconi’s resignation, is preparing his final political battle as he seeks to steer Italy out of its latest government crisis before his term expires in May. Napolitano, 87, is charged with resolving the political logjam caused by elections last month that produced a hung parliament. To avoid a new vote, he can try to forge a national unity government, accept an administration without a majority or appoint a non-politician to head a so-called technical government, similar to that of Prime Minister Mario Monti. Markets are pricing in two scenarios, “another technical government or the possibility, which is less and less likely, of a bipartisan government,” Mario Spreafico, who manages 1.5 billion euros ($1.95 billion) as chief investment officer at Schroders Private Banking for Italy, said in a phone interview. “Both would be temporary solutions” before new elections.”

Bloomberg reports Italy’s debt highest since dictator Mussolini. Italy’s public debt rose to the highest level since Benito Mussolini won elections 89 years ago, paving the way for his 20-year dictatorship. The CHART OF THE DAY shows debt jumped in 2012 to 127 percent of gross domestic product from 120.8 percent a year earlier. That’s the most since 1924, when Mussolini won 64 percent of the popular vote in elections that opposition members said were marked by irregularities

Mike Mish Shedlock writes What’s next for Italy? No working government for 7 months, Then elections in September.  Pier Luigi Bersani has twice ruled out the possibility of a grand coalition with Silvio Berlusconi’s centre-right coalition, and Beppe Grillo’s Five Star Movement wants no part of overtures from Bersani.  There is insufficient support for another technocrat. So, the logical conclusion is new elections are forthcoming. Mr Shedlock writes further Eurozone downturn accelerates despite German growth.

Jean Pisani-Ferry is a French economist and public policy thought leader; he is currently Director of Bruegel, the Brussels-based economic think tank. In Project Syndicate he writes The Euro’s House Divided.

“The European Commission’s latest economic outlook paints a disheartening picture: unemployment rates close to or above 5% in Austria, Germany, and the Netherlands in 2014, but above 25% in Greece and Spain and roughly 15% in Ireland and Portugal. In the same year, per capita GDP is expected to be almost 7% above its pre-crisis level in Germany, but about 7% below in Ireland, Portugal, and Spain, and a terrifying 24% below in Greece. So the deep economic and social divide that has emerged within the eurozone is expected to persist.
Such a gulf within a monetary union cannot be sustained for very long. As Abraham Lincoln said, “a house divided against itself cannot stand.” The same monetary policy cannot possibly fit the needs of a country that is in depression and another that is at or close to full employment. Indeed, the single most important question for the future of the eurozone is whether the gap between prospering and struggling members is being closed
During the euro’s first decade, the countries that are now struggling recorded persistently higher wage and price inflation than those in Europe’s north. To recover and return to both internal and external balance, they must not only close the cost gap, but actually reverse it, thereby generating the trade surpluses needed to repay the foreign debt that they accumulated in the meantime.
The process of internal devaluation, as economists call it, is occurring very slowly. Employees have suffered wage cuts, but prices have not declined accordingly, so their loss of purchasing power is higher than it should be. Likewise, economies have not recovered lost competitiveness, so employment, especially in the traded-goods sector, is lower than it should be.
Austerity and reforms were supposed to deliver rebalancing within the eurozone. And so they have, at least insofar as external balances are concerned. But, despite visible progress on the export front and noticeable labor-cost reductions, this rebalancing is mostly the result of the same collapse in domestic demand that is driving mass unemployment.
Ultimately, perhaps, all the pain will pay off. But societies may lose patience in the meantime. This should be enough to prompt a reassessment. The issue is not whether fiscal consolidation and external rebalancing are necessary – they are. It is how to make them politically and socially sustainable.”

I respond that there is currently no government in Italy, it is currently ungovernable, peak sovereignty that is peak national sovereignty has been achieved. In Europe, there is something greater than a labor price and debt divide; the dynamos of corporate profit and trade, based upon sovereign nation states  are winding down, on demand destruction, the dynamos or regional security, stability and sustainability are powering up; the Eurozone’s Great Divide will result in the rise of a one euro government.

Europe’s great cultural and economic divide is The Nordic Latin Ethical Divide; and out of it will come true European regional governance.  The European Divide is both striking and is widely known. Norway, Sweden, Denmark, and Finland, have debt loads significantly below those of the eurozone. Sweden’s government spending as a percent of GDP has fallen from 55% to 50% since the introduction of the Euro. And the Nordics are progressive in every way for example, they have high rates of female labor force participation and are accepting of gays and lesbians.

On all international metrics of competitiveness, entrepreneurship, innovation, creativity, responsible government, and human development, the Nordics consistently rank at the top, as the Economist Magazine reports on pages 14 to 16, of the February 2, 3013 print edition, which relates that Nordic countries pride themselves on the honesty and transparency of their governments; citizens pay their taxes and play by the rules. This has led Norway, Sweden, which have national currencies, and Denmark and Finland which use the Euro, to being ranked as the world’s four most prosperous nations. The Nordic people are a creative, innovative, industrious, corruption free, and socially responsible people, which contrasts sharply with the Latin people, that is the Portugese, Italian, Greek and Spanish people, who rank at the bottom of prosperity.

A known unknown, is that Jesus Christ is at the helm of the economy of God, Ephesians 1:10, where He is effecting The Great Paradigm Shift from Liberalism to Authoritarianism, where political governance will change from the rule of sovereign nation states to sovereign regional leaders and regional bodies in regional governance; and economic experience from investment choice and prosperity to debt servitude and austerity; as leaders meet in summits to renounce national sovereignty and pool sovereignty regionally, a concept that has been presented by Herman van Rompuy for a long time.

Please consider the horror, revulsion and anger that the Nordics will experience, especially the Euro using Danes and Finns, being a creative, innovative, industrious, corruption free, and socially responsible people, realize, when their prosperity is decimated by a soon coming Financial Apocalypse, and that have to share in a European gulag of regional governance, totalitarian collectivism and debt servitude, that has arisen through the insolvency of their Latin peers, which is yet another unknown known, presented in bible prophecy of the Beast Regime of Revelation 13:1-4, and in the prophecy of The Ten Toed Kingdom of regional governance of Daniel 2:25-45.

Peak Prosperity is now being achieved. Prosperity comes by good ethics, that is by having right relations with others. The Nordic people are a creative, innovative, industrious, corruption free, and socially responsible people, which contrasts sharply with the Latin people, that is the Portugese, Italian, Greek and Spanish people, who rank at the bottom of prosperity. The most prosperous people, the Norwegians and the Finns, have national currencies which have floated highly in value, and have the least amount of treasury debt.

The Financial Times reports Dutch support EU referendum. Dutch lawmakers have been forced to debate a referendum on any further transfers of power to the EU after a citizens’ petition demanding a plebiscite garnered 40,000 signatures in two weeks. Although parliament is not obliged to follow through with legislation, the move underlines the surge euroscepticism in one of the EU’s founding members, which could pose an obstacle to any further integration needed to bolster the eurozone.

Massive and total Eurozone integration is coming very soon. New regional sovereign authority is coming out of the European Sovereign Debt Crisis, where those living in Euroland will no longer be citizens of any nation, but rather residents living in a region of fascist economic governance where nannycrats manage the factors of production via public private partnerships, and oversee regional resources under the direction of a monetary pope, Revelation 13:10-11, and a regional king, Revelation 13:5-10.  Regionalism will displace national investment, national wealth and national currencies, as country leaders meet in summits, renounce national sovereignty and pool sovereignty regionally.

Regional governance is presented in the Statue of Empires of Daniel 2:25-45, as ten toes of iron and clay, a miry mixture of diktat and democracy, form out of failure of the two iron legs of governance that have rule the world since the late 1700s. First, came the failure of the British Empire in 1948 with the the UK being kicked out of Palestine with establishment of the State of Israel, then the ceding of the Suez Canal at the behest of the US, and finally the transfer of authority over Hong Kong. And secondly with the soon coming failure of US Hegemony, and its war for oil, and war on Muslims. The world is at Peak Dollar Hegemony with Richard Norton Taylor of the UK writing Donald Rumsfeld must be indicted over Iraq militias. What he knew of detention centres is not the only point. He was in charge, and if he had a plan the militias wouldn’t have existed. A Guardian investigation reports that Colonel James Steele, a special forces veteran, was nominated by Rumsfeld to help organise paramilitaries to quell a growing Sunni insurgency in Iraq. Steele reported directly to Rumsfeld. The paramilitary groups were drawn from Shia militia and set up detention centres where Iraqis were tortured.

7) … Summary
Please consider the veracity of bible prophecy as given by angels to the Apostle John in a dream while he was in his 90s living in exile on the Isle of Patmos, Revelation 1:1; specifically that being Authoritarianism’s Beast Regime of ten heads and seven heads will replace Liberalism’s Milton Friedman Banker Regime of US Dollar Hegemony. Out of soon coming Financial Apocalypse, Revelation 13:3, a European gulag of regional governance, totalitarian collectivism and debt servitude, Revelation 13:1-4, will rise from the profligacy and insolvency of the Mediterranean Sea nations of Portugal, Italy, EWI, Greece, GREK, and Spain, EWP, where a Sovereign, Revelation 13:5-10, and a Seignior, that is a top dog banker who takes a cut, Revelation 13:11-18, are going to rule Euroland; their word, will and way will be the law of all those using the Euro currency, replacing and superseding all traditional rule of law, corporate, constitutional and national laws, which are part of the former age of Liberalism, as Jesus Christ is in charge of the economy of God, Ephesians 1:10, pivoting the world to the new era of Authoritarianism. The peripheral European states will be exist as hollow moons of technocratic government revolving around Planet Germany, which will rise to be the core strength of a type of revived Roman Empire, Daniel 7:23. Sven Heymanns and Johannes Stern of WSWS report German trade unions march in step with German army. The German Trade Union Federation is publicly backing the increasingly aggressive role of the German army.

Liberalism featured sovereign nation states, and their central banks provided ever increasing credit liberality which stimulated economic growth, global trade and prosperity. It is sovereignty that provides seigniorage, that is moneyness. With the failure of national sovereignty, the seigniorage of investment choice will fail.

Authoritarianism features regionalism. Regional sovereignty in the Eurozone will be the model for governance throughout the entire world. Europe will be the leading example of regional fascism where leaders from industry, banking and state rule via public private partnerships in all of the world’s ten regions and totalitarian collectivism occupies in every one of mankind’s seven institutions.

Under Liberalism, the seigniorage of investment choice drove economic production. Under Authoritarianism, the seigniorage of diktat will direct the factors of production. Liberalism’s fiat money system will be replaced with Authoritarianism’s diktat money system, where diktat serves as money, currency, power and prosperity for nannycrats whose rule replace that of bankers.

Some are inveterate silver investors, believing that silver has value; it does not; it is simply a base metal used in the production of economic goods. King World New writes Massive silver short positions to force COMEX default. Itinerant writes in Seeking Alpha Effects of dilution for silver mining companies which reviews  PAAS, HL, CDE, and SSRI. Three out of the four companies have managed to outperform the price of silver by market capitalization over a 10-year time frame; however, all of them have grossly underperformed when using the share price as a yardstick. The only explanation that comes to mind would be dilution that has translated into increasing market capitalization, but has not created value for shareholders. I relate that when looking at CDE, and SSRI, and the Silver Mining ETF, SIL, in their combined ongoing Yahoo Finance chart, it is my contention that finally, yes finally, all currency carry trade investment has washed out of Silver Standard Resources Inc, SSRI, which traded at $10.02; and investors are willing to buy the stock at a PE of 24. I never have and still do not recommend any investment in either silver or silver mining stocks.

Soon an investment demand for gold, $GOLD, which traded at 1,575 will arise, and traded by the ETF, GLD, on falling major world currencies, DBV, and emerging market currencies, CEW.  Liberalism is passing away and Authoritarianism is rising, where gold, held in one’s physical possession or owned in Internet Trading Vaults such as BullionVault, and diktat will be the only two forms of sovereign wealth.

As for me, I relate that I live in abject poverty and have no money whatsoever. Physorg reports Poverty rate is highest in 15 years. The Great Recession leaves behind the largest number of long-term unemployed people, or 4.7 million, since records were first kept in 1948, according to research from the University of Michigan.  I do not participate in any political action, because I belong to the Lord. GreekCrisisNet presents The Economist article Golden Dawn’s “national awakening” sessions, noting that opinion polls show support for Golden Dawn jumped from 6.9% to 11.5%.   I had a personal awakening when Morpheus, the God of Dreams, came forth with the Morpheus Proposal; yet it was a foregone conclusion as God knew I would take the Red Pill, Ephesians 1:5, because he had been working from eternity past to make me accepted in the Beloved, Ephesians 1:6.

There is a God, in Him we move and live and have our very being, Acts 17:28.  He is responsible for all things, 2 Corinthians 5:18. Since Pentecost, when the Holy Spirit came with power, we have The Present Truth, 2 Peter 1:12, which relates that The Almighty is know as, and is called, God The Father, and that He has appointed Apostles, meaning Sent Ones, to proclaim Him, Colossians 1:1-2.

It is God who provides the threads and substance of life. The threads are trust and credit; the substance is Christ. These are woven together through meditation, prayer and singing of songs and spiritual hymns to produce the fabric and texture of one’s inner life which manifests in the virtues, that is morals of Christ, and New Testament ethics, that is right relationships of living with others.

Virtues present in graceful and benevolent ways.  Ethics manifest in responsible, respectful, peaceful and accepting relationships.

God has a Son, Colossians 1:3; this concept is offensive to both Jews and Muslim.  God’s Son has been appointed heir of all things.  His name is Jesus Christ, and he being the very image of God, is now the firstborn of all creation, Colossians 1:15.   He is the creator of all that exists and is the Sovereign King of the Universe, and is Lord of all things and of all peoples. There is no human action as perceived by Libertarians, there is only Christ working His Will, and His Way in all things, Colossians 1:16. All sovereignty coalesces in Christ, Colossians 1:17.

It is Christ who stands at the helm of the Economy of God, directing all political and economic activity.  It is Christ who is effecting His Administrative Plan for the fullness of every dispensation, that is every age, time period, epoch and era, Ephesians 1:10.

Jesus Christ has been working to perfect, that is mature, Liberalism, and is now pivoting that paradigm to Authoritarianism. Christ commenced Liberalism with the Federal Reserve Act of 1913 and also with World War 1 in 1914, and brought Liberalism forth strongly in 1948 with the establishment of the nation state of Israel, and more solidly with the deployment of the Milton Friedman Free to Choose Floating Currency Regime in 1971, which produced Liberalism’s Banker Regime for one to trust in.

It has been very rewarding for one to place faith in the most toxic of debt such as Fidelity Investment’s FAGIX, as well as Junk Bonds, HYG, and Senior Bank Loans, BKLN, and the most speculative of equity such as Fidelity Investment’s VICEX, as well as the most risky of debt such as PowerShares’ Leveraged Buyouts, PSP.   Reliance on Dividend Stocks, DLN, and Dividend Appreciation, VIG, has been the bedrock upon which investors have relied for investing in Large Cap Growth, JKE, Small Cap Growth, RZG, MidCap Growth, JKH, Russell 1000 Growth, IWF, and Russell 2000 Growth, IWO, the latter being the most credit and banking sensitive of all growth shares, as is seen in their combined Yahoo Finance five day chart for the week ending Friday February 8, 2013.  It is the genius of Christ which has produced the insight to develop the life sciences that MarketGrader reveals has provided lucrative reward in the Russell Small Cap Growth Shares such as NRCI, MWIV, SRDX, RGEN, SNTS, VIVO, TMH, ABAX, PDLI, ACOR, CHE, STE,  JAZZ, HMSY, CBST, PCYC, as well as the Biotechnology Stocks seen in this Finviz Screener.

Through the national sovereignty of democracies, and through the monetary authority of the world central banks, seigniorage, that is moneyness, has flowed through Asset Managers such as BlackRock, Eaton Vance, Affiliated Managers Group, Waddell & Reed, Wisdom Tree Investments, that have coined wealth, especially in the Mid Cap Stocks, as John D Hartman reveals in Why the mid caps have outpaced the large indices.

Through carry trade leverage, in a spectacular nine month risk-on toxic debt based rally, investors have experienced stellar rewards in Global Producers, FXR, such as Whirlpool, WHR, and International Paper, IP, as well as in Nation Investment, EFA, such as Australia, EWA, Thailand, THD, and the Phillippines, EPHE, and most recently in the Nikkei, NKY.

The world now exists at Peak National Sovereignty, as is seen in Peak Money, that is Peak Wealth being achieved as follows:
Peak Commodities, DBC, September 14, 2012,
Peak Credit, BND, and AGG, December 6, 2012,
Peak M2 Money, January 7, 2013,
Peak Emerging Market Currencies, CEW, February 1, 2013
Peak Nation Investment, EFA, February 1, 2013
Peak Major Currencies, DBV, March 8, 2013
Peak Stock Wealth, VT, March 8, 2013
Paek Global Central Bank “International Reserve Assets” (excluding gold) March 8, 2013, as tallied by Bloomberg and reported by Doug Noland to stand at $10.951 TN.

The paradigm of sovereign nation states has supported the Milton Friedman Free To Choose floating Currency Regime, where Major world Currencies, DBV, and Emerging Market Currencies, CEW, have floated and the US Dollar, $USD, has sunk. But now the US Dollar, $USD, traded by the 200% ETF, UUP, is rising and it no longer serves as the world’s reserve currency.  There is now no international reserve currency. The world’s Fiat Money System, that has underwritten corporate profitability, global growth and trade since 1971, when the world went off the gold standard, is literally disintegrating.

Jesus Christ is bringing forth the new paradigm of regionalism, based upon the sovereignty of regional leaders and regional bodies, where the Diktat Money System, will underwrite regional security, stability and sustainability.

As of the week ending February 8, 2013, the world exists at the very pivot of two eras. Jesus Christ  is transitioning the world from Liberalism into Authoritarianism.

To achieve His aim of producing the Beast Regime of Diktat to replace the Banker Regime of Investment Choice, which will rule in all of the world’s ten regions and in all of mankind’s seven institutions, Revelation 13:1-4, as well as to produce the Ten Toed Kingdom of Regional Governance, Daniel 2:25-24, Jesus Christ has released the First Horseman of the Apocalypse, that is the Rider on the White Horse, who has a bow but no arrows, Revelation 6:1-2, to effect global economic and political coup d etat.  This rider is seen having great success in Argentina, ARGT, with Kirchnerism, in Egypt, EGPT, with Morsi’s rise to power, and in Greece, GREk with the Troika’s technocratic rule. Greece is no longer a sovereign nation; it is a vassal colonial state ruled by bankers and oligarchs residing in Brussels, and Berlin. The Greeks rely totally for the provision of their fiscal needs upon the regional sovereignty existing in the ECB.

And now the First Horseman of The Apocalypse, Revelation 6:1-2, has taken sovereignty that is rulership from Italy; it exists as a country having no head, that is no rule, no government. Italy is no longer a democracy, rather it is a zombie state existing governed by Christ’s First Henchman, and whose fiscal needs are provided courtesy of Mario Draghi and the monetary authority of the European Central Bank

The Netherlands Cry for Freedom reported in the Financial Times article Dutch support EU referendum, will go unheeded, as God’s Clarion Call, Revelation 1:1, is for fascist technocratic government in the Eurozone, Revelation 13:1-4, Daniel 2:25-45, and Daniel 7:23.  Rest assured that God will accomplish his aim as the Rider on the White Horse, Daniel 6:1-2, has all authority and power to fully displace all existing sovereignty as well as dislocate all current seigniorage.

In mankind’s final dispensation, that is humanity’s last time period, Jesus Christ is bringing forth  the Church, literally meaning the Called Out Ones, to be Overcomers in Him, as Bible Org relates and asks Who are the Overcomers of Revelation 2 and 3.  The saints trust in Christ, and give Him credit for all accomplishments, and take their spiritual life from Him, Colossians 3:4.

Either one will be genuine, having real life experience in Christ, Ephesians 4:21; or one will be fiat, having worldly experience in fiat mandate of religion, philosophy or political party. Christians know Christ as the All Sovereign One, and as the All Sufficient One.

Thanks for visiting this blog; this is most likely my last post here. I began writing in May 2010 as Herman van Rompuy worked to provide a regional framework agreement known as the First Greek Bailout, a seigniorage aid scheme which served to keep Greece in the Eurozone and provided for destruction of the national sovereignty of Greece. I appreciate Finviz for their complimentary charting and portfolio service and Google for their document service.

Nation Investment And Commodities Trade Lower On Competitive Currency Devaluations As Italians Give Support To Politicians Who Reject Austerity And In Some Cases The Euro … The Fiat Money System Starts To Die As The Dollar Rises

Financial Market report for the week ending Friday March 1, 2013

1) … Nation stocks and commodities traded lower on falling currencies, as political crisis stalked Greece and Italy.
The very linchpin of ECB sovereign debt support, as well as the capstone of Liberalism’s Banker Regime of Credit Stimulus, has collapsed, as Greece, GREK, traded 8.2% lower. The nation that defines Clientelism, Barriers To Competition, Unionism, and Corruption, as well as Italy, EWI, which defines trading in European Treasury Debt, led the World into Investment, Economic and Political Failure.

The Japanification of the entire world has commenced on the monetization of debt by the world central banks.Nation Investment, EFA, was led lower by Greece, GREK, and Italy, EWI, and the other Eurozone Nations, EWP, EWG, EIRL, as well as by the Nordic Countries, EFNL, EWN, NORW, EWD, and Russia Small Caps, ERUS, as well as the US Small Caps, IWM. Stock sectors trading lower induced COPX, KWT, IEZ OIH, PSCE, FLM, XSD, CARZ, IGN, PICK, REMX, KOL, URA, SLX,and XME.  

Transports, IYT, traded 2.2% lower and Industrials, IYJ, 2.0% lower, giving Dow Theory confirmation that a bear market is underway. Industrial producers trading lower included, E, MKTAY, NOK, FLS, FWLT, TSM, MHK, LYB, EMN, CE, ABB, EMR, ARG, BA, MTW, IR, JOY, TEX, CNH, GE, NSANY, TTM, HMC, ALV, F, GM, OC, EXP, USG, NCS, BECN.

In the US, VTI, the S&P 500, SPY, traded 1.9% lower, and the Russell 2000, IWM, 2.2% lower.

World Banks, IXG, were led lower by The National Bank of Greece, NBG, -7.4%, Banco Santander, SAN, -5.8%, European Financials, EUFN.

The All Important Yield Bearing Stocks trading lower today included DTN -1.3%, VIG, -1.6%, VNQ -1.9, and DBU -2.6%. These together with the most toxic of debt that is the Distressed Investments held by the US Federal Reserve, and traded by Fidelity Mutual Fund, FAGIX, as well as Senior Bank Loans, BKLN, and Junk Bonds, JNK, have been the credit basis for Liberalism grand finale risk-on Euro Yen Currency Carry Trade Rally, EUR/JPY, which was supported by PBOC Monetary Injections, as well as by BOJ Unlimited Quantitative Easing.

The Currency Demand Curve, the ratio of the Small Cap Value Stocks relative to the Small Cap Growth Stocks, RZG, manifested strongly lower, communication that competitive currency deflation is  underway.  Small Cap Value Stocks, RZV, traded 2.8% lower, while the Small Cap Growth Stocks, RZG, traded 1.3% lower.  

The US Dollar, $USD, UUP, rose, to 81.67, as Major World Currencies, DBV, traded 0.7% lower, and Emerging Market Currencies, CEW, 0.5% lower.  Business Insider reports It looks like the dollar is about to surge. Reuters reports James Saft sees a coming Dollar bull run.

Commodities, DBC, traded lower being led so by Base Metals, DBB, Agricultural Commodiites, JJA, and Oil, USO. Gold, GLD, rose.

Mike Mish Shedlock writes Beppe Grillo’s Five Star Movement on verge of being largest political party in Italy; its Stock Market futures plunge 3.5%. The center-left coalition of four political parties has 29.7% of the vote, but Bersani’s party, Partito Democratico (Pd), has 25.5% of the vote. Beppe Grillo has no coalition. His MoVimento 5 Stelle (M5S) party is in a dead tie with 25.5% of the vote.
On an Actual Party, Not Coalition Basis:
Pier Luigi Bersani – Partito Democratico (Pd) – 25.5%
Beppe Grillo – MoVimento 5 Stelle (M5S) 25.5%
Silvio Berlusconi – Il Popolo della libertà (Pdl) – 21.4%

Ambrose Evans Pritchard writes Euro debt crisis looms again as Italians defy EU austerity demands. The eurozone’s debt crisis strategy was in chaos on Monday night after anti-austerity parties appeared on track to win a majority of seats in the Italian parliament, vastly complicating efforts to forge a government able to carry through EU-imposed reforms. And The NYT reports Split Vote Sends One Clear Message in Italy: No to Austerty Italy vote shows backlash against political establishment:

Bloomberg reports Italy renews market jitters as voters reject Monti austerity. Italy’s inconclusive election triggered renewed market jitters over Europe’s debt crisis as recession-scarred voters repudiated budget rigor and established former comedian Beppe Grillo as a political force. In the four-way race, pre-election favorite Pier Luigi Bersani led for control of the lower house by less than a half percentage point. Silvio Berlusconi, the former premier fighting a tax-fraud conviction and charges of paying a minor for sex, called for a recount and won a blocking minority in the Senate. In its first national contest, Grillo’s group got 25 percent support and was probably the most-voted party in the lower house. “The political situation across Europe is effectively a race between austerity and reforms on the one hand and the rise of populist movements on the other.” said Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc. “Austerity is painful, and if reforms are not implemented in time, you run the risk of social unrest and populism. It hasn’t happened so far in Greece, it hasn’t happened in Portugal or Spain, but we are very close in Italy.”

Bloomberg reports: Grillo’s anti austerity wave crashes into Italian Parliament. Beppe Grillo, the comic banned from Italian television two decades ago for ridiculing a corrupt cadre of ruling lawmakers, had his political satire rewarded yesterday with about 180 seats in Parliament. Grillo’s parliamentary list filled with political neophytes amassed enough votes in yesterday’s election to deny a majority to front-runner Pier Luigi Bersani and a comeback to three-time Premier Silvio Berlusconi. As his competitors seek to cobble together a make-shift alliance, the 64-year-old Grillo is keeping his distance and preparing for a new vote. “They can’t hold us back any longer,” Grillo said late yesterday in a video posted to his website. “They might go on another seven or eight months and produce a disaster, but we will be watching and working to keep it under control.”

CNBC reports Silvio Berlusconi rules out an alliance with former Italian prime minister Mario Monti  saying the election results reflected popular discontent with austerity measures. Speaking in a TV interview after the Italian elections created a political stalemate, Berlusconi said it was time to reflect on the results.But he also added that a return to polls wouldn’t be “useful”.

John Rubino of Dollar Collapse writes Why we’re ungovernable, Part 7: Italy does chaos with style
As an Italian-American I’m allowed to say it: Italians are an amusing mess. They go on about “la dolce vita,” the sweet life of long lunches and short work days and pretty girls on little scooters – without acknowledging or apparently even realizing that the whole show is based on other people’s money.

Robert Stevens of WSWS in Social counterrevolution in Greece, describes the humanitarian crisis in that nation.

2) … On Wednesday February 27, 2013, stocks rallied on Bernanke comments
Bloomberg reports Bernanke says Fed sees reduced risk of Japanese style deflation; and WSWS reports Bernanke said “I don’t see much evidence of an equity bubble,” Bernanke said of the near record surge in stock values  and in response the  Transports, IYT, led the Industrials, IYJ, bouncing higher.  Sectors rising included, XTN, WOOD, ITB, PKB, FDN, PPA, XLE, and XRT. Silver, SLV, traded 1.4% lower and Gold, GLD, 1.0%, lower.  Japan, EWJ, rose strongly, and Japan Small Caps, JSC, blasted to a new rally high. The Russell 2000, IWM, Turkey, TUR, China, YAO, China Small Caps, CHII, ECNS, China Industrials, CHII, Taiwan, EWT, South Korea, EWY, and New Zealand, ENZL, rose strongly; and the Phillippines, EPHE, climbed to a new rally high, which stimulated Small Cap Nation Investment, IFSM, and Nation Investment, EFA higher, but these remain below their rally high.    

The NYT reports Split vote sends one clear message in Italy: No to austerity.  And Bloomberg reports Italy confronts vacuum as leaders seek to avoid election. Italian party chiefs began jockeying to forge a coalition of rivals and head off a second vote as a political vacuum of at least a month loomed, threatening to whipsaw financial markets. In the aftermath of an inconclusive election, Democratic Party leader Pier Luigi Bersani and resurgent ex-Premier Silvio Berlusconi may be seeking to avoid a ballot that would favor populist Beppe Grillo, whose movement was the top vote-getter in its first national contest. No formal steps can be taken until a new parliament convenes March 15. “If they don’t change strategy and go vote again with similar candidates, the risk is a Grillo landslide,” Giovanni Orsina, a history professor at Luiss Guido Carli University in Rome, said in an interview today. Reuters reports Italy must reduce unsustainably high level of debt – EU Commission Says. And Bloomberg reports EU Chiefs tell Italy there’s no alternative to austerity  And Ambrose Evans Pritchard writes ECB bond plan in jeopardy as Italy’s voters reject conditions.  Italy’s electoral earthquake is “a catastrophe for the euro and the European Union”, according to Luxembourg’s foreign minister, Jean Asselborn.

Economic Times reports Italy Faces Worst Six Months in 50 Years: Giorgio Squinzi. The head of Italy’s main business federation warned in an interview today that the next six months will be the worst for the country in 50 years as the economic crisis reaches its peak. “The next six months will be terrible, the worst in 50 years,” Giorgio Squinzi, the head of the Confindustria lobby, told La Repubblica daily. “The situation is very serious,” Squinzi said. “GDP ( gross domestic product) has shrunk 8.1 percent since 2007 and 3.2 million people have been out of work,” he said. “Politicians have to create the conditions for growth. This is a last chance,” he warned. Asked about the political situation, Squinzi suggested a grand coalition government to deal with urgent issues. “The real economy cannot wait for political machinations,” he said. Squinzi called for “shock therapy” for Italy, with tax cuts and immediate payment of debts that the state has accrued with the private sector. He also dismissed the idealistic economic proposals made by the anti-establishment Five Star Movement led by former comedian Beppe Grillo, which had a shock electoral success. “If we applied Grillo’s programme, Italian industry would be finished. We would become a rural and bucolic country,” he said.

3) … On Thursday March 28, 2013, India Stocks fell sharply lower.  
India Small Caps, SCIN, literally collapsed, falling 5.3%; and India, INP, 3.5%. Argentina, ARGT, traded 2.8%, South Africa, EZA, 2.1%  and Russia, RSX, 1.3% lower.  Business Insider reports India’s new budget plans won’t bring the economic growth the country desperately needs. India Banks are required to purchase India Treasury debt. Finally , monetization of this India’s treasury debt has enabled currency traders to sell the India Rupe, ICN, causing investors to derisk out of India Banks, HDB, and IBN, Automobile Manufacturers, TTM, and Drug Manufactures, RDY.  India’s continued deficit spending, coupled with slower growth, has turned the tide on nation investment in India, INDY.
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Silver, SLV, traded 1.8%, lower, Gold, GLD, 1.2%, Oil, USO, 1.0%, Copper, JJC, 0.9%,  Base Metals, DBB, 0.7% all lower; as Agricultural Commodities, JJA, rose 1.1% higher.  

Reuters reports Italy’s Grillo rules out voting for center-left government. Bloomberg reports With Italy In disarray, Berlusconi emerges anew as a power And also reports Italy investors will force Bersani Berlusconi deal, Polillo says

The Telegraph reports  EU Troika rule in Ireland worse than British Empire. Ireland’s trade union chief has accused the EU-IMF troika in charge of Irish austerity policies of tipping the economy into downward spiral and acting as an imperial oppressor.

Open Europe Events asks Is Ireland the poster child for the eurozone crisis response?  Open Europe hosted an event in Brussels yesterday titled, “Ireland: the poster child for the Eurozone’s crisis response?” Dublin-based economic commentator Constantin Gurdgiev argued that Ireland remained subway below where it should be, and warned that positive headline GDP figures are distorted by multinationals which transfer money out of Ireland. Zsolt Darvas, of the Bruegel think tank, offered similar warnings on the need for significant reform in Ireland but highlighted a lack of alternatives to the current path and stressed the depth of the crisis must be kept in mind. Open Europe’s Head of Economic Research Raoul Ruparel suggested that while export growth has been positive, it is the only driver of growth in Ireland, with domestic demand collapsing. This leaves Ireland exposed to faltering trading partners and a strengthening euro. Raoul also warned that the banking sector remains shaky and unprofitable as well as being a massive burden on the state.

Open Europe reports via WSJ FT Bloomberg European Voice Slovenia’s Prime Minister, Janez Jansa, has become the latest casualty of European public anger at austerity measures and alleged government corruption, as he was ousted in a no-confidence vote last night. Alenka Bratusek, the head of the largest opposition party, will become interim Prime Minister with new elections expected in early 2014.

Please consider investing in the Euro Intelligence Daily News Briefing which reports the European Commission will force a valuation of Bankia shares at 1 cent a share, thus wiping out existing shareholders.

Euro Intelligence continues We are quite surprised to see the number of news organisations yesterday who took the Bersani-Grillo option seriously – even advocating it as a way out of Italy’s crisis. Grillo’s Movimento 5 Stello supports a PD minority government in Sicily – but national politics is very different, especially as in this case Grillo’s agenda is much more radical than it is on regional level. Grillo is effectively campaign for a withdrawal from the EU – not just the euro – with his demand to reopen all European treaties.

That silly phase of speculation ended abruptly yesterday Grillo hilarious he called Pier Luigi Bersani a dead man talking – morto que parla in his blog. He then heaped a series of insults on Bersani, calling him a political stalker, and said he should have resigned like any normal person would have done under his circumstances. This is quite a blog entry. He lists Bersani’s insults against the M5S in his election campaign, and concludes that the M5S will not support him in a confidence vote in the Senate, which is what Bersani needs to become prime minister. Il Fatto Quotidiano adds a remark by Grillo according to which Italy will be the new headquarter of revolt against Germany’s austerity and the bankers’ conspiracy.

Having been so rudely rebuffed by Grillo, Pier Luigi Bersani is now open to alliances with other political forces to rule out instability, as La Repubblica reports. The Partito Democratico is ready to begin talks to create a new government, while his key ally Nichi Vendola, the SEL (Sinistra, Ecologia e Libertà) leader ruled out every deal with other parties. According to Bersani, the relationship with Vendola is not at risk and there are no plans to create a grand coalition government. Bersani also said the first priority of the country is to reverse the austerity measures and boost the Italian economy.
(That would suggest that Berlusconi would support a minority Bersani government. Bersani is going to great length to avoid a Grand Coalition – naturally because it would have a different leader than him.)

Silvio Berlusconi warns over possible instability over Italian elections and urges a stable coalition before mid March, as Il Corriere della Sera reports. He remarks that Italy would otherwise risk paying a very high price on financial markets. Italy will have a stable government until March 15, Berlusconi says. He said the hung Parliament was less of a problem in the long term than in the short term. The PDL will reach an agreement to give Italy a government, Berlusconi affirms.

4) … On Friday March 1, 2013, Greece, Italy, and the European Financials traded lower again as the US started down the road of automatic budget cuts with The Sequester.  
Reuters reports The US starts down road of automatic budget cuts under The Sequester. The US  government hurtled on Friday toward making deep spending cuts that threaten to hinder the nation’s economic recovery, after Republicans and Democrats failed to agree on an alternative deficit-reduction.

Again I encourage that one purchase a subscription to Euro Intelligence which relates Renzi ready to take on Bersani and lead Grand Coalition.  Corriere della Sera reports this morning that Matteo Renzi, the mayor of Florence, has stepped into the fray and said that he is ready to become prime minister of a Grand Coalition of the PD, PdL, and Grillo’s party; Corriere rites that a coalition under Renzi, a PD moderniser who lost to Pier Luigi Bersani in the primaries, would offer the best chance for a stable, pro-European government; Bersani, meanwhile, has ruled out a coalition with the PdL, and wants to run a minority government with an agenda of 7 or 8 reforms; the European Commission and the IMF yesterday called on Italy to continue the path of reforms; Tito Boeri and Luigi Guiso have the solution for Italy: another technical government.

After the economic crisis, now comes the political crisis. Tito Boeri and Luigi Guiso write on Lavoce that the return of Silvio Berlusconi, linked to rise of Beppe Grillo, is the signal of an increasing rage against political institutions and Italian ruling class. It is a destructive situation that may have a solution: a grand coalition government led by a technician like Mario Monti, but not Monti, obviously. According to Boeri and Guiso, there is room for reform of electoral law as well as the country should not disperse the efforts on structural reforms of 2012.

(We agree on that a Grand Coalition could work, but only a political grand coalition, not one run by another remote professor. The problem in Italy is the disconnect between the economic policies pursued and their political legitimacy. Government is by definition political, not technical.)

Euro Intelligence adds that a confidential troika report shows that the Greek record on tax collection remain catastrophic – only 10% of assessed taxes are collected. Thousands of Greek company owners and self-employed professionals routinely contest their assessments through the courts waiting for the finance ministry to grant tax amnesty settling for a tax bill cut by at least 30%.

Mike Mish Shedlock writes 84% of Greeks, 90% of Greek businesses have difficulty repaying loans.  Think Greece has been “saved” by the Troika? A quick look at some loan repayment stats may help you think clearly. Please consider ekathimerini More than 80 pct of Greeks are having difficulties repaying loans.  That loan data highlights what any clear-thinking person already knows: Greek banks are insolvent and will be in need of still more recapitalization

Greece, GREK, and Italy, EWI, led Nation Investment, EFA, lower. Countries trading lower included, EWG, EIRL, EWP, EWN, EFNL, EWU, and INP.  Small Cap Nation Invesment, IFSM, trading lower included SCIN, EPHE, GERJ, EWZS, and KROO. Nations trading higher included THD and TUR.

Austrian economist Benson Te covers the Philippine Stock Market, that is the Phisix stock Exchange PSEi, and writes in More signs of manic phase in The Phisix, ASEAN and the US Finally a much needed reprieve for the Philippine Phisix. Yet this week’s .34% loss can hardly be seen as the required “correction” or “profit-taking” phase following EIGHT successive weeks of advances that has brought about a magnificent 14.27% of returns in 2013. This week’s marginal profit-taking has barely changed the parabolic phase and near vertical picture which the local bellwether has transitioned to. Going back to the Philippines, the manic phase of bubbles—which I described as last week as yield chasing phenomenon that are essentially underpinned by voguish themes unquestioningly embraced by the public and most importantly enabled, facilitated and financed by credit expansion [19] seems to be well intact. The Philippine central bank, the Bangko Sentral ng Pilipinas (BSP) reports that for January [20] systemic credit continues to be vigorous, albeit at a slightly lower pace on a month to month basis, 15.6% December and 16.6% for January. The pace of credit expansion undergirding the supply side growth is almost three times the rate of economic growth. This is the tooth fairy from the populist “Aquinomics”: a credit bubble that will soon be unmasked along with the other central planning fantasies masqueraded as economic policies

Sectors trading lower included KWT, XSD, SLX, XME, PSCE, IEZ, OIH, CARZ, FLM, IGN, PICK, COPX, URA, REMX, and KOL.

European Financials, EUFN, traded lower.

A new financial crisis is coming as the result of sovereign insolvency and Eurozone banking insolvency.

Soon there will be no democracies in the Eurozone. Sovereign nations, their banks, and European Socialism are all creatures of treasury debts that cannot be repaid. European countries are insolvent and thus they have no sovereign authority. EU countries and their banks are being sustained by the monetary authority of the ECB, which is rising as a regional sovereign body.

This week investors derisked out of Europe’s insolvent nations, Greece, GREK, Italy, EWI, Spain, EWP, and Ireland, EIRl, and their insolvent national banks, NBG, SAN, IRE, as insolvent countries cannot provide seigniorage, that is moneyness, to investors, or provide fiscal spending resources to citizens.    

New regional sovereign authority is coming.out of the European Sovereign Debt Crisis, where those living in Euroland will no longer be citizens of any nation, but rather residents living in a region of fascist economic governance where nannycrats manage the factors of production and oversee regional resources under the direction of a monetary pope and a regional king.

5) …  German President Joachim Gauck calls for German Led More Europe; it will be the leading example of regional governance as Liberalism shifts to Authoritarianism.  
Dr. Worden writes Solidarity as a shared value in European identity. Speaking at the Schloss Bellevue palace in Berlin, German President Joachim Gauck uses major speech to call for More Europe, where he makes the case for more European integration,  
At the time, calling for “more Europe” in terms of shifting still more governmental sovereignty from the state governments to that of the Union was not a very popular task. Further limiting the power of his message is the fact that the German presidency is largely ceremonial , unlike the office of governor in an American state. Nevertheless, Gauck was determined to put the contemporary condition of the “European project” in favorable perspective.
The most striking—and even effective—aspect of his speech is his repeated references to “European citizens.” Had he used “Germans” instead, he would have subtly undercut his own message.

Acknowledging the fiscal and structural imbalances that gave rise to the debt crisis in several E.U. states and the problems entailed in “patching up” the problems by emergency measures, Gauck nonetheless pointed to non-economic elements of the European project that were also in crisis. “It is also a crisis of confidence in Europe as a political project. This is not just a struggle for our currency; we are struggling with an internal quandary too.” This problem is predicated on the point that the strengthening of a European identity comes out of a recognition of shared values, rather than in differentiation from other cultures outside of Europe.

Too often, Europeans artificially delimit their values to their particular state. Typically, Europeans will preface a self-referential remark with, “In my country,” only to describe a custom or value that is by no means limited to, distinctive in, one particular state. Even in saying “more Europe means a European Germany,” Gauck risked falling into this trap, at least in terms of keeping Europe as secondary. More in line with his thesis would have been the expression, more Europe means more European. More European in turn means more of a consciousness of values that European citizens (and residents) share, whether or not people in Africa, Asia, or America happen to esteem those values too. So the question facing European citizens is this: What values do you share?

From an American perspective, I notice the salience of the value of solidarity held by Europeans because it is such a recessive value in America. Ironically, World War II was perhaps the last time solidarity in terms of “we’re all in it together” was explicitly pushed and acknowledged in America. Even then, the value was more in terms of sacrificing for a common purpose rather than seeing to it that the most vulnerable among us do not fall through the cracks in terms of sustenance. In Europe, solidarity has more of a social welfare quality.

Moreover, whereas Americans tend to apply human rights only to the harm caused by tyrants abroad, Europeans tend naturally to extend to the value to covering the basic sustenance rights of one’s own fellow citizens as well. The shift needed for a stronger European identity involves becoming aware of the duty to apply the value domestically to other Europeans rather than merely to people in one’s own state, or “country.” So “European Germans” would feel solidarity with starving “European Greeks,” for example. This is the element that was largely missing from the austerity response of E.U. finance ministers to the debt crisis from 2010 to 2012.

Accordingly, “more Europe” involves not only a stronger value-fueled-identity, but also more fiscal redistribution at the federal, or E.U., level. Put another way, Europeans surely have more shared values than that of austerity.

6) …  Liberalism’s great Banking Schemes produced Peak Sovereignty and Peak Seigniorage, that is Peak Moneyness, to produce Peak Prosperity. The Age of Credit and the Age of Prosperity is over, and the Age of Debt Servitude and the Age of Austerity is commencing on the traded lower in major world currencies and emerging market currencies.
Sovereignty begets seigniorage, that is moneyness, and trust in the debt of the sovereigns, that is in the US, VTI, Germany, EWG, Spain, EWP, Italy, EWI, Greece, GREK, Germany, EWG, China, YAO, Australia, EWA, Japan, EWJ, Norway, NORW, Sweden, EWD, Denmark, EDEN, Finland, EFNL, India, INP, and others produced Peak Commodities, DBC, on September 14, 2012, Peak Credit, BND, on December, 6, 2012, Peak Wealth, VT, on January 28, 2013, Peak Nation Investment, EFA, February 1, 2013, and Peak Currencies,  DBV, and CEW, and thus Peak Seigniorage, and Peak Prosperity on February 11, 2013.

Matthew Leising Bloomberg reports  “Jim Casey, co-head of global debt capital markets at JPMorgan Chase says 2012 was so spectacular that it deserves a moniker: the Year of Refinancing. The cost of borrowing for companies fell to a record low of 3.24% last year, spurring the flood of deals. With rates so depressed, corporations, which typically refinance debt that matures in one or two years, issued replacement bonds for credit that’s due in four years. Casey says that doubled the potential number of clients for bankers. Corporate and sovereign borrowers issued $3.69 trillion in debt in 2012, generating $19.2 billion of fees for banks, both records.  Investor demand for debt was so strong that banks were able to revive collateralized loan obligations, the bundles of securities that helped inflate the credit bubble that burst in 2008. About $55 billion in CLOs were sold last year compared with $13 billion in 2011.”

The sovereigns of Liberalism, nation states and their central banks gave seigniorage to money, that is wealth, producing the seigniorage of investment choice. Asset Managers such as BLK, WDR, EV, STT and WETF, Investment Bankers such as JPM, the World’s Leading Banks such as SAN, NBG, RBS, LYG, BCS, HDB, IBN, and UBS, The Too Big To Fail Banks such as BAC, and C, the Regional Banks such as SNV, HBAN, and RF, coined Liberalism’s money, consisting of fiat investments; some of which were given more seigniorage than others, such as Gaming Stocks, BJK, Leveraged Buyouts, PSP, Small Cap Growth Companies, such as CSL, Global Producers, IP, and GE, Dig And Dirt Equipment Manufacturers, MTW, Agricultural Companies, MON, and Small Cap Revenue Companies such as LAD, to name just a few.

Where seigniorage exists, that is where moneyness manifests, there exists a sovereign producing it.
New seigniorage, that is new moneyness, is coming on the death of the fiat money system, that is on the death of the Milton Friedman Free To Choose Floating Currency Regime. The sovereigns of the Era of Credit and the Epoch of Fiat Asset Appreciation and the Age of Prosperity are dying on the exhaustion of the world central banks’ monetary authority and on the death of of currencies. Kayla Tausche of CNBC reports JPMorgan to slash 4,000 staff, $1 Billion in costs. And Bespoke Investment Group reports Euro Spreads widen out.  Bloomberg reports Bank credit risk surges in Europe amid Italian election deadlock. The cost of insuring against default on European bank debt surged to the highest in three months on concern deadlock in Italy’s elections will trigger a flight from risky assets as a political vacuum roils markets. Gridlock in parliament means gridlock in the economy, Alberto Gallo, the head of European macro credit research at Royal Bank of Scotland Group Plc in London, wrote in a client note.  The longer the instability lasts, the more the recession can deepen, pushing up unemployment, defaults and bad loans.” The Markit iTraxx Europe Index of swaps on investment-grade companies rose seven basis points to 120, the highest since November 30, 2012.

Operating through Destiny, Revelation 1:1, Jesus Christ is replacing the Banker Regime of Liberalism with the Beast Regime of Authoritarianism, and with that, Crony Capitalism, in America, European Socialism, in France, and Greek Socialism, in Greece, is being replaced by Regional Governance, Totalitarian Collectivism, and Debt Servitude, in Euroland, in fulfillment of Revelation 13:1-4.

Christ began by unleashing the First Horseman of the Apocalypse, to transfer the baton of sovereignty from nation states to the sovereigns of Authoritarianism, these being regional leaders, regional bodies, and soon coming regional public private partnerships, as presented in Revelation 6:1-2, in May of 2010, with the First Greek Debt bailout, led by Herman van Rompuy and Angela Merkel.

And Christ is producing from the crumbling two iron legs of global hegemony, these being the British Empire and the US, a Ten Toed Kingdom of regional governance, where toes of a miry mixture of iron diktat and clay democracy, rule in the world’s ten regions, as foretold in Daniel 2:25-45. Jordan Michael Smith writes Lessons from the British Empire.  Cecil Rhodes comprehended the magnificence of the British Empire; he once remarked that “to be born an Englishman is to win first prize in the lottery of life.”

The first of two iron legs of global power, that being Britain, ceased, so that the second of the two legs of global power, as foretold in bible prophecy of Daniel 2:25-45, could begin its rise to global dominance, establishing the rise of Liberalism that began in 1913 with the establishment of the Creature From Jekyll Island. Further banking schemes strengthened Liberalism. These included the establishment of the State of Israel in 1948, the ceding of the Suez Canal and the ceding of Hong Kong, which decimated British global hegemony

The world is at Peak US Hegemony.  US Hegemonic thought leaders are Frederick Kagan, who came out of Yale Law School, and became a neocon who served with the US Defense Department as Adviser to General  Stanley McChrystal. And also Danielle Pletka, American Enterprise Institute VP, strong advocate for the Iraq War and defender of Ahmed Chalabi.  US Hegemony is coming under threat.  AP reports Military leaders say Congress must stop Sequester. The billions of dollars in defense budget cuts scheduled to begin at the end of the week will have a swift and severe impact on military readiness and Congress needs to take fast action to stop them, members of the Joint Chiefs of Staff said. An inquiring mind asks one, will Britain, Canada, Italy, Turkey, Denmark, Netherlands, Australia, and Norway continue to support the F-35 program, where the contractor is Lockheed Martin, LM,  and Pratt & Whitney, a unit of United Technologies, UTX, supplier of the engines?   

It’s as Peter Schiff relates in Yahoo Breakout America is becoming the United States of Britain. The President & CEO of Euro Pacific Capital says the near-term fate of the colonies is being foreshadowed across the pond as its sovereignty is crumbling.

Germany will be the hub of all economic production in Europe for ever. The PIGS will be desolate, hollow moons, revolving around Planet Germany, existing as colonies of Brussels and Berlin technocratic government. Germany will be the epicenter of a revived Roman Empire, exercising regional governance over vassal peripheral Eurozone states. Handelsblatt reports Germany is liable for EU134b of bailout money, citing Finance Ministry calculations it obtained. Liability risk for credits paid out to Greece, Ireland, Portugal and Spain amounts to EU112b. Hat Tip to Between the Hedges.

The introduction of the Euro did a number of things, it created the Euro, FXE, as a Commodity Currency, CCX, which drove up the price of Commodities, DBC, and created European Socialism, and the most extreme form of Socialism, that being Greek Socialism, and it created Export Germany, based upon what is fiat asset deflation in Germany, as is indicated by Germany’s low unit labor cost, by the failure of its housing prices to soar like in Spain and France, and by the depression of German Treasury Debt. In The Economist Magazine Print Edition Long After The Party, How Italians are going to vote is not clear; but the vote will matter both to the future of their country and to the Euro, page 26, the chart of Eurozone Unit Labor Costs from 1999 through 2011, shows that Spain, followed by Italy and then France have labor costs in excess of 128, compared to Germany with 102.  There is no amount of restructuring or rebalancing that can be done in the periphery to stabilize the European Union. Like oil and water, the core, being Germany, and the periphery, being the PIIGS, cannot mix; one will rise to the top, and the other settle to the bottom.

Not only will Germany be the epicenter and hub of economic activity in Euroland, it will also be the head of hegemonic military and spiritual attention as well. Johannes Stern of WSWS writes The return of German imperialism. Germany is making intensive preparations to wage new wars to secure resources. Wolfgang Weber of WSWS reports German Government decides on military deployment in Mali. Veit Medick of Der Spiegel reports Germany lans to deploy armed drones in combat. Tyler Durden reports German lawyer to head Vatican Bank A German pope may be vacating the Vatican but a German lawyer is about to head its bank, an institution some say is as important if not more, and whose shady dealing some say may have been the reason for the pope premature departure. Per Reuters, The Vatican appointed German lawyer Ernst von Freyberg to be the new president of its bank filling a post left vacant when the previous head was ousted from the scandal-tainted institution.

As it grows in prominence, Germany will transition from being a One Euro Government to being a One World Government as foretold in Daniel 7:7, the fourth beast, and in Daniel 7:23.
The first beast is presented in Daniel 7:4 as being, “Like a lion; it has eagles wings”. This beast was Babylon, whose emblem was a lion with eagle’s wings.
The second beast is presented in Daniel 7:5, “Then behold! Another beast, a second one, similar to a bear; it was placed on one side, and there were three ribs in its mouth between its teeth; and this is what they said to it, ‘Arise, devour much flesh!’” The second beast was Medo-Persia.
The third beast is presented in Daniel 7:6, “After this I was watching and behold! Another beast, like a leopard, with four bird’s wings on its back; the beast had four heads, and it was given dominion”. The third beast was Greece. When Alexander the Great died in 323 C.E., his empire was divided between and ruled by four of his generals.
The fourth beast, is presented in Daniel 7:7-8, “After this I was watching in night visions, and behold! A fourth beast, exceedingly terrifying, awesome and strong. It has immense iron teeth, and it was devouring and crumbling, and trampling its feet what remained. It was different from all the beasts that had preceded it, and it had ten horns. As I was contemplating the horns, behold! Another horn, a small one, came up among them, and three of the previous horns were uprooted before it. There were eyes like human eyes in this horn, and a mouth speaking haughty words”.

The fourth beast, Empire Germany, will manifest as a revived Roman Empire, that is an authoritative kingdom from today’s EU Debt Crisis, whose Emperor, The Sovereign, seemingly one of little authority, Daniel 7:8, will rule a One Euro Government, and eventually conquer three of the world’s other ten regional kings as he rises to rule the world, and sets up his world headquarters in Jerusalem, Daniel 9:25.   

And Daniel 7:23, relates, “Thus he said, the fourth beast shall be the fourth kingdom upon the earth, which shall be diverse from all kingdoms, and shall devour the whole earth, and shall tread it down, and break it to pieces.” The coming European Empire will eventually rise to govern the world as a one world government, which will precede the coming of Christ to establish his World Wide Kingdom.

Most definitely new sovereignty, new sovereigns, and new sovereign wealth will be coming from two agents of Destructionism, these being first, the unwinding of the Euro Yen Currency Carry Trade, that is the EUR/JPY, and the second, competitive currency devaluation. Zero Hedge reports Why Central States/Banks inflate asset bubbles, and why they implode.

The economic and political shift from Liberalism to Authoritarianism is foretold in Daniel 2:25-45, as a Ten Toed Kingdom, that is a global empire, existing with toes, that is regional zones, of a miry mixture of iron diktat and clay democracy

The Banker Regime of nation states and their central bankers, is being replaced by the Beast Regime of Fascist Regional Governance, Totalitarian Collectivism, and Debt Servitude, as presented in Revelation 13:1-4, an event that is unseen by practically everyone, as it has a coat of a leopard, whereby it blends in with all of mankind’s media, technology, banking, educational, banking, government and religious and think tank institutions; the feet of a bear which enables it to stand its ground as well as root out its enemies, and the mouth of a lion to make authoritative governing statements; this minotaur, is the ultimate predator, devouring all who it chooses to consume.

Please consider that a German centric EU will attempt to spread Christian Religion, not genuine Christianity, through military power in the Age of Regionalism. Yet it will come head on to Mystery Babylon, described as a whore who rides the Beast Regime, as it rises to govern in all the world ten regions and ia all the world’s seven regions, Revelation 17:3-5.  Mystery Babylon is the combined political, economic and religious experience that will unify mankind, when the Sovereign, Revelation 13:5-10, and the Seignior, Revelation 13:11-18, come to rule from Jerusalem, Daniel 9:25; at that time the world’s leader will command and receive worship as God.     

Regionalism is replacing globalism. The dynamos of Liberalism, corporate profitability and global growth, are winding down on the exhaustion of the world central banks’ monetary authority and resulting inability to stimulate global growth and corporate profitability, as well as on the dynamic that the monetary policies of the US Fed, the ECB, the BoJ, and the PBOC, to monetize debt, have crossed the rubicon of sound monetary policy, and have turned “money good” investments, bad.  

Both Major World Currencies, DBV, and Emerging Market Currencies, CEW, crested on February 22, 2013, turning the value shares, RZV, JKI, JKF, which have been the backbone of Liberalism’s Finance since QE1, lower. The dynamos of Authoritarianism, regional security, stability and sustainability, are winding up regional diktat on unwinding currency carry trades, such as the EUR/JPY, and falling currencies such as the British Pound Sterling, FXB. Gold Money reports UK downgrade knocks British Pound Sterling.

Major World Currencies, DBV, traded 0.5% lower, and Emerging Market Currencies, CEW, 0.7% lower, and Small Cap Pure Value Shares, RZV, traded 1.5% lower this week, communicating that competitive currency devaluation is underway. The US Dollar, $USD, traded up 1.0% to close at 82.31, as the Indian Rupe, ICN, -1.6%, the Norwegian Krone, -1.6%. the New Zealand Dollar, -1.6%. the British Pound Sterling, FXB, -1.5%, the Swiss Franc, FXF, -1.4%, The Danish Krone, -1.3%, the Euro, FXE, -1.3%, the Australian Dollar, FXA, -1.2.%, the Canadian Dollar, FXC, -0.6%, the Brazilian Real, BZF, -0.4%, the Japanese Yen, FXY, -0.2%, and Emerging Market Currencies, CEW, -0.6%

Investors deleverage out of Commodities, DBC, which traded 2.4% lower.

Italy, EWI, traded 5.3%, lower, Greece, GREK, 4.0%, Spain, EWP, 1.9, Germany, EWG,1.1%,  taking Nation Investment, EFA, 0.7%. European Financials, EUFN, traded 2.0% lower. Investors have been derisking strongly out of The Netherlands, EWN, specifically, UN, LYB, PHG, AEG, and ENL, as the Euro, FXE, turned lower on February 13, 2013.  Investors sold out of the other Nordic Nations, Finland, EFNL, Norway, NORW, and Sweden, EWD, as well as out of India, INP, India Small Caps, SCIN, Russia, RSX, Russia Small Caps, ERUS, The UK, EWU, and Argentina, ARGT.           

Sectors trading lower included Solar, KWT, 7.2%, Uranium Mining, URA, 4.1, Metal Manufacturing, XME, 4.2, Copper Mining, COPX, 2.7%, Rare Earth, REMX, 3.0, Coal Mining, KOL, 2.7%,  Semiconductors, XSD, 2.5%, Networking, 2.1%, Steel, SLX, 2.2%, Mining 1.1%, Energy Service, OIH, IEZ, -1.7, Design Build, FLM 1.3%.  Small Cap Gold Mining, GDXJ, 3.1, Gold Mining, GDX, 2.1, Small Cap Silver Mining, SILV, 3.6. Silver Mining, SIL, 2.6

Soon World Stocks, VT, VSS, will have an inflection point where “risk on” succumbs to “risk off”.  Risk on is definitely still on in Nasdaq Biotech, IBB, which traded 2.4% higher and Paper And Timber, WOOD, 2.0% higher.  

Doug Noland writes in Italy and “Ro, Ro” The Italian electorate essentially voted against EU imposed “austerity” they believe is being dictated by Berlin. Berlusconi and Grillo ran campaigns critical of both the loss of sovereignty to European mandates and the euro currency more generally (Grillo has called for a public referendum on the euro). Friday from Bloomberg: “CDU [Merkel’s party] lawmaker Klaus-Peter Willsch says if majority of Italians cannot be convinced to stand by EMU rules, the country must be allowed to return to its own currency, Handelsblatt says… Monetary union will only survive if it benefits all its members.” Napolitano cancelled a scheduled meeting with the candidate running against Chancellor Merkel in Germany’s September elections, after Peer Steinbrueck was quoted as saying he was “horrified that two clowns won the election.” One can ponder the outcome if Germany’s Bundestag is ever called upon to vote for what would be a very large bailout package for Italy.

There are serious long-term ramifications for the rise of anti-European integration populism in Italy and throughout Europe. For now, the pressing issue is whether Italy can cobble together a functioning government. Grillo’s independent Five Star Movement actually received the most votes of any individual party. He has nothing but acrimony for the establishment – essentially calling for the downfall of the traditional dominating political parties. Grillo has had particularly harsh words for Bersani, while stating that he will not join a coalition with either Bersani or Berlusconi. Meanwhile, Bersani and Berlusconi despise each other. And new corruption charges against Berlusconi have his supporters livid. New elections may be necessary, although it doesn’t appear Bersani, Berlusconi or Grillo prefer that route for now. Complicating matters, the term of Italy’s President (Giorgio Napolitano) – who has a traditional role dissolving parliaments, calling for new elections and brokering alliances – ends next month. Some type of “loose” – and likely dysfunctional – coalition government seems likely.

I envision a dysfunctional “loose” coalition as well, out of which will come total chaos, as Ambrose Evans Pritchard writes Comedian Beppe Grillo repeated his vow to “bring down the old system” and dismissed the latest talks as cattle market trading by a depraved political class trying to circumvent the will of the people. “I repeat for the umpteenth time, the Five Star Movement will not back any government. It will vote law by law in keeping with its platform,” he said. “We’re not a political party, we’re a civic revolution. This country is in ruins with two trillion in debts and we have to rebuild it from scratch,” he told a scrum of journalists. In a rhetorical play on the slogans of 1789 and 1917 he exhorted “all citizens” to descend on parliament.

7) … Summary, The world has attained Peak Democracy, Peak National Sovereignty and Peak Prosperity under the Banker Regime which has provided the Milton Friedman Free To Choose Floating Currency Regime.
In Europe, the Nordic Latin cultural and economic divide is striking and widely known. Norway, Sweden, Denmark, and Finland, have debt loads significantly below those of the eurozone. Sweden’s government spending as a percent of GDP has fallen from 55% to 50% since the introduction of the Euro. And the Nordics have high rates of female labor force participation.

On all international metrics of competitiveness, entrepreneurship, innovation, creativity, responsible government, and human development, the Nordics consistently rank at the top, as the Economist Magazine reports on pages 14 to 16, of the February 2, 3013 print edition, that relates that Nordic countries pride themselves on the honesty and transparency of their governments; citizens pay their taxes and play by the rules. This has led Norway, Sweden, which have national currencies, and Denmark and Finland which use the Euro, to being ranked as the world’s four most prosperous nations. The Nordic people are a creative, innovative, industrious, corruption free, and socially responsible people, which contrasts sharply with the Latin people, that is the Portugese, Italian, Greek and Spanish people, who rank at the bottom of prosperity.

Investors have rewarded the Norwegian cultural superiority by investing in oil & gas, energy service, maritime, and aquaculture, particularly in Bergen Norway, but have disinvested out of debt laden and economically inefficient Athens Greece. Currency carry trade investment has had the consequence of driving consumer prices higher: $7.69 for a Big Mac vs $4.37 in the America.

An example of Swedish ingenuity is Linas Matkasse, a Vällingby, Sweden-based e-commerce weekly food delivery service providing subscribers with a bag of groceries, recipes and ingredients for five dinners for four people. The company currently has a customer base of over 50,000 registered customers and the service is also available via iPhone reports FinSMEs, The NewsBlog about Financing for Small and Medium Sized Enterprises.

Denmark is a global competitive leader in Drugs, Pharmaceuticals, and Biotechnology with Novo Nordisk … in Hearing Aids with Oticon … in Toys with Lego … in Beverage with Carlsberg … and in Wind Power, having more than 200 companies that account for a third of the world’s wind turbine market according to The Economist Magazine February 2, 2013 page 9 print edition, which also relates Denmark is the world’s eighth biggest food exporter thanks to its obsession with productivity.

And the Economist goes on to relate that Finland based Rovio Entertainment struck gold with Angry Birds, a game that involves catapulting irascible avians at elaborate fortresses constructed by evil pigs.

Ludwig von Mises writing in Inflation III. Inflation and credit expansion; Interventionism an economic analysis warned “The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances.”

The crack up boom that has created prosperity has ended, and a collapse of the money, that is wealth, and credit system, coming from unwinding currency carry trade investment, such as the Euro Yen, EUR/JPY, as well as competitive currency devaluation, will result in Financial Apocalypse, as foretold in bible prophecy of Revelation 13:3- 4  

An inquiring mind asks, is it really to hard to believe that Jesus Christ is at the helm of the economy of God, Ephesians 1:10, effecting The Great Paradigm Shift from Liberalism to Authoritarianism, where political governance will change from the rule of sovereign nation states to sovereign regional leaders and regional bodies in regional governance; and economic experience from investment choice and prosperity to debt servitude and austerity; as leaders meet in summits to renounce national sovereignty and pool sovereignty regionally, a concept that has been presented by Herman van Rompuy for a long time.

Regional leaders and diktat, will replace sovereign nation states and investment choice; these will provide the seigniorage of diktat, replacing the seigniorage of investment choice. Ambrose Evans Pritchard writes EU ‘Troika’ rule in Ireland worse than British Empire. Ireland’s trade union chief has accused the EU-IMF troika in charge of Irish austerity policies of tipping the economy into downward spiral and acting as an imperial oppressor. And Robert Stevens of WSWS writes Greek military prepares for mass repression. Politicians have been in contact with military personnel over how to respond to an “explosion” of social unrest against government austerity measures. “Paper money no more”, will be Authoritarianism’s banner. The Banker’s fiat money system will soon be replaced by the Beast’s diktat money system, where diktat serves as currency, credit, power and wealth.

Please consider the horror, revulsion and anger that the Nordics will experience, especially the Euro using Danes and Finns, being a creative, innovative, industrious, corruption free, and socially responsible people, realize, when their prosperity is decimated by a soon coming Financial Apocalypse, and that have to share in a European gulag of regional governance, totalitarian collectivism and debt servitude, that has arisen through the insolvency of their Latin peers, as is foretold in bible prophecy of Revelation 13:1-4 and Daniel 2:25-45.   

Regionalism will be born out of a credit bust and financial system breakdown: democracies, national sovereignty, and prosperity will be epitaphs on the tombstone of the former era of Liberalism.

Doug Noland writing in Italy and “Ro, Ro” reports on International Reserve Assets, that is the wealth of Liberalism’s Sovereigns, and M2, that is the wealth of the people. Peak Money, that is Peak Wealth,  is being achieved

Federal Reserve Credit jumped another $14.2bn to a record $3.078 TN. Fed Credit expanded $292bn in 21 weeks. Over the past year, Fed Credit jumped $169bn, or 5.8%. And Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $748bn y-o-y, or 7.3%, to a record $10.987 TN. Over two years, reserves were $1.646 TN higher, for 18% growth.

M2 (narrow) “money” supply dropped $23.7bn to $10.413 TN. “Narrow money” has expanded 6.6% ($641bn) over the past year. For the week, Currency increased $3.6bn. Demand and Checkable Deposits fell $26.6bn, while Savings Deposits gained $4.7bn. Small Denominated Deposits declined $2.0bn. Retail Money Funds fell $3.5bn.

In Authoritarianism, diktat and physical wealth either in bullion form or at Internet Trading Vaults such as Bullion Vault, will be the two forms of sovereign wealth  Gold,  $GOLD, rose at the beginning of the week, but then traded lower to close at $1575.

Political Crisis In Italy Together With Eurozone Economic Decline Enables Currency Traders To Devalue Currencies Causing Investors To Derisk Out Of Stocks and Deleverage Out Of Commodities

Financial Market report for the week ending Friday February 22, 2013

1) … World Stocks, VT, and Commodities, DBC, traded lower on political tensions in Italy, as well as on the exhaustion of the world central banks’ monetary authority to stimulate global growth and corporate profits especially in the Eurozone, as currency traders commenced competitive currency devaluation, who called Major World Currencies, DBV, 0.33% lower to close at 26.86; and Emerging Market Currencies, CEW, 0.62% lower to close at 21.15. Currencies traded this week as follows:
Indian Rupe, ICN +0.7
Australian Dollar, FXA, unchanged
Brazilian Real, BZF, -0.4
Swiss Franc, FXF, -0.8
The Euro, FXE -1.3
Canadian Dollar, FXC -1.4
Swedish Krona, FXS -1.6
British Pound Sterling, FXB -1.8. The Telegraph reports Losing Our AAA Rating [in the UK] Could Mean Bank Collapse And Deflation: Like a condemned man, the British government awaits the sentence. It’s ceased to be a question of whether we’ll lose our AAA rating, but when.

The US Dollar, $USD, traded higher 1.1% higher to close at 81.48. Liberalism’s Milton Friedman Free To Choose Floating Currency Regime, has failed, as the US Dollar is no longer sinking. Look for other currencies to stop rising and fall lower. There is no longer any International Reserve Currency. All currencies, will be following the South African Rand, the British Pound Sterling, and the Japanese Yen lower in Competitive Currency Devaluation, causing investors to derisk out of stocks and delverage out of commodities. Action Forex reports the EUR/JPY … traded lower to 132.25

The world central banks’, that is the US Fed’s, the ECB’s, the BoJ’s, and the POBC’s, monetary policies, have in effect printed trillions dollars of dollars to lend to the Major World Banks, IXG, that created and used the Japanese Yen Carry Trade Scheme to flood world markets with bogus speculative trading, based upon the most toxic of debt, such as the Distressed Investments, FAGIX, held by the US Fed, upon which QE1 was based, (and backed mainly by AIG insured derivative swap contracts), Senior Bank Loans, BKLN, and Junk Bonds, JNK.

The risk off ETN, OFF, has been rising since February 1, 2013, and the Risk On ETN, ONN, has been trading lower since then as well, as investors are derisking out of Emerging Markets EEM, since January 1, 2013, and Nation Investment, EFA, since February 1, 2013. The chart of Leveraged buyouts PSP, shows a grand finale climax; this includes corporations such as Carlisle Companies, CSL, which are climaxing out in value, or turning lower in value, such as Apache Oil, APA.

The Guardian reports The OECD economies shrank at end of 2012: GDP across 34 Organisation for Economic Co-operation and Development members fell 0.2% in final quarter of last year. And EuroNews reports OECD economies contract for first time since 2009. And Zero Hedge reports Japan welcomes Abenomics with record unadjusted trade deficit in January. This portends stock market declines for Japan, EWJ, and Japan Small Caps, JSC.

World Stocks, VT, -0.3
US Shares, VTI -0.4%
Emerging Market, EEM -1.6
Europe, VGK -0.2
Asia, EPP unchanged
S&P 500,, SPY -0.1
Russell 2000, IWM -0.8

Transports, IYT -0.1
Industrials, IYJ -0.7

Sectors trading lower included
Metal Manufacturing, XME, -6.6
Global Miners, PICK, -6.0
Steel, SLX, -5.9
Homebuilding, ITB, -5.5
Solar, KWT -3.9
Fertilizers, SOIL -3.1
Small Cap Energy Service, IEZ -2.8
Energy Service, OIH -2.5
Gaming, BJK -2.5
US Infrastructure, PKB -2.5
Global Natural Resources, GNR, -2.4
Semiconductors, XSD -2.2
Automobiles, CARZ -2.0
Small Cap Energy, PSCE -1.8
Internet Retailers, FDN -1.7
Airlines, FAA -1.5
IPOs, FPX, -1.5
Global Real Estate, DRW, -1.5, Small Cap Real Estate, ROOF, -.7, US Real Estate, IYR, -.1
Global Producers, FXR -1.1
Wind Energy, FAN -1.0
Consumer Discretionary, IYC -0.9
Small Cap Industrials, PSCI -0.7
Networking, IGN, -0.7
Retail, XRT, -0.3
World Banks, -0.3

Mining trading lower included
Copper Miners, COPX, -6.2
Silver Miners, SIL, -5.2
Gold Mines, GDX, -4.9
Rare Earth Miners, REMX, -4.9
Coal Producers, -4.5
Uranium Miners, URA, -2.9

Financials trading lower included
World Banks, IXG -0.3
European Financials, EUFN -1.0
Too Big To Fail Banks, RWW -0.3
Small Cap Financials, RWJ -0.9
Emerging Market Financials, EMFN -3.1
Chinese Financials, CHIX -5.6
Regional Banks, KBE -0.7
Investment Bankers, KCE -1.6
Stockbrokers, IAI -1.4

Dividend bearing investments trading lower included
Chinese Real Estate, TAO -4.5
Brazil Financials BRAF -3.3
Dow Telecom, IST -1.7
Mortgage REITS, REM -1.2
Super Dividend, SDIV -0.4
Vanguard Dividend Growth, VIG -0.2
Wisdom Tree Dividend Excluding Financial, DTN, -0.1

Nation Investment trading lower included
Emerging Market Dividend EDIV -1.7
World Small Cap Dividend, DLS -0.1
Emerging Market Infrastructure, EMIF -1.2

Japan trading higher included EWJ +2.2, JSC +3,6

Asia trading higher included EPHE +1.3 and THD +1.4

Asia trading lower included
ENZL -0.6
KROO -0.9
EWA 0.6
TAO -4.5
YAO -4.4
CHII -3.9
ECNS -3.7
CAF -5.6
VNM -7.7

Nations trading lower included
RSX -2.9
ERUS -0.9
TUR, -4.7
EPOL -1.4
EWZ -2.4
EWZS -1.0
INP -0.4
SCIN -0.1
CNDA -4.4
EWC -1.2
EZA -2.5
EWN -1.7
NORW -0.1
EFNL -4.9
EPU -2.5
ECH -2.2
EWW -0.2
EWU -0.8
EWUS -0.3
ARGT -3.0
IWM -0.7

Europe, VGK, -0.2
EWI -2.1
EWP unchanged
EIRL -0.3
GREK -3.4; it is the Greek shares that fell the sharpest this week as is seen in this Yahoo Finance chart
EWG -0.3

US Infrastructure Stocks, PKB, traded 2.5% lower this week; stocks included SNA, OC, USG, BECN, EXP, MAS, MHK, NWL, ROK, FBHS, LOW, HD, PIR, ARII, WAB, WOR, STLD, RS, CRS, MLI, CMC, AZZ, VMI, ITW, GLTS, PCP, USAP, GHM, ETN, LII, CSL, WHR, IP, EME, GE, AMWD, AOS, AME, WIRE, VAL, CYT, KRA, SEH, GPK, PPG, POL, RPM, WLK, FTK, KWR, EMN, CE, FMC, GRA, BZ, PKG, KS, URI, ADS, TISI, PRIM, MTX, GLDD, FLT, GVA, NCS, ROP, MTW, TEX, BGG, DRC, CR,

Styles falling lower included
RZV -1.0
RZG -2.1
JKE -0.4
JKF -0.1
IJK -1.4

Commodities, DBC, traded, -2.6, lower
SLV -3.5
GLD -1.8
CUT unchanged
UGA -1.5
USO -3.2
BNO -3.1
JJT -6.8
JJN -7.8
JJC -5.3
DBB -5.2
BAL -1.1
RJA -0.9
UNG +3.2

Peter Schiff writes The Pound Gets Pounded, Given the relatively moderate approach pursued by the British, the poor performance of their currency (the British Pound Sterling, FXB) may be hard to fathom. The deciding factor may be that the Pound Sterling is not nearly as vital to investors, or as integrated into the global economy, as the U.S. dollar or the euro. The greenback, being the world’s reserve currency, has always benefited from demand that is independent of its economic fundamentals. The euro benefits from the size of the euro zone and the legacy of German banking discipline. The pound enjoys no such privileges and as a result foreign central banks do not feel as pressured to prop it up. As a result, over the past few years the pound has been… pounded. Since July 2008, the currency is down 26.7% against the U.S. dollar, and in recent months it has started falling faster than all other developed currencies except for the Abe-pummeled yen. Since October 1, 2012 the pound has fallen by 4% against the dollar and 8% against the euro.
The pound’s health is made more suspect by the extreme challenges faced by the Bank of England as it tries to stimulate the most admittedly inflation prone economy among the major Western nations. Unlike the Federal Reserve, which is tasked by statute to combat both inflation and unemployment, the BofE has only a single mandate: to keep inflation contained. On that score it has been failing habitually. Inflation in the UK has been north of its 2% target for the past five years (the current official rate is 2.7%). In its most recent inflation projections, Mr. King admitted that it will stay that way for years to come, and that it may exceed 3% this year and next. With its currency weakening and inflation accelerating, the mandate of the BofE would clearly indicate that the time has come for monetary tightening.
However, like all central bankers, Mr. King, and his successor, the Canadian Mark Carney, will not be bound by such triflings as statutory mandates and past promises. In his press conference last week, Mr. King spoke of “looking past” current inflation figures to a time when he expects inflation will moderate. When the choice is between inflation and the political pain of economic contraction, bankers (at least those who don’t speak German) will choose inflation every time.
While the American media has poked fun at the Bank of England’s backtracking, they somehow do not understand that the Federal Reserve would be doing the same if not for the advantages given to us by the dollar’s reserve status. Our ability to monetize the vast majority of the annual government deficit while exporting our inflation through half trillion dollar trade deficits and the overseas sale of hundreds of billions of Treasury bonds annually means that we do not yet face the pressures bearing down on the Bank of England.
For now at least Cameron is sticking to his guns and making the politically difficult case to voters that today’s hard choices will yield benefits down the road. This puts all the pressure on the Bank of England to satisfy the calls for stimulus. The Federal Reserve is fortunate in that the Obama Administration shares none of Cameron’s fiscal determination.
But already the Fed has done plenty of backing off from its prior promises. Just a few months ago Ben Bernanke announced specific inflation and unemployment triggers that would apparently put monetary policy on automatic pilot. But just last week, Fed Vice Chairman Janet Yellen announced that those goalposts (6.5% unemployment and 2.5% inflation) should not be considered “triggers” but as thresholds past which the Fed “may consider” tightening. When U.S. prices start to rise in earnest, look for the denials and rationalizations to come in torrents. The Fed will never acknowledge high inflation no matter what the data, nor will it ever take any steps to combat it. The simple reason is that it will be unable to do so without bringing on the economic contraction that is so terrifying to the British.
However, as British inflation accelerates, the pressure on the Bank of England to change course will intensify. As monetary stimulus continues to take its toll on the pound, price pressures will mount, even as the economy continues to stagnate. In other words, it is charting a course to stagflation. Perversely, this will put even more pressure on the BofE to ease. However, more cheap money will not stimulate the economy but merely cripple it further by fueling the inflationary fire.
At some point the British will have to admit that stimulus doesn’t work. To break the inflationary spiral and rescue the ailing pound, the BofE will be forced to aggressively raise rates, at which point the British government will have no choice but to slash spending more deeply than would have been the case had they taken their medicine sooner. However, if the BofE refuses to tighten even in the face of much higher official inflation, the pound may deteriorate further and the UK might be left with the embarrassing choice of adopting the euro.
As far as the United States is concerned, the U.K. is the canary in the coal mine. What they are going through now, and what they may be about to go through, we will surely experience in the years ahead. The only difference is that the leeway afforded to us by our special status simply gives us more rope to hang ourselves. When the noose finally tightens, the fall will be that much more painful.

Omar R. Valdimarsson of Bloomberg reports in article Iceland Foreshadows Death of Currencies Lost in Crisis  Iceland is hinting its currency may be too small to survive in the volatile world left behind by the global financial crisis. Less than five months after Finance Minister Katrin Juliusdottir said the krona probably will never be restored to a free floating regime, central bank Governor Mar Gudmundsson is signaling the same
“We’ve said that Iceland can live with the krona, but then we have to do this and that,” Gudmundsson said in a telephone interview from Reykjavik. “And it may well be the case that we don’t like all the things we have to do. Then we have to consider other options. Another option is to join a large currency union.”
After its biggest banks defaulted on $85 billion in 2008, Iceland imposed currency controls to cauterize the outflow of capital. The International Monetary Fund and economists, including Nobel laureate Paul Krugman, praised the step as necessary. Now, even as Iceland outgrows much of Europe, the nation is holding on to the currency restrictions amid concern the krona won’t survive on its own.
Offshore investors have about $8 billion in kronur locked behind the controls. That compares with Iceland’s total economic output in 2012 of $13 billion. A slump in the krona would drive inflation higher and hurt households in the Atlantic island, where loans linked to the consumer price index made up 83 percent of all borrowing as of September 2012 Even with the controls, the krona has lost almost 6 percent against the euro in the past 12 months. Versus the dollar, it’s declined almost 5 percent in the period. Annual inflation held at 4.2 percent in January, the statistics office said Jan. 29. Though the currency restrictions are protecting the krona from even steeper losses, they come with a different set of risks, Gudmundsson said.
“The restrictions have long-term costs for the economy and its international links,” he said. “Also, it might lead to asset bubbles and other such things, which we still haven’t seen much of yet. However, over the short- and medium term, there are benefits to the capital controls as they maintain stability. As soon as the long-term costs are greater than the medium-term benefits, we should abolish the controls. We have, however, not arrived at that juncture.”
While policy makers responsible for some of the world’s smallest currencies are struggling to protect their markets, the world’s biggest economies have also focused on exchange rates as the debate shifts from debt reduction to trade competitiveness.
Group of 20 finance chiefs meeting in Moscow over the weekend signaled Japan has scope to keep stimulating its economy as long as policy makers don’t publicly advocate a weaker yen. The group pledged not “to target our exchange rates for competitive purposes” following signs that some governments were descending into a contest to help exporters through devaluations.
“This isn’t only a problem for Iceland,” Gudmundsson said. “This is a discussion that’s taking place all over the world. As the country is smaller, the more difficult it is.”Gudmundsson stopped short of calling it “impossible” for a small currency to survive in a free-float regime.
In the Nordic region that Iceland is a part of, Sweden and Norway have free-floating currencies. Denmark pegs its krone to the euro, while Finland is a full euro member. Sweden’s krona soared to a four-month record against the euro last week, while Norway’s krone touched a nine-year high in August as capital poured into the AAA rated nations. Yet the direction of those flows has varied as investors try to gauge whether the euro area is over the worst of its crisis, or whether they need to keep buying safer assets.
For Sweden’s krona, one-month implied volatility — a measure of expected moves in the exchange rate — has averaged 14.96 percent since the start of 2008, compared with 10.2 percent in the five years leading up to the financial crisis that broke out in 2007. Volatility on the Norwegian krone was 14.4 percent since the start of 2008, compared with pre-crisis average of 10.2 percent.
While Sweden has signaled it won’t resort to policies that target a weaker krona, exporters in the nation have complained about the competitive disadvantage they say they’re struggling against. In neighboring Norway, central bank Governor Oeystein Olsen said last week he’s ready to cut rates should the krone appreciate too much. Both Sweden and Norway rely on exports for about half their total economic output.
Iceland has passed a series of milestones on its path to economic resurrection. The nation won a court battle against the U.K. and Netherlands last month, freeing it of as much as $2.6 billion in damages for not honoring depositor claims. That victory prompted Moody’s Investors Service to raise the outlook on Iceland’s Baa3 grade to stable, while Fitch boosted its rating to BBB from BBB-.
According to Fredrik Jonsson, an economist at the Washington-based World Bank, even those successes aren’t enough to protect the island from an external shock. He warns that the restoration of a free-floating krona would trigger “another economic collapse,” unless Iceland takes “radical action.”
For Iceland, which started European Union membership talks in 2010, the lesson of the euro crisis is that being inside a larger currency group isn’t always the best protection. The key is having an economy that’s aligned with the currency bloc a nation plans to enter, according to Anders Svendsen, an economist at Nordea Bank AB in Copenhagen. Euro membership “may have short-term benefits, but those may be outweighed by longer-term downsides accompanied by actually tying yourselves up while the economy is not anywhere near an equilibrium,” Svendsen said by phone. Iceland’s policy makers are mindful that “there’s a lot of risk” associated with maintaining a small currency, Gudmundsson said. “Everyone needs to be aware of the risks and we need to have rules that regulate the risks.”

The Telegraph reports Bulgaria Succumbs To Euro Deflation Curse. Another euro-pegged government defending an overvalued exchange rate bites the dust, a reminder that the underlying economic and social disaster across the Europe’s Arc of Depression is still getting worse. Bulgarian prime minister Boiko Borisov resigned this morning after days of mass protests against austerity across the country.

Lauren Lyster of the Daily Ticker reports Don’t Want to Fight the Fed? Euro Architect Offers Alternative. It’s not everyday you hear a former central banker and an architect of the euro advocating for complementary currencies that have nothing to do with the national ones we call money. But that’s exactly what Bernard Lietaer does in his book Rethinking Money: How New Currencies Turn Scarcity Into Prosperity. He argues new monetary tools are needed to avoid repeated financial meltdowns and fiscal crises like we’ve seen in the U.S. and Europe. “There’s nothing wrong with a hammer when you are dealing with nails,” Lietaer tells The Daily Ticker. “However I think we are dealing with a broader set of issues than one single type. Therefore, I think it’s time to look at other possibilities; complete the toolset. If you want to do a paint job it’s a good idea to have a paint brush.”

Lietaer says in complementary currency terms, a “paint brush” is a standard medium of exchange functioning in parallel with conventional money. If that seems alien, Leitaer gives the example of frequent flier miles as a relatable example. For an example of the real life currency kind, you can look to the WIR. It’s a business-to-business currency in Switzerland which started in the 1930s. When some businessmen in the 1930s had credit lines from their banks cut, they created a mutual credit system among themselves to conduct business, inviting clients and suppliers to join. Even in modern days, during recessions when bank loans decline, businesses use WIR to pick up the slack. That’s how it helps to smooth the tough times, says Lietaer. He reports about 600,000 mostly small and medium-sized Swiss businesses use the WIR, or about 16% of businesses, with a volume just under $2 billion annually.

While Lietaer was a co-designer of the ECU, the European Currency Unit, the precursor to the euro which brought many currencies into a single monetary system, he acknowledges the irony that he now advocates alternative currencies from the regional to global level. Now he sees complementary currencies running parallel to national money at all levels. He claims we need a global business-to-business currency that is nobody’s national money, and which programs multinational corporations to think long-term. Meanwhile, he sees complementary currencies providing value all way to a local neighborhood to help solve regional social problems.

Business Insider, Beppe Grillo, head of Five Star Movement draws big crowd in from of this coming weekend’s Italian election. There’s obviously a lot of attention paid to Silvio Berlusconi, and whether or not he’ll make a strong, comeback showing. But the politician that a lot of folks are watching is Beppe Grillo, the head of his own “Five Star Movement” party, which has a very strong populist, anti-Eurozone, anti-banker bent. If he has a huge showing in the election, and the last polls had him in 3rd place, even ahead of Mario Monti, then that could cause a major political disturbing. Anyway, he had a huge rally in Milan tonight. Anywhere between 70k-100k showed up to hear him.

Reuters reports Possible Berlusconi comeback is nightmare for Merkel

Bloomberg reports Bersani Preaches Spread-the-Wealth Before Italian Vote. Pier Luigi Bersani is traveling from Palermo to Naples with a spread-the-wealth message to fend off populist rival Beppe Grillo in two poor regions pollsters say are vital to gaining control of Italy’s Senate. With outright victory at stake in the Feb. 24-25 parliamentary election, Bersani, 61, is set to appear in Naples, capital of the southern region of Campania, after speaking to thousands in Sicily’s biggest city yesterday. He has covered the length of the Italian peninsula this week to rally voters in the three must-win regions of Lombardy, Sicily and Campania. Victory in Campania and Sicily, two of Italy’s poorest regions, is in doubt as former comic Grillo’s anti-austerity message resonates with recession-scarred voters. Bersani drew cheers from flag-waving supporters in Palermo’s Piazza Verdi when he said he’d push to get more out of the wealthy. Still, his base of union supporters may not be enough to stop Grillo from carrying Sicily. Victory by Grillo in Sicily is “a concrete possibility,” said Roberto D’Alimonte, a professor at Rome’s Luiss University who does political analysis for Sole 24 Ore, Italy’s leading business newspaper

Mike Mish Shedlock writes It’s All Up In The Air Now as Silvio Berlusconi, head of the centre-right Il Popolo della Libertà (the People of Freedom) has staged a massive rally in the polls (now blacked out). Berlusconi has been on a rampage lately blaming Germany and Chancellor Angela Merkel for the unemployment problems in Italy. It’s a populist message that is resonating well with voters.
Beppe Grillo’s Movimento 5 Stelle (Five Star Movement) has been largely ignored in the Italian press, yet Grillo has been wildly popular at rallies. Grillo has a chance to come in second, and I would not be surprised by a first place finish

With such little difference between Berlusconi and Bersani, and with huge rallies for Beppe Grillo and Berlusconi, any outcome is possible. Will Grillo take votes from Berlusconi or Bersani (or both). If enough of both I could even envision a win. If he takes more votes from Bersani, then Berlusconi is likely to win.

From my experience, late deciders break in a massive way for one candidate or the other (and in the US election I predicted for Obama). Here, it appears against Bersani (to who is more uncertain).

Spiegel reports Berlusconi’s Faithful: ‘Only Silvio Can Save Italy’. Adoration of Berlusconi in Italy remains widespread. In the parallel universe occupied by his followers, there is no room for doubt about Berlusconi and lines are clearly drawn. Silvio is good and the others are bad.

These fans gather at his speeches, like the Saturday rally in Palermo, where thousands crowded into the venerable Teatro Politeama. There were women in long fur coats and fine gentlemen in three-piece suits. Dock workers like Ferrante squeezed with them through the entrance, everyone pushing and shoving each other like adolescents at a rock concert. The hundreds who didn’t make it in must stand outside.

Silvio the Savior. Fans of the 76-year-old ex-premier see him as more than just a beacon of hope. “Berlusconi will now start a revolution,” says teacher Marinella Romano. She confesses “I have always loved Silvio.” Donatella Catalano, a friendly retiree, gushes, “He stands for everything that is good in the world.” The unemployed Ferrante says that “only Silvio can save Italy, he will bring us much good.”

Fully a quarter of Italians are prepared to vote for Berlusconi again. It is an astounding degree of homage paid to man who faces allegations of abuse of power and bribery; who faces the scandal surrounding the underage escort Karima el-Marough, alias Ruby Rubacuori; who has been blasted for blatantly misogynistic comments; and who broke many promises as prime minister. Instead, the opposition, left-leaning judges and even the Germans are blamed for all that is not right with Italy.

“It was Merkel who toppled him,” says retiree Catalano, referring to the German chancellor. She then turns to her neighbor and says: “It’s better not to tell the man anything, because the Germans always write negatively about Berlusconi.” Another voice yells: “First World War II and now attacks against Berlusconi!”

The comments are not surprising. In almost every campaign speech, Berlusconi rails against Germany. “Should we continue to allow Germany to dictate policies that ruin Italy?” he calls out. “Nooooo!” scream his followers.

It’s difficult to judge from this side of the Atlantic, but things do not look good for a viable center-left coalition. At best, Bersani will win the Chamber and lose the Senate. That would likely result in a hung parliament.

Anti-German sentiment in Italy is high already. The entrance of German politicians into the battle may fuel that sentiment in a major way.

It is conceivable “Silvio the Savior” pulls off a stunning upset win in both the Chamber and Senate, but a Senate victory would still require a coalition (no party will come close to a majority).

In theory, Movimento 5 Stelle and Silvio Berlusconi could form a nice anti-Euro coalition and put the Euro to a vote, but given the anti-political party platform of Movimento 5 Stelle it’s hard to see that coalition forming. Indeed it may be difficult if not impossible for any party to form a Senate coalition if Monti’s party does poorly enough (as I expect it will).

The most likely outcome once again is a hung parliament, and the next most likely outcome may very well be a return of Silvio Berlusconi (rather than a weak center left coalition of some sort that most seem to expect).

Regardless, Berlusconi is no savior (nor is there one to be found in the entire group). There are no good outcomes for Italy.

Breakout relates It’s No Joke: A Foul-Mouthed Comic May Be Next Italian Leader The political turmoil in Italy may seem like a distant concern here, but if we’ve learned anything from tracking the Euro crisis over the past few years, it’s that nothing that happens in Europe, happens in isolation.

Zero Hedge reports Italy’s North-South Divide, And Lombardia’s Starring Role In The Elections.

Bloomberg reports Monti’s Austerity Pushes Italians Toward Parliamentary Upheaval. Elisa Dalbosco says she lost her job when it came time for her former employer, a refugee shelter in much,” said Dalbosco, who at 26 is now unemployed and poised to vote for self-described populist Beppe Grillo in elections on Feb. 24 and Feb. 25. Dalbasco’s disappointment shows why Italy is braced for its biggest political upheaval since 1994. Dalbosco, whose ballot five years ago went to an ally of front-runner Pier Luigi Bersani, won’t vote for anyone tied to incumbent Mario Monti because she says his austerity policies in a shrinking economy put the interests of banks ahead of everyone else’s.

Bloomberg reports Spain’s Graft Scandals Reach Palace as King’s Adviser Testifies. The graft allegations roiling the Spanish elite may edge closer to the head of state, King Juan Carlos, when his son-in-law and a senior palace official testify in court on corruption charges. Inaki Urdangarin, a former Olympic handball player married to Princess Cristina, is due to answer questions in Mallorca tomorrow as part of a private prosecution where he has been named as an official suspect on six counts including fraud, embezzlement and money laundering, a court spokeswoman said. Magistrates on the tourist island will also question Carlos Garcia Revenga, the princess’s personal secretary, who is also a suspect, she said.

Mike Mish Shedlock writes France Sinks Further Into Gutter; PMI Accelerates to 4-Year Low; “Core” of Europe Now Consists of Germany Only.

The PMI reports are out today, and inquiring minds will note the Markit Flash France PMI shows the decline in French private sector output accelerates further to reach near four-year record. Expect GDP to follow the PMI far more than economists expect.

The Markit Flash Eurozone PMI shows steepening downturn in February. Recall that the “core” of Europe was once Germany, France, and Italy. Italy went down the tubes long ago and the “core” became Germany and France. The “core” is now Germany.

Illusion of Eurozone Stabilization. There is no real stabilization and there is no healing. Rather, the policies of Hollande are so disastrous that some output has shifted to Germany and elsewhere, (coupled perhaps with some inventory replenishment and a temporary stimulus-fueled increase in demand in Asia).

Even that cannot last. How can it? US growth has stalled (at best) and 2% payroll tax cuts will tip the US into recession (assuming it’s not there already). With employment sinking in France, Italy, and Spain, precisely who will buy German exports? Properly rebalancing will require a shift in production from Germany to the rest of Europe as well as a shift towards more consumption in Germany from the rest of Europe. That cannot and will not happen with the destructive policies of Hollande, and the lack of reforms in Spain and Italy.

Something has to give. And it’s something very few people see coming.

Germany will pay a steep price. One way or another Germany will pay a huge price. These are the only two eurozone recovery options: Germany gives (not lends) more bailout money to the rest of Europe or The eurozone breaks up. Until one of those things happens, signs of stabilization are nothing but an illusion. There are no other options, and no other choices. Meanwhile, imbalances grow and German taxpayers keep funneling tax dollars to the Southern states to keep them afloat. How long German citizens are willing to put up with this sorry state of affairs remains to be seen.

I reply Jesus Christ is at the helm of the economy of God, Ephesians 1:10, bringing forth Authoritarianism’s Beast Regime to replace Liberalism’s Banker Regime.

Wikipedia relates On May 14, 1948, the day on which the British Mandate over Palestine expired, the Jewish People’s Council gathered at the Tel Aviv Museum, and approved a proclamation, declaring “the establishment of a Jewish state in Eretz Israel, to be known as the State of Israel“.[52] Thus the global hegemonic power of the British Empire, a company of nations, ended. The first of two iron legs of global power ceased, so that the second of the two legs of global power, as foretold in bible prophecy of Daniel 2:25-45, could begin its rise to global dominance, establishing the rise of Liberalism that began in 1913 with the establishment of the Creature From Jekyll Island.

Now, operating through Destiny, Revelation 1:1, Jesus Christ is replacing the Banker Regime of Liberalism with the Beast Regime of Authoritarianism,.and that Crony Capitalism, in America, European Socialism, in France, and Greek Socialism, in Greece, is being replace by Regional Governance, Totalitarian Collectivism, and Debt Servitude, in Euroland, according to Revelation 13:1-4

He began by unleashing the First Horseman of the Apocalypse, to transfer the baton of sovereignty from nation states to regional leaders, regional bodies, and soon regional public private partnerships, as presented in Revelation 6:1-2.

Jesus Christ is producing from the crumbling two iron legs of global hegemony, these being the UK and the US, a Ten Toed Kingdom of regional governance, where toes of a miry mixture of iron diktat and clay democracy, rule in the world’s ten regions, as foretold in Daniel 2:25-45. It’s as Peter Schiff relates in Yahoo Breakout America Is Becoming the United States of Britain. The President & CEO of Euro Pacific Capital says the near-term fate of the colonies is being foreshadowed across the pond as its sovereignty is crumbling.

Germany will be the hub of all economic production in Europe for ever. The PIGS will be desolate, hollow moons, revolving around Planet Germany, existing as colonies of Brussels and Berlin technocratic government. Germany will be the epicenter of a revived Roman Empire, exercising regional governance over vassal peripheral Eurozone states.

In The Economist Magazine Print Edition Long After The Party, How Italians are going to vote is not clear; but the vote will matter both to the future of their country and to the Euro, page 26, the chart of Eurozone Unit Labor Costs from 1999 through 2011, shows that Spain, followed by Italy and then France have labor costs in excess of 128, compared to Germany with 102.

The introduction of the Euro did a number of things, it created the Euro, FXE, as a Commodity Currency, CCX, which drove up the price of Commodities, DBC, and created European Socialism, and the most extreme form of Socialism, that being Greek Socialism, and it created Export Germany, based upon what is fiat asset deflation in Germany, as is indicated by Germany’s low unit labor cost, by the failure of its housing prices to soar like in Spain and France, and by the depression of German Treasury Debt. There is no amount of restructuring or rebalancing that can be done in the periphery to stabilize the European Union. Like oil and water, the core, being Germany, and the periphery, being the PIIGS, cannot mix; one will rise to the top, and the other settle to the bottom.

Not only will Germany be the epicenter and hub of economic activity in Euroland, it will also be the head of hegemonic military and spiritual attention as well.

Johannes Stern of WSWS writes The return of German imperialism. Germany is making intensive preparations to wage new wars to secure resources. And Wolfgang Weber of WSWS reports German Government Decides On Long Term Military Deployment In Mali.

Tyler Durden reports German lawyer to head Vatican Bank A German pope may be vacating the Vatican but a German lawyer is about to head its bank, an institution some say is as important if not more, and whose shady dealing some say may have been the reason for the pope premature departure. Per Reuters, “The Vatican appointed German lawyer Ernst von Freyberg to be the new president of its bank on Friday, filling a post left vacant since May when the previous head was ousted from the scandal-tainted institution.

As it grows in prominence, Germany will transition from being a One Euro Government to being a One World Government as foretold in Daniel 7:7, the fourth beast, and in Daniel 7:23.

The first beast is presented in Daniel 7:4 as being, “Like a lion; it has eagles wings”. This beast was Babylon, whose emblem was a lion with eagle’s wings.
The second beast is presented in Daniel 7:5, “Then behold! Another beast, a second one, similar to a bear; it was placed on one side, and there were three ribs in its mouth between its teeth; and this is what they said to it, ‘Arise, devour much flesh!’” The second beast was Medo-Persia.
The third beast is presented in Daniel 7:6, “After this I was watching and behold! Another beast, like a leopard, with four bird’s wings on its back; the beast had four heads, and it was given dominion”. The third beast was Greece. When Alexander the Great died in 323 C.E., his empire was divided between and ruled by four of his generals.
The fourth beast, is presented in Daniel 7:7-8, “After this I was watching in night visions, and behold! A fourth beast, exceedingly terrifying, awesome and strong. It has immense iron teeth, and it was devouring and crumbling, and trampling its feet what remained. It was different from all the beasts that had preceded it, and it had ten horns. As I was contemplating the horns, behold! Another horn, a small one, came up among them, and three of the previous horns were uprooted before it. There were eyes like human eyes in this horn, and a mouth speaking haughty words”. The fourth beast, Empire Germany, will manifest as a revived Roman Empire, that is an authoritative kingdom from today’s EU Debt Crisis, whose Emperor, The Sovereign, seemingly one of little authority, will eventually conquer three of the world’s other ten regional kings.

And Daniel 7:23, relates, “Thus he said, the fourth beast shall be the fourth kingdom upon the earth, which shall be diverse from all kingdoms, and shall devour the whole earth, and shall tread it down, and break it to pieces.” The coming European Empire will eventually rise to govern the world as a one world government, which will precede the coming of Christ to establish his World Wide Kingdom.

New sovereignty, new sovereigns, and new sovereign wealth is coming from two agents of Destructionism, these being first, the unwinding of the Euro Yen Currency Carry Trade, that is the EUR/JPY, and second competitive currency devaluation.

The economic and political shift from Liberalism to Authoritarianism being foretold in Daniel 2:25-45, as a Ten Toed Kingdom, that is a global empire, with toes of a miry mixture of iron diktat and clay democracy; and a Beast Regime, in Revelation 13:1-4, is unseen by practically everyone, as it has a coat of a leopard, whereby it blends in with all of mankind’s media, technology, banking, educational, banking, government and religious and think tank institutions; the feet of a bear which enables it to stand its ground as well as root out its enemies, and the mouth of a lion to make authoritative governing statements; this minotaur, is the ultimate predator, devouring all who it chooses to consume.

With the Great Paradigm Shift from Liberalism to Authoritarianism, political governance will change from the rule of sovereign nation states to regional governance; and economic experience from investment choice to debt servitude; as leaders meet in summits to renounce national sovereignty and pool sovereignty regionally, a concept that has been presented by Herman van Rompuy for a long time.

Sovereignty begets seigniorage, that is moneyness. Where seigniorage exists, that is where moneyness manifests, there exists a sovereign producing it.

New seigniorage, that is new moneyness, is coming on the death of the fiat money system, that is on the death of the Milton Friedman Free To Choose Floating Currency Regime.

Regional leaders and diktat, will replace sovereign nation states and investment choice; these will provide the seigniorage of diktat. “Paper money no more”, will be Authoritarianism’s banner. The fiat money system will soon be replaced by the diktat money system, where diktat serves as currency, credit, power and wealth.

Doug Noland reports current sovereign wealth as follows:

Federal Reserve Credit surged $45.7bn to a record $3.063 TN. Fed Credit has increased $278bn in 20 weeks. Over the past year, Fed Credit expanded $146bn, or 5.04%.

Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $701bn y-o-y, or 6.9%, to $10.953 TN. Over two years, reserves were $1.644 TN higher, for 18% growth.

M2 (narrow) “money” supply rose $14.3bn to $10.435 TN. “Narrow money” has expanded 6.7% ($655bn) over the past year.

2) … In other news
Reuters reports Report to call for Detroit emergency manager, city official communicates. Detroit Free Press reports Bing and council can’t turn Detroit’s finances around, state-ordered review finds. WSWS reports Unpaid furlough days dictated for 600 Detroit city workers. And Mike Mish Shedlock writes Half of Detroit properties have not paid taxes.

WND Politics Big Brother To Monitor Sovereign Citizens. New task force to target ‘anti-government extremists. With almost no media coverage, the White House last week announced its new Interagency Working Group to Counter Online Radicalization to Violence that will target not only Islamic terrorists but so-called violent “sovereign citizens.”
The FBI defines “sovereign citizens” as “anti-government extremists who believe that even though they physically reside in this country, they are separate or ‘sovereign’ from the United States.”
The new online working group will be chaired by the national security staff at the White House with input from specialists in countering what the Obama administration calls violent extremism.
Also included in the group, according to a White House release, will be “Internet safety experts, and civil liberties and privacy practitioners from across the United States Government.”
The new group says its initial focus will be on raising awareness about the threat and “providing communities with practical information and tools for staying safe online.”
The working group says it will coordinate with the technology industry to “consider policies, technologies, and tools that can help counter violent extremism online” while being careful not to interfere with “lawful Internet use or the privacy and civil liberties of individual users.”
Today, Obama is reportedly poised to issue an executive order aimed at thwarting cyber attacks against critical infrastructure.
The Hill reported the executive order would establish a voluntary program in which companies operating critical infrastructure would elect to meet cybersecurity best practices and standards crafted, in part, by the government. Because of the troubling ideology of some Obama officials, the question arises as to exactly which citizens are considered threats by the government.
WND broke the story about a lengthy academic paper by President Obama’s so-called regulatory czar, Cass Sunstein, suggesting the government should “infiltrate” social network websites, chat rooms and message boards. Sunstein stepped down last year.
Such “cognitive infiltration,” Sunstein argued, should be used to enforce a U.S. government ban on “conspiracy theorizing.” Among the beliefs Sunstein classified as a “conspiracy theory” is that global-warming advocacy is a fraud.
Last year, Reuters revealed that a government document indicates the U.S. Department of Homeland Security’s command center routinely monitors dozens of popular websites, including Facebook, Twitter, Hulu, WikiLeaks and news sites such as the Huffington Post and Drudge Report.
Reuters reported that a “privacy compliance review” issued by DHS in November 2012 confirms that since at least June 2010, the department’s national operations center has been operating a “Social Networking/Media Capability” which involves regular monitoring of “publicly available online forums, blogs, public websites and message boards.” The government document states that such monitoring is meant to “collect information used in providing situational awareness and establishing a common operating picture” to help manage national or international emergency events.
Last year, Attorney General Eric Holder signed new guidelines that relaxed restrictions on how counterterrorism analysts may retrieve, store and search information about Americans gathered by government agencies for purposes other than national security threats. The new guidelines allow the government’s National Counterterrorism Center to keep Internet data collected on private citizens for up to five years instead of 18 months.

3) … The world’s paradigm for economic and political experience, pivoted from Liberalism to Authoritarianism the week ending Friday February 22, 2013.
I. Sovereignty begins seigniorage, that is moneyness.

II. The sovereigns of Liberalism, nation states and their central banks gave seigniorage to money, that is wealth, producing the seigniorage of investment choice. Asset Managers such as BLK, WDR, EV, STT and WETF, Investment Bankers such as JPM, the World’s Leading Banks such as SAN, NBG, RBS, LYG, BCS, HDB, IBN, and UBS, The Too Big To Fail Banks such as BAC, and C, the Regional Banks such as SNV, HBAN, and RF, coined Liberalism’s money, consisting of fiat investments; some of which were given more seigniorage than others, such as Gaming Stocks, BJK, Leveraged Buyouts, PSP, Small Cap Growth Companies, such as CSL, Global Producers, IP, and GE, Dig And Dirt Equipment Manufacturers, MTK, Agricultural Companies, MON, and Small Cap Revenue Companies such as LAD, to name just a few.

III. In 1971, the world embraced the Milton Friedman Free To Choose Floating Currency Regime, whereby Liberalism’s Fiat Money System served to underwrite economic and political experience, where currencies served not only as the medium of exchange in payment of debt and payment for goods or services, but became the medium of driving corporate profitability, global growth and trade, as well as enhancing national standards of living.

The US Dollar became the World’s Reserve Currency, and currencies began to float according to investment opportunities in nations, EFA, such as Finland, EFNL, and its Nokia, NOK, communications equipment producer; or Sweden and its LM Ericsson, ERIC, telephone equipment manufacturer, in small cap nations, IFSM, and especially the Emerging Markets, EEM, such as Peru, EPU, and its Southern Peru Copper Corporation, SCCO, as well as in Ireland, EIRL, and its CRH PLC, CRH, cement producer, as well as in Thailand, THD, and its ability to adeptly produce everything, as well as it being a tourist destination for both personal and brothel prostitution.

IV. Liberalism’s money started to die the week ending Friday, February 22, 2013, as the Major World Currencies, DBV, and Emerging market Currencies, CEW, traded lower and the US Dollar, UUP, traded higher.

V. Authoritarianism’s money, the ability to command rule and govern, began to rise with the first of three Greek Bailouts beginning in May 2010, and is seen increasingly rising, as in the Alejandro Lopez WSWS report, Spain’s Popular Party makes U-turn on eviction petition. Last week, Spain’s ruling Popular Party executed an about-face over foreclosures and evictions.

VI. Dispensationalism, the ideology that Jesus Christ, God’s Son, is in charge of the administration, that is the management, of all things (Ephesians 1:10, Ephesians 3:2, Ephesians 3:9, Colossians 1:25) presents that He created Liberalism, as an age where trust in credit produced prosperity.

Strong’s Greek word oikonomia, #3622, dispensation, literally means household dispensing, household stewardship, household management and economic oversight of property. Dispensations are epochs, ages, and time periods of mercy and judgement.

MB-Soft relates Dispensational theology grows out of a consistent use of the hermeneutical principle of normal, plain, or literal interpretation. This principle does not exclude the use of figures of speech, but insists that behind every figure is a literal meaning. Applying this hermeneutical principle leads dispensationalism to distinguish God’s program for Israel from his program for the church. Thus the church did not begin in the OT but on the day of Pentecost, and the church is not presently fulfilling promises made to Israel in the OT that have not yet been fulfilled.

VII.  Inflationism is pivoting to Destructionism. Currency traders are unwinding currency carry trades, and initiating competitive currency devaluation, devaluing money; and bond vigilantes are calling interest rates higher; causing investors to derisk out of stocks and delverage out of commodities.

The week ending February 22, 2013, Major World Currencies, DBV, and Emerging Market Currencies, CEW, joined World Stocks, ACWI Commodities, DBC, and Bonds, BND, in turning lower on the exhaustion of the world central banks’ monetary authority and resulting inability to stimulate global growth and corporate profitability, as well as on the dynamic that the monetary policies of the US Fed, the ECB, the BoJ, and the PBOC, to monetize debt, have crossed the rubicon of sound monetary policy, and have turned “money good” investments, bad.  Major World Currencies, DBV, crested February 11, 2013, at 26.95; and Emerging Market Currencies, CEW, crested February 11, 2013, at 21.29.

The chart of the S&P 500 Weekly, $SPX, SPY, crested February 11, 2013, at 152.11, in an Elliott Wave 5 High. And World Stocks Weekly, ACWI, crested January 28, 2013, at 50.34, in an Elliott Wave 2 High.

Austrian Economist and Libertarian Robert Wenzel writes correctly The economist Murray Rothbard tied together the stock-market crash and Great Depression, in his book, America’s Great Depression, to Federal Reserve money printing of the 1920s. The end to this printing, in Rothbard’s view, caused the crash and the Great Depression.

And Mr Wenzel writes Tens of Thousands Protest in Spain (as Santa Clause dies).  The Alberto though an accountant, seems to have a problem understanding that the Spanish government has no money to provide health and education at previous spending levels. The country is reaching what Ludwig von Mises called the exhaustion of the reserve fund:

The interventionist in advocating additional public expenditure is not aware of the fact that the funds available are limited. He does not realize that increasing expenditure in one department enjoins restricting it in other departments. In his opinion there is plenty of money available. The income and wealth of the rich can be freely tapped. In recommending a greater allowance for the schools he simply stresses the point that it would be a good thing to spend more for education. He does not venture to prove that to raise the budgetary allowance for schools is more expedient than to raise that of another department, e.g., that of health. It never occurs to him that grave arguments could be advanced in favor of restricting public spending and lowering the burden of taxation. The champions of cuts in the budget are in his eyes merely the defenders of the manifestly unfair class interests of the rich.

With the present height of income and inheritance tax rates, this reserve fund out of which the interventionists seek to comer all public expenditure is rapidly shrinking. It has practically disappeared altogether in most European countries.[...]

From day to day it becomes more obvious that large-scale additions to the amount of public expenditure cannot be financed by “soaking the rich,” but that the burden must be carried by the masses. The traditional tax policy of the age of interventionism, its glorified devices of progressive taxation and lavish spending have been carried to a point at which their absurdity can no longer be concealed. The notorious principle that, whereas private expenditures depend on the size of income available, public revenues must be regulated according to expenditures, refutes itself. Henceforth, governments will have to realize that one dollar cannot be spent twice, and that the various items of government expenditure are in conflict with one another. Every penny of additional government spending will have to be collected from precisely those people who hitherto have been intent upon shifting the main burden to other groups. Those anxious to get subsidies will themselves have to foot the bill. The deficits of publicly owned and operated enterprises will be charged to the bulk of the population.[...]

Every strike becomes, even in the short run and not only in the long run, a strike against the rest of the people.

An essential point in the social philosophy of interventionism is the existence of an inexhaustible fund which can be squeezed forever. The whole system of interventionism collapses when this fountain is drained off: The Santa Claus principle liquidates itself.

I relate that trust in the debt of the sovereigns, that is in the US, VTI, Germany, EWG, Spain, EWP, Italy, EWI, Greece, GREK, Germany, EWG, China, YAO, Australia, EWA, Japan, EWJ, Norway, NORW, Finland, EFNL, Sweden, EWD, and others produced Peak Commodities, DBC, on September 14, 2012, Peak Credit, on December, 6, 2012, Peak Wealth, on January 28, 2013, and Peak Currencies, on February 11, 2013. Liberalism’s great Banking Schemes produced Peak Sovereignty and Peak Seigniorage, that is Peak Moneyness, to produce Peak Prosperity. The Age of Credit and the Age of Prosperity is over.

VIII. Jesus Christ is now introducing the epoch, that is the era, of Authoritarianism, which is characterized by fiat asset deflation (read stock market decline), headline inflation, fascism, totalitarian collectivism, debt servitude and austerity.

The Age of Fiat Asset Deflation and the Age of Austerity is commencing as Jesus Christ has released  the Four Horsemen of the Apocalypse, to ride with intensifying vigor over mankind. The Second Great Depression is on the way as the Great Debt Bubble, AGG, and associated Great Major World Currency Market, DBV, and Emerging Market Currency, CEW, Bubble has burst.

The very linchpin of ECB sovereign debt support has burst as Greece, GREK Greek shares that fell the sharpest this week of all European shares as is seen in this Yahoo Finance chart. The nation that defines Clientelism, Barriers To Competition, and Corruption, is leading Europe, and the World into Economic and Political Failure.

IX. The sovereigns of Authoritarianism, nannycrats, acting through regional governance provide the seigniorage of diktat, via the Diktat Money System, where diktat serves as both money and currency for regional security, stability, and security, establishing fascism with public private partnerships being the chariots of debt servitude and austerity, as well as the agents of diktat that manage regional resources, oversee the factors of production, and direct economic activity for the region’s security, stability and stability. Macquarie Infrastructure Company, MIC, will likely be the model for the coinage of Authoritarianism’s money.

In North America, Access America Transport, a third-party logistics company based in Chattanooga, Tennessee, which operates nine locations and specializes in truckload, less-than-truckload, and supply chain management service, may morph to be a leading regional public private partnership.

Regional commodity and commerce exchanges will support trade and economic activity in un-dollar, that is dollar-less, transactions; that is something akin to Paxum e-wallet based upon a regional currency or something akin to the Alibaba business-to-business online marketplace. Currently, the Think Finance Platform delivers leaning products for underbanked consumers; perhaps this platform will be expanded in new and innovative ways.

Increasingly money will be available from Lending Club, a “peer-to-peer” lending website for personal loans which assesses applicants’ risk and allows investors to lend directly to individuals or spread their money across a number of loans

Liberalism was characterized by wildcat finance, a Doug Noland Term, where bankers sought to outdo one another with financial schemes. Authoritarianism is characterized by wildcat governance where authoritarians bite, rip, and tear one another in order to rise to be the top dog.

Under Liberalism, money was the reward for meritocracy and the resource of credit. Under Authoritarianism, money is the means of repaying liberalism’s debts.

X. Schemes of Liberalism came by bankers beginning in 1913, with the coup d’etat which created the US Federal Reserve, which is neither Federal nor exists having any reserves. Further banking schemes strengthened Liberalism. These included the establishment of the State of Israel in 1948, the ceding of the Suez Canal and the ceding of Hong Kong, which decimated British global hegemony. US Hegemony increased with the repeal of the Glass Steagall Act and an active war for oil policy beginning in 2001 which gave seigniorage to energy service as well as energy production companies.

Doug Noland writes in Prudent Bear, There are those that believe that the Federal Reserve and global central bankers are on the right course. If QE/money printing is not getting the desired results, it’s because central banks aren’t using it with sufficient determination. And then there are those of us that see global monetary policy as an unmitigated disaster. Dr. Bullard is certainly accurate when he states “We had a big bubble in the nineties. A big bubble in the two thousands This has been going on for 20 years.” In reversing last year’s potentially destabilizing global “risk off,” the Fed and global central bankers incited a historic period of “risk on” excess and attendant fragilities. Now they’re stuck. When one takes an objective view of the world, I along with others see a deeply flawed monetary policy experiment run amuck. I see myriad historic Bubbles. I see, as well, a global “risk on” speculative trading dynamic that will eventually impart pain upon the unsuspecting

XI. Schemes of Authoritarianism are coming by European elites such as Herman van Rompuy who coordinated the first of three Greek Bailouts to keep Greece in the EU, Angela Merkel who was awarded the Charlemagne Prize on behalf of Eurozone unification, Mario Monti who introduced technocratic government in Italy, and Mario Draghi who provided the ECB’s monetary policies of LTRO1, LTRO2, and OMT, which drove down European country Treasury Debt Interest Rates, which funded the fiscal needs of the PIIGS, and created an almost nine month risk-on global Euro Yen Currency Carry Trade Rally, which was underwritten by the most toxic of debt, held by the US Federal Reserve, and is reflected in the trading of Distressed Investments, FAGIX, Senior Bank Loans, BKLN, and Junk Bonds, JNK.

XII. Political crisis in Italy together with Eurozone economic decline is enabling currency traders to devalue currencies causing investors to derisk out of stocks and deleverage out of commodities, and will also bring forth a German led One Euro Government, foretold in Daniel 7:7; which will morph into a One World Government seen in Daniel 7:23.

Mike Mish Shedlock consistently writes “Eventually, there will come a time when a populist office-seeker will stand before the voters, hold up a copy of the EU treaty and (correctly) declare all the “bail out” debt foisted on their country to be null and void. That person will be elected.”

I respond, that the Beast Regime of fascist regional governance, totalitarian collectivism, and debt servitude, presented in bible prophecy of Revelation 13:1-4, will arise out of Financial Apocalypse, that is a credit bust and global financial breakdown, Revelation 13:3. This is also known as the Ten Toed Kingdom of Regional Governance presented in Daniel 2:25-45.

There is waiting in the stage of Europe’s wings, the most capable of sovereigns, one who today is of seemingly little authority, Daniel 7:8; one who is knowledgeable in the schemes of Authoritarianism, Daniel 8:23.

Soon the Sovereign Lord God, Ephesians, 1:1-23, will open the curtains, and into the limelight will step the Sovereign, the EU’s Leader, Revelation 13:5-10; he will be accompanied by the Seignior, the EU’s Finance Minister, Revelation 13:11-18.

Candidates for the Sovereign include Olli Rehn, Herman van Rompuy, and Guido Westerwelle; and candidates for the Seignior include Jens Weidmann and Mario Draghi.

Together their word will and way will be Euroland’s rule, replacing all national constitutional law, as well as historical law.

XIII. Under Authoritarianism, physical possession of gold and diktat will be the only two forms of sovereign wealth.

On February 20, 2013,Tyler Durden wrote Stocks dropped the most in 2013,the S&P Futures uptrend is broken, as the chart of gold shows a death cross, with its 50DMA crossing under its 200DMA. Matthew Boesler of Business Insider writes Death Cross actually bullish for gold. On February 22, 2013, Spot Gold, $GOLD, closed at $1580. The chart of the Gold ETF, GLD, shows a price of 153, which is its June 2012 low. The monetization of debt by the world central banks has fully debased gold; it having reached a bottom will be trading higher, just as all carry trade investment has been washed out of Silver Standard Resources Inc, SSRI, as well as out of the Gold and Silver Mining Stocks seen in this Finviz Screener

4) …. I will be blogging with less frequency.
I plan to spend more time in the Bible and in the Hymnal for spiritual refreshment and for doctrinal growth, so as to live in godly virtue and in biblical ethics, and thus attain the very stature of the person of Christ, maturing more and more in the life and faith of Jesus Christ.

The tiny url for this post is http://tinyurl.com/b4ql7xm

An Investment Demand For Gold Will Arise On Competitive Currency Devaluation

Presidents’ Day report on the investment implication of the pivoting of Liberalism to Authoritarianism

1) … An investment demand for gold will be commence on the unwinding of the Euro Yen Currency Carry Trade and on competitive currency devaluation.
Keynesian and Monetarist stimulus, specifically the US Fed’s ZIRP, and Quantitative Easing, the ECB’s LTROs and OMT, the BoJ’s Unlimited Easing and PBOC monetary injections have stimulated global growth and trade, as well as have developed corporate profitability and rewarded investors who went long when QE1 commenced, or who hung in with their investments as they recovered.

Sovereignty begets seigniorage, that is moneyness. Where seigniorage exists, that is where moneyness manifests, there exists a sovereign producing it.

Sovereign nation states, and their central banks, such as the US Fed, the ECB, the BoJ, and the PBOC, are the sovereigns that have produced the seigniorage that stimulating Nation Investment, EFA, Small Country Nation Investment, IFSM, Emerging Market Investment, EEM, Global Production, FXR, Dividend Investment in yield high yield bearing ETFs, such as Vanguard REITS, VNQ, such as SPG, and Mortgage REITS, REM, as well as Risk Investment in Leveraged Buyouts, PSP, Junk Bonds, JNK, Senior Bank Loans, BKLN, Emerging Market Bonds, EMB, Spin Offs, CSD, and IPOs, FPX, as is seen in the ongoing two year combined chart of EFA, FXR, VNQ and PSP.

Since the eruption of the global financial crisis in 2008, the US Federal Reserve has increased its holdings of financial assets some threefold. These purchases of financial assets added to the supply of dollars and worked to push down the US Dollar, $USD, UUP, both expanding fiat assets globally and increasing exports from a number of US based industries, such as Metal Manufactures such as STLD, RS, WOR, VMI, AZZ, CMC, and ITW, seen in this Finviz Screener, Specialty Chemical Manufacturers such as PPG, seen in this Screener, US Infrastructure Stocks, PKB, such as USG seen in this Screener, and Small Cap Industrial Stocks, PSCI, such as LECO, SWK, and BGG, seen in this Screener.

The Sovereignty of Liberalism is at its zenith. And the US is Liberalism’s Premier Sovereign. The US, the second of two iron legs of global hegemonic power since the late 1700s, is as President Obama just finished speaking in the State of the Union Address, manifesting Peak Hegemony.

The adoption of the Milton Friedman Free To Choose Floating Currency Regime has produced Liberalism’s Peak Credit, Peak Currencies, Peak Nation Investment, Peak Global Production, Peak Stock Wealth, Peak Central Bank Wealth, and Peak Sovereignty, pretty much in that exact order.

Dollar Hegemony is at its peak, as Allan Sloan communicates in Fortune Magazine article The Fed’s Big Dollar Gamble. Ben Bernanke’s low interest rate policy has driven down the dollar; the Fed’s keeping-lowering-rates program doesn’t have an an indefinite shelf life. The bottom line is that pharmaceutical stimulus is forever; but Fed stimulus isn’t. It’s as Ron Paul, in Lew Rockwell, writes we are seeing The End Of Dollar Hegemony.

New sovereignty, new sovereigns, and new sovereign wealth is coming on the unwinding of the Euro Yen Currency Carry Trade, that is the EUR/JPY, together with competitive currency devaluation. These two agents will destroy, firstly fiat wealth, secondly the traditional cohesion of the EU as witnessed by the rising level of protests, such as the reported by the Euro News YouTube report Anti-austerity protests on Portugal’s streets, and thirdly, the global hegemonic power of the US.

Inflationism turned to Destructionism on Valentines Day, February 14 and on Friday February 15, 2015, as World Stocks, VT, Commodities, DBC, joined Bonds, BND, in turning lower on the exhaustion of the world central banks’ monetary authority and resulting inability to stimulate global growth and corporate profitability, as well as on the dynamic that the monetary policies of the US Fed, the ECB, the BoJ, and the PBOC, have crossed the rubicon of sound monetary policy, and have turned “money good” investments, bad.

The chart of the S&P 500 Weekly, $SPX, SPY, crested February 11, 2013, at 152.11, in an Elliott Wave 5 High. And World Stocks Weekly, ACWI, crested January 28, 2013, at 50.34, in an Elliott Wave 2 High. Nifty Charts writes Weekly $SPX chart has hit a crucial resistance line

Ryknow of PositiveExpectedValue(You) writes This is an equity rally driven by one simple factor: the growth of debt. In this entry I will show charts and give explanations that should leave very little questions on why I see the end results of this being a flight from capital markets. It has been the most heavily ended stocks which have drawn strong investor interest; these include, Diversified Equipment Manufacturer, GE, Paper Producer, IP, and Dig and Dirt Moving Stock, MTW, Rubber and Plastics Manufacturer, CSL.

It has been the Dividend Paying Stocks Excluding Financials, DTN, that is the first of two factors underwriting Nation Investment, EFA, Small Cap Nation Invesment, IFSM, Global Producers, FXR, Emerging Markets, EEM, and other yield bearing instruments such as VNQ, and REM, as is seen in the combined ongoing Yahoo Finance Chart, of DTN, EFA, IFSM, FXR, EEM, and VNQ.

And more importantly, the second factor in underwriting such wealth has been trust in the Distressed Investments held by the US Federal Reserve, that were taken in under QE1, such as those traded by Fidelity Investments FAGIX, and exchanged for “money good” US Treasuries; it is these that have been the basis for Liberalism’s expanding wealth and Dollar Hegemony. But the Distressed Investments topped out January 22, 2012, portending a turn lower in all forms of fiat wealth.

After a soon coming Financial Apocalypse, that is a credit bust and financial system breakdown, two forms of sovereign wealth will manifest under Authoritarianism.

The first form of sovereign wealth will be physical possession of Gold, GLD, either in bullion form, or in Internet Trading Vault form, on platforms such as BullionVault, which will be the Investors form of sovereign wealth. Gold, GLD, is both a currency and a commodity; and it is being fully debased by the rise of the World’s Major Currencies, DBV, and Emerging Market Currencies, CEW; and a sell of the Japanese Yen, FXY. Spot Gold, $GOLD, at $1600, is back at August 2012 levels; but is up 134% from the 2008 Lehman Event. Gold will soon will be trading higher as fiat wealth of World Stocks, ACWI, Base Metals, DBB, Major World Currencies, DBV, and Emerging Market Currencies, CEW, and Bonds, BND, tumble into the Pit of Financial Abandon. The Gold ETF, traded down to 155.75, and could conceivably trade lower to 147.50. An inquiring mind asks will silver go boom or will silver go bust? Resource Investor reports Bank short silver positions near record, risk squeeze. And Gold Money reports Spike in banks’ net short silver position. I believe that despite the short positions, Silver, SLV, is simply a base metal, and will trade lower with Base Metals, DBB.

The second form of sovereign wealth will be diktat, coming from regional sovereign leaders, from regional sovereign bodies such as the Troika, and from public private partnerships, managing regional economic production, conserving regional natural, and overseeing human resources.

2) … The very nature of money is changing as the world pivots from Liberalism to Authoritarianism; money will become a means to pay the debts of Liberalism.
The Mediterranean nations of Greece, GREK, Italy, EWI, and Spain, EWP, have been in the throes of sovereign and banking crisis since may 2010, when Herman Van Rompuy came forward with the first of what is now three Greek Bailouts, and now have finally introduced Systemic Risk.

NPR reports The Eurozone economies of Italy and Spain had especially sharp economic declines.

Hans-Werner Sinn writes in Project Syndicate The collateral damage of Europe’s rescue. The euro’s appreciation lays bare the huge collateral damage that Europe’s rescue policy has caused. The measures taken so far have opened channels of contagion from Europe’s crisis-ridden peripheral economies to the still-sound economies of Europe’s core, placing the latter’s taxpayers and pensioners at great financial risk, while hindering long-term recovery in the troubled countries themselves. True, Europe’s rescue policy has stabilized government finances and delivered lower interest rates for the over-indebted economies. But it has also led to currency appreciation, and thus to lower competitiveness for all eurozone countries, which may yet turn into a debacle for the southern eurozone and France, which are too expensive anyway, and for the euro itself. The ECB’s rescue operations have hindered the internal depreciation, lower prices for assets, labor, and goods, that the troubled economies need to attract fresh private capital and regain competitiveness, while the euro’s appreciation is now compounding the challenge. In short, Europe’s rescue policy is making the eurozone’s most serious problem the troubled countries’ profound loss of competitiveness, even more difficult to solve.

Bloomberg reports, Lars Seier Christensen, the CEO of Saxo Bank, says he would be a “seller of the EUR at anything near 1.40,” noting that “right now we’re in one of those fake solutions where people think that the problem is contained or being addressed, which it isn’t at all.” … “people have been dramatically underestimating the problems.” …. “the whole thing is doomed”.

Phoenix Capital Research, writes in Zero Hedge If Europe were a house… It’d be condemned. One of the primary focal points of our writing is the corruption that has become endemic to the political and financial elites of the world. When we refer to corruption we are referring to insider deals, cronyism, lies and fraud. Since the Great Crisis began in 2008, these have become the four pillars of the financial system replacing the pillars of trust, transparency, truth and reality that are the true foundation of capitalism and wealth generation.

As we regularly note, corruption only works as long as the benefits of being “on the take” outweigh the consequences of getting caught. As soon as the consequences become real (namely someone gets in major trouble), then everyone starts to talk.

In this sense, the entire EU has been held together by Draghi’s credibility as head of the ECB. The fact that we now have a major scandal indicating that he was not only aware of fraudulent deals in 2010, but gave them a free pass will have major repercussions for the future of the Euro, the EU, and the EU banking system.

We hope by now that you see why we have remained bearish on Europe when 99% of analysts believe the Crisis is over. The only thing that has the EU together has been the credibility of politicians who we are now discovering are all either corrupt, inept or both.

To use a metaphor, if Europe were a single house, it would be rotten to its core with termites and mold. It should have been condemned years ago, but the one thing that has kept it “on the market” was the fact that its owners were all very powerful, connected individual. We are now finding out that the owners not only knew that the home should have been condemned but were in fact getting rich via insider deals while those who lived in the house were in grave danger.

As we stated at the beginning of this issue, corruption only works as long as the benefits of being “on the take” outweigh the consequences of getting caught. As soon as the consequences become real (in that someone gets in major trouble), then everyone starts to talk.

Business Insider adds, The new Spanish debt stats will give you chills. Insolvent sovereign nations, such as Ireland, EIRL, Italy, EWI, Greece, GREK, and Spain, EWP, and their insolvent financial institutions, EUFN, such as NBG, and SAN, are unable to provide seigniorage, that is moneyness, to stocks, such as Pharmaceutical Producers, NVO, Specialty Chemicals, LYB, Beverage Manufactuers, CCH, Energy Producers, E, Software Manufacturers, SAP, Copper Mining Stocks, COPX, Cement Manufacturers, JHX, Agricultural Chemicals, MON, Semiconductor Equipment Manufacturers, ASML, NXPI, Retailers, LUX, Telecom Services, TEF, TI, PT, and Base Metal Commodities, such as Lead, LD, and Tin, JJT. These investments were given seigniorage by the regional soveign, that being the ECB, and that sovereignty is beginning to wane as is witnessed by a decline in their stock market values..

The failure of the stock value Eurozone periphery nation states, that is the PIIGS, traded as Ireland, EIRL, Italy, EWI, Greece, GREK, and Spain, EWP, as investment vehicles, is the defining pivotal event in world investment history as the paradigm of Liberalism transitions into Authoritarianism. Nation State Investment, EFA, and Small Cap Nation Investment, IFSM, is failing, and World Stocks, VT, are trading lower. Volatility, VIXM, is turning up as investors are starting to derisk out of stocks and delever out of commodities.

It is reasonable to believe that a see-saw destruction of wealth will now commence. Total Bonds, BND, which have fallen in value two percent since December 6, 2012, will be going higher for a while, as the Major World Currencies, DBV, and Emerging Market Currencies, CEW, trade lower in competitive currency devaluation. Needless to say, investing in IPOs, FPX, will be a losing endeavor. Expecting a return of capital from investing in Dividend Appreciation, VIG, is an unreasonable expectation.

Money is no longer cheap as bond vigilantes have called for a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the Steepner ETF, STPP, steepening since December 6, 2012, when Bonds, BND, traded lower. One of the defining attributes of the shift from Liberalism to Authoritarianism is the end of ZIRP, as the Interest Rate on the Ten Year US Note, ^TNX, has risen to 2.01% from its September 14, 2012 low. The weekly chart of International Treasury Debt, BWX, seen in this Google Finance Chart shows a 4% loss since its September 14, 2012, high.

Money, and moneyness, as it has been known, is going to be literally dissolved away by the loss of national sovereignty of the EU periphery nations, and the failure of the European Financial Institutions, EUFN. On Friday February 15, 2013, disinvestment out of European Financials, EUFN, stimulated derisking out of the following investment sectors:
Solar, KWT, -1.8%
Small Cap Energy, PSCE, -1.8%
Small Cap Energy Service, IEZ, -1.8%
Energy Services, OIH, -1.4
Semiconductors, XSD, -1.3
Emerging Market Infrastructure, EMIF, -1.3
Energy, PXE, -1.1
Emerging Markets, FEMS, -1.0
Coal Miners, KOL, -1.0, such as WLT, ANR, BTU, ACI, JRCC
Energy Service, FLM, -0.9
Steel Producers, SLX, -0.8
Copper Miners, COPX, -07

Debt deflation, that is currency deflation, is going to pick up. An unwinding Euro Yen Currency Carry Trade, EUR/JPY, will be stimulating nation disinvestment out of heavily currency carry traded Switzerland, EWL, stocks, such as RIG, WFT, NE, SYT, TEL, FWLT, ABB, MT, ACE, TYC, and STM, especially, CS. Competitive currency devaluation at the hands of currency traders will be causing deleveraging out of the Swiss Franc, FXF, as well as the other world currencies.

Nick Beams of WSWS writes G20 issues empty declaration against currency wars. Because the dollar is the foundation of the international monetary system, the inevitable consequence of “quantitative easing” is to lower the value of the dollar in relation to other countries. This creates economic difficulties for US rivals both in export markets and in their domestic markets, due to the increased pressure of international competition.

Japan has been among those countries adversely affected. However, its program of lowering the value of the yen has impacted on its competitors, in particular South Korea. The head of South Korea’s central bank has warned that its future growth could be adversely affected.

Before the meeting got underway, stern warnings were issued about the dangers of competitive devaluation. “We refuse to enter into any kind of currency war,” the French finance minister Pierre Moscovici declared. Britain’s chancellor of the exchequer, George Osborne, took an even stronger line. “Currencies should not be used as a tool of competitive devaluation,” he said. “The world should not make the mistake that it has made in the past of using currencies as the tools of economic warfare.” However, following Osborne’s remarks, the senior Bank of England policymaker Martin Weale advocated precisely that. In a speech delivered on Saturday, he said that a 25 percent depreciation of the British pound in 2007-2008 had had little impact on boosting exports and that further depreciation was required. “The perhaps most natural means of resolving the problem is for the nominal exchange rate to fall,” Weale said

The G20 meeting held in April 2009 was full of promises of coordinated action to stimulate the world economy. At the Moscow meeting, however, there was barely even pretence that such action would be taken. This was despite the fact that at least one-third of G20 countries are officially in recession. The communiqué simply said that “ambitious reforms and coordinated policies” were the key to achieving strong sustainable growth, without specifying what they might be.

Yes indeed, the G20’s declaration is totally empty. The Age of Fiat Asset Inflation is pivoting into the Age of Fiat Asset Deflation, as investors derisk out of Emerging Market Investment, EEM, and Nation Investment, EFA, and delever out of Commodities, DBC, such as Natural Gas, UNG, Nickel, JJN, Tin, JJT, and Copper, JJC. Fiat Asset Deflation will pick up steam as currency traders call Major World Currencies, DBV, such as the British Pound Sterling, FXB, and Emerging Market Currencies, CEW, lower, with the result that the US Dollar, $USD, UUP, will be going higher for a while.

Dave Fairtex, of Market Daily Briefing writes in The Automatic Earth makes the case Europe is in deflation. Now don’t get me wrong, if the Spanish banks (among others) had been marking their loans to market, deflation would have arrived long ago, but according to the data series provided by the ECB, Official Europe has now recognized that they are in deflation. However you slice it, deflation is NOT a good sign for the equity markets. Fewer bank loans means less money to buy stuff.

The global economic and political tectonic plates are shifting as the International Reserve Currency System crumbles with the rise of the US Dollar, and the failure of currencies. A New System of Regional Governance will come forth to provide regional economic and political security, stability, and sustainability.

I wrote Risk on momentum trading failed on Valentines Day, Thursday, February, 14, 2013, this being confirmed in the Risk On ETN, ONN, trading lower, and the Risk Off ETN, OFF, trading higher. Volatility, ^VIX, hit a double bottom at 12.46. And VIXM, traded down while, VIXY, traded up.
ETF Trends reports on SVXY relating Inverse VIX ETF rises 170% as Volatility hits five year low.

Jesus Christ is at the helm of the economy of God, Ephesians 1:10, bringing forth the Beast Regime.

Operating through Destiny, Revelation 1:1, He is replacing the Banker Regime of Liberalism with the Beast Regime of Authoritarianism,.and that Crony Capitalism, in America, European Socialism, in France, and Greek Socialism, in Greece, is being replace by Regional Governance, Totalitarian Collectivism, and Debt Servitude, in Euroland, according to Revelation 13:1-4

This as Jesus Christ has unleashed the First Horseman of the Apocalypse, to transfer the baton of sovereignty from nation states to regional leaders, regional bodies, and soon regional public private partnerships, as presented in Revelation 6:1-2

And is bringing forth from the two iron legs of global hegemony, these being the UK and the US, a Ten Toed Kingdom of regional governance, where toes of a miry mixture of iron diktat and clay democracy, rule in the world’s ten regions, as foretold in Daniel 2:25-45. It’s as Peter Schiff relates in Yahoo Breakout America Is Becoming the United States of Britain. The President & CEO of Euro Pacific Capital says the near-term fate of the colonies is being foreshadowed across the pond as its sovereignty is crumbling.

Germany will be the hub of all economic production in Europe for ever. The PIGS will be desolate, hollow moons, revolving around Planet Germany, existing as colonies of Brussels and Berlin technocratic government. Germany will be the epicenter of a revived Roman Empire, exercising regional governance over vassal peripheral Eurozone states.

Of note, Tyler Durden reports German lawyer to head Vatican Bank A German pope may be vacating the Vatican but a German lawyer is about to head its bank, an institution some say is as important if not more, and whose shady dealing some say may have been the reason for the pope premature departure. Per Reuters, “The Vatican appointed German lawyer Ernst von Freyberg to be the new president of its bank on Friday, filling a post left vacant since May when the previous head was ousted from the scandal-tainted institution. As it grows in prominence, Germany will transition from being a One Euro Government to being a One World Government as foretold in Daniel 7:7: the fourth beast, and Daniel 7:23: the world empire.

The first beast is presented in Daniel 7:4 as being, “Like a lion; it has eagles wings”. This beast was Babylon, whose emblem was a lion with eagle’s wings.
The second beast is presented in Daniel 7:5, “Then behold! Another beast, a second one, similar to a bear; it was placed on one side, and there were three ribs in its mouth between its teeth; and this is what they said to it, ‘Arise, devour much flesh!’” The second beast was Medo-Persia.
The third beast is presented in Daniel 7:6, “After this I was watching and behold! Another beast, like a leopard, with four bird’s wings on its back; the beast had four heads, and it was given dominion”. The third beast was Greece. When Alexander the Great died in 323 C.E., his empire was divided between and ruled by four of his generals.
The fourth beast, is presented in Daniel 7:7-8, “After this I was watching in night visions, and behold! A fourth beast, exceedingly terrifying, awesome and strong. It has immense iron teeth, and it was devouring and crumbling, and trampling its feet what remained. It was different from all the beasts that had preceded it, and it had ten horns. As I was contemplating the horns, behold! Another horn, a small one, came up among them, and three of the previous horns were uprooted before it. There were eyes like human eyes in this horn, and a mouth speaking haughty words”. The fourth beast, Empire Germany, will manifest as a revived Roman Empire, that is an authoritative kingdom from today’s EU Debt Crisis, whose Emperor, The Sovereign, seemingly one of little authority, will eventually conquer three of the world’s other ten regional kings.

And Daniel 7:23, relates, “Thus he said, the fourth beast shall be the fourth kingdom upon the earth, which shall be diverse from all kingdoms, and shall devour the whole earth, and shall tread it down, and break it to pieces.” The coming European Empire will eventually rise to govern the world as a one world government, which will precede the coming of Christ to establish his World Wide Kingdom.

The economic and political shift from Liberalism to Authoritarianism being foretold in Daniel 2:25-45, as a Ten Toed Kingdom, that is a global empire, with toes of a miry mixture of iron diktat and clay democracy; and a Beast Regime, in Revelation 13:1-4, is unseen by practically everyone, as it has a coat of a leopard, whereby it blends in with all of mankind’s media, technology, banking, educational, banking, government and religious and think tank institutions; the feet of a bear which enables it to stand its ground as well as root out its enemies, and the mouth of a lion to make authoritative governing statements; this minotaur, is the ultimate predator, devouring all who it chooses to consume.

With the Great Paradigm Shift from Liberalism to Authoritarianism, political governance will change from the rule of sovereign nation states to regional governance; and economic experience from investment choice to debt servitude; as leaders meet in summits to renounce national sovereignty and pool sovereignty regionally, a concept that has been presented by Herman van Rompuy for a long time.

Under Liberalism, Asset Managers were the very wheels of fortune that drove credit and prosperity. Under Authoritarianism, Public Private Partnerships will be the chariots of debt servitude and austerity.
Asset Managers, such as BLK, BX, WDR, EV, STT, WETF, seen in this ongoing Yahoo Finance Chart, were the mints, that is the foundries of Liberalism’s wealth, rewarding investors for investing in corporate profitability, and economic growth. Yet under Authoritarianism, the Asset Managers will be seen as burned out foundries of investment mania.

Under Authoritarianism, Public Private Partnerships, will be the agents of diktat that manage regional resources, oversee the factors of production, and direct economic activity for the region’s security, stability and stability. With the paradigm shift from Liberalism to Authoritarianism, investment in US Infrastructure, PKB, and Emerging Market Infrasturcture EMIF, will rapidly evaporate. To survive, firms such as Macquarie Infrastructure Company, MIC, Quanta Services, PWR, and EMCOR Group, EME, will move from being service companies to being public private partnerships. And regional commodity and commerce exchanges will support trade and economic activity in un-dollar, that is dollar-less, transactions; that is something akin to Paxum e-wallet based upon a regional currency or something akin to the Alibaba business-to-business online marketplace.

Liberalism was characterized by wildcat finance, a Doug Noland Term, where bankers sought to outdo one another with financial schemes. Authoritarianism is characterized by wildcat governance where authoritarians bite, rip, and tear one another in order to rise to be the top dog.

Under Liberalism, money was the reward for meritocracy and the resource of credit.

Under Authoritarianism, money is the means of repaying liberalism’s debts.

3) … Inasmuch as Libertarianism is transitioning to Authoritarianism, an inquiring mind asks, does the concept of a sovereign individual and a sovereign investor ring true?
Libertarians proclaim themselves to be sovereign individuals existing in self ownership of one’s person. Wikipedia relates John Locke wrote in his Two Treatises on Government, “every man has a Property in his own Person.” Locke also said that the individual “has a right to decide what would become of himself and what he would do, and as having a right to reap the benefits of what he did.”[8][9] And Josiah Warren was the first who wrote about the “sovereignty of the individual”. [citation needed] And JPMorgan makes the claim that it partners with sovereign investors and governments in all parts of the world.

When reflecting from a bible point of view, there are two types of people.

The first type of person is the Fiat Individual, one who has identity and experience out of declarations of philosophy and religion. In light of bible prophecy of Daniel 2:25-45, and Revelation 13:1-4, the Fiat have daily experience in the Beast Regime’s panopticon of regional governance, totalitarian collectivism, and debt servitude. They have political life in the Sovereign, Revelation 13:5-10. And they have spiritual and economic life in the Seignior, Revelation 13:11-18.

The second type of person is the Christian, one who believes in Christ, and has life in Him. In light of Scripture, these are God’s called out ones; they were chosen by God to be in Christ from before the foundation of the world; appointed to live in sundry times and various places by Him; know him as the All Sovereign One, and experience Him as the All Sufficient One.

No Eurozone Breakup … And No Exit For Any EU Member

Regionalization of the Eurozone is coming as a result of the unwinding of the Euro Yen currency carry trade, as well as by competitive currency devaluation.

Mike Mish Shedlock ask Sky Brightening? The US, Germany, China, Japan, UK, Spain, Italy, and in fact every country wants to be a net exporter to create jobs. Mathematically it’s impossible. There is no significant rebalancing, only Illusions of Stabilization. Moreover, in the non-news of the day on Thursday ECB president Mario Draghi went out of his way to sink the euro with his statement “Risks to Downside”. In that article I took a look at the Nascent Recovery in Spain, pointing out Two Things Spain Needs (and Won’t Get).

Rebalancing the Wrong Way. It’s clear that Draghi wants to sink the euro to help exports. But what needs to happen is for Spanish, French, and Italian exports to soar. Instead exports from Germany have soared (primarily based on renewed unsustainable growth in China). A sinking euro may help net European exports a bit, but it will not help Spain and Italy in relation to Germany

As long as all countries remain committed to the eurozone, European rebalancing improvement must come from rising unemployment and/or still lower wages in the rest of Europe relative to Germany.

I agree with Mr Shedlock that European rebalancing improvement must come through internal devaluation and relate that there will never be any exit or ejection from the EU, as no kind of structural reform, nor any amount of wage reduction can restore economic production in Italy, France or Spain.

Germany is an exporting economic powerhouse similar to South Korea, Japan, and China; it simply has the best in class manufacturing capability, a disciplined and adaptable workforce, with long global supply chains firmly in place; its exporting capability cannot be matched or caught up with in a thousand years by the periphery nations, all of which are die hard socialist countries.

While Italy does have economic production capability, it still is no match for the German powerhouse. It would be hard to imagine that Diversified Equipment Manufacturer, Siemens, SI, would relocate any production to Italy, just to obtain a break on a lower wage structure.

Numerous articles communicate that France lacks an innovative spirit as evidenced by the lack of any stock to the French Stock Market in years. And its president François Hollande desires to take European Socialism to an all new level, as the Economist writes Europe à l’ Hollandaise. “The future of the euro zone, Mr Hollande suggests, will not be the Germanic notion of euro-zone members bearing individual responsibility for their economic policies, within rigid rules imposed by the centre. Instead integration must include common projects on, say, infrastructure and renewable energy, paid for by “new financial instruments”. And integration must be accompanied by greater “solidarity”, including guaranteed jobs and training for young people and, yes, Eurobonds.”

Spain is now the labyrinth of speculative real estate investment supported by the Catholic Cajas, that is the Spanish Regional Banks. The Nordic Latin historical, cultural, and economic divide is as great as the Grand Canyon chasm. Germany will be the hub of all economic production in Europe for ever. The PIIIGS will be desolate, hollow-moons, revolving around Planet Germany existing as colonies of Brussels and Berlin technocratic government.

Greece is simply a relic of nation state treasury debt, that is sovereign debt, investing. To think that tourism and shipping could support participation in a currency union was propaganda of Goldman Sachs Bankers and CIA operatives who desired a Fortress Europa. Greece is the most extreme form of Socialism which the Economist Magazine reported as being characterized by pork and patronage. Greece is a beggar thy neighbor clumsy toe, existing as part of an emerging German headed up minotaur known as the Troika.

Two factors will bring forth a Financial Apocalypse, and will introduce Authoritarianism’s Beast Regime’s regional governance, totalitarian collectivism and debt servitude

The Mario Draghi Carry Trade, that is the Euro Yen Carry Trade, the EUR/JPY, which was the funding source for Liberalism’s final risk-on toxic credit based rally, is going to unwind, and will be the first of two factors for a soon coming Financial Apocalypse, that is a credit bust and financial system breakdown, as foretold in Revelation 13:3.

Liberalism featured paper money issued by nation states and their central bankers, which gave rise to Inflationism through monetary policies of ZIRP and Quantitative Easing, which were supplemented by currency carry trade investment, in particular the Euro Yen Carry Trade, that is the EUR/JPY. Nation state monetary systems, supplemented by FX currency traders, provided investment liquidity for Liberalism’s Banker Regime.

Red State Electric provides the David Schlichter, Paper Money Collapse, pages 200 to-201, quote Money injection always leads to economic dislocation. “The ongoing moderate inflationism that Monetarism prescribes is far from benign. By sanctioning the ongoing injection of new money into the economy, a Monetarist policy will lead to the accumulation of dislocations that make a crisis at a later stage unavoidable.”

Inflationism no more.

Competitive currency devaluation, which began with the anticipation of Unlimited Quantitative Easing by the Bank of Japan, as well as by the devaluation of the Venezuelan Bolivar, will be the second of two factors in the Destructionism that will introduce Authoritarianism’s Beast Regime’s regional governance, totalitarian collectivism and debt servitude, seen in Revelation 13:1-4. After the soon coming Financial Apocalypse, Revelation 13:3, regional commodity exchanges and regional public private partnerships will support trade and economic activity in un-dollar, that is dollar-less, transactions, as leaders will meet in summits to renounce national sovereignty, and pool sovereignty regionally. Regional leaders and diktat, will replace sovereign nation states and investment choice. Paper money no more, will be Authoritarianism’s banner. The fiat money system will soon be replaced by the diktat money system, where diktat serves as currency, credit, power and wealth.

Bloomberg reports Euro-Area Debt Crisis Isn’t Over, Finland’s Urpilainen Says. Finnish Finance Minister Jutta Urpilainen said the economic situation in many Western countries remains “exceptionally challenging.” “Resolving the challenges requires an ability to see further; short-term solutions to quell panic won’t resolve the situation.” Europe is headed for a social crisis of high unemployment, Urpilainen said. “Finland won’t co-operate on any terms” in the EU. “It’s our job to defend Finnish taxpayers.”

Wikipedia relates Finland is highly integrated in the global economy, and international trade is a third of GDP. The European Union makes 60% of the total trade. The largest trade flows are with Germany, Russia, Sweden, United Kingdom, United States, Netherlands and China. Trade policy is managed by the European Union, where Finland has traditionally been among the free trade supporters, except for agriculture. Finland is the only Nordic country to have joined the Eurozone.With respect to foreign trade, the key economic sector is manufacturing. The largest industries[66] are electronics (22%), machinery, vehicles and other engineered metal products (21.1%), forest industry (13%) and chemicals (11%).

Nation Investment in Finland, EFNL, topped out on January 28, 2013, as its chart shows an evening star candlestick pattern, and one of its major electronics industry components, Nokia, NOK, saw Euro Yen Currency Carry Trade leverage, but has recently sold off. Nokia is a has been company, that is it has been losing market share to Apple, AAPL, and Samsung, SAMS. Nevertheless Nokia, is still very much a hugely carry trade leveraged company as is seen, in its ongoing comparative chart Yahoo Finance Chart.  Brian X Chen of the NYT reports Samsung is leading the way forward as Samsung emerges as a potent rival to Apple’s Cool.

There is nothing, literally nothing, that Finland’s Jutta Urpilainen can do, to defend its taxpayers. In Authoritarianism’s wildcat governance, which is about to ensue producing only the most fierce of governors to rule the Eurozone, Jutta Urpilainen, will be very much an underdog.

Germany will rise to be preeminent over vassal European sovereign nation states; yes, Germany will rise to be a type of authoritarian Revived Roman Empire, Daniel 7:7, heading up the EU, as the prime example of Regionalism.

Please consider reading Michael Avery Sutton of the NY Times’ article in Real Clear Religion Why The Antichrist Matters In Politics THE end is near, or so it seems to a segment of Christians aligned with the religious right. The global economic meltdown, numerous natural disasters and the threat of radical Islam have fueled a conviction among some evangelicals that these are the last days. While such beliefs might be dismissed as the rantings of a small but vocal minority, apocalyptic fears helped drive the anti government movements of the 1930s and ’40s and could help define the 2012 presidential campaign as well. Christian apocalypticism has a long and varied history for more read here. And please consider reading my article The beginning of the end.

There is waiting in Europe’s wings, the most capable of Sovereigns, the Little Horn, Daniel 7:8; this one of seemingly little authority, is thoroughly familiar with Authoritarianism’s schemes, Daniel 8:23; he will rise to be the first of ten regional kings, Daniel 8:21. Together with Europe’s Seignior, that is top dog banker who takes, a cut, they will will rule Euroland with the iron malet of diktat. Their word, will and way will be the law of the land, replacing all constitutional and historical precedent.

Liberalism featured Globalism; it was the dynamic that produced Globalization. In like manner, Regionalism is the life experience of Authoritarianism, that produces Regionalization.

There is coming a thorough rebalancing in the Eurozone. While Germans, cannot be Spaniards, Frenchmen, or Greeks, all will be one, unified in debt servitude and austerity, bonded together, yes yoked together, by Authoritarianism’s schemes, that is by regional framework agreements, which leaders will soon announce, as the dynamos of regional security, stability, and sustainability are winding up Regionalism, just as the dynamos of corporate profit and global trade, are winding Crony Capitalism, Greek Socialism, and European Socialism.

Regionalism and regional governance is based upon a tripart foundation:
1) A growing awareness that the region and the rule of its leaders is a common life experience.
2) Public private partnerships have a mission to manage the regions’ economic production.
3) Mandates of leaders provide economic security, stability and sustainability.

All “isms” have a head, that is a person who heads the experience up. For example Roman Catholicism has The Pope; and of note, Reuters reports Pope resigns saying no longer has strength to fulfill ministry. Please consider that the death of the money, as well the death of traditional moneyness, that is the death of seigniorage, is imminent. Crony Capitalism had its head in Milton Friedman who promoted the Free To Choose Floating Currency Banker Regime, whose seigniorage, that is moneyness, came from investing in sovereign nation states, EFA, and small cap nation states. As well as in Global Producers FXR, such as Southern Peru Copper Corporation, SCCO.

James Rickards writes in Silver Gold Worlds World currency system moving towards catastrophe.

Insolvent nations and their insolvent banks cannot provide seigniorage.

With current monetary authority and political sovereignty failing, Destiny, Revelation 1:1, is bringing forth the new head of Regionalism, possessing regional sovereignty, specifically the sovereignty of regional sovereign leaders and sovereignty of regional bodies; these will provide the seigniorage of diktat.

In Europe, the experience of Regionalism will be headed up by the Sovereign, Revelation 13:5-10, and his monetary, fiscal and economic pope, the Seignior, Revelation 13:11-18, as well as a whole host of monetary, fiscal and economic cardinals, working in regional public private partnerships for the region’s security, stability and sustainability

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The Countdown To Financial Apocalypse Commences With The Devaluation Of The Venezuelan Bolivar

Competitive Currency Devaluation commenced on September 14, 2013 with the sell of the Japanese Yen.

Back in 2009 the G20 agreed not to engage in competitive currency devaluation, and Ben Bernanke stepped up to the plate and came through with QE1, where “money good” US Treasuries, were traded out for Distressed Investments, like those traded in the Fidelity Mutual Fund, FAGIX, in order to restart the global economy. Trust in Major World Currencies, DBV, and Emerging Market Currencies, CEW, Nation Investment, EFA, Small Cap Nation Investment, IFSM, and in Global Producers, FXR, ensued. Speculative investment in Gaming Stocks, BJK, Vice Stocks, VICEX, and in Leveraged Buyouts, PSP, returned great rewards. And further trust in the most toxic of debt grew to include Junk Bonds, JNK, Senior Bank Loans, BKLN, and Emerging Market Bonds, EMB, which gave global seigniorage to Sovereign Debt, BWX, and International Corporate Bonds, PICB. As a result, Total Bonds, BND, inflated along with World Stocks, VT, in a massive global wealth bubble.

The beginning of Competitive Currency Devaluation is clearly seen in the evening star candlestick chart pattern of the Japanese Yen, FXY, on September 14, 2012.  Anticipation that Japan would devalue its currency the Yen, FXY, which finally came with an announcement of Unlimited Quantitative Easing, and increasing PBOC Liquidiy Injections, as reported by Benson te, gave strong currency carry trade seigniorage to China Stocks, YAO, Nation Investment, EFA, and Global Producers, FXR, on November 19, 2012.

Now Venezuela, a communist country, has devalued its currency. Venezuela devalued its Bolivar to 6.3 per dollar from 4.3 per dollar, thus making its currency 46.5 percent less costly against the dollar. Venezuela makes its crude oil more attractive to refiners, at the expense of other crude oil producers and crude oil producing nations.

Doni Icha of Belajar Bisnis reports By boosting the Bolivar value of Venezuela’s dollar-denominated oil sales, the change is expected to help alleviate a difficult budget outlook for the government, which has turned increasingly to borrowing to meet its spending obligations. Venezuela’s government has had strict currency exchange controls since 2003 and maintains a fixed, government-set exchange rate. Under the controls, people and businesses must apply to a government currency agency to receive dollars at the official rate to import goods, pay for travel or cover other obligations. While those controls have restricted the amounts of dollars available at the official rate, an illegal black market has flourished and the value of the bolivar has recently been eroding. In black market street trading, dollars have recently been selling for more than four times the official exchange rate of 4.30 bolivars to the dollar. The devaluation had been widely expected by analysts in recent months, though experts had been unsure about whether the government would act while President Hugo Chavez remained out of sight in Cuba recovering from cancer surgery. The announcement came after the country’s Central Bank said annual inflation rose to 22.2 percent in January, up from 20.1 percent at the end of 2012. The oil-exporting country, a member of OPEC, has consistently had Latin America’s highest officially acknowledged inflation rates in recent years. Spiraling prices have come amid worsening shortages of some staple foods, such as cornmeal, chicken and sugar. Seeking to confront such shortages, the government last week announced plans to have the state oil company turn over more of its earnings in dollars to the Central Bank while reducing the amount injected into a fund used for various government programs and public works projects. Giordani said the government had also decided to do away with a second-tier rate that has hovered around 5.30 bolivars to the dollar, through a bond market administered by the Central Bank. That rate had been granted to some businesses that hadn’t been able to obtain dollars at the official rate. It was the fifth time that Chavez’s government has devalued the currency since establishing the currency exchange controls a decade ago in an attempt to combat capital flight.

Competitive currency devaluations will intensify, currency wars deepen, and beggar thy neighbour monetary policies will lead to debased currencies, inflation and an International Monetary Crisis.

Monetary inflation, coming through the world central banks’ monetary policies have driven the Major World Currencies, DBV, and Emering Market Currencies, CEW, higher. But their daily charts show these to peaking out and turning lower, on the exhaustion of the monetization of debt. Liberal central bank monetary policies, have crossed the rubicon of sound monetary policy and hav turned “money good” currencies, and “money good” investments, bad.

Disinvestment is now seen in the charts of Nation Investment, EFA, such as South Korea, EWY, Small Cap Nation Investment, IFSM, such as the Netherlands, EWN, and Peru, EPU, in Global Producers, FXR, such as LPP, PHG, SCCO, and in Consumer Staple Manufacturer, KCI, such as CL.

Trust in currencies is soon going to evaporate, as more countries announce competitive currency devaluations, and as investors derisk out of Nation Investment, EFA, and Small Cap Nation Investment, and deleverage out of Commodities. DBC, starting a natural process of Debt Deflation, that is currency deflation, which with increasing intensity, can only result in Financial Apocalypse, that is a global credit bust and financial system breakdown.

John Butler writes Countdown to collapse In 1967, France, already having indicated from early 1965 that it was dissatisfied with the dollar-centric Bretton Woods system, abruptly withdrew from the pool. While this was a clear message to all that the official $35/oz gold price was unsustainable, encouraging yet more speculation, at the same time it meant that the remaining London gold pool participants had to cover for France’s significant absence by making even more gold available to the growing number of buyers. This unsustainable arrangement lasted less than a year, with the pool collapsing entirely in 1968. The situation was now critical as the monetary system was without solid foundation. The upward pressure on the price of gold intensified yet again. The Federal Reserve was now frightened that a run on the dollar was imminent, with the pound sterling already under renewed attack. At one Fed meeting that year it was claimed that, “the international financial system was moving toward a crisis more dangerous than any since 1931.”[6] By 1971 the day of reckoning had arrived. The US had continued to sell gold into the market to suppress the price and to convert foreign reserves on demand into gold since 1968 but when even the UK was asking for a substantial portion of its gold back in summer 1971, it was clear that this effort was futile. Either the US would run out of gold or it would allow the gold price to rise and the dollar to ‘float’, that is, to devalue substantially. President Nixon opted for the latter course, as he announced to the world on 15 August that year. The dollar was devalued and gold convertibility suspended indefinitely as a ‘temporary’ measure. But why did the world continue to use dollars as reserves when these were unbacked by gold? Because the US was still by far the largest economy in the world, the biggest importer and exporter. And while US finances were deteriorating at the time, they were in far, far better shape than they are today, with trade and budget deficits tiny as a percentage of GDP. Today, the picture is the complete opposite. US finances are in a far worse state than those of the BRICs.

Keep calm, buy gold, get out of bonds.

If the recommendation to accumulate gold in advance of its remonetisation for use as an international money seems obvious, perhaps less obvious is to reduce holdings of bonds. Why should a remonetisation of gold lead to higher bond yields/falling bond prices? After all, the economic dislocations associated with international monetary regime change could well tip the world into yet another recession as the associated economic rebalancing takes place. While we have come to associate rising yields with economic recoveries and falling yields with recessions, in fact, on a sound money foundation this relationship does not hold. Back when the world was on the gold standard, for example, yields sometimes rose in recessions and declined in recoveries. This is because the central bank was unable to manipulate the bond market with monetary policy. Take the euro-area today as a contemporary case in point. As Greece, Portugal and Spain have tipped into deep recessions, their bond yields have risen as they lack national central banks which can buy their bonds with printed money. And investors have a choice whether to hold these bonds, or to hold the bonds of sounder euro area governments, such as Germany, hence the wide spreads that investors demand in compensation. The US and other indebted countries may resort to capital controls and even to selective default on their debt, such as that held by foreigners abroad. If so, this will be another major escalation in the currency wars, one that will begin to resemble the 1920s and 1930s in its intensity. Those were sad decades, to be sure, in which much of the global middle class saw its savings wiped out at least once and, in some cases, twice. They didn’t care whether this occurred via inflation/devaluation or via deflation/default. Investors today shouldn’t care either. They should accumulate gold and certain other real assets in limited supply. These are the ultimate insurance policy against inflation, deflation, devaluation, currency and trade wars, financial crises, monetary collapse, you name it. The time to do so is running out.

Matthew Boesler of Business Insider writes Venezuela Devalues Its Currency. Venezuela undertook a massive currency devaluation and also announced that it would shutter the Venezuelan currency exchange system known as SITME. Given the currency devaluation underway in other economies around the world right now, perhaps most notably in Japan, a few are calling this Venezuela’s foray into the global “currency war” between countries trying to devalue their currencies in order to increase export competitiveness.

Omar Upegui R. writes Hugo Chavez is leading his country into the abyss. Venezuela’s economy is in shambles and experiencing a dramatic free fall. Even food is imported into the country and the crime rate is one of the highest in Latin America. Communism is not working, but Chavez is determined to continue socializing the Venezuelan economy following the tips from his Communist friend, Fidel Castro. Bolivia, Ecuador, and Nicaragua are following Hugo Chavez’s irrational ideology and leading their countries towards an economic pandemonium. The latest measure taken by Hugo Chavez to calm the stormy waters is to devaluate the bolívar from 4.3 to 6.3 to the U.S. dollar. President Hugo Chavez ordered the move from his sick-bed in Cuba, Finance Minister Jorge Giordani said. Venezuela relies heavily on crude oil exports to keep its economy afloat, and the devaluation will help the South American country to balance its books. The country is the fourth-largest foreign oil supplier to the United States. Pressure to devalue had built for months, as the black market exchange rate rose to more than four times the official rate. The imbalance was clear in the prices of many goods. A Big Mac at McDonald’s costs 70 bolívares, or $16.27, at the official pre-devaluation rate. But the devaluation will also make imported goods more expensive, which will probably make inflation worse. Inflation for the 12 months ended on January 31, 2013 was 22.2 percent, one of the highest rates in Latin America. Surging inflation could cause political problems for the government. But the exchange rate had reduced the dollars available to importers, leading to shortages of goods like sugar, chicken and toilet paper. Many analysts believe that voters blame the government more for shortages than for inflation. Sooner or later Venezuela will learn the hard way, that Communism is not the answer to solve its problems. Just ask Cuba and Russia if they were satisfied with their Communist dream. The whole house of cards crumbled down in Russia and Eastern Europe when Communism collapsed in 1989. China had to adopt Capitalism to avoid political and economic mayhem—“one country two systems” proposed Deng Xiaoping.

Joshua Goodman and Charlie Devereux of Bloomberg News report Hugo Chavez Implements Spending Cuts He Warned About. Hugo Chavez coasted to re-election last year warning Venezuelans that a victory for the opposition would lead to a “giant package” of spending cuts. Now his government is being forced to adopt the same strategy to stave off a budget crisis and devaluation. Last week the government cut by $2.9 billion Petroleos de Venezuela’s share of oil revenue it contributes to an off- budget fund that’s the second-biggest source of public spending. Central government outlays, which surged 26 percent in real terms in the year prior to the Oct. 7 vote, have declined 7 percent since then, according to Bank of America. At the same time, consumer prices jumped by the most in more than two years in December, pushing inflation to 20.1 percent. The austerity drive taking place as Chavez recovers from cancer surgery in Cuba should help narrow a budget deficit larger than that of the United States as a share of gross domestic product and delay a devaluation that analysts say is overdue.

Pan Kwan Yuk of FT writes Venezuela’s government announced that is devaluing the country’s currency. Aside from local who just lost a considerable amount of their purchasing power in Venezuela’s import dependent economy, there will also be some wailing and gnashing of teeth among foreign investors who have invested in the country’s local bolivar bonds. Global consumer goods company aren’t going to be too pleased either. Colgate-Palmolive, CL, which gets about 5 per cent of total sales from Venezuela, is probably the most vulnerable consumer company to a devaluation. A devaluation of the bolivar of 30-50 per cent early next year would wipe out between 1.5 and 2.5 per cent of revenues at Avon, and Colgate and trim earnings per share still more, according to Bernstein Research. McCormick, the spice maker and Heinz, HNZ, best known in the UK for its baked beans both make more than 3 per cent of sales from the country, Bernstein estimates. This, it says, is “despite a 50 per cent devaluation and a continually difficult operating environment over the past few years”.

I relate that unfortunately, the devaluation of the Venezuelan Bolivar will only make the nation’s high rate of greater; hyperinflation will ensue as there will be an even greater shortage of dollars. It’s important to understand that Venezuela has a communist government led by Hugo Chavez and that his wild monetary policies, plus lack of trust in him as a leader, contributed to the inflation presented in Huffington Post report Venezuela’s Annual Inflation Soared 27 Percent In 2012. Venezuela’s Central Bank says the country finished the year with 27.6 percent inflation, the highest in Latin America. The oil-producing nation has had the highest inflation in the Americas for six years running. Inflation in 2010 was similar at 27.2 percent. Venezuela had the second-highest official inflation rate in the world as of November, surpassed only by Ethiopia’s 31.5 percent. President Hugo Chavez’s government and the Central Bank both predict inflation of between 20 percent and 22 percent this year. But analysts say inflation could rise above 30 percent, influenced by an expanding money supply and heavy government spending.

Competitive Currency Devaluation misery will increase as consumer will have to pay more for dollar denominated consumer goods, such as Colgate, CL, Toothpaste. I believe that Agricultural Commodities, JJA, are trading at strong support and will be going higher and consumers will be paying more for dollar denominated Food Commodities, FUD. In contrast,  Natural Gas, UNG, will be a commodity loss leading sector once again. Base Metals, DBB, are at strong resistance, and will be going lower. Timber, CUT, has maxed out. Oil, USO, is at strong resistance and will be turning lower. One can follow US Commodities, USCI, and Commodities, DBC, with the use of this Finviz Screener.

Competitive currency devaluation, as well as a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, from its December 6, 2012 low, as is seen in the Steepner ETF, STPP, steepening; and the Interest Rate on the US Ten Year Interest Rate, ^TNX, rising above 1.95%, at the hand of bond vigilantes, will cause headline inflation, that is inflation experienced by consumers, to rise dramatically.

Clarity2012, in comment to an Arlen Williams article, writes The Austrian economists advocate a private competitive currency market, which you would know if you read any of their books, like Hayek’s The Denationalization Of Money or Lawrence White’s Competition And Currency. This notion of “sovereign money” ultimately leads us to the same predicament we are in now, it opens up the value of our money to debauchery and arbitrary devaluation, putting our economic health in the hands of central banker mad men that have ridden us on a on a harrowing roller coaster of booms and busts for the last century when that was precisely what they promised to be able to save us from. No sir, “sovereign money” is not nearly as important as SOUND money. Good money chases out bad, with competition in the marketplace, we the people will determine the best money to use.

John H. Cochrane writes Debauching the currency, the great bugaboo of gold-standard champions, will always remain a temptation. If the government can’t raise tax revenues, cut spending, or persuade investors to lend against credible future budget surpluses, it must print $15 trillion of cash not backed by gold, devalue the currency, or default on the debt. And Anonymous writes in comment, Many economists such as Friedrich Hayek (“The Denationalization of Money,” 1977) and Free Banking advocates such as George Selgin, Lawrence White, and Steve Horwitz have written compelling arguments about the benefits of allowing competing private currencies to exist concurrently.

Liberalism featured paper money issued by nation states and their central bankers, which gave rise to Inflationism through monetary policies of ZIRP and Quantitative Easing. State run monetary systems were a key feature of the Banker Regime.

Red State Electric provides the David Schlichter, Paper Money Collapse, pages 200 to-201, quote Money injection always leads to economic dislocation. The ongoing moderate inflationism that Monetarism prescribes is far from benign. By sanctioning the ongoing injection of new money into the economy, a Monetarist policy will lead to the accumulation of dislocations that make a crisis at a later stage unavoidable.

Now, Inflationism no more. Competitive currency devaluation will be a leading factor in the Destructionism that will introduce the Beast Regime’s regional governance and totalitarian collectivism seen in Revelation 13:1-4. After the soon coming Financial Apocalypse, Revelation 13:3, regional commodity exchanges and regional public private partnerships will support trade and economic activity in un-dollar, that is dollar-less, transactions, as leaders will meet in summits to renounce national sovereignty, and pool sovereignty regionally. Regional leaders and diktat, will replace sovereign nation states and investment choice. Paper money no more, will be Authoritarianism’s banner. The fiat money system will soon be replaced by the diktat money system, where diktat serves as currency, credit, power and wealth. Under Authoritarianism’s Beast Regime of regional governance, the only money will be diktat as well as the physical possession of gold. The only money most will will come to know and experience will be diktat.

In today’s news
Doni Icha of Belajar Bisnis reports Canadians are paying far more than Americans for the same products because of a systemic and unjustifiable markup scheme by many manufacturers, a retail expert says. A Marketplace report on Canada-U.S. price gaps found Canadians paying higher prices, more than double in some cases, for the same retail goods because of an industry phenomenon called “country pricing.” “Multi-national brands, they have two different price lists … (one) for retailers in Canada, and (one) for retailers in the United States,” says Diane Brisebois, president of the Retail Council of Canada. “And I can guarantee you that the price lists for retailers in Canada [have] prices that are between 10 to 50 per cent higher than the prices in the United States.” In some cases, the final sale price is much more.

Country pricing is literally driving Vancouver Canada residents to shop in Bellingham Washington. It’s just a short drive down I-5 to the retailers in North Bellingham, which include Fred Meyers, for groceries, Costco for business supplies and gasoline, Marshalls, Kohl’s, and Macy’s for clothing, Target for housewares, as Tracy Sherlock of Vancouver Sun reports Overnight travel to US at record high. Since the duty free exemptions were raised on June 1, 2012, overnight travel by Canadians to the U.S. has reached its highest level since record-keeping began. It appears Canadians are embracing these new limits, especially since goods are often cheaper in the U.S. with the Canadian dollar at, or near, parity with the U.S. dollar. A BMO report released in May found the overall price gap is now 14 per cent, down from 20 per cent last year but still significant. At the time the report was released, Doug Porter, deputy chief economist at the Bank of Montreal, said cross-border shopping may be costing the Canadian economy as much as $20 billion a year, and he predicted that the new duty-free limits would make the problem worse.

I live in the City of Subdued Excitement, and can testify the benefits of a literal flood of money coming to Whatcom County beginning in 2010, with road improvements to Guide Meridian, the main north south road in the County, with the Vancouver Winter Olympics.  Since then the City of Bellingham Public Works Department has spent huge sums improving local street intersections with round-a-bouts, as well as by improving neighborhood sidewalks. The stimulus of US Fed M2 Money Growth are undeniable, Dave Gallagher reports Whatcom county Real Estate Recovering: Agents Report Busiest January Since 2008. And Ralph Schwartz reports Whatcom Ranks 5th Among State’s Healthiest Counties. And Ralph Schwartz reports Focus On Alabama Street Project Draws Interest: Traffic corridor slated for bike lanes and other safety improvements.  And Ralph Schwartz reports City May Allow Big Box Retail Stores At Site In Costco Talks: The City will consider removing size limits on big box retail stores for a property that has been the subject of negotiations between City officials and Costco.

Doni Icha of Belajar Bisnis reports Toyota surpasses GM as world’s biggest car seller. Toyota has against caught up with GM to become the world’s largest automobile seller (Vincent Kessler/Reuters). I comment that shares of Toyota, TOYT, soared 1.6% on Friday, 6.4% for the week, driving up the Automobile ETF, CARZ, to participate in a record breaking S&P 500, SPY. What a difference between Yen based Toyota, TOYT, and Indian Rupe based Tata Motors, TTM, which declined 0.5% and 2.6% for the week. Toyota experienced carry trade seigniorage coming from monetary policy, while Tata Motors saw disinvestment from the unwinding of currency carry trade investment, which can be seen in the ongoing Yahoo Finance Chart of TTM and TOYT.

Dr. Housing Bubble reports The massive jump in list prices for Culver City

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