Archive for the ‘Uncategorized’ Category

News That China Has Bought US Treasuries Prompts Liberalism’s Grand Finale Stock Rally

July 26, 2014

This post is available in Google Documents format here

Introduction

News that China has purchased US Treasuries prompts liberalism’s grand finale stock rally; sovereign currencies have started to fail introducing the death of money; aggregate credit is trading lower introducing the failure of credit, that is failure of trust in the Global ZIRP monetary policy of the world central banks; the world has pivoted out of the age of investing and into the age of debt servitude.

 

1) … In this week’s financial marketplace trading.

On Tuesday, July 22, 2014, liberalism’s grand finale stock rally came as Asia Excluding Japan, EPP Emerging Asia, GMF, The Emerging Markets, EEM, EWX, DGS, EMMT, EMIF, EMFN, more specifically the BRICS, EEB, Brazil, EWZ, Russia, RSX, India, and China, YAO, jumped higher taking the Emerging Market Currencies, CEW, higher, on the Financial Sense report that China Buys US Debt At Fastest Pace On Record. This as CNBC reports China’s Debt Soars To 250% Of GDP, and Ambrose Evans Pritchard reports China’s Terrifying Debt Ratios Poised To Breeze Past US Level.

 

China Investments, YAO, CHIX, CHXF, CQQQ, ECNS, CHII, TAO, CHIQ, CHIE, HNP, CHII, CHIM, CHXX, REMX, EWH, traded to new rally highs. Vietnam, VNM, Thailand, THD, Indonesia, IDX, IDXJ,  Singapore, EWS, EWSS, and Australia, EWA, KROO, traded to new rally highs. Taiwan, EWT, South Korea, EWY, New Zealand, ENZL, and Turkey, TUR, traded strongly higher.

 

Emerging Market Financials, EMFN, Brazil Bank, BBDO, India Banks, HDB, IBN, The Chinese Financials, CHIX, Columbia Bank, CIB, Stockbrokers, IAI, Australia Dividends, AUSE, rose to new rally highs. Asset Managers, such as IVZ, BEN, BK, AMP, STT, KKR,  traded strongly higher, most to new highs.

 

Bloomberg reports Record India Bank Issues Seen As RBI Allows Longer Debt. Incentives for Indian lenders to issue longer-dated debt to fund infrastructure and affordable housing will trigger record sales of rupee-denominated bank bonds this year, according to the nation’s biggest underwriter.

 

The trade lower in the Benchmark Interest Rate, ^TNX, to 2.46%, drove Home Construction, ITB, Design Build, FLM, and US Infrastructure, PKB, higher; and Smartphone, FONE, and Transportation, XTB, rose to their former rally highs. Nasdaq Large Caps, QQQ, Health Care Providers, IHF, and Steel, SLX, rallied to a new highs. Pharmaceuticals, PJP, Medical Devices, IHI, Casinos, BJK, Biotechnology, IBB, Internet Retail, FDN, Nasdaq Internet, PNQI, Media, PBS, Social Media, SOCL,  Consumer Discretionary, IYC, Software, IGV, and Energy Service, OIH, traded higher.

 

Global Industrial Miners, PICK, specifically Aluminium Producers, traded to a new rally high, and Copper Miners, COPX, traded strongly higher, as Base Metals, DBB, specifically Aluminum, JJU, traded to a new rally high.

 

Global Real Estate, DRW, and US Real Estate, IYR, Residential REITS, REM, Mortgage REITS, REM, Premium REITS, KBWY, Retail REITS, and Hotel REITS, traded to new rally highs, on the lower Benchmark Interest Rate. Global Infrastructure, IGF, and Global Utilities, DBU, traded strongly higher.

 

The chart of the S&P 500, $SPX, SPY, shows a trade higher to a new all time high.

 

Emerging Market Local Currency Bonds, EMLC, traded strongly higher leading Aggregate Credit, AGG, to a new rally high, as the Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.46% as the case for Interest rates going higher has come of age as David Kotok posts Financial Sense posts Tapering Is Now Tightening.

 

The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX has flattened considerably, seen in the Flattner ETF, FLAT, trading higher in value. Look for this to now reverse: the yield curve will be steepening, seen in Steepner ETF, STPP, trading higher in value, as the Benchmark Interest Rate, ^TNX, trades higher from 2.49%.

 

Soon Credit Investments, AGG, will join Equity Investments, such as World Stocks, VT, Global Financial Institutions, IXG, Yield Bearing Investments, and Large Cap Nation Investments and Small Cap Nation Investment, EFA, and will be trading lower in value together in a see saw destruction of fiat investments.

 

Bloomberg reports Junk-Bond Indigestion Burns Buyers Gorged on Record Sales. Junk-bond buyers, JNK, are showing signs of indigestion after snapping up a record $361 billion of the debt at the lowest yields on record

 

Sovereign currency debasement is underway, as evidenced by the Euro, FXE, trading strongly lower, yet strangely there was no follow through in the EUR/JPY Currency Carry Trades, nor in Nation Investment in the Eurozone Nations, in fact, Ireland’s, IR, RYAAY, Netherlands, UN, AER, and Finland’s NOK, Frances, ORAN, Belgium’s BUD, and Germany’s SAP, traded higher. CNBC posts

The Stubborn Euro May Have Finally Cracked.

 

Not only is fiat currency debasement underway; but, also fiat wealth debasement is underway on the failure of credit; cases in point is Portugal Telecom, PTI, and the Nation of Portugal, PGAL, and Deutsche Bank, DB, and the Nation of Germany, EWG.

 

Zero Hedge posts NY Fed Slams Deutsche Bank (And Its €55 Trillion In Derivatives): Accuses It Of “Significant Operational Risk”.

 

The WSJ reports Deutsche Bank Suffers From Litany of Reporting Problems, Regulators Said.  Letter From New York Fed Said Some Reports From Deutsche Bank’s U.S. Operations Were ‘Inaccurate and Unreliable’.

 

Now with the US Dollar, $USD, UUP, some have been calling for a new Bretton Woods, fearing that the US Dollar, can no longer serve as the world’s reserve currency. The Telegraph posts The Dollar’s 70 Year Dominance Is Coming To An End .

 

Some say economics is a science, what baloney. Economics is a life experience in the monetary policy of sovereigns, and the seigniorage that they provide. The Banker Regime of democratic nation states, provided the economic experience of prosperity in the monetary policy of investment choice and schemes of credit liquidity and floating currencies.

 

The Banker Regime monetary policy of investment choice has come through what economist Hyman Minsky termed, Money Manager Capitalism, and has produced a number of peak economic events: peak manufacturing, peak transportation, peak oil production and peak moral hazard.

 

Investor Scott Grannis writes of peak manufacturing, peak transportation, and peak oil production.

 

Manufacturing production (the volume output of industrial establishments in mining, quarrying, manufacturing, and public utilities) has increased by 25% in the past five years. It’s almost at a new all-time high. The manufacturing side of the economy survived, and has largely recovered from, its steepest plunge in history.

 

Actual shipments by truck, rail, waterways, pipelines and aircraft, as measured in ton-miles by the Dept. of Transportation, has increased over 25% in the past five years, and is now at a new all-time high.

 

U.S. crude oil production has surged over 70% in the past five years, with the result that the U.S. has surpassed Saudi Arabia as the world’s largest oil producer. Back in 2008 this would have been unthinkable, and it’s all due to the ingenuity of oil producers (i.e., fracking technology).

 

Scott Grannis concludes, It’s still the case that this has been the weakest recovery in history. But it is nevertheless a recovery, and the economy has without question been growing in a real, physical sense.

 

Socialist Nick Beams writes of peak moral hazard.

 

During the post-war boom, the mode of profit accumulation was based on large-scale industrialisation in the US and other advanced capitalist countries. However, this regime of production entered a crisis from the end of the 1960s, when the average rate of profit started to fall.

A fundamental restructuring of the capitalist system resulted. Vast sections of industry were either wiped out or transferred to cheap-labour regions, and profit accumulation in the advanced economies came to be increasingly based on operations within financial markets.

The extent of this restructuring is indicated by the fact that whereas in 1980 the profits of the finance sector in the US amounted to between 5 and 10 percent of all corporate profits, that figure had risen today to 40 percent.

In other words, large sections of capital have cut themselves adrift from the production process and continue to accumulate profit only to the extent that money continues to be pumped out by the central banks to boost the price of financial assets.

These sections of capital have now grown so large that any move to “take away the punchbowl,” as advocated by the BIS, would result in a crash of the entire economy.

 

Nick Beams concludes, The only way to halt the ongoing economic disaster is the abolition of capital itself, that is, the ending of private ownership of the means of production to bring them under social ownership and control, thereby opening the way for rational economic planning.

The tail risk of money manager capitalism will be a Minsky Moment. Out of the ongoing death of currencies, and failure of credit, Financial Armageddon, that is a global financial system breakdown will occur.

 

The result will be that the world will completely pass out of the paradigm and age of liberalism and into that of authoritarianism, where the Beast Regime will provide the seigniorage of diktat money.

 

Leaders will meet in summits to renounce national sovereignty, and announce regional framework agreements, which create regional pooled sovereignty, that is shared sovereignty, to establish regional security, stability, and sustainability, where regional ownership replaces private ownership and private property rights.

 

The Beast Regime of regional economic governance, specifically regional fascism, will provide the economic experience of austerity in the monetary policy of diktat in debt servitude and schemes of totalitarian collectivism.

 

One can follow the death of currencies via this Finviz Screener of Currency ETFs, and one can follow, the failure of credit via this Finviz Screener of Credit ETFs.

 

Debt deflation, that is competitive currency deflation is underway; it arises out of the Bond Vigilantes war with the world central banks for the control of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, $TNX.

 

The trade lower in fiat wealth, that is World Stocks, ACWI, Nation Investment, EFA, Global Financial Institutions, IXG, in June 2014, coming on the death of the Major World Currencies, DBV, specifically the Swedish Krona, FXS, the Euro, FXE, the Swiss Franc, FXF, beginning in June 2014, and the British Pound Sterling, FXB, in July 2014, was an extinction event that commenced the extinction of the equity investor, as is seen in Dividends Excluding Financials, DTN, in Eurozone Nations, in European Financials, EUFN, and in US Regional Banks, KRE, trading lower in value.

 

The world has attained both peak money and peak fiat wealth. The world is passing through an inflection point in economic history, as the seigniorage, that is the coinage of the fiat money and the fiat wealth of Banker Regime is starting to fail.

 

The Business Cycle is one of economic growth and economic deflation that comes from investing. The trade lower in fiat money and fiat wealth beginning in June 2014, pivoted the world into final phase of the Business Cycle, known as Kondratieff Winter.

 

Destructionism is now replacing inflationism as the economic dynamic of the age. Risk-off investing is beginning to replace risk-on investing, documenting that a worldwide bear stock market is beginning to replace a worldwide bull stock market; this is well seen in the Vice Stocks, VICEX, trading lower with the Small Cap Pure Value Stocks, RZV. and the Small Cap Pure Growth Stocks, RZG, beginning in July 2014.

 

On Thursday, July 24, 2014, liberalism’s grand finale stock rally completed as China Investments, YAO, CHIX, CHXF, CQQQ, ECNS, CHII, TAO, CHIQ, CHIE, HNP, CHII, CHIM, CHXX, REMX, EWH, traded to new rally highs, taking Asia Excluding Japan, EPP, to a new all time high, as Bloomberg reports China Manufacturing Gauge Rises To 18 Month High On Stimulus.

 

China, YAO, Turkey, TUR, Egypt, EGPT, and Mexico, EWW, led Emerging Markets, EEM, higher to a new rally high. And Sweden, EWD, Switzerland, EWL, Australia, EWA, KROO, Greece, GREK, Italy, EWI, Spain, EWP, Portugal, PGAL, and Netherlands, EFNL, led Nation Investment, EFA, higher; while New Zealand, ENZL, and Gulf States, MES, traded lower.

 

Emerging Market Financials, EMFN, Investment Bankers, KCE, Stock Brokers, IAI,  Far East Financials, FEFN, European Financials, EUFN, and Regional Banks, KRE, led Global Financials, IXG, higher. The Highly Leveraged Financial Institutions represent excellent short selling opportunities.

 

Nasdaq Internet, QQQ, Social Media, SOCL, Nasdaq Internet PNQI, Internet Retail, FDN, Software, IGV, and Transports, XTN, led World Stocks, ACWI, higher, near its previous rally high, while US Homebuilders, ITB, and US Infrastructure, PKB, traded lower, as NumberNomics posts New Home Sales Fall Lower, and as Zero Hedge reports New Home Sales Collapse 20% From May To Dec 2012 Level, and as Market Watch reports New Home Sales Hit Three Month Low; and as Semiconductors, SOXX, traded lower, suggesting that the three month rally leading technology sector, MTK, is history.

 

The Fed spurred Pursuit of Yield Rally that came through Global ZIRP is over. The higher Benchmark Interest Rate, $TNX, is terminating the unprecedented carry trade and debt trade investing in the Yield Bearing Investments, such as IST, PSP, DBU,  IGF, EMIF, DGS, XLU, IDOG, DRW, REZ, REM, FNIO, KBWY, thus terminating the experience of fixed income investing, DTN. For example Industrial Office REITS, FNIO, which have gone up 100% in 5 years, traded 0.4% lower on the day.

 

On Thursday, July 24, 2014, the S&P 500, $SPX, SPY, traded slightly higher to a new all time high; very likely communicating a US Stock Market, VTI, rally high. The ratio of US Stocks, VTI, relative to US Treasury Bonds, TLT, that is VTI:TLT, and the ratio of World Stocks, ACWI, relative to Aggregate Credit, AGG, that is ACWI:AGG, communicates that stocks have maxed out leveraging over debt.

 

The bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.46% to 2.51%, continuing the see saw destruction of fiat investments. Aggregate Credit, AGG, traded lower, and the 10 30 US Sovereign Debt Yield Curve, $TNX;$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening.

 

Popular Notes And Bonds, such as SHY, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, and MBB, traded lower.  And Inverse Bond ETFS, such as SAGG, JGBS, traded higher.

 

Macronomy posts The Core European bond market picture making new record lows such as the German bund 10 year yield at 1.14% and the French OAT 10 year at 1.56%, at the lowest level since 1746, source Bloomberg Chart. The continuing bull market in bonds, now a third of a century old, is a conundrum to those of us who are not infected by the bug of Keynesianism. It is fully explained by the incentive to earn risk-free profits on a continuing basis, unconditionally offered to bond speculators by the policy of open market operations.  Antal Fekete write Bonds Defy Dire Forecast. In Europe of course, courtesy of our “Generous Gambler” aka Mario Draghi, ECB’s president “whatever it takes” moment in July 2012 has indeed triggered the incentive to earn risk-free profits based on continuing “implicit” guarantees, a subject we discussed in our previous conversation last week. Our dexterous “Generous Gambler” has indeed been highly successful in propelling Spanish bonds gains above Germany. But what our “Generous Gambler” ignores is that generally hyper-deflation can lead to a deflationary spiral in which a deflationary environment leads to lower production, lower wages and demand, and thus lower price levels, which is continuing in Europe as far as we can see from the latest economic data releases.

 

The age of low interest rates and a Flattening Yield Curve, seen in the Flattner ETF, FLAT, flattening, is over through and done, as the bond vigilantes are in control of the Bow of Economic Sovereignty, and are calling the Benchmark Interest Rate, $TNX, higher from 2.49%, effecting coup d etats worldwide, commencing the failure of credit and the death of currencies. The failure of credit is seen in the chart of Aggregate Credit, AGG, topping out in value, as well as is seen in the chart of Distressed Investments, FAGIX, which underwrote QE 1, trading lower in value.

 

This is a fulfillment of bible prophecy seen in Revelation 6:1-2, where Jesus Christ has opened the First Seal of the Scroll of End Time Events, and has released the Rider on the White Horse, who has the Bow Of Economic Sovereignty, and is enabling bond vigilantes and warlords to effect coup d etats world wide, destroying traditional democratic nation state sovereignty, so that the Beast Regime of regional economic governance can rise to govern mankind.

 

Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, traded lower on a lower price of Gold, GLD, and Silver, SLV. After a seven week rally the Precious Metal Mining Stocks, $HUI, are starting to detach from the price of Gold, as is seen in the chart of GDX:GLD.  For example, KGC, has lost 5% of its value since the rally high.  Austin Galt posts in Safehaven HUI Gold Bugs Fighting To Break Downtrend.

 

In the age of the failure of credit and the death of currencies, wealth can only be preserved by taking physical possession of gold bullion, storing it safely and insuring it under a homeowners insurance policy.

 

The sovereign Lord God, looking down the hallways of time, exercised His Sovereign Will and choose how things would flow. Then He acted, and has been acting, to influence the decisions of people to effect that Will.

 

The debt based money system has produced peak coinage. Now debasement of the coinage of the Banker Regime. specifically fiat money, which commenced in July 2014, with the trade lower in Major World Currencies, DBV, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, and the British Pound Sterling, FXB, and specifically fiat wealth, which commenced in July 2014, with the trade lower in Global Financials, IXG, and Nation Investment, EFA, communicates that the world is passing from the fiat of democratic nation state governance into the fiat of regional governance.

 

The fiat money system was fathered by Milton Friedman in 1971, who proposed that the US go off the gold standard, and who proposed the economic paradigm where the investor be free to choose investment opportunities in democratic nation states, where floating currency exchange rates would develop economic trade, global growth and investment gain, and where the US Dollar would serve as the world’s reserve currency. Since then the global finance has been underwritten by a flood of Dollars. But now, the US Dollar, USD, has been rising, unsettling the world’s finance scheme as  Ambrose Evans Pritchard writes Fed Kicks Off Global Dollar Squeeze As Janet Yellen Turns Hawkish

 

Jeff Nelson posts What If We Never Left The Gold Standard? Part II. It was in Part I that I ended by challenging readers to engage in a difficult, mental feat: imagining sanity. Our present pseudo-reality (dubbed “the New Normal” by the Corporate media) has been so insane, for so long, that few of us have any recollections at all of living in even quasi-sane societies.

 

God never ever purposed for a sane society and a sustainable money system, rather He purposed a debt based money system that would underwrite a US Dollar Hegemonic Empire and produce peak moral hazard. Having perfected such, His Son, Jesus Christ, acting as His Steward, in all things, seen in Ephesians 1:10, is pivoting the world out of the Banker Regime, and into the Beast Regime seen in Revelation 13:1-4, which is synonymous with the Ten Toed Kingdom of Regional Governance and Totalitarian, seen in Daniel 2:25-45.

 

On Friday, July 25, 2014, World Stocks, ACWI, Nation Investment, EFA, and Global Financials, IXG, and Dividends Excluding Financials, DTN, traded lower. The world passed through an epic economic inflection point where the monetary policies of the world central banks no longer provide investment gains; the failure of fiat wealth investments has commenced on the exhaustion of the world central bank’ monetary authority.

 

The S&P 500, SPY, traded lower from its Thursday, July 24, 2014, market top high.

 

Growth Sectors, Semiconductors, SOXX, Biotechnology, IBB, Small Cap Industrial, PSCI

Homebuilding, ITB, Transportation, XTN, traded lower.

 

Consumer Sectors, Home Building, ITB, Retail, XRT, Internet Retail, FDN, Global Consumer Discretionary, RXI, Consumer Services, IYC, traded lower.

 

Risk-on investing has turned to risk-off investing, as the High Beta Investments, that is Risk Assets, Small Cap Pure Value, Stocks, RZV, and Small Cap Pure Growth Stocks, RZG, traded lower in value.

Basic Materials, PYZ, traded higher as Global Industrial Minerals, PICK, Copper Mining, COPX, and Coal, KOL, traded lower.

 

Argentina Banks, BFR, GGAL, BMA, India Banks, HDB, IBN, causing Emerging Market Financials, EMFN, and Global Financials, IXG, to trade lower.

 

Defensive Stocks, DEF, traded lower from their market top highs.

 

China Investments continued their rally higher. But, Nations Norway, NORW, Gulf States, MES, India, INP, SCIN, INXX, Russia, RSX, ERUS, Developing Europe, ERUS, Taiwan, EWT, Indonesia, IDX, IDXJ, Australia, EWA, KROO, Argentina, ARGT, and The Eurozone, EZU, traded lower., leading Nation Investment, EFA, lower.

 

This inquiring mind asks, If the monetary policy of the world central bank is one of investment choice, to what degree are the supporting schemes of credit liquidity oversupplied and floating currencies maxed out?

 

To answer this I turn to Doug Noland who relates in Bubbles And Schemes. What is the nucleus of the underlying credit expansion? Answer: Non-productive government debt, speculative leverage and borrowings to support financial engineering. Whose balance sheets/liabilities are growing? Answer: The Fed’s and Treasury’s, along with corporate America. What is the nature of the prevailing financial flows? Answer: Financial speculation – chasing yields and inflating securities prices. How stable are the underlying credit and flow dynamics? Answer: I believe highly unstable and susceptible to changing market perceptions and faltering confidence. What is the role of policymaking and government market intervention? Answer: Profound impact on the markets and real economy. Are there major market misperceptions and resulting mispricings? Answer: Confidence in both ongoing liquidity abundance and the power of central banks has fostered profound systemic mispricing throughout securities and asset markets on a global basis. Is the backdrop consistent with a momentous financial scheme? Absolutely.

 

And this inquiring mind asks, Has peak credit been achieved?

 

To answer this I again turn to Doug Noland who relates in Bubbles And Schemes An abrupt reversal of flows would spell credit tightening trouble. Further, any meaningful deterioration in corporate credit availability would have negative ramifications for an overextended stock market Bubble. As I have written previously, with QE winding down the securities markets are increasingly vulnerable to a destabilizing bout of “risk off.” It wouldn’t require a major derisking deleveraging episode to dramatically alter the marketplace liquidity backdrop.

 

The failure of credit commenced the week ending July 25, 2014, as most Credit Investments traded lower in value at the end of the week. Aggregate Credit, AGG,  now resides below its Wednesday, July 23, 2014, high, which manifested the Evening Star reversal candlestick chart pattern.

 

Mortgage Backed Bonds, MBB, Emerging Market Bonds, EMB, Emerging Market Local Currency Bond, EMLC, World Government Treasury Bonds, BWX, International Corporate Bonds, PICB, High Yield Corporate Bonds, HYXU, Junk Bonds, JNK, Ca Rated Corporate Bonds, QLTC, all traded lower, evidencing the failure of credit. The 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, traded up to their recent rally highs.

 

The Evening Star reversal candlestick chart pattern comes as Elaine Moore of Financial Times reports Emerging and frontier market countries have borrowed a record amount of money in capital markets in the first half of this year, even as central bankers warn that ‘debt market euphoria’ could be storing up trouble for the future. International sovereign bond sales by emerging markets reached $69.47bn in the first six months of the year, a jump of 54% on the same period in 2013. The increase makes 2014 a record year for emerging market government debt issuance so far.

 

And The Evening Star reversal candlestick chart pattern comes as  Ben Bain and Isabella Cota of Bloomberg report Mexico’s riskiest companies have almost doubled their bond sales abroad this year as surging demand for junk debt sends borrowing costs to a record low. Lender Unifin Financiera SAPPI’s offering last week pushed sales of speculative-grade dollar notes from the country to $3.5 billion, a 92% increase from the same period last year and the most since 2011. As the Federal Reserve pledges to keep interest rates near zero, companies in developing countries including Mexico are turning to debt markets to exploit global demand for higher-yielding assets. Yields on junk-rated Mexico corporate debt have tumbled 0.76 percentage point this year and touched an unprecedented 5.23% this month. Average yields in emerging markets have dropped 0.65 percentage point in the same span.

 

The coming demand for safe haven investment will be quite significant; look for exit restrictions on savings accounts and money market funds, that is those accounts which are suppose to maintain a constant one-dollar value, but won’t, as short-term securities, such as Short Term Bonds, FLOT, and Short Duration Treasuries, SHY,  trade lower on higher interest rates across the board following the Benchmark Interest Rate, $TNX, higher from the July 25, 2014, 2.47%. One should immediately begin taking physical possession of gold bullion, storing it safely, and insuring it under a homeowners insurance policy.

 

Scott Grannis relates The M2 measure of money supply has been growing at about a 6.4% annualized rate for over 7 years. This growth is very much in line with the past history of M2, which has grown at an annualized growth rate of 6.4% over the past 15 years and 6.1% over the past 20 years. The lion’s share of M2 growth in recent years has come from bank savings deposits, shown in the graph above.

 

Doug Noland relates M2 (narrow) “money” supply jumped $54.5bn to a record $11.415 TN. “Narrow money” expanded $718bn, or 6.7%, over the past year.

Most definitely look for the value of M2 Money to decline, evidencing the failure of credit, that is the failure of trust in the Banker Regime’s fiat money system.

 

Inasmuch as the failure of credit commenced the week ending July 25, 2014, investments will literally be going up in smoke, as the Interest Rate on the US Interest Rate, ^TNX, continues higher from 2.47%, destroying the basis of Credit Investments, as well as diminishing the basis and effective yield on Yield Bearing Investments; FIW, SEA, IDOG, GRID, IST, and XLU, have already lost principal.

 

The death of currencies that commenced in June 2014, continued intensifying the week ending July 25, 2014. Except for the Chinese Yuan, CYB, almost all the Sovereign Currencies, FXY, FXE, FXC, FXB, FXF, BZF, FXA, ICN, CCX, traded lower, with the result that the US Dollar, $USD, UUP, traded higher. Bespoke Investment Group posts Dollar Index Breakout. I comment that given the rally in the US Dollar, the Banker’s Floating Currency Regime, that came when the US went off the gold standard is history; this being confirmed by the fact that currencies are sinking not floating, and evidencing that there is no investment growth opportunities anywhere in the world.

 

The six year long enduring bull stock market ended July 25, 2014. The prior financial system peak came in 2007, with the failure of what was thought to be “money good” sub prime debt.

 

The world’s economy was regenerated in 2008 as investors came to trust in the US Federal Reserve monetary policy of QE 1, where Distressed Investments, like those traded in Fidelity Investments FAGIX Mutual Fund, were traded out with the banks for US Treasuries, TLT.

 

With the topping out of Equity Investments, the week ending July 25, 2014, trust in the Distressed Investments held by the US Federal Reserve, is now waning, as is seen in FAGIX, trading lower in value; thus trust in the monetary policy of the world central banks of investment choice and related schemes of credit liquidity and floating currencies is faltering.

 

A bear stock market has commenced as a fall lower from the stock market peak has started, as is seen in the Proshares 200% Inverse Market ETFs, such as SSG, and the Direxion 300% Inverse Market ETFs, such as SOXS, trading higher in value.

 

The Inverse Market ETFs, STPP, XVZ, MLPS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, PSQ, REK, MYY, RWM, traded higher, and could be used as the basis for collateral in a short selling investment strategy.

 

The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 24, 2014.

 

In July 2014, Global Growth, DNL, started trading lower, communicating that investors no longer trust the monetary policies of the world central banks to stimulate investment gains, and global economic growth; in recognition of this, AP reports IMF Cuts US and Global Growth Forecasts for 2014.

 

With the failure of credit, seen in AGG, trading lower, on July 24, 2014, and the death of currencies, seen in Major World Currencies, DBV, trading lower in June 2014, the age of investing is over, through finished and done; the age of debt servitude has commenced.

 

Destructionism has replaced inflationism, and is causing destruction of nation investment worldwide.  For example, disinvestment out of debt trade investments, such as the UK’s PUK, ABY, NGG, KNOP, GSL, MANU, and deleveraging out of currency carry trade investments, such as the UK’s BT, SNN, EROS, UL, PSO, RUK, will not only destroy Nation Investment in the UK, EWU, EWUS, but will also introduce economic deflation, and thus compel the development of regional fascism.

 

2) … In the news

AP reports Bulgaria’s Socialist Led Government Resigns Bulgarian Prime Minister Plamen Oresharski has introduced in Parliament the resignation of his left-leaning government, a move that should ease political tensions in the European Union’s poorest member state.

 

Paul Mitchell, of WSWS posts US Pressures Balkan Countries To  Cut Ties With Russia  The push for a renewed offensive in the Balkans to counter Russian influence will be stepped up at a top-level conference next month on the integration of the Balkans into the EU.

 

Bloomberg reports Aviva to Norway Await EU Clarity as Bonds Slide. The prospect that Russia’s state banks will be shut out of European bond markets is prompting some of the region’s biggest money managers to reassess their holdings, as it drives up borrowing costs at the lenders.

 

CNBC reports Zillow (Z) Said To Be Seeking To Acquire Trulia (TRLA).

 

Zero Hedge reports US Manufacturing PMI Drops, Biggest Miss On Record.

 

Bloomberg reports Japan Trade Deficit Expands After Exports Unexpectedly Drop.

 

Zero Hedge reports Japanese Inflation Holds Near 23 Year Highs As Food, Energy, & TV Costs Soar.

 

Mike Mish Shedlock reports France Unemployment New High, Output Down 15th Month; Prices Drop 27th Month; Activity Up in Peripheral Europe; Outlook for Germany. The grim economic news from France keeps piling up. Today, Europe Online reports Number of Unemployed in France Hits New High. According to the Markit Flash France PMI, French private sector output contracts again, albeit at slower pace. The France Synopsis

  • Manufacturing down at sharpest rate in 15 months
  • New business down 4th month
  • Budgets under pressure
  • Input costs rising sharply
  • Output prices down 27th month and accelerating
  • Private sector employment down 9th month
  • Service sector activity improved slightly

 

I side with Steen Jakobsen, chief economist for Saxo bank on the path for Germany, and it’s not a pretty one.

 

Europe is not prepared for a German slowdown, but it is coming. France is obviously hopeless.

 

I comment that France has Municipal Socialism and High Tax Socialism, meaning that the basis of the economy is municipal governance with many impediments to innovation and sky high taxes; this form of economy is increasingly unsustainable.

 

Stefan Riecher of Bloomberg reports German business confidence dropped more than economists predicted to the lowest level since October as weaker growth and escalating tensions in Ukraine weigh on the outlook for Europe’s largest economy. The Ifo institute’s business climate index, based on a survey of 7,000 executives, fell to 108 from 109.7 in June, marking the third straight monthly decline… Today’s report follows a series of weak economic data for Germany that included industrial production dropping for a third month in May, factory orders falling more than economists expected and retail sales decreasing for a second month.

 

Reuters reports Japan Walking Tightrope On Public Debt As Yields Set To Rise.  Japanese long-term interest rates are set to rise as Prime Minister Shinzo Abe’s stimulus policies boost economic growth, Economics Minister Akira Amari said, stressing the need to keep up efforts to rein in the country’s massive public debt.

 

Bloomberg reports Coal Company Pain Accelerates as Bankruptcy Cases Rise. The coal business, after fueling the Industrial Revolution and powering U.S. growth for much of the past century, is now beset by a glut of cheap natural gas and tighter regulation. James River Coal Co. in many ways epitomizes these ills. After filing for bankruptcy almost four months ago with plans to sell its business, the Richmond, Virginia-based company has delayed an auction twice without announcing a buyer.

 

James Pethokoukis writes The Ryan Pro-work, Anti-poverty plan: Thomas Aquinas 1, Ayn Rand 0. The part likely to get the most media intention is Ryan’s “Opportunity Grant” proposal. For states volunteering to participate, 11 existing federal anti-programs – including food stamps, cash welfare, and housing assistance – would be smooshed into a single funding stream for states and include work requirements. Receiving the same amount of federal dough as before, states could then experiment with different ways of providing aid such as partnering with nongovernmental organizations. Ryan: “So if the public and private sector work together, we can offer a more personalized, customized form of aid—one that recognizes both a person’s needs and their strengths—both the problem and the potential.”

Results would be thoroughly tracked and tested by a third party. “In short, more flexibility in exchange for more accountability,” Ryan said. Indeed, that bit about “accountability” is key, even more than the experimentation. To get effective reform, the same people implementing the plan – the “vanguard” Ryan calls them — should be the same ones with accountability and funding authority.

Now some, like CAP, worry that Opportunity Grants would just be block grants meant to cut spending over time and wouldn’t get bigger during recessions. But Ryan stresses this is not a budget-cutting proposal. And if the program moves beyond the experimentation stage, it would “benefit from increasing assistance during recessions.” And certainly there are other questions. Can nonprofits scale up? Will the next House budget reflect the Ryan’s new emphasis on poverty fighting?

But wait, there is even more to the Ryan plan, including expanding access to education through accreditation reform, and giving low-risk, nonviolent offenders a second chance to contribute through prison reform. Yes, this is a severely conservative Republican talking: “Here’s the point: non-violent, low-risk offenders—don’t lock them up and throw away the key. Get them in counseling; get them in job training; help them rejoin and contribute to our society.”

At its heart, the Ryan plan rejects the view that the poor are an undeserving burden on society. Instead, it sees low-income Americans as underutilized assets who need to be reintegrated into the work economy so they and America can reach full potential

2) … Russia’s takeover of Crimea has birthed the region of Eurasia; and ongoing conflict in the Ukraine is fracturing the world into regions of military and economic goverance.  

Out of the death of sovereign currencies, and the failure of credit, liberalism’s three dynamos of creditism, globalism and corporatism are winding down; and authoritarianism’s singular dynamo of regionalism is starting to wind up.

 

The British Empire is history, and The US Dollar Hegemonic Empire is dust blowing in the wind. The Ten Toed Kingdom of regional military and economic governance is emerging where regional fascism will emerge to replace all existing economic systems such as socialism, crony capitalism, socialism and communism, seen in Daniel 2:25-45. This New Empire is synonymous with the Beast Regime of regional governance and totalitarian collectivism, seen in Revelation 13:1-4.

 

Bloomberg reports Yatsenyuk Resigns as Ukraine’s Premier After Coalition Dissolves. Ukrainian Prime Minister Arseniy Yatsenyuk resigned after two parties quit the ruling coalition and President Petro Poroshenko signaled his support for early elections. Yatsenyuk told the parliament in Kiev today that he’s stepping down after losing his allies’ backing and failing to pass legislation. Former world boxing champion Vitali Klitschko’s UDAR and Svoboda, a nationalist group, said they’d leave the coalition and seek a snap parliamentary ballot, according to statements today on their websites

 

Elaine Meinel Supkis posts Yatsenyuk Resigns In Ukraine, Kiev Coup Collapses, New ‘Elections’

Huffington Post relates Ukraine’s Prime Minister Arseniy Yatsenyuk Resigns!  His far right wing fascist government is so unpopular, it fell suddenly.  While the Chocolate King tried desperately to lure the US into a war with Russia, he suddenly gave up.  Meanwhile, Obama, reading script written by Zionist fascists, has dropped the ‘Putin shot down the civilian plane’ for ‘Putin is Firing On Ukraine.  Even with the CIA puppet regime collapsing, they are keeping up the warmongering.

 

This is a clear example of the childish, silly, name-calling, double standard US diplomacy which has become a running joke internationally.  No one can take the US seriously.  Germany and England, having learned nothing from WWI and WWII, have decided to stir this witches’ brew and get WWIII for some idiotic reason.  But Germany’s elites are now getting cold feet due to dim memories of Berlin burning.

This playing with fire to launch WWIII is highly dangerous as NATO is most likely using a Poland base in order to be prepared for blitz against Russia!  Meanwhile, European rights court condemns Poland for hosting secret CIA prisons thanks to everyone eager to help the fascists in the US break international laws and commit war crimes.

 

The FT posts Ukraine’s Prime Minister Quits. Arseniy Yatseniuk, Ukraine’s prime minister, resigned on Thursday after two parties quit the ruling coalition government in a move designed to trigger early elections.  “The fact that the coalition has fallen apart, that laws haven’t been voted on, that soldiers can’t be paid, that there is no money to buy rifles, that there is no possibility to fill gas storages. What options do we have now?” Mr Yatseniuk said in address to parliament

 

Mike Mish Shedlock writes Take Ukrainian Prime Minister Yatsenyuk Announces Resignation. “If no new coalition is formed and the existing coalition in a parliamentary-presidential republic had collapsed, the government and the prime minister have to resign. I announce my resignation because of the coalition’s collapse,” he said.

 

Yatsenyuk also expressed disappointment with Ukrainian parliament’s decision to reject a bill that allows the government to hand over up to 49 percent of the country’s gas transport system to investors from the European Union and the United States.

 

Follow the Money Step by Step

  1. Prime minister Yatseniuk resigned
  2. This will lead to early elections in which pro-Russian members will be ousted from Parliament
  3. Parliament will pass a law selling 49% of Ukraine’s gas and transportation systems to US and European investors.
  4. Ukraine needs the money to pay soldiers to fight an inane war.

 

Far be it from me to propose state ownership of energy pipelines. Yet, here’s the vital question: Think Kiev is going to get full value, in the midst of a war, when it desperately needs money to pay unpaid soldiers?

 

Alex Lantier of WSWS writes Ukraine Prime Minister Resigns As NATO, Australia Prepare Intervention In East. While Washington has been unable to substantiate any of its charges that Russia is responsible for the crash, and evidence increasingly points to involvement by the Kiev regime itself, Australia and the Netherlands are seizing on the crash to justify a provocative intervention in east Ukraine.

Yesterday, Dutch Foreign Minister Frans Timmermans and Australian Foreign Minister Julie Bishop visited Kiev to discuss a military deployment to east Ukraine, ostensibly to secure the MH17 crash site, which is in territory held by anti-Kiev regime forces.

The Netherlands announced they would send 40 unarmed military police to east Ukraine, while Australia is reportedly sending 50 police to London as a first stop on the way to Ukraine.

In the Netherlands, Elsevier’s commentator Eric Vrijsen demanded that Dutch Prime Minister Mark Rutte “threaten to send in these troops in order to up the pressure on the rebels and Russian President Vladimir Putin. And if he does this, he will probably have made up his mind to act on his threat. The Dutch Special Forces (army commandos and the Marine Corps Mars Offs) are internationally respected. Rutte doesn’t have these elite troops at his disposal for nothing.”

 

Reuters reports Australia to Send 100 Extra Police, Troops to Ukraine PM Abbott Says

 

Mike Mish Shedlock posts Who’s Winning the War in Ukraine? Answer May Shock You.  One must step back and ask “What the hell is this war really about?” Is it NATO? Or is it energy?

 

I happen to believe both. Starting from that scorecard, please consider my post on Thursday Ukraine Government Breaks Up: Prime Minister Resigns Over “Vital Laws on Energy and Army Financing”; Follow the Money. Synopsis: The Ukrainian Prime Minister Arseniy Yatseniuk resigned and that will lead to early elections in which pro-Russian MPs will be removed from parliament.

 

In essence, Ukraine will be more pro-NATO. But that’s not all.

 

Biden’s Son, Kerry Family Friend Join Ukrainian Gas Producer’s Board.  Please consider this resignation statement as noted by RIA: “Yatsenyuk also expressed disappointment with Ukrainian parliament’s decision to reject a bill that allows the government to hand over up to 49 percent of the country’s gas transport system to investors from the European Union and the United States.”

 

In response I said “Follow the Money”. I neglected to report precisely where the money flowed.  The Wall Street Journal has all you need to know with this May headline regarding Biden, Kerry, and Ukraine: Biden’s Son, Kerry Family Friend Join Ukrainian Gas Producer’s Board.

 

The Automatic Earth posts Economic Warfare Is it the Kremlin, or the White House, that has redrawn Europe’s borders by force? Or, in different words, does the US care one bit about European borders? Yeah, right. The goal is Russia’s fossil fuels. And Europe blindly follows the call to war, because people like Cameron know how vulnerable and “energy empty” their nations are. Nothing to do with any plane crash, that’s just a handy excuse that’s being played for all it’s worth.

 

CNBC asks How Long Can Russia Go Without Selling Bonds?  The real concern is with Russia’s companies and banks, which face around $83 billion in external debt repayments by the end of the year, he noted. “Unlike the government, most firms do not have large external assets to fall back on,” he said, but he noted the government may step in to assist any systemically important companies. Over the past week, Russia’s corporate bonds within the Emerging Market Corporate Index have seen their yields rise around 79 basis points, according to data from Barclays. Bond yields move inversely to prices.

 

Reuters reports EU Targets State-Owned Russian Banks in Sanctions Plan

 

Ambrose Evans Pritchard posts Russia Vastly Outgunned In Economic Showdown With West

 

And Ambrose Evans Pritchard posts Proposed EU Sanctions Threaten To Shut Russia Out Of The World Financial System.

 

Julie Hyland of WSWS posts EU Foreign Ministers Announce Forceful Measures Against Russia

 

Implode-O-Meter German Economy Hit By US, EU Sanctions On Russia

 

Bernice Napach of Yahoo Finance reports Pity the poor Russian Billionaire; Putin’s Costing Them Billions. Russian government policies helped create many of the country’s billionaires and now they are the reason many of those billionaires are losing billions of dollars of wealth. These oligarchs got rich when the Russian government awarded them control of newly-privatized, state-owned enterprises. But sanctions imposed by the U.S. and European Union to protest Russia’s incursion into Ukraine have erased some of that wealth. As of Monday, the 19 richest Russians lost $14.5 billion so far this year, while the 64 richest Americans gained $56.5 billion, according to Bloomberg Billionaires, which tracks the net worth of the world’s richest people

 

Bloomberg reports German Business Climate Drops In Sign Of Economic Risks.

 

4) …. The world central banks will develop macroprudential policies and macroprudential tools for financial system stability, and in so doing will lead the way into regional fascism.

Please consider reading the Zero Hedge posts The “Gates” Are Closing: SEC Votes Through Money Market Reform.  As well as the Economic Policy Journal post SEC Will Allow Money Market Funds To Stop Redemptions During Tumultuous Periods

 

Liberalism, meaning freedom from government, was fathered by Milton Friedman, who heralded monetary freedom through his Free To Choose Doctrine, and was characterized by wildcat finance, a  Doug Noland term, where bankers waived magic wands of credit creating prosperity.

 

The new paradigm of authoritarianism is emerging. It was heralded by Angela Merkel who said said on November 8, 2013, “We cannot stop halfway. We have to be creative: We have to find our own new solutions.” (The EurActiv Institute, “Merkel Preaches Federalism to MEPs, Warns Britain against EU Exit”.)  It is fathered by Mario Draghi, and is characterized by wildcat governance, where regional fascist leaders waive heavy clubs of diktat enforcing austerity.

 

The ECB chairman on June 5, 2014, in NIRP and Targeted LTRO Announcement called for a charge on money held at the ECB,, and on June 14, 2014, in ECB Press Announcement called for shared sovereignty.

 

Both Mario Draghi, announcements are designed to address secular stagnation, defined as low growth, low employment, and low inflation; yet both introduce monetary controls.

 

Mike Mish Shedlock posts Spain Issues Retroactive 0.03% Tax on Bank Deposits to “Boost Economic Growth and Job Creation”. Via translation from Libre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation

 

Yes, Spain is coming out with “A tool for economic growth and job creation”.

 

There will be many such mandates, that is economic diktat, coming from Eurozone leaders, especially the ECB. The forthcoming diktat; will be “macroprudential regulation tools” designed for financial system stability, as central bank leaders turn away from traditional interest rate policies.

 

David Wessel posts in the WSJ Central Bankers Appear to Line Up their Defenses … And Create The Macroprudential Maginot Line.  It looks like there has been some international coordination of monetary policy rhetoric lately.

 

With price and wage inflation not a concern right now, we aren’t going to raise interest rates and throw a lot of people out of work to avoid excesses in financial markets or to head off possible asset bubbles, they said. There may come a day when our worries about financial stability will prompt us to hike interest rates, but rates are “the last line of defense.” Not now. The “first line of defense” is making the financial system more resilient so it can better withstand shocks and using our supervisory and regulatory “macroprudential tools” to rein in excesses, as we are doing now.

 

This inquiring mind asks, just what are “macroprudential policies”, and “macroprudential tools” for financial system stability? And what might they include?

 

Macroprudential tools are central bank regulations designed for financial stability; frankly they are quite blunt central bank clubs; these tools might be exit taxes from bond funds, another might be capital controls, and yet another might be for banks everywhere to be integrated with the government and be known as the government banks or gov banks for short. In the US most every bank, that is Money Center Banks and Regional Banks, have US Government Treasury Notes, TLT, residing at the Fed. As the Benchmark Interest Rate, $TNX, rises banks might be tempted to withdraw these monies from Mother Fed. So I believe the Fed will put a hold on such action and start to integrate banks into the Fed.

 

The Fed will be changing and morphing into the North American Fed, and will become the Atlantic compliment to the ECB, that is a North American Continent, that is Canada, Mexico, and America Regional Central Bank, which will serve as the singular banking institution for CanMexAmerica, that is the Regional Financial Hub, for the soon coming North American Union.

5) … Private neighborhood emerges in Detroit as tycoon charges teenage women with vandalism.

Zac Corrigan posts in WSWS Dan Gilbert’s New Detroit: Billionaire Land Speculator Witch Hunts For Teens As Graffiti Emerges Near His Property

 

Gilbert has been at the forefront of efforts by the elite to “revitalize” a small enclave for the wealthy and upper middle class in the downtown area (see: “Detroit’s downtown ‘redevelopment’ plan”) that will essentially be off-limits to the majority of the city’s population. This has been accompanied by the forced eviction of hundreds of poor and elderly residents, as well as dozens of artists, from the area. With investments worth tens of millions Gilbert wants to make sure any “riff-raff” that don’t fit in with the sparkling, upscale designs of the “New Detroit” are kept out.

 

Gilbert who holds no elected office, has emerged as the de facto king of Detroit. He wields enormous power over economic and political decisions, enjoys non-stop promotion by a fawning media in Detroit and nationally, and owns a private army to protect his property.

In addition to his hundreds of surveillance cameras, his privately owned Rock Security agents patrol the area 24 hours a day. He owns 60 buildings throughout downtown, many acquired from the city at rock-bottom prices through what he himself has referred to as a “skyscraper sale.” For some buildings he paid as little as $8 per square foot. Downtown rents are now approaching $2 per square foot every month—which means after four months the cost of his “investment” will be fully covered and he will make pure profit from then on.

 

Gilbert’s Quicken Loans mortgage lending companies, and his network of other companies under the “Rock” moniker (Rock Ventures, Rock Gaming, Bedrock, etc), make him the largest employer in downtown Detroit. He owns approximately nine million square feet of downtown real estate, including offices, apartments, the Greektown casino and hotel, as well as shopping, parking structures, and recently the building housing both of Detroit’s daily newspapers, the Detroit Free Press and Detroit News (the papers plan to relocate). Residents therefore work for his companies, pay him rent at their homes, gamble at his casino, shop at his stores, are spied on by his cameras and policed by his hired agents.

 

The situation harkens back to the “company towns” of the 19th and early 20th century, when coal companies or the auto giants controlled virtually every aspect of life.

 

The extreme charge of “malicious destruction of a building” is being handed down for what amounts to a teenage prank, while Gilbert is engaged in the most destructive and parasitic activity, for which he is not being punished but on the contrary lauded and showered with public subsidies. Gilbert has been appointed to the Obama-created Detroit Blight Removal Task Force, which has a budget of $150 million to demolish tens of thousands of houses across the city’s 139 square miles.

 

This will provide even more profit opportunities for Gilbert and other aspiring “entrepreneurs,” while wide swaths of the city, deemed too poor for investment, will be “decommissioned” and their residents driven out by shutting down water, electricity, fire protection and other vital services. As Gilbert once boasted, “For probably the first time in Western civilization, large parcels of vacant, pristine land that have paved streets, utilities of all sorts, cable, phone, water, sewer” were available for the taking, with “everything at affordable prices.”

 

In 1960, Detroit had the highest standard of living of any major American city. After decades of de-industrialization, during which the automakers moved hundreds of thousands of jobs to low-wage areas throughout the US and overseas, it now perennially tops lists of “poorest,” “most dangerous” and “most miserable” big cities in the country. Detroit’s child poverty rate is near 60 percent.

 

The city is currently undergoing the largest municipal bankruptcy in US history, and corporate vandals are looting it of anything they can get their hands on, including constitutionally protected city worker pensions, a publicly-owned (and world renowned) art collection, and one of the nation’s largest municipally owned water and sewerage systems. Thousands of its poorest residents are being shut off from water service each week.

The Obama administration has backed this attack in order to use Detroit as a model to attack public sector workers throughout the country, destroy public services and carry out the wholesale privatization of urban areas.

 

What is happening in Detroit is a massive transfer of wealth to the super-rich that is part of a national and international process. The fortunes of the very rich in the US have seen an historic increase nationwide, with 95 percent of income gains from 2009-2012 going to the top one percent of earners. Gilbert has virtually quadrupled his own wealth to $3.8 billion since the crash of 2008.

 

Gilbert is not the only oligarch in town. Fellow billionaire Mike Ilitch—owner of Little Caesar’s Pizza, the Detroit Tigers and Red Wings sports teams, the Motor City Casino, and much more—recently acquired a 45-block area of downtown for $1, and was given hundreds of millions in public money to finance the building of a new hockey arena and surrounding entertainment and shopping district.

 

Detroit’s unelected Emergency Manager Kevyn Orr, who is overseeing the bankruptcy and officially rules over Detroit as an unchallengeable dictator, has favorably compared Gilbert and Ilitch to bygone tycoons Carnegie and Rockefeller, saying “every great city needs its patrons.”

 

6) … Is one’s economic view predetermined? Does one’s economic view come from nature or nurture or personal education?

Robert Wenzel posts Where Ron Paul Might Be Wrong. Ron Paul has said that he thinks some people are born libertarians and that he himself was born such. There is an understandable natural tendency for life-long libertarians to agree with Ron’s claim. I think he may be wrong.

If it is true that most libertarians are born libertarians, the libertarian movement is in a lot of trouble. At best, I estimate that maybe 5% of the population is libertarian. If you become a libertarian at birth and we have the percentage that are libertarians, then there is little chance we will ever see a libertarian society.

But, as I say, I do not believe people are born libertarians. I believe some people are born with a healthy brain balance between reality, logic and emotions (as contrasted with, for example, pathological altruists). That is, they do not allow emotions to interfere with their understanding of the real world. They recognize reality for what it is and don’t try to emotionally block out clear thinking or go into denial about some things in the world.

Freedom and libertarianism are very logical things. If you have an open mind (no blocking mechanisms operating) and think things through logically, you are going to be a libertarian. But, it’s the thinking logically, and having a correct balance with reality and emotions that people may be born with. Thus, it is very easy for such people to become libertarians early in their life. But it is the logical thinking that we are born with that begins the process, not an inherent libertarian philosophy.

I have talked to many adults who have only come to libertarianism in recent years. They all tend to be very logical, thus, it is not surprising that they would be attracted to libertarianism. In fact, most tell me that in the past, although they might not have been full-fledged libertarians, they had libertarian “instincts.” To me this means that they likely were simply thinking logically about events and society without having a full libertarian perspective presented to them early on. That is, it may just be that while they weren’t exposed to libertarian ideas at an early age, their logical way of thinking was always pushing them in that direction–always suspicious of interventionist and government propaganda.

Thus, if the key to being a libertarian is logical thinking and a healthy balance between emotions and thinking, and exposure to libertarian ideas, then there is a lot more hope for a libertarian society, since the number of current libertarians is certainly only a subset of generally logical thinkers. The more logical thinkers that can be made aware of libertarian logic, the better

 

Wikipedia posts the David M Halbfinger February 5, 2012 NYT article  “Ron Paul’s Flinty Worldview Was Forged in Early Family Life”.

 

From that article, I conclude that it was family life training in morals, meaning virtue, and ethics, meaning relationships with others, that developed the Dr. Paul’s character set of independence, personal responsibility, and frugality. It was this that provided a heart for adulthood learning and communicating Austrian economics.

 

Being an Calvinist, and not an Libertarian, I believe that God, from eternity past, purposed and brought Dr Paul forth to champion Libertarianism, and the call to End The Fed.

 

Most assuredly Dr. Paul is an empath, with a pen, and not a psychopath with a gun; this was by God’s ordination. God provides appointment in all things. He determines the times and places in which one will live; and then provides childhood mentors where some learn to feel after noble things, so that when the age of reason arrives, as in the case of Dr. Paul in his college years, one pursues things intellectually to develop his personhood.

 

7) … According to Nature Economist Elaine Meinel Supkis, the new normal weather is that El Nino Is Dead And Gone. The Watts Up With That ENSO Page, communicates that it is very obvious now that not only is el Nino aborted, we are definitely seeing the beginning of a la Nina cold cycle again.

I comment that the sun is going quiet. The new normal is a quiet sun (for now).

The Daily Mail asks Why Has The sun Gone Quiet? Scientists baffled as sun spots disappear during peak period of solar activity. Researchers are baffled as the sun has gone quiet during a time in its 11-year-cycle when it should be at its most active. Just a few weeks ago it was bursting with sunspots but now it seems to be going days without even developing a single dark spot. Solar physicist Tony Phillips has named it an ‘All Quiet Event.’

Sunspots attract attention because they highlight the part of the sun where solar activity originates. That can mean solar flares or even coronal mass ejections, which happen when material from the son shoots into space. The phenomena occur by highly concentrated magnetic fields which are slightly cooler than the surface of the sun.  Energy builds up as the fields become tangled, and when that energy is released in an explosion it results in a solar flare.

SMH reports Sun Goes Spotless, Baffling Scientists. Some astronomers call it the Big Quiet – the absence of sunspots during what is supposed to be a period of heightened magnetic activity on our sun. For past four or more days, telescopes pointed at the sun have detected only a handful of sunspots, sometimes none at all, in a “very weird” development that is baffling scientists, said Alan Duffy, an astrophysicist at Swinburne University. “Sunspots can change all the time, but when you should be seeing many dozens at any one point of time, it’s quite strange that we’re not seeing any at all,” Dr Duffy said.  “We don’t have any idea why that is.”

Fed Chairman Yellen Speaks … The Death Of Fiat Money Commences … Turning All Fiat Investments Lower In Value

July 19, 2014

Financial Market Report for the week ending July 18, 2014

This post is available in Google Documents format here.

1) … In this week’s financial marketplace trading

On Monday, July 14, 2014, Marketwatch reports Gold Plunges 2.3% In Biggest Daily Drop of 2014 As Investors Book Profit. “Overall, we believe that physical demand has remained short of expectations, the latest price increase having been driven largely by speculation,” wrote Eugen Weinberg, commodity strategist at Commerzbank in Frankfurt, in a note. Pointing to India, Weinberg said the country’s decision to maintain a 10% import duty on gold and silver “is also likely to have a dampening effect on future gold demand expectations. In conjunction with a rather below-average monsoon season, this points to below-average gold demand from India.” Gold prices ended last week on a down note, but still managed to register their sixth straight weekly gain. Gold had probed four-month lows near $1,244.30 an ounce in early June, rallying to more than $1,337 last week.

On Tuesday, July 15, 2014, Fed Chairman Janet Yellen spoke in Semiannual Monetary Policy Report To Congress, and stocks, commodities, bonds, and currencies all traded lower, evidencing the failure of fiat money.

Nation Investment, EFA, traded slightly lower, and was led lower by Philippines, EPHE, Argentina, ARGT, Europe, EZU, FEU, FEZ, DFE, Sweden, EWD, US Small Caps, IWM, IWC, Peru, EPU, Colombia, GXG, Canada, EWC, CNDA, and Russia, RSX, ERUS, as investors deleveraged out of currency carry trades worldwide, such as the EURJPY.

World Stocks, ACWI, traded slightly lower, and were led lower by the High Beta Sectors, in particular,

Social Media, SOCL, Biotechnology, IBB, Pharmaceuticals, PJP, Small Cap Pure Growth, RZG, Nasdaq Internet, PNQI, Internet Retail, FDN, Biotechnology, TAN, Medical Devices, IHI, IPOs, FPX, and Design Build, FLM.  Of note, Building Materials, such as AAON, GFF, HW, APOG, BECN, AOS, and MAS, traded lower.

Global Financials, IXG, traded unchanged, but Argentina Banks, BMA, GGAL, BFR, BBVA, Spain’s Bank, SAN, and the National Bank of Greece, NBG, traded lower, and led European Financials, EUFN, lower, as Zero Hedge reports Espirito Santo Holding Company Preparing To File Bankruptcy.

Yield Bearing Investments, DTN, trading lower included Shipping, SEA, Water Resources, FIW, International Dividend Dogs, IDOG.

Commodities, DBC, was led lower by a lower price of Oil, USO, BNO, and Natural Gas, UNG, which stimulates Natural Resources, IGE, to trade lower; which were led lower by Copper Mining, COPX, Energy Production, XOP, and Energy Service, OIH.

Gold Miners, GDX, GDXJ, traded lower on a lower price of Gold, GLD. And Silver Miners, SIL, SILJ, traded lower on a lower price of Silver, SIL. The six week rally in the HUI Precious Metal Miners, $HUI, is over, as the chart of the Gold Miners relative to Gold, GDX:GLD, shows a dark cloud candlestick at the top of an ascending wedge.  Money News posts Gold Miner Stock Rally Presages Gains For Gold Itself.

Debt deflation is underway as Credit Investments, AGG, traded lower, as the Interest Rate on the US Ten Year Notes, ^TNX, traded higher from its Friday July 11, 2014, value of 2.52% to 2.55%, chipping away of a broad range of credit investments  Distressed Investments, such as those traded in Fidelity’s FAGIX Mutual Fund, which underwrote QE1, as well as Junk Bonds, JNK, traded lower. Almost all of the most Popular Notes and Bonds, such as TLT, EDV, BWX, FLOT, SHY, LQD, PICB, MBB, traded lower in value from their market top highs.

Major World Currencies, DBV, were led lower by the Canadian Dollar,  FXC, the Euro, FXE, and the Swiss Franc, FXF, and the Emerging Market Currencies, CEW, traded lower, with the result that the US Dollar, $USD, UUP, traded higher. Based on the success of the bond vigilantes in sustaining the Benchmark Interest Rate, $TNX, above 2.49%, the currency traders have commenced global competitive currency devaluation.

On July 2, 2014, the failure of credit commenced as Aggregate Credit, AGG, traded lower in value.

On Monday, July 7, 2014, the destruction of fiat wealth commenced, as risk-on investing turned to risk-off investing, with World Stocks, ACWI, Nation Investment, EFA, Global Financials, IXG, and Yield Bearing Investments, DTN, all trading lower from rally highs, as investors fear that the monetary policies of the world central banks no longer stimulate investment gains nor global economic growth.

Zero Hedge posts Wall Street “Throws In The Towel” On Q3/Q4 Revenue Growth Expectations, Charts Reveal.

This week, on Tuesday, July 15, 2014, the death of currencies commenced as is seen in the Swiss Franc, FXF, Commodity Currencies, CCX, such as the Canadian Dollar, FXC, the Euro, FXE, and the Australian Dollar, FXA, trading lower, on fear that the monetary policies of the world central banks have crossed the rubicon of sound monetary policy and have made money good investments bad; these include Eurozone Nation Investment, such as Spain, EWP,  Italy, EWI, Finland, EFNL, Netherlands, EWN, France, EWQ, Ireland, EIRL, Austria, EWO, Portugal, PGAL, and Greece, GREK, as well as Sweden, EWD, Norway, NORW, Denmark, EDEN, Switzerland, EWL, and the US Small Caps, IWM, IWC; these are all failed nation state investments.

The Eurozone Nations are insolvent sovereigns and cannot provide fiscal investment, economic seigniorage; and exist solely through the credit liquidity of the ECB.

Gary of Between the Hedges posts Los Echos reports ECB’s Praet Says Investment in France Is Acute Problem. The ECB’s chief economist comments in an interview with daily newspaper Les Echos that the pace of recovery in France is disappointing.

One should not be invested in Equity Investments, Nation Investments, Banking Investments, Yield Bearing Investment, or Credit Investments, as the death of Sovereign Currencies, commenced on Tuesday July 15, 2014, after Janet Yellen spoke in Semiannual Monetary Policy Report To Congress.

Fiat Money, defined as the combination of Credit, AGG, and Major World Currencies, DBV, such as the New Zealand Dollar, as well as Emerging Market Currencies, CEW, such as the Philippine Peso, died on Tuesday July 15, 2014, as investors fear that the monetary policies have crossed the rubicon of sound monetary policies and have made money good investments bad.

Bloomberg reports on the Philippine Peso relating Peso Goes From First to Worst as Court Halts Plans. My comment on the article is that the Philippines, EPHE, is an insolvent sovereign.

The week ending July 18, 2014, kicked off the new normal of nation state currency debasement, with nations outside of the Eurozone, such as New Zealand, ENZL, and Russia, RSX, trading lower.

In contrast Mexico, EWW, traded higher as Bloomberg reports Foreigners Can’t Get Enough Bonds In Oil Law Boon.  International investors are boosting their holdings of Mexico’s peso-denominated government debt to a record as lawmakers near a vote on rules to end the nation’s seven-decade-old oil monopoly.

Canada, EWC, also traded higher, largely due to a trade lower in its 10 Year Sovereign Yield.

Please consider that given that Fiat Wealth, That Is The Coinage Of The Banker Regime,  Is Trading Lower In Value, With the Result That The World Has Pivoted Into Kondratieff Winter.

With the failure of credit on July 1, 2014, seen in Aggregate Credit, AGG, trading lower in value as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the world is moving through a historic economic inflection point.

The world is pivoting through peak wealth. Fiat Wealth, defined as World Stocks, VT, Global Financial Institutions, IXG, Nation Investment, EFA, and Yield Bearing Investments, DTN, together with Aggregate Credit, AGG, is is literally being sawn asunder by the failure of trust in the world central banks’ monetary authority to continue to provide investment gain, and global economic growth, as is seen in the Bloomberg reportEuropean Stocks Drop With Treasuries as Commodities Fall, and as is seen in the Zero Hedge reportPeak Abenomics.

The recovery from the Great Recession of 2008-09 has been the weakest ever, the reason being that the nature of money changed with the provision of the Greenspan Put, which became the Ben Bernanke QE1.

From 2008 onward, the Fed’s policy no longer came from theHumphrey Hawkins dual mandate of employment and growth, and thus have not provided economic recovery.  The Global ZIRP monetary policies of the world central banks were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being the creation of awesome fiat wealth inflation, rather than much of any employment gains.

The June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, together with theJune 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, addresses secular stagnation, defined as low growth, low employment, and low inflation; and introduce the new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance, and clay in totalitarian collectivism.

The First Toe will emerge out of Club Med, that is Portugal, Italy, Greece and Spain, sovereign, banking, and corporate insolvency, as a Revived Roman Empire, having a New Charlemagne, Jean Claude Juncker, and a New Monetary High Priest, Mario Draghi, which in soon coming regional economic governance, will serve as a template for like governance, in all of the world’s ten regions, establishing totalitarian collectivism unifying all of mankind’s seven institutions.

Thus a new monster, the Beast Regime, will replace today’s monster, the Creature from Jekyll Island.

These Mandates and the Call serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out of debt trade investments and deleverage out of currency carry trade investments.

There are no social rights in the age of regional governance. Jerry White of WSWS posts Detroit Elites Declare: Water Is Not A social Right

The failure of credit, which occurred on July 2, 1014, and the death of currencies, which occurred on July 15, 2014, are dual extinction events, which will rapidly make the investor extinct; one should not be invested in any fiat investments..

The Bond Vigilantes, being in firm control of The Bow of Economic Sovereignty, that is the Benchmark Interest Rate, will be calling Interest Rates higher worldwide, introducing political coup d etats; out of which the new money, diktat money, defined as the mandates of regional leaders for regional security, stability, and sustainability, will underwrite regional fascism replacing today’s crony capitalism, socialism, and communism.

The Fed will not be rolling over maturing Treasuries and MBS; they will be held to term, with the result the bond vigilantes will be having a hay day causing an ever accelerating destruction of the Fed’s Balance Sheet, rapidly destroying the US Dollar Hegemonic Empire. In its place eventually ten kings will come to rule in each of the world’s ten regions which will feature un-dollar, that is dollar-less, or better said un-dollar, regional bartering exchanges featuring new currencies such as the Petro Yuan.

Now that Global ZIRP, that underwrote property investments of all types,is history look for Real Estate, IYR, and especially Global Real Estate, DRW, to rapidly fall lower in value, as the Benchmark Interest Rate, $TNX, starts to rise from 2.49%.

Inasmuch as destructionism is replacing inflationism, the economic future is one of global economic deflation, and rising headline price inflation.

Bloomberg reports Ukraine Says Russia May Have Shot Down Transport Plane. Ukraine’s Defense Ministry said Russian forces may have shot down one of its airplanes to bolster the Kremlin-backed insurgency and sabotage efforts to end a conflict that’s already claimed hundreds of lives. An An-26 transport plane was shot down in eastern Ukraine today by a “powerful weapon” not previously used by the separatists, probably from inside Russia, Defense Minister Valeriy Geletey told President Petro Poroshenko, according to the president’s website. The plane was hit at 6,500 meters, an altitude shoulder-fired missiles can’t reach, he said. The aircraft was probably struck either by an air-to-air missile from a jet based at Russia’s Millerovo base or a surface-to-air rocket from a mobile ground system, Andriy Lysenko, a ministry spokesman, told reporters in Kiev.

The Daily Star reports NATO Denounces New Russian Troop Build-up On Ukraine border. NATO on Monday said Russia had increased its troops near the Ukraine border to as many as 12,000 after reducing them to less than 1,000 in June, hurting efforts to ease the crisis. “This is not a step in the right direction. It is a step away from de-escalating the situation,” a NATO official said. “Our current assessment is that between 10,000 and 12,000 Russian troops are in the area.”

Public Private Partnership established by the US Intelligence Community. Government Executive posts Amazon’s Huge Cloud Deal With the CIA.  The intelligence community is about to get the equivalent of an adrenaline shot to the chest. This summer, a $600 million computing cloud developed by Amazon Web Services for the Central Intelligence Agency over the past year will begin servicing all 17 agencies that make up the intelligence community. If the technology plays out as officials envision, it will usher in a new era of cooperation and coordination, allowing agencies to share information and services much more easily.

Whiting To Buy Kodiak For $3.8 bln, Create No. 1 Bakken Producer. Whiting Petroleum, WLL, said it would acquire Kodiak Oil & Gas for $3.8 billion in stock, to become the largest producer in North Dakota’s Bakken shale oil formations, eclipsing Harold Hamm’s Continental Resources.

Philip Guelpa of WSWS posts Atlantic City, New Jersey Casino To Close, Sign Of Worsening US Jobs Crisis. The owners of the Trump Plaza resort casino in Atlantic City announced on Saturday that it would close in September, laying off approximately 1,000 workers.

CBS Philly reports Violent Night In North Philly Leaves 2 Dead, 1 Critical.  Because of its high crime rate, North Philly is known as The Badlands. Wikipedia reports There are six zip codes for North Philadelphia: 19132, 19133, 19121, 19122, 19130 and 19123.

On Wednesday, July 16, 2014, Regional Banks, KRE, traded lower, taking the US Small  Caps, IWM, IWC lower.  India, INP, SCIN, INXX, EPI, China, YAO, ECNS, CHXF, CHIX, traded higher; while Brazil, EWZ, EWZS, BRXX, and BRAF traded lower.

On Thursday, July 17, 2014, Bloomberg reports S&P 500 Tumbles, Treasuries Rally On Crises In Ukraine And Middle East. The S&P 500, $SPX, lost 1.2 percent for its first decline of at least 1 percent since April 10. The rate on German 10-year bonds, closed at a record low, driving German Treasury Debts, BUND, to a new high.

Sectors, Semiconductors, SOXX, Solar Energy, TAN, Homebuilders, ITB, Small Cap Consumer Staples, PSCC, US Infrastructure, PKB, China Technology, CQQQ, Nasdaq Internet, PNQI, Copper Miners, COPX, Biotechnology, IBB, Resorts And Casinos, BJK, Social Media, SOCL, Small Cap Pure Growth, RZG, Pharmaceuticals, PJP, Transportation, XTN, Global Industrial Producers, FXR, Medical Devices, IHI, Smartfone, FONE, and Retail, XRT, led World Stocks, ACWI, lower, as Bespoke Investment Group posts  Retail Sales Weaker Than Expected.

Credit Services, V, MA, CIT, AXP, DFS, traded lower.

Legacy Industries, Steel, SLX,  Coal, KOL, Global Industrial Miners, PICK, Timber Production, WOOD, traded lower.

Energy Production, XOP, and Energy Service, OIH, traded lower.

Cement Manufacturers, JHX, CX, JHX, EXP, CRH, led Global Growth, DNL, lower.

Investors derisked out of debt trade investments in the Yield Bearing Sectors such as Emerging Market Dividend, EDIV, Leveraged Buyouts, PSP, Global Utilities, DBU, Water Infrastructure, FIW. International Dividend Dogs, IDOG, Shipping, SEA, International Telecom, IST, Dividends Excluding Financials, DTN, and Global Real Estate, DRW.

Currency carry trades unwound world wide as the Yen, FXY, traded strongly higher. Commodity Currencies, CCX, and Emerging Market Currencies, CEW, traded strongly lower.

Investors deleveraged out of currency carry trade investment in Portugal, PGAL, Italy, EWI, Greece, GREK, Spain, EWP, Netherlands, EWN, Germany, EWG, and Eurozone Small Cap Dividends, DFE, which led the Eurozone, EZU, lower. The US Small Caps, IWM, IWC, traded lower. Russia, RSX, ERUS, New Zealand, ENZL, Developing Europe, ESR,  GUR, Taiwan, EWT, Sweden, EWD, Brazil, EWZ, EWZS, BRXX, BRAF, India, INP, SCIN, INXX, EPI, China, YAO, CHIQ, ECNS, CHXX, CHXF, CHIX, TAO, HNP, South Africa, EZA,  Norway, NORW, Turkey, TUR, Thailand, THD, Chile, ECH, Indonesia, IDX, IDXJ, Emerging Market Infrastructure, EMIF, led Nation Investment, EFA, and the Emerging Markets, EEM, tower, as Market Watch reports European Losses Deepen As Ukraine Crisis Intensifies.

European Financials, EUFN, Far East Financials, FEFN, and Regional Banks, KRE, traded lower, turning Global Financials, IXG, lower.

The Inverse Market ETFs, such as EUM, RWM, MYY, PSQ, EFZ, traded higher; these could be used as the basis of collateral in a short selling investing strategy.

Reuters reports Euro Zone Industry Stumbles In May, Recovery Still Frail.

Open Europe posts Franco German Stand Off Over Eurozone Fiscal Rules Reaches Biblical Proportions.

Trading Floor posts Retreating Renzi Is Proving To Be No Italian Saviour.  Italian Prime Minister Matteo Renzi retreating from reformist agenda. The Italian debt-to-GDP ratio at 133% with prospects of reduction to 60% minimal. Renzi on collision course with fellow Italian Mario Draghi at ECB over debt.

Bloomberg reports Bloomberg Ukraine Says Malaysian Airliner Shot Down Near Russian Border. A Malaysian Airlines jet was shot down over eastern Ukraine killing all 295 people on board, with the government in Kiev blaming pro-Russian rebels.  Yet, Mike Mish Shedlock post Russian news website claimsUkrainian Army Buk Missile Likely Downed Malaysian Plane.

Rosneft Sanctions to Boost Reliance on China Loans. OAO Rosneft (ROSN), the world’s biggest publicly traded oil producer by volume, will rely on deals with China to withstand the latest U.S. sanctions against Russia.

China Rate Swap Jumps as Bond Sales Pulled Amid Default Risk. China’s interest-rate swaps jumped the most in a year and at least four companies scrapped debt sales amid concern the nation faces what would be the second default in its $4.4 trillion onshore bond market. The cost of one-year swaps that exchange fixed payments for the floating seven-day repurchase rate rose 17 basis points, or 0.17 percentage point, to 4.10 percent in Shanghai, according to data compiled by Bloomberg. That’s the biggest increase since July 22, 2013, and adds to a 20 basis-point gain in the last three days. Junk bond yields jumped the most in three months

Gold, GLD, Silver, SLV, traded higher, recovering some of Monday’s losses, taking the Gold Miners, GDX, GDXJ, and the Silver Miners, SIL, SILJ, higher.

Oil, USO, traded higher, taking Energy Partnerships, AMJ, EMLP, MLPJ, higher, while Natural Gas, UNG, traded lower.

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.49% and the 10 30 US Sovereign Debt Yield Curve flattened, as is seen in the Flattner ETF, FLAT, trading higher, and the Steepner ETF, STPP, trading lower, with the result that  the 30 Year Us Government Bonds EDV, The 10 Year US Notes, TLT, Long Duration Corporate Bonds, LWC, Build America Bonds, BABS, Insured Municipal Bonds, PZA, Corporate Bonds, LQD, Mortgage Backed Bonds, MBB, and Municipal Bonds, led Aggregate Credit, AGG, higher to recover to its early June 2014, high.  But Junk Bonds, JNK, Emerging Market Bonds, EMB, Emerging Market Currency Debt, EMCD, and High Yield Municipal Bonds, HYD, traded lower.

On Friday, July 18, 2014, Brazil, EWZ, EWZS, Turkey, TUR, Argentina, ARGT, Indonesia, IDX,  IDXJ, Vietnam, VNM, South Africa, EZA, Egypt, EGPT, Philippines, EPHE, India, INP, SCI, China, ECNS, CHXF,  Turkey, TUR, Thailand, THD, Peru, EPU, and Developing Africa, GAF, traded higher, drawing Emerging Market Dividends, EDIV, Emerging Market Infrastructure, EMIF, Emerging Markets, EEM, Emerging Market Small Caps, EWX, in recovery from losses earlier this week.

Sweden, EWD, South Africa, EZA, Taiwan, EWT, Singapore, EWS, South Korea, EWY, Israel, EIS, Australia, EWA, KROO, Mexico, EWW, Singapore, EWS, Australia, EWA, KROO, traded higher, helping Nation Investment, EFA, in recovery from losses earlier this week.

Sectors, Manufactured Housing, CVCO, Biotechnology, IBB, Solar Energy, TAN, Nasdaq Internet, PNQI, Social Media, SOCL, Internet Retail, FDN, Pharmaceuticals, PJP, IPOs, FPX, Small Cap Pure Growth, RZG, Retail, XRT, Small Cap Consumer Discretionary, PSCD, Small Cap Consumer Staples, PSCC, Small Cap Pure Value, RZG, China Technology, CQQQ, Aerospace, PPA, Semiconductors, SOXX, Transportation, XTN, Small Cap Industrials, PSCI, traded higher, helping World Stocks, ACWI, recover from losses earlier this week.

The Precious Metal Miners, GDX, GDXJ, SIL, SILJ, traded lower, on a lower price of Gold, GLD, and a lower price of Silver, SLV.  The ratio of Gold Mining Stocks, GDX, relative to Gold, GLD, that is GDX:GLD, has risen strongly to resistance and communicates that these will be unable to leverage higher over the price of the precious metals. To preserve one’s wealth, one should start to dollar cost average an investment in gold bullion, store it safely, and insure it with an insurance policy, as well as invest in OUNZ, the deliverable gold ETF, and open an Internet Bullion Trading Account with GoldMoney and Bullion Vault.

Asset Managers, STT, BK, PFG, AMG, BLK, AMG, BEN, Canadian Banks, BMO, BNS, RY, US Bank C, Argentina Banks, BFR, GGAL, BMA, Brazil Financials, BRAF, BSBR, BBDO, BBD, ITUB, India Earnings, EPI, HDB, IBN, and Emerging Market Financials, EMFN, CIB, European Financials, EUFN, Stock Brokers, IAI, Investment Bankers, KCE, JPM, GS, MS, Life Insurer, PUK, Regional Bankers, KRE, and Stockbrokers, IAI, traded higher, helping Global Financials, IXG, recover from losses earlier this week.

The market manifested a short squeeze, with Health Care Providers, IHF, Global Industrial Miners, PICK, Steel, SLX, Aerospace, PPA, Media, PBS, Design Build, FLM, Automobiles, CARZ, Large Cap Nasdaq, QQQ, Credit Services, URI, HEES, V, MA, AXP, DFS, FCFS, Regional Airlines, Foreign Airlines, Major Airlines, Aluminum Producers, and Automobile Dealerships, trading higher on Friday July 18, 2014.

The trade lower in Regional Banks, KRE, and European Financials, EUFN, the week ending July 18, 2014, evidences that these are failed financial institutions, are incapable of transmission of the world central banks monetary policies, and thus are unable to continue to generate liberalism’s economic growth, DNL; such is witnessed by the trade lower in the US Small Caps, IWM, and the Eurozone Stocks, EZU, and the Eurozone Nations, such as Portugal, PGAL, Italy, EWI, Greece, GREK, and Spain, EWP.

In the Yield Bearing Sectors, Water Resources, FIW, Global Utilities, DBU, Global Infrastructure, IGF, Australia Dividends, AUSE, Leveraged Buyouts, PSP, Shipping, SEA, and International Dividend Dogs, IDOG, traded higher, recovering from losses earlier in the week. Rental Management Company, BX, Industrial Office REITS, FNIO, Residential REITS, REZ, Hotel REITS, Retail REITS, Real Estate, IYR, and Global Real Estate, DRW, traded to new rally highs.

The trade lower in the Defensive Sectors, DEF, such as Utilities, XLU, Global Utilities, DBU, International Energy Producers, IPW, Energy Service, OIH, Global Agriculture, PAGG, Consumer Staples, KXI, and Insurance, KIE, evidences the beginning of the extinction of the investor, coming on the failure of credit on July 2, 2014, and the death of currencies, on July 15, 2014.

Aggregate Credit, AGG, settled slightly lower on the day, but higher on the week, and now resides at its June 2014, market rally high. The Benchmark Interest Rate, $TNX, closed the week at 2.49%, with the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, totally flattened, as is seen in the Flattner ETF, FLAT, trading strongly higher, and the Steepner ETF, STPP, trading strongly lower.

The case for Interest rates going higher has come of age as David Kotox posts Financial Sense posts Tapering Is Now Tightening.

The trade lower in Junk Bonds, JNK, the week ending July 18, 2014, evidences the beginning of the end of the pursuit of yield investing that came with the world central bank’s monetary policies of Global ZIRP.

The trade lower in the Swiss Franc, FXF, the Commodity Currencies, CCX, the Euro, FXE, the Canadian Dollar, FXC, and the Emerging Currencies, CEW, together with the trade higher in the US Dollar, $USD, UUP, to strong resistance, the week ending July 18, 2014, communicates the termination of the Milton Friedman Free to Choose floating currency exchange rate paradigm where the  US Dollar served as the US Reserve Currency.

The  Creature from Jekyll Island died the week ending July 18, 2014; out of the soon coming failure of the Eurozone Nations, and the European Financials, the Mario Draghi and Jean Claude Juncker Beast Regime will rise to establish regional economic governance and totalitarian collectivism, for regional security, stability and sustainability.

2) … Conclusion.  The debt based money system has produced peak coinage …  Debasement of the coinage of the Banker Regime commenced July 15, 2014 … The world is passing from the fiat of democratic nation state governance into the mandate of regional governance.   

The fiat money system was fathered by Milton Friedman in 1971 who proposed the economic paradigm where the investor be free to choose investment opportunities in democratic nation states where floating currency exchange rates would develop economic trade, global growth and investment gain, where the US Dollar would serve as the world’s reserve currency.

Global finance was underwritten by a Flood of Dollars. Ambrose Evans Pritchard writes Fed Kicks Off Global Dollar Squeeze As Janet Yellen Turns Hawkish. A vast wash of dollars flooded the global financial system when the Fed cut rates near zero and then bought $3.5 trillion of bonds. This may now go into reverse.

We still live in a dollarized world. Charles de Gaulle railed against the “exorbitant privilege” of US dollar hegemony in the 1960s, but remarkably little has changed since. The BIS says global cross-border lending by banks alone has risen from $4 trillion to $10 trillion over the past decade, and $7 trillion of this is denominated in dollars. This does not include the dollar bond markets.

What Fed now does arguably has more amplified effects than at any time since the end of gold and the collapse of the fixed-exchange Bretton Woods regime in 1971. This is the paradox of 21st century globalisation.

Much of the dollar business is conducted through European and UK banks, leaving them acutely vulnerable to a dollar squeeze. Such episodes can be ferocious. It was a dollar liquidity shock that turned the Lehman affair into a global banking crisis, instantly engulfing Europe in October 2008.

Emerging markets went into a tailspin last year at the first suggestion of Fed bond tapering. There was a sudden stop in capital flows. The “Fragile Five” (India, Indonesia, South Africa, Brazil and Turkey) were punished for current account deficits. The Fed backed down. The storm passed. There was a second “taper tantrum” earlier this year as the Fed finally began to pare back its $85bn monthly purchases under QE3.

However, that is not the end of story. A study by the International Monetary Fund concluded that the Fed’s QE had pushed $470bn into emerging markets that would not otherwise have gone there. IMF officials say nobody knows how much of this hot money will come out again, or how fast.

The BIS in turn said in its annual report two weeks ago that private companies had borrowed $2 trillion in foreign currencies since 2008 in emerging economies, lately at a real rate of just 1pc. Loans to Chinese companies have tripled to $900bn – some say $1.2 trillion – mostly through Hong Kong and often disguised by opaque swap contracts in what amounts a dangerous carry trade. Countries do not borrow in dollars any longer (mostly) but their banks and industries certainly do.

The report said monetary largesse in the West has destabilised emerging economies in all kinds of ways. One of the worst – and least understood – ways is that they were forced to choose between internal credit bubbles or surging currencies. Most opted for (credit)  bubbles as the lesser evil, holding their domestic interest rates at 300 basis points below the safe “Taylor Rule” level.

This has driven their total debt levels to a record 175 pc of GDP. It may be even worse. China has thrown all caution to the wind, pushing credit from $9 trillion to $25 trillion since Lehman. Its debt levels have reached 220 pc by some estimates. Officials at both the IMF and the BIS privately doubt whether China can extricate itself smoothly from this.

Not all emerging markets are in the same boat. It is meaningless to compare Poland or the Czech Republic with Nicaragua. Yet there is no denying that a long string of countries are in structural crisis, ensnared by the middle-income trap. They have exhausted the low-hanging fruit of catch-up growth. They failed to carry market reforms to varying degrees. Productivity has wilted.

Brazil, South Africa and Russia have all hit the buffers and all have a foot in recession right now, casualties of commodity addiction or the Dutch Disease. The outlook for Russia is utterly bleak. It has blundered into a conflict with the West that will smother investment for years, and it may have to draw down its reserves to cover $700bn of foreign currency debt unless it can tap the capital markets again.

Now these countries – and many others with parallel problems, like autocratic Turkey under Tayyip Recep Erdogan – must brace for a secular rise in global borrowing costs, and as the BIS warns, the world is today more sensitive to interest rates than ever before. As yields on two-year US Treasuries ratchet higher, the US currency will inevitably ratchet with it. “I am convinced that we are close to a major cyclical recovery for the dollar,” said Nomura’s Mr Nordvig.

The dollar did not rally in the tightening cycle of 2004 to 2007 but that was an exception, the result of the EMU bubble, as well as trillions of reserve accumulation by China and the commodity bloc, amid a feverish rotation into euro bonds. That chapter is closed.

This time may look more like the traumatic episodes of the Volcker Fed, or the mid-1990s, both occasions when the world woke up to find the US had not spiralled into decline after all, and latterly was the only superpower left.

The BRICS, the mini-BRICS and much of global finance have taken out a colossal short position on the US dollar. Mrs Yellen has just issued the first margin call.

The global system of moral hazard came to an end on July 15, 2014, when in response to Janet Yellen’s Semiannual Monetary Policy Report To Congress, Major World Currencies, DBV, and Emerging Market Currencies, CEW, traded lower with Aggregate Credit, AGG, as the bond vigilantes sustained the Interest Rate on The US Ten Year Note, ^TNX, calling it higher from 2.49% to 2.54%, terminating the investor and his life pursuit of investment gain. Fiat money died with the death of currencies and the failure of credit on July 15, 2014.

Sovereign currency debasement is underway. The July 15, 2014, Fed Chairman’s served as an inflection point in mankind’s economic history, as investors no longer trust in the monetary policies of the US Fed, and as a result debasement of fiat currencies and fiat investments is underway.

Also fiat wealth debasement is underway on the failure of credit, a case in point is Portugal Telecom, PTI, and the Nation of Portugal, PGAL. Matt Clinch of CNBC reports Portugal’s Bank Woes Just Got More Complicated. In video and print article Otto Dichtl, managing director at Stifel Nicolaus, relates that Portugal Telecom shares slip on credit concerns of merger. “The saga surrounding troubled Portuguese lenderBanco Espirito Santo (BES) took another twist on Wednesday, with the fortunes of a telecoms merger shedding more light on the strength of the country’s banking sector.” Portugal Telecom (PTC-PT) rushed Wednesday to salvage a possible tie-up with Oi, the Brazilian telecoms company, after a possible default by Rioforte, an investment unit of the Espirito Santo Group, called the deal into question. Yields on Portuguese debt rose and investors fled to lower-risk assets. BES’ parent company, Espirito Santo International (ESI), was at the center of concerns after an audit by the country’s central bank in May showed “irregularities” in its accounts. The flames were fanned once again last week when debt repayments to clients on commercial paper issued by ESI were delayed. Shares in another part of the conglomerate, Espirito Santo Financial Group (ESFG), were temporarily suspended on the news, after it cited “material.

The failure of credit, has commenced the explosion of credit bombs, as is seen in the case of Portugal Telecom, PTI, and Nation Investment in Portugal, PGA; said another way debt deflation in unexpected places; the result of which can only result in ever widening waves of destructionism, manifesting as economic deflation in terms of corporations stumbling in providing goods and services, and in laying off employees as corporate balance sheets implode.

A suggested reading on destructionism is the John Rubino post They’re Lying To Us, Part 4: Fake Pensions.

Out of the failure of credit, and the collapse of currencies, liberalism’s dynamos of creditism, corporatism, and globalism are winding down. And authoritarianism singular dynamo of regionalism is winding up.

Out of soon coming global credit bust and financial system breakdown known as Financial Armageddon, regional leaders will meet in summits to renounce national sovereignty and announce shared sovereignty, that is regional pooled sovereignty, where regional framework agreements will provide regional fascism for regional security, stability, and sustainability.

The age of global finance is history on the death of currencies and the failure of credit; the new age is one of regional fascism. The June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, together with theJune 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, addresses secular stagnation, defined as low growth, low employment, and low inflation; and fathers the diktat money system, where in the new economic paradigm the debt serf be compelled to participate in regional fascist and totalitarian collectivism endeavors in a life of debt servitude. 24th Gold reports  EU Bail-ins Coming As Germany OKs Depositor Bail-in.

 

Yann Algan Professor of Economics at Paris School of Economics and University Paris Est, posts in VOX Trust And The Welfare State: The Twin Peaked Curve.

I comment that Sweden and Denmark are characterized by Trust. The key is that both have Sovereign Currencies, and do not use the Euro, a common currency. These nations had sense not to be involved in the common currency debacle.

Trust in Sweden exists because it is cultured to develop there, and because their currency the Swedish Krona, up until March 2013, floated on top of the Euro, in fact it went sky high over the Euro, and because they use a tremendous amount of credit. Trust developed in Sweden because of currency float and credit bloat.

Trust in Denmark exists because it is Europe’s port and because Denmark has benefited from Nation Investment and Carry Trade Investment, as is seen in the relationship of Denmark, EDEN, relative to Europe 50, EFU, that is EDEN:EFU.  If there is one term that describes Denmark it is “global economic powerhouse”, similar to Germany and South Korea. Trust developed in Denmark because of personal industry and unified entrepreneurship.

Wikipedia relates Denmark is a society based onconsensus (dialogue and compromise) with the Danish Confederation of Trade Unions and the Confederation of Danish Employers in 1899 in September Forget (The September Settlement) recognising each other’s right to organise, thus, negotiate.The employer’s right to hire and fire their employees whenever they find it necessary is recognised. There is no officialminimum wage (Danish: minimumsløn) set by the government; the minimum of wages (Danish: mindsteløn) is determined by negotiations between the organisations of employers and employees. Denmark produces oil, natural gas, wind- and bio-energy. Its principal exports are machinery, instruments and food products.

A new trust will developing, that is the trust in the word, will and way of regional leaders, as they provide policies of regional economic governance and schemes of debt servitude in totalitarian collectivism, to establish regional security, stability and sustainability.

The US Dollar, $USD, UUP, is headed higher; but will not inflate dramatically higher like Ambrose Pritchard believes. In fact it may be that Gold will be trading lower in value, as it does, one should be dollar cost averaging into the physical possession of gold bullion, as it is the only safe asset and will eventually be trading higher as all fiat assets trade lower in value.  Gold is in the middle of an Elliott Wave 3 Up, these are the most dynamic and sweeping of all economic waves, as they move higher to their Elliott Wave 5 High.

The trade lower in the Defensive Sectors, DEF, such as Utilities, XLU, Global Utilities, DBU, International Energy Producers, IPW, Energy Service, OIH, Global Agriculture, PAGG, Consumer Staples, KXI, and Insurance, KIE, evidences the beginning of the extinction of the investor, coming on the failure of credit on July 2, 2014, (seen in the strong trade lower in Junk Bonds, JNK), and the death of currencies, seen in the Emerging Market Currencies, CEW, the Euro, FXE, and the Swiss Franc, FXF, trading lower the week ending July 15, 2014.

Look for a grade higher in the Direxion 300% Bear Market ETFs, and the Proshares 200% Bear Market ETFs, which will confirm that the bull stock market has turned to a bear market.

Another technical factor indicating that the stock market has turned from a bull market to a bear market is that while US Stocks, VTI, has sold off only 0.75%, from its rally high, a strong sell off has commenced in the High Beta Sectors from their recent highs, and includes Solar Energy, TAN, Biotechnology, IBB, Social Media, SOCL, Small Cap Consumer Discretionary, PSCD, Small Cap Consumer Staples, PSCC, Small Cap Puree Value, RZV, and Small Cap Pure Growth, RZG.

One of the principles in short selling is to sell into strength. Inasmuch as the market manifested a short squeeze on Friday, July 15, 2014, it would have been wise to go short those sectors being squeezed; which included Emerging Market Small Caps, EWX, Large Cap Nasdaq, QQQ, Manufactured Housing, CVCO, Credit Services, Retailers, Health Care Providers, Global Industrial Miners, Energy Service Companies, Credit Services, Major Airlines, Regional Airlines, Foreign Airlines, Railroads, Aluminum Producers, Automobile Dealerships, and Highly Leveraged Financial Institutions, such as the following BOFI, IBN, SAN, BSBR, BAP, BCA, SHG, WBK, GGAL, BMA, IX, CIB, RY, BNS, PUK, GNW, TMK, BANF, TFSL, WFC, PNC, LM, BR, STT, BK, CHIX, BCH, MTU, MCO, SMFG, BFR, BBVA, BLX, HDB, BMO, NMR, BBD, ITUB, TD, CM, STI, FITB, RF, HBAN, USB, KB, C, AMG, BLK, MS

Outside of the US Stocks there exists a number of short selling investment opportunities which exist in  debt trade investments and currency carry trade investments, as well as in Developed Nation Investment, such as New Zealand, ENZL, Australia, EWA, and Emerging Market Small Caps, EWX, Emerging Market Small Cap Dividends, EDIV, and Nation Investment in the Emerging Market, specifically, Philippines, EPHE, Indonesia, IDX, IDXJ, Vietnam, VNM, Thailand, THD, Turkey, TUR, Columbia, GXG, Emerging Africa, GAF, Argentina, ARGT, Brazil, EWZ, and China Technology, CQQQ.

Short selling opportunities exist across industry groups these include, IEP, NJ, ETN, FTK, GPK, BLL, AA, AAPL, ADBE, MSFT, STLD, LYB, PKOH, IFF, F, SCOR, HBI, REX, TEL, T, DIS, ARG, GT, INTC, HON, LRCX, GPRE, ABT, TBI, CSL, LXK, GLW, CSCO, TER, ADI,  CMG, NFLX, SWKS, SHW, SCSS, EMC, WDC, SIG, and on, and on, and on

Another principle of short selling is to sell at a market top; it would have been wise to go short these revenue sectors as they rose to their market top; which included Rental Management Company, BX, Industrial Office REITS, Premium REITS, Residential REITS, REZ, Hotel REITS, and Retail REITS

Fiat Wealth, That Is The Coinage Of The Banker Regime, Trades Lower In Value, Pivoting The World Into Kondratieff Winter

July 12, 2014

This post is available in Google Documents format here

Financial Marketplace report for the week ending July 11, 2014.

In this week’s financial marketplace trading.  

1) …. The see saw destruction of Fiat Wealth got strongly underway as European Stocks led stocks worldwide lower, as investors assessed equity valuations following the biggest rally since March, and as fears of Greek insolvency arose, and a Portuguese bank failed.

 

On Monday July 7, 2014, Bloomberg reports European Stocks Drop After Biggest Weekly Rally Since March. The Stoxx Europe 600 Index dropped 0.9 percent with all 19 industry groups retreating. The equity gauge rose 1.8 percent last week as U.S. jobs data exceeded economists’ forecasts and commodity producers rallied. The index traded at 15.6 times the estimated earnings of its members on July 4, near its highest valuation since 2009.

 

“What we need to see now is earnings growth,” said Michael Kapler, a portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “Companies have to really deliver this time because equities are not so cheap any more. We might have some sort of correction in Europe if this earnings season disappoints, and there will be bigger questions concerning valuations

 

Alcoa, AA, the largest U.S. aluminum producer, unofficially kicks off the U.S. quarterly earnings season when it releases second-quarter financial results after the close of trading tomorrow. Profit for members of the S&P 500 probably climbed 5 percent in the period, while sales rose 3 percent, according to analyst estimates compiled by Bloomberg.

 

In Germany, data from the Economy Ministry in Berlin showed industrial production slipped 1.8 percent in May.

 

Just after last Friday’s July 3, 2014, Bespoke Investment Group report Big Tick Higher in Bullish Sentiment, on Monday, July 7, 2014, risk-on investing turned to risk-off investing, as investors deleveraged out of Euro Yen Carry Trade, that is out of EUR/JPY carry trades, such as RYAAY, AER, TI, SNY, VE, ING, FLTX, ICLR, ASMI, ERIC, MNK, LUX, ORAN, NVO, LYB, STM, EEFT, which drove Eurozone Stocks, EZU, FEZ, and the Eurozone Nations, EWO, EWI, EWP, GREK, EWQ, PGAL, EWQ, EWG, EWN, EIRL, and EFNL, lower, which led Nation Investment,  EFA, lower.

 

The Global Growth Nations, Germany, EWG, Denmark, EDEN, and South Korea, EWY, traded lower. The credit sensitive, US Small Caps, IWM, IWC, traded lower; their trade lower documents the failure of credit.

 

Israel, EIS, traded lower as Zero Hedge reports More Powderkegs: Israel Prepares For Gaza Escalation, Boosts Troops On Gaza Border.

 

Emerging Europe, ESR, traded lower as Zero Hedge reports Russia Rushes To Seal Ukraine-Bypassing Gas Pipeline: Lavrov Pays Bulgaria A Visit. And as AP reports Bulgaria, Russia Push For South Stream Pipeline Blocked By EU

Markus Salzmann posts in WSWS Bulgaria’s Financial Instability Fueled by EU-Russia Conflict. In the May 25 European elections support for the BSP collapsed. The opposition conservatives under former Prime Minister Boyko Borisov, who retains much closer relations with the EU and the US, won a clear victory. The DPS subsequently withdrew its support for the government. As a result, early elections will take place on October 5. The current government is to be replaced by a cabinet of technocrats in August.

The principal point of immediate contention in the conflicts and intrigues in Bulgaria is the building of the South Stream pipeline, intended to transport Russian gas to Bulgaria through the Black Sea, bypassing Ukraine, before going on to Austria and Italy. The building of this pipeline, funded mainly by Russian concern Gazprom, would strengthen Russia’s position against Ukraine significantly. It would be able to transport Russian gas to Europe without Moscow being dependent on transit pipelines in Ukraine.

With the outbreak of the Ukraine conflict, the EU and US stepped up pressure on Sofia to put the building of the pipeline on hold. At the beginning of June, a group of US senators led by John McCain visited the Bulgarian prime minister. Two days after the Americans’ visit, Oresharski announced the halting of the building project.

The US ambassador in Sofia, Marcie Ries, threatened Bulgarian firms involved in the building project with sanctions. She justified this by arguing that the Russian firm Stroytransgaz was involved in the consortium building the €3.5 billion section of Bulgarian pipeline. The US has imposed sanctions on the firm’s financier, the oligarch and ally of Russian President Vladimir Putin, Gennady Timchenko.

The temporary halting of South Stream not only met with opposition in Moscow, but also in Rome and Vienna. The Austrian government demonstratively welcomed Putin to Vienna on June 24, where the chiefs of Gazprom and Austrian energy firm OMV signed a contract for the building of South Stream.

In Bulgaria, the BSP supports the project, while Borisov has announced that in the event of an election victory, he would only continue the construction of the pipeline if the contracts conform to EU regulations. He intends to exclude all the companies on US sanctions lists, i.e., firms close to the Kremlin.

Along with the conflicts over South Stream, a conflict is raging behind the scenes over the billions that are to be invested in its construction. The EU has claimed that hundreds of millions have flowed into the pockets of Russian and Bulgarian oligarchs.

There are suspicions that Bulgarian tycoon Delyan Peevski could be behind the banking crisis. The 33-year-old controls a massive media and business empire and is one of the most powerful oligarchs in the country. He sits in parliament for the DPS. Last year, the government tried to appoint Peevski to head the intelligence services, a move that provoked mass protests.

Several months ago, Peevski fell out with the head and main shareholder of KTB, Tzvetan Vassilev, with whom he had worked together for years. KTB was one of the banks that was on the verge of bankruptcy in late June. It has close ties to the BSP and administers the funds of many state concerns.

A war of words has erupted between Peevski and Vassilev. Both claimed they have received death threats.

Regardless of who was behind the crisis, the near collapse of two major banks due to rumours shows the extreme instability of the country. The head of the German Konrad Adenauer Foundation in Sofia declared that the conflicts were endangering the financial stability of the country. Other analysts fear Bulgaria could be compelled to give up the pegging of its national currency to the euro.

The recent events are reminiscent of 1997, when the Bulgarian financial system collapsed after hyperinflation. Since the 1990s, the Bulgarian lev has been linked to the German mark and subsequently the euro. While the population lost everything at the time and hunger protests broke out in Sofia, a number of oligarchs were able to write off their debts due to the devaluation.

 

In an epic socio-economic change inflationism turned tod destructionism, as risk appetite turned risk aversion, as investors Volatility, ^VIX, trade by XVZ, derisked out of the debt trade in The National Bank of Greece, NBG, Ireland’s Bank, IRE, and Banco Santander, SAN, which led European Financials, EUFN, lower; Argentina’s Bank, BBVA, and India’s Bank, IBN, HDB, led Emerging Market Financials, EMFM, lower; Regional Banks, KRE, Nasdaq Banks, QABA, and Stockbrokers, IAI, led Financial Services, lower; all of which which led Global Financials, IXG, lower; this as Zero Hedge reports European Banks Are In Trouble.

A trade lower in the Risk Assets, that is the High Beta ETFs, TAN, IBB, FEZ, TAN, IBB, PJP,SOCL, RZV, RZG, FLM, FDN, PNQI, XTN, FXR, CQQQ, PBS,  IGV XRT, FPX, led World Stocks, ACWX, lower.

 

Major Airlines and Regional Airlines, led Transports, XTN, lower.

 

Global Producers, FXR, such as GPK, GRA, DOW, SEE, and LYB, traded lower.

 

Investors sold out of the riskiest of Risk Assets.  Rental and Leasing Companies, such as HEES, and URI, led Small Cap Pure Value Stocks, RZV, lower.  And Building Materials, led Small Cap Pure Growth Stocks, RZG, lower.

 

Global Infrastructure, UTF, led Closed End Funds, GCE, lower.

 

Aluminum Companies, such as AA, and Metal Manufacturing Companies, XME, traded lower.

 

Fracking Companies, IEZ, and Energy Production Companies, XOP, traded lower.

 

In the Defensive Sectors, Global Energy, IPW, traded lower, as Bloomberg reports Defense Trade Coming Undone in $2 Trillion S&P 500 Rally

 

The market vane ETFs, Extended Market, VTF,  and Convertible Securities, CWB, traded lower.

 

In the Yield Bearing Sectors, AMJ, EMLP, MLPJ, FIW, SEA, IDOG, IGF, IST, PSP, traded lower.

 

Dividends Excluding Financials,  DTN, led by Dow Chemical, DOW, traded lower.

 

Natural Gas, UNG, UNL, Cotton, BAL, Nickel, NINI, Sugar, SGG, Wheat, WEAT, and Corn, CORN, led Commodiites, DBC, DJP, lower; it appears that Agricultural Commodities, RJA, have hit support, after having gone through a strong sell off, now Base Metals, DBB, will be trading lower on diminished outlook for global growth and trade.

 

Ed Yardeni posts The Four Phases Of The Bull Market.

 

FT reports Short selling drops to lowest level since Lehman.  In the Inverse Market ETFs, MLPS, RWM, YXI, MYY, DOG,  EFZ, PSQ, SEF, EUM, XVZ, traded higher; these could under close supervision serve as the basis of collateral for a short selling strategy. as the S&P 500, $SPX, SPY, has traded lower from its Elliott Wave 5 High.

 

A stock market top is in as the Proshares 200% Bear Market ETFs, SQQQ, SSG, SKF, EPV, SCC, SZK, DUG, EFU, traded higher, and The Direxion 300%  Bear Market ETFs, ERY, FAZ, SOXS, GASX, DPK, YANG, EURZ, traded higher.  Their turn higher evidences that the world stock market has turned from a bull market to a bear market.

 

The world is pivoting through peak credit. Popular Notes and Bonds, SHY, EU, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, and MBB, bounced higher from last week’s sell off, as the Benchmark Interest Rate, ^TNX, traded slightly lower from its recent high of 2.65%, to 2.62%; its likely objective is 2.53%

 

With the failure of credit on July 1, 2014, seen in Aggregate Credit, AGG, trading lower in value as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the world is moving through a historic economic inflection point.

 

The world is pivoting through peak wealth. Fiat Wealth, defined as World Stocks, VT, Global Financial Institutions, IXG, Nation Investment, EFA, and Yield Bearing Investments, DTN, together with Aggregate Credit, AGG, is is literally being sawn asunder by the failure of trust in the world central banks’ monetary authority to continue to provide investment gain, and global economic growth, as is seen in the Bloomberg report European Stocks Drop With Treasuries as Commodities Fall, and as is seen in the Zero Hedge report Peak Abenomics.

 

The recovery from the Great Recession of 2008-09 has been the weakest ever, the reason being that the nature of money changed with the provision of the Greenspan Put, which became the Ben Bernanke QE1.

 

From 2008 onward, the Fed’s policy no longer came from the Humphrey Hawkins dual mandate of employment and growth, and thus have not provided economic recovery.  The Global ZIRP monetary policies of the world central banks were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being the creation of awesome fiat wealth inflation, rather than much of any employment gains.

 

The California Beach Pundit posts “The world has been stockpiling liquidity instead of spending it. The Fed’s expansion of the money supply has only accommodated an increased demand for that money; that’s why it hasn’t been inflationary. But this should soon start to reverse”. And he adds, “Since late 2008, the Fed has pumped up the supply of bank reserves by over $2.6 trillion through its purchases of Treasuries and MBS. About 94% of those additional reserves currently are held by banks in the form of excess reserves”

 

The US Fed’s massive purchases of bonds of all types has served to underwrite the US Dollar Hegemonic Empire, and cause a fantastic Global Credit Bubble, which finally burst on July 1, 2014, as the Bond Vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%.

 

The June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, together with the June 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, addresses secular stagnation, defined as low growth, low employment, and low inflation; and introduce the new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance and clay in totalitarian collectivism, as is foretold in Bible Prophecy of Daniel 2:25-45.

 

These Mandates and the Call serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out ofdebt trade investments and deleverage out ofcurrency carry trade investments.

 

The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014. On July 10, 2014, Global Growth, DNL, traded strongly lower, communicating that investors no longer trust the monetary policies of the world central banks to stimulate investment gains, and global economic growth.

 

Formerly, credit in the Milton Friedman Free To Choose paradigm, underwrote credit, and investment was the way of life.  Now diktat in the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude is the way of life.

 

Credit Writedowns asks The Euro Crisis: Muddling Through, or The Way To a More Perfect Euro Union?

 

The Eurozone sovereigns, that is theEurozone Nation States, with their policies of investment choice and credit liquidity, no longer support investment gain. Because they are insolvent sovereigns and their banks are insolvent financial institutions, the seigniorage, that is the moneyness, of the entire Banker Regime, is beginning to fail.

 

News reports communicate that the Eurozone periphery nations, such as Portugal, Italy, Greece and Spain, are loaded with all types of debt, not just Treasury Debt that cannot be repaid; this includes The WSJ reportBad Property Loans Stick to Italian Banks. A Fraction of bad loans has been bought by investors.  Other news reports consistently communicate that prosperity has been relegated to the dustbin of history by economic deflation; this includes the CNBC reportEurozone Retail Sales Stall As Households Feel Pain.

 

Failed sovereigns and failed seigniorage cannot, and does not provide ongoing economic experience of prosperity; such only provide economic deflation and economic chaos.

 

As foretold in Bible Prophecy of Revelation 13:3-4, that out of the tossing and turning Club Med economic turmoil, new sovereignty and seigniorage will emerge, as regional leaders meet in summits, to renounce national sovereignty and announce shared sovereignty, more specifically regional pooled sovereignty, which will be come though regional framework agreements, whose purpose is to establish regional security stability and sustainability. Do such framework agreements already exist? Open Europe asks Has The ECB Backed German Reform Contracts For The Eurozone?

Bruno Maçães, the Portuguese Minister for Europe, asks in VOX, An Ever Closer Union? He stresses the importance of policy coordination in achieving better integration. One way to do so is via a fiscal union, but this creates unity at the expense of diversity. A second way involves formal contracts and partnerships. But to make this approach less rigid, the political dialogue does not need to be formalised in actual contracts.

 

An ism is a process which establishes life. Economics is based upon a number of isms; the economic foundation of liberalism is giving way to authoritarianism.

 

The very nature of economics changed with the trade lower in Credit Investments. that is Aggregate Credit, AGG, on July 1, 2014.  It was an extinction event, that terminated the debt investor; and the trade lower in Equity Investments, that is World Stocks, VT, Nation Investment, EFA, Global Financial Institutions, IXG, and Yield Bearing Investments, DTN, on July 7, 2014, terminated the equity investor.

 

With investors going extinct, on the failure of credit, and the soon coming death of currencies, liberalism’s dynamos are powering down, and authoritarianism’s dynamos are powering up.

 

The three dynamos of creditism, globalism and corporatism developed the Banker Regime Seigniorage of fiat money that coined fantastic fiat wealth in Equity Investments, VT, Yield Bearing Investments, DTN, Nation Investment, EFA, Banking Investments, IXG, and most importantly Credit Investments.

 

Debasement of the coinage of fiat wealth commenced on Monday, July 7, 2014, on fears that Greece, GREK, is an insolvent sovereign, and its bank the National Bank of Greece, NBG, is an insolvent bank,  Debasement of the coinage of fiat money, specifically debt deflation in Sovereign Currencies, will occur soon, the reason it has happened yet is the strong demand for currencies in Asia, as is seen in the WSJ report Currency Reserves Swell in Asia.  Eventually it will be as in Venezuela, where William Neuman of the NYT posts Profits Vanish in Venezuela After Currency Devaluation.

 

 

Out of failure of trust in the Banker Regime’s monetary policies of investment choice and schemes of credit liquidity, the Beast Regime of Revelation 13:3-4, having healed the apparent deadly wound of its economic head, through the establishment of regional framework agreements, will rise to rule economics, with new monetary policies of diktat and schemes of debt servitude.

 

The singular dynamo of regionalism will develop the Beast Regime’s seigniorage of diktat money, which will coin awesome mandated poverty, where austerity is one’s economic experience.

 

Jesus Christ, operating in the Economy of God, that is the concept presented by the Apostle Paul in Ephesians 1:10, is acting in stewardship of all things economic and political, to complete, mature, and perfect every age. And as presented in Revelation 6:1-2, has opened the First Seal of the Scroll of End Time Events, to release the First Horseman of The Apocalypse, to effect global coup d etats. The Rider on the White Horse, has the Bow without Any Arrow, and has thus given the Bond Vigilantes, the authority to yield the Bow of Economic Sovereignty, to begin calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.49%, to effect investment coup d etat, destabilizing sovereign authority in the Eurozone and in the US. They will be increasingly successful, in calling the Benchmark Interest Rate progressively higher, producing a new sovereignty and a new seigniorage.

 

Fiat Money defined as the combination of Aggregate Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, will soon literally burst apart at the seams.  The failure of Credit came on June 1, 2014, with the trade lower in Aggregate Credit, soon the Sovereign Currencies, will trade lower in value; the death of currencies is at hand; and as John Rubino writes in USA Watchdog, The Money Bubble Will Pop.

 

In the Eurozone, a new sovereign, Jean Claude Juncker, and a new seignior, meaning top dog banker who in the process of coining money takes a cut, Mario Draghi, will lead the way forward in establishing regional economic governance as well as in providing new seigniorage of diktat money, to establish regional security, stability and sustainability. John Vassilopoulos of WSWS reports Greek Government Outlaws Power Workers Strike. 
The Greek government has again used dictatorial measures to end a strike.

 

In the new normal Mario Draghi economy of shared sovereignty, and the new normal Jean Claude Juncker economy of negotiated government, the call of liberals for income redistribution will not be met, as the mandates of these two Eurozone Titans and their soon to be appointed regional fascist leaders, will establish increasing austerity for all of the EU’s citizens; these will be replacement for the World Central Bank economy’s Asset Manager tycoons.

 

The Eurozone will serve as the headquarters, and template, for the development of the Beast Regime of regional economic governance and totalitarian collectivism, which is synonymous with the Ten Toed Kingdom, which is replacing the US Dollar Hegemonic Empire, and the British Empire, now that the 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, are trading lower on the Bond Vigilante’s Call of the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.  Economic Collapse Blog posts The Dollar Is In Peril As Global The De-Dollarization Trend Accelerates. And Larry Summers posts The United States’ Global Leadership Has Eroded.

 

The Chicago Tribune reports Fourth of July weekend toll: 82 shot, 14 of them fatally, in Chicago. For 10 minutes, it seemed like the shooting was everywhere in the South Chicago neighborhood. It started when someone shot and wounded a couple, then two people fired at the shooter, then there was a chase and shots exchanged and a man sitting on a porch was hit. Responding officers kept cutting each other off on their radios as they reported other gunfire in the area late Sunday night and early Monday morning. Then the heavy equipment rolled in: A helicopter and SUVs packed with lockers of rifles. SWAT teams in green coveralls patrolled the streets with uniformed officers.

 

Macronomy posts The Economic Chaos Risks Of The US Fed’s QE Monetary Policies. The FED currently owns about 33% of the outstanding US Federal debt. As funding needs of the US Treasury are diminishing following the sequester, there is less issuance and the FED ownership of bonds in percentage is rising quicker. Should the Central Bank continue buying the same amounts of bonds, it will own 40% of the outstanding in 2014, then north of 50% in 2015. The subsequent volatility on the interest rate market will increase drastically as the liquidity of the bond market disappears, and the currency could debase very quickly, creating a new crisis.

A cause of concern, the bond market repo activity is facing an increasing number of failures (fails to deliver are on the rise exponentially) due to the large FED holding, which has ripple effect on the overall bond market activity.

Economic growth in a society based on consumption requires credit. In order for credit to grow, or in other words banks to lend, collateral must be available. Since the 2007-2008 financial crisis, high quality collateral has slowly but surely become less available.

If Central Banks continue to buy various government bonds (and US Treasuries are among those bonds), the available collateral will trend lower and the economy will stall, or worst spiral down as a credit crunch will occur at some point. So the FED has no other choice than to slow and even stop its QE if it wants the game to go on.

From the Liza Capo McCormick article in Bloomberg on the 7th of July entitled Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar.  “In the relative calm that is the market for U.S. Treasuries, a sense of unease over a vital cog in the financial system’s plumbing is beginning to rise.

The Federal Reserve’s bond purchases combined with demand from banks to meet tightened regulatory requirements is making it harder for traders to easily borrow and lend certain desired securities in the $1.6 trillion-a-day market for repurchase agreements. That’s causing such trades to go uncompleted at some of the highest rates since the financial crisis.

Disruptions in so-called repos, which Wall Street’s biggest banks rely on for their day-to-day financing needs, are another unintended consequence of extraordinary central-bank policies that pulled the economy out of the worst financial crisis since the Great Depression. They also belie the stability projected by bond yields at about record lows.

“You have a little bit of a perfect storm here,” said Stanley Sun, a New York-based interest-rate strategist at Nomura Holdings Inc., one of the 22 primary dealers that bid at Treasury auctions, in a telephone interview June 30.

A smoothly functioning repo market is vital to the health of markets. The fall of Bear Stearns Cos., which was taken over by JPMorgan Chase & Co. in 2008 after an emergency bailout orchestrated by the Fed, and collapse of Lehman Brothers Holdings Inc., whose bankruptcy in September of that year plunged markets into a crisis, was hastened after they lost access to such financing.” – source Bloomberg

 

Remember financial crisis are always triggered by liquidity crisis. From the same article:

 

Liquidity Issues

 

“The effect of all the collateral issues we see now is an indication of not so much how things are, but how bad things will be when you really need liquidity,” said Jeffrey Snider, chief investment strategist at West Palm Beach, Florida-based Alhambra Investment Partners LLC, in a telephone interview June 30. “That’s when you get into potentially dire situations.”

The conditions for repo stress were on display last month. The 2.5 percent note due in May 2024 reached negative 3 percentage points in repo in the days preceding a June 11 Treasury auction of $21 billion in notes to finance government operations.

Dealer Constraints

 

Repo rates have been most prone to go negative, a situation known as specials in the market, in the days preceding an auction as traders who previously sold the debt seek to buy the securities to cover those positions.

In this week’s note and bond sales, the U.S. plans to auction $27 billion of three-year Treasuries tomorrow, $21 billion of 10-year debt on July 9 and $13 billion of 30-year securities July 10.

Signs of dysfunction are coming at a sensitive time for markets. The Fed is paring its stimulus and futures show traders expect the central bank may start raising interest rates in the middle of next year.

The concern is that dealers, which have pared inventories to meet more-stringent capital requirements required by the 2010 Dodd-Frank Act mandated by the Volcker Rule and Basel III, won’t have as much capacity to handle any surge in volumes or volatility.

Securities Industry and Financial Markets Association data show the average daily trading volume in Treasuries has fallen to $504 billion this year from $570 billion in 2007, even though the amount outstanding has risen to more than $12 trillion from $4.34 trillion.

Available Securities

 

Bank of America Merrill Lynch’s MOVE Index, a measure of expectations for swings in bond yields based on volatility in over-the-counter options on Treasuries maturing in two to 30 years, reached 52.7 percent on June 30, almost a record low.

The Fed is partly to blame. Through its policy of quantitative easing, it now owns about 20 percent of all Treasuries, or $2.39 trillion. Banks hold $547 billion of Treasury and agency-related debt.

In addition, the Fed’s holdings have shifted in ways that leave fewer central-bank-owned Treasuries available to be borrowed. The shifts were caused by Operation Twist during the November 2011 to December 2012 period when the Fed sold shorter-dated Treasuries and bought more bonds, plus self-imposed central-bank restrictions on holdings of specific maturities.

 

Stimulus Withdrawal

 

The Fed’s lack of certain holdings “appears to be driving the surge in fails, which has been concentrated in the on-the-run five- and 10-year notes,” Joe Abate, a money-market strategist in New York at primary dealer Barclays Plc, wrote in a note to clients on June 27. On-the-run refers to the most recently issued Treasuries of a specific maturity.

While the Fed has sought to cut risk in the repo market since the crisis, it still sees the chance that rapid sales of securities, known as fire sales, could disrupt the financial system. Fails reached a record $2.7 trillion in October 2008.

Repos are also important to the Fed because it has been testing a program in the market that is seen as a potential tool to withdraw some of its unprecedented monetary stimulus.

Eric Pajonk, a spokesman at the New York Fed, decline to comment on the Fed’s reaction to the movements in recent weeks in the repo market.

The amount of securities financed daily in the tri-party repo market has declined 18 percent an average $1.60 trillion May, from $1.96 trillion in December 2012, data compiled by the Fed show. In a tri-party agreement, one of two clearing banks functions as the agent for the transaction and holds the security as collateral. JPMorgan Chase & Co. and Bank of New York Mellon Corp. serve as the industry’s clearing banks.

 

Supply Falls

 

Another difficulty in the repo market has been the decline in Treasury bill supply, with the U.S. having sold $264 billion fewer short-term bills in the April-through-June period than those that matured, according to John Canavan, a fixed-income strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.

“The repo market itself provides lubricant to the entire Treasury market,” Canavan said in a July 3 telephone interview. “Bills are a key lubricant to the repo market, and the supply of bills has fallen sharply. If this situation were to continue longer-term, it would be a more substantial problem.””  – source Bloomberg.

 

Macronomy relates US Corporate Pension Plans’ Participation In ZIRP. When it comes to our contrarian take on US yields since early January 2014 we argued the following in our conversation Supervaluationism back in May this year: We recently pointed out the strength of the performance of US long bonds as well as the Great Rotation From Institutional Investors To Private Clients. As posited by Cam Hui on his blog Humble Student of the Markets, The Great Rotation Has Indeed Been Triggered By Defined Benefit Pension Funds Locking In Their Profits.

 

One of the chief reason therefore behind this rotation has been coming from US Corporate pensions, as indicated by Gertrude Chavez-Dreyfuss and Richard Leong in Reuters in their article from the 24th of April article, US Corporate Pensions Bet On Bonds Even As Prices Seen falling.  Major US companies including Clorox and Kraft are favoring more bonds in the mix for their employees’ defined benefit pension plans, even amid signs the three-decade bull run in bonds is on its last legs.

 

The $2.5 trillion U.S. corporate pension market enjoyed a robust recovery in 2013, paced by stocks, as the Standard & Poor’s 500 Index rose the most since 1997. That helped pension funds close a funding hole that opened after the global credit crisis of 2008, so that the average corporate pension was funded at about 95 percent at the end of 2013, compared with 75 percent at the end of 2012, Mercer Investments data show.

 

Now that they’re more confident that they have the money to meet their pension obligations, corporate pension managers are pulling back from the perceived risk of the stock market and buying U.S. government and corporate bonds, even though many expect bond prices to fall in coming years.

 

“Even if interest rates rise more than the market predicts, you do get the income component that offsets the price loss of those bonds,” said Gary Veerman, managing director of U.S. Client Solutions Group at BlackRock in New York, which has $4.4 trillion under management, of which two-thirds are retirement-related assets. Beerman’s group advises corporate treasurers how to manage their pensions. The allocation to bonds by the top 100 publicly-listed U.S. companies in their defined benefit pension plans increased to a median of 39.6 percent in 2013 from 35.9 percent in 2010. Stock allocation in the plans fell to 40.9 percent in 2013 from 44.6 percent in 2010, according to global consulting firm Milliman.”

 

“Now they’re in a position to say: ‘I don’t need all those equities because my funding status is in the mid- to low-90s,'” said Dan Tremblay, director of institutional fixed-income solutions at Fidelity unit Pyramis in Merrimack, New Hampshire, which manages more than $200 billion.

 

To further illustrate the “pension fund” effect and the increase in duration risk with the “great rotation” in 2014 from equities to bonds please find below the iBoxx U.S. Pension Index up 11% YTD.

 

The chart tracks the iBoxx U.S. Pension Index, designed to mirror the performance of a typical plan with defined benefits.

 

What our “wealth effect” planners at the Fed should take into account is that rising stock prices may do relatively little to bolster the finances of corporate pension funds. Bonds matter because increases in projected distributions put even more pressure on yield hunting leading to an increase in duration risk exposure and high yield exposure. Volatility in funds’ asset value and relatively low interest rates have made managing pensions increasingly difficult for corporate managers, one of the solution they have found is shifting into bonds and away from stocks

 

As a reminder from our conversation Goodhart’s Law in June 2013: As indicated by CreditSights in their 29th of May 2013 Asset Allocation Trends – 2012 Pension Review: “Key among the prevailing market realities in the post-financial crisis environment has been the extended period Quantitative Easing and the continuation of the Fed’s prevailing zero interest rate policy and in the latest year’s plan asset allocation data there was evidence of the effect this was having. As noted above, historically low interest rates have not only inflated the calculated liabilities of pension plans via the downward pressure on interest rates, they have also deflated assumed plan asset return rates as fixed income has increased as a percentage of plan assets.” – source CreditSights.

 

So much for the great rotation, given, as indicated in the same report from CreditSights: “One of the notable observations from our data analysis was that there was very little change in the allocation across the plans vs. the prior year. The median allocation to equity fell only marginally (from 50.8% to 50.0%) and the allocation to fixed income, rather than increasing, fell from 37.0% to 36.4%. This suggests that the trend towards Liability Driven Investment has slowed. While this, at least in part, likely reflects that the shifts made over the last seven years have better aligned many plans with their desired allocations, it also is undoubtedly influenced by the interest rate environment.

Historically low interest rates across the full maturity spectrum make it an inopportune time to be increasing the allocation to fixed income assets (or to be increasing the duration of those assets in the portfolio!) ”  – source CreditSights.

 

Hence the reason of our Wicksellian stance relating to the distortion created by ZIRP, because of the increasing duration risk which has to be taken by players such as pension funds!

 

On Tuesday July 8, 2014, fears over the solvency of Greece, GREK,and sustainability of its Bank arose, as The National Bank of Greece, NBG, Ireland’s Bank, IRE, Banco Santander, SAN, as well as Lloyds Banking Group, LYG, drove European Financials, EUFN, lower, as Bloomberg reports Greece Resists Troika on Third Bailout as Mario Draghi Protests Delays.

 

In addition to the trade lower in the European Financials, EUFN, Nomura Holdings, NMR, Banco Santander Brazil, BSBR, Argentina Bank, BBVA, Bank of America, BAC, Regional Banks, KRE, led Global Financials, IXG, lower, evidencing the failure of credit which commenced on July 1, 2014,with the trade lower in Aggregate Credit, AGG.

 

The trade lower in Stockbrokers, IAI, Investment Bankers, KCE, such as MS, GS, and the Asset Managers, such as BLK, EV, communicates that the age of securitization and financialization, to coin fiat wealth, which was built on trust in the monetary policies of the world central banks,for investment gain is over, through, finished and done.  The era of the investor is relegated to the dustbin of history.

 

A new age of trust in the mandates of regional fascist leaders to coin totalitarian collectivism for regional security, stability and sustainability is underway. The era of the debt serf has come of age.

 

Michael Ignatieff calls for the development of sovereignty; it’s only a whisper.  Sovereignty And The Crisis Of Democratic Politics. Dani Rodrik, a colleague of mine at Harvard, coined the phrase ‘policy space’ to describe what we need. Every country has to have policy space, by which he means political space. We’ve got too much macroeconomic policy which assumes that one size fits all; one size does not fit all. We need policies that are appropriate to the sovereign conditions and histories of the countries that we live in.

Progressive politics must defend and expand the capacity of sovereign democracies to create the ‘policy space’ they need, instead of swallowing austerity medicine concocted by doctors who know nothing of their patient’s specific needs.

 

I don’t suppose that market regulation is the sum and substance of a progressive politics. There is so much more that a progressive politics stands for: egalitarianism, the rule of law rather than the rule of men, generosity, social compassion, love and respect for learning and innovation. But none of these values can be realised without an economics that resets the relation between market and state.

 

To a degree we haven’t realised, our sovereignty has been emptied out and because it has, our democracy has been draining away. Sovereignty and democracy are linked. We must feel we are masters in our own house, if our politics is to have any meaning for us. Democracy is not a procedure, an instrument or a technique. It is a way of living a set of values of patriotism, equality and fairness, and it creates a sentiment: the blessed feeling that you live in a place where you are not adrift, you are not a prisoner of fate, where you join with citizens to shape your world.This is the value—the sense of mastery—that a progressive politics can and should deliver to its citizens.

More than any one factor for the dissolution of the sovereignty of the British Empire was the rise of Attlee and his Labor Party in the UK.  Robin Phillips, author ofSaints and Scoundrels and writes for a variety of publications; He is currently working on a PhD in historical theology through Kings College, London, posts  Remembering Clement Attlee: a Wolf in Sheep’s Clothing. Attlee’s legacy has been seminal in the internationalism that came to dominate the last half of the 20th century. Mr Attlee suggested that the notion of the sovereign states making its own decisions was “as out of date as would be the heptarchy in these islands.” Elsewhere he wrote, “The Labour Party does not regard the British Commonwealth as an end in itself, but only as a factor in the building up of a world federation.” He hoped the League of Nations would be transitional to a one-world government, describing it “as a beginning of the World Federation which it hopes to see established.”

 

The trade lower in the City of London, Lloyds Banking Group, LYG, on July 8, 2014, from the middle of a broadening top chart pattern, communicates the capitulation of the UK’s David Cameron, to the monetary authority of the ECB, and to the economic sovereignty of the EU. The inertia direction forward for the UK is one More Europe.

 

The monetary policies of the Banker Regime no longer stimulate global economic growth and trade, as is seen in Nation Investment, EFA, trading strongly lower on the trade lower in  the UK, EWU, EUUS, as Shaun Roberts reports Slow Down In The UK’s Rate Of Economic Growth, The Office for National Statistics released this data: Total production decreased by 0.7% between April 2014 and May 2014; Manufacturing was the largest contributor, decreasing by 1.3%.  He adds, In the three months to May 2014, production and manufacturing were 11.3% and 7.2% respectively below their figures reached in the pre-downturn GDP peak in Q1 2008.

 

Norway, NORW, Sweden, EWD, and Denmark, EDEN, traded lower as the Eurozone Financials, EUFN, Eurozone Stocks, EZU, FEZ, European Small Cap Dividends, DFE, and European Nations, led by  Portugal, PGAL, and Greece, GREK, continued lower. India, INP, SCIN, Israel, EIS, and the US Small Caps, IWC, IWM, traded lower. Electric Utility, HNP, and China Technology, CQQQ, led China, YAO, lower; as Bloomberg reports Sensex Falls Over 500 Points The BSE Sensex and Nifty slumped more than 2 percent on Tuesday, marking their biggest single-day fall in over 10 months and retreating from record highs hit earlier in the session, after the railway budget raised worries the government would slash spending.

Nation investment in New Zealand, ENZL, traded to a new rally high as Brown Brothers Harriman reports The New Zealand Dollar Rose To A New  Multi Year High Just Above $0.88.  Fitch lifted the outlook for the country’s AA rating to positive from stable. The central bank meets on July 23 and is expected to hike rates again.  A 25bp hike would be the fourth hike this year and would put the cash rate at 3.25%.

 

In Yield Bearing Investments, Leveraged Buyouts, PSP, Shipping Stocks, SEA, and International Telecom, IST, traded lower.  Dividends Excluding Financials, DTN, were led lower by the debt trade Verizon, VZ.

 

A trade lower in the Risk Assets, that is the High Beta ETFs, TAN, SOCL, FDN, PNQI, CQQQ, IBB, IGV, IGN, PJP, RZV, RZG, PBS, CARZ, FONE, XRT, PPA, QQQ, FPX, forced World Stocks, ACWX to trade lower.  Data Storage Devices, traded strongly lower.

 

On Tuesday, July 8, 2014, fiat wealth, that is the coinage of the Banker Regime, traded lower in value as fears of Greek Insolvency arose, as Mario Draghi pressed Greece for reforms in exchange for a Third Greek Bailout.

 

Aggregate Credit, AGG, bounced slightly higher, but resides below its January 2014, through July 1, 2014 rally high as Popular Notes and Bonds, such as SHY, EU, TLT, EDV, LQD, LWC, PICB, BWX, and MBB, continued to bounce higher from last week’s sell off, as the Benchmark Interest Rate, ^TNX, traded slightly lower from its recent high of 2.65%, to 2.57%, on its way lower to a likely support at 2.53%. Junk Bonds, JNK, traded lower with stocks.

 

Robert Wenzel posts on the strong dynamic of Pursuit of Yield Investing in Puerto Rico Municipal Bonds. Puerto Rican general obligation bonds are rated triple-B minus, the most risky investment grade bonds in the market. The 5.0% coupon maturing in 2041 is trading approximately 25 basis points above the coupon rate. Bottom line: There is little fear in this market, despite the fact that number crunchers view Puerto Rico’s financial situation to be worse than that of Greece. PR GOs should be trading hundreds of basis points higher.

 

Puerto Rico is an insolvent sovereign and has neither investment seigniorage nor fiscal seigniorage; it is a candidate for bondholders to literally own the electricity and water infrastructure and charge whatever rates they may for essential public services.

 

Without access to credit, Puerto Ricans  may come to be beholding to the sovereignty of investment funds such as Franklin Templeton and OppenheimerFunds, for the essentials of life. Most assuredly these people will be living out their lives in perpetual debt servitude.

 

A new paradigm is emerging. Liberalism is giving way to authoritarianism.  Under liberalism bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and the legislators of economic life that shape one’s means and one’s ends.

Now under authoritarianism, currency traders, bond vigilantes, bond traders, and regional fascists working in public private partnerships and in regional governance, are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

 

Those living in Detroit are no far behind as Muhammad Khan and Shannon Jones post in WSWS Detroit Residents And Water Workers Speak Out Against Water Shutoffs. The city of Detroit is racing ahead with its plans to shut off water to some 150,000 families who cannot afford to pay their water bills.

 

Reuters reports Sarkozy Party Faced With 80 Million Euro Debt Mountain, Audit Shows

 

Real Estate Follies at the end of the age of fiat wealth. Bloomberg reports Office REITs in U.S. Plan the Most Construction in Decade. Office REITs, FNIO, led by Boston Properties Inc. (BXP), Vornado Realty Trust (VNO) and Kilroy Realty Corp. (KRC), are planning to plow almost $11 billion into new projects, triple the amount just two years ago and the most in data going back to 2004, according to research firm Green Street Advisors Inc. Much of that is focused on the coasts, including San Francisco and New York, the areas with the most demand from both tenants and investors.

 

The Israeli Stock Exchange could go extinct because of delisting. Bloomberg reports Unintended Consequences Risk $4.4 Billion Israeli Flight. Israel risks losing 15 billion shekels ($4.4 billion) from the Tel-Aviv Stock Exchange because of efforts to limit control of the economy by the country’s wealthiest families.

 

Bloomberg reports Approaching Reactor Restarts Encourage Utilities To Sell Bonds The Nuclear Regulation Authority is moving toward the first reactor restart under its new safety requirements since the Fukushima disaster started, giving impetus to bond sales by utilities as borrowing costs plunge.

The regulator may submit a safety report on two reactors at Kyushu Electric Power Co.’s Sendai plant on July 16, paving the way for them to come online before year’s end, the daily Yomiuri Shimbun reported this week. The utility is set to sell ¥20 billion ($197 million) in 10-year bonds Friday at 39 basis points over government debt, its lowest spread for such maturities since 2010, a source said.

Kansai Electric Power Co. and Shikoku Electric Power Co. also plan to offer notes this week as investors are drawn by the industry’s higher-than-average yield premiums. Unprecedented Bank of Japan stimulus has pushed down Japanese corporate spreads to a seven-year low of 22 basis points. That for power companies’ debt is 29 basis points, compared with 105 for utilities worldwide, Bank of America Merrill Lynch data show.

“The fact that the government is in favor of restarting reactors is positive because it shows a firm commitment toward the electric power companies,” said Yasuhiro Matsumoto, the senior manager for the financial services industry at ABeam Consulting Ltd. “Once one restart is approved, others will come one after another, and the pace may quicken. You can’t approve one but turn down others.”

The Sankei, another daily paper, said earlier that the nuclear regulator would give the green light to restarting the Kyushu reactors as early as Wednesday.

The draft inspection report is completed and commissioners are examining the approximately 400-page document, NRA Chairman Shunichi Tanaka told reporters the same day. He declined to say when it will be made public.

All 48 of Japan’s functioning commercial reactors are idled for safety checks after a tsunami wrecked Tokyo Electric Power Co.’s Fukushima No. 1 plant on March 11, 2011, and caused the worst nuclear crisis since Chernobyl in 1986.

Utilities’ expenses have mounted as they’ve had to purchase fossil fuel to make up for nuclear energy. The nation’s 11 power companies had combined net losses of ¥482.7 billion in the three months that ended on March 31, compared with a profit of ¥4.7 billion in the same period in 2010 before the Fukushima disaster started, according to data compiled by Bloomberg.

 

On Thursday, July 10, 2014, a Portugal banking crisis sparked a global stock selloff.  Portugal, PGAL, led nation Investment, EFA, lower. A Portuguese bank named after the Holy Spirit is seen failing. Bloomberg reports European Stocks Decline for a Fifth Day as Luxembourg based Espirito Santo Financial Group SA, which owns 25 percent of Portugal’s second-biggest bank by market value, said it decided to suspend its shares. Banque Privee Espirito Santo SA, fully owned by ESFG, said on July 8 that there was a delay in payments of some of the last maturities of short-term debt securities issued by ESI. Portugal’s PSI 20 tumbled 3 percent, the most among 18 western-European markets, sending its seven-day slump to 11 percent. The index trades at its lowest level since October.

 

Open Europe directs to other reports ReutersCity AMTelegraphGuardianBloombergBloomberg 2Forbes:lFortuneTelegraph live blog

 

The value of equities in Portugal, Italy, Greece, and Spain, is falling after rising 13 percent in the first six months of 2014, compared with a 2 percent gain for the market capitalization of stocks in France and Germany. The ratio between the two reached an almost three-year high. The last time shares in the so-called peripheral European nations rallied so much relative to those in the biggest economies, they lost about half their value in the following year.

 

Bloomberg reports Espirito Santo Bonds Tumble to Records Amid Missed Note PaymentsBanco Espirito Santo has been “adequately isolated” by the Bank of Portugal from the financial problems, Parliamentary Affairs Minister Luis Marques Guedes said on July 3. The bank was the only one of the three biggest publicly traded Portuguese lenders that didn’t request state aid after the country received a European Union-led bailout in May 2011.

 

The coinage of the entire Banker Regime is failing, as investors greed has turned to fear that European leaders are unable to contain investment losses from what are most definitely insolvent banks.

 

A new coinage, that of the Beast Regime is emerging, it is totalitarian collectivism to establish regional security, stability and sustainability.

 

Bloomberg reports Draghi Says Brussels Needs Higher Powers as Leaders Quarrel.  European Central Bank President Mario Draghi said the region needs more-centralized powers to push governments to overhaul their economies.

Draghi said in London Speech “There is a case for some form of common governance over structural reforms” … and ..  “This is because the outcome of structural reforms, a continuously high level of productivity and competitiveness, is not merely in a country’s own interest. It is in the interest of the union as a whole.”

Draghi has repeatedly said the ECB’s ultra-loose monetary policy isn’t sufficient to sustain the euro area’s fragile recovery if governments backslide. European Union finance ministers meeting in Brussels this week signaled a willingness to give politicians extra leeway so long as they take measures to fix their economies. They then clashed as Italian Prime Minister Matteo Renzi pushed back against austerity measures.

ECB Executive Board member Benoit Coeure said earlier yesterday that convergence could be complemented by action such as a European effort to increase investment by channeling private savings. It could culminate in the transfer of budgetary responsibilities to the European level, he said in Athens.

“But let me add an important note of caution,” Coeure said. “This can only occur once trust has been restored across countries and within countries, i.e. after growth has resumed, unemployment and inequalities have receded, and economies have sufficiently converged. What we are talking about is a new social contract among European countries.”

 

Reuters reports Draghi Urges Eurozone States To Be Sovereign Together: A Unity Of Sovereignty Should Direct How Needed Reforms Take Place.European Central Bank President Mario Draghi urged euro zone states to respect their joint fiscal rules and extend their cooperation to economic reforms, telling governments they must “learn to govern together”.

While reiterating his message that the ECB is ready to use “unconventional instruments”, code for large-scale asset buying, if needed, he devoted most of a speech in London to pressing for closer European integration to deliver growth and jobs.

“What is essential now is that these rules are enforced,” he said in the text of his speech, a memorial lecture on Wednesday in honour of the late Italian minister and ECB policymaker Tommaso Padoa-Schioppa.

“To unwind the consolidation that has been achieved, and in doing so to divest the rules of credibility, would be self-defeating for all countries,” Draghi said.

His comments come as euro zone policymakers debate the flexibility of their fiscal rules, with Italian Prime Minister Matteo Renzi leading calls to move from austerity to expansion.

Draghi appeared to push back: “Fiscal rules should be viewed in the national debate as promoting growth-friendly fiscal consolidation and not simply as a painful accounting exercise.”

The ECB president added that high debt made countries more vulnerable in the event of financial shocks.

Furthermore, only by showing a willingness to respect common fiscal rules could euro zone states achieve the mutual trust that is a prerequisite for integration in other areas, he said.

Pressing for closer integration, Draghi urged euro zone states to align their approach to structural reforms, efforts to shape up economies by, for example, liberalising labour markets, using the template of the common fiscal rules.

“There is a strong case for us to apply the same principles to the governance of structural reforms as we do to fiscal governance,” he said. “The essential cohesion of the union depends on it.”

The return of market confidence in the euro area stemmed in good part from the efforts made by some countries to shape up their economies after the euro zone crisis took hold, he said.

Establishing rules on structural reforms at a European level could also help governments implement them, he said.

The experience of the International Monetary Fund had shown that, with discipline imposed by supranational bodies, “the debate can be framed not in terms of whether, but in terms of how reform needs to take place.”

European governments are not powerful enough individually to be able to fully exercise their sovereignty alone, Draghi said.

“To serve their purpose, they have to learn to govern together; they have to learn to be sovereign together so as respond to their citizens’ needs,” he added. “Those needs today are growth and job creation.”

 

This inquiring mind asks do you want your savings channeled?

 

The July 8, 2014, Mario Draghi Call For EU Common Governance Over Structural Reforms, is a continuance of the June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, and the June 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, which addresses secular stagnation, defined as low growth, low employment, and low inflation.

 

Taken as whole, these series of Mario Draghi Mandates and Calls introduce a new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance and clay in totalitarian collectivism, as is foretold in Bible Prophecy of Daniel 2:25-45.

 

The Mario Draghi Calls and Mandates serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional economic governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out ofdebt trade investments and deleverage out ofcurrency carry trade investments.

 

John Redwood posts The Ghosts Of Hampden, Pym And Eliot Should Haunt Parliament Today. Members of Parliament are heirs to a great tradition. Some of our predecessors took great personal risks to defend  and extend the liberties of Englishmen and women. They fought to prevent the executive government, the Crown, exercising too much arbitrary power at the expense of the people. Today we need to remember that when  Parliament debates whether important matters of criminal justice, recently repatriated to UK control, should be surrendered to the EU. John Hampden, John Pym and John Eliot fought against a Crown which wanted to presume to itself the power to tax without reference to the grievances and rights of those paying the bills. They fought to uphold the right of Parliament to fashion the law and ensure its fair enforcement. John Eliot died prematurely from his stay in prison for refusing to accept Ship money. John Hampden died of his wounds  in an early battle of the civil war. Their cause was just and ultimately upheld. Today the threat to our liberties and right of self government comes not from the Crown but from the EU. Some of us this day will argue against surrendering any criminal justice powers to the EU. We accept the need to co-operate with the police and criminal justice systems of our  neighbours to track criminals and bring them to court. This can be done by bilateral agreements which preserve the authority of the UK Parliament and the sovereignty of the UK electorate. Eliot, Pym and Hampden would expect no less.

 

Open Europe Blog posts Juncker: The next Economic and Monetary Affairs Commissioner Will Be A Socialist

 

Open Europe reports Juncker: I Don’t Believe In A United States of Europe.  During his hearing with Nigel Farage’s Europe of Freedom and Direct Democracy (EFDD) group in the European Parliament yesterday, European Commission President-designate Jean-Claude Juncker said, “I don’t believe in a United States of Europe…I’m not a federalist in the British sense…I’m not someone who wants to reinforce the centre in a stupid way to the detriment of the member states.” He added, “There isn’t such a thing as the European people.” Separately, during his hearing with the Greens group, Juncker said, “There shouldn’t be unfair competition between [EU] countries on corporate taxes” – and advocated a common EU corporate tax base. TimesEuropean VoiceFTWSJEUobserver.

 

Open Europe posts Will The Real Jean-Claude Juncker Please Stand Up?  I relate that Juncker is synonymous with Brussels; and Brussels is synonymous with Juncker.

 

A trade higher in the Yen, FXY, caused Hedged Japan, HEWJ, Japan, EWJ, Japanese Small Caps, JSC, Japanese Small Cap Dividend, DFJ, to trade lower.

 

Hedged Nation Investment, HEFA, Commodity Country, CCXE, Norway, NORW, Sweden, EWE, Denmark, EDEN, Netherlands, EWN, Italy, EWI, Spain, EWP, Greece, GREK, Austria, EWO, Finland, EFNL, Germany, EWG, GERJ, European Small Cap, SMEZ, European Small Cap Dividend, DFE, and Europe, EZU, FEZ, traded lower.

 

Nation Investment, EFA, and Emerging Market Investment, EEM, traded lower as South Africa, EZA, South Korea, EWY, The UK, EWU, EWUS, India, INP, SCIN, Egypt, EGPt, Turkey, TUR, Russia, RSX, ERUS, and Emerging Europe, ESR, traded lower. Vietnam, VNM. Indonesia, IDX, IDXJ, China Small Caps, ECNS, Philippines, EPHE, and Australia, EWA, KROO, traded lower. The credit sensitive US Small Caps, IWC, IWM, traded lower. Bloomberg reports Disputed Indonesia Election Deterring State Street.

 

Zero Hedge posts Europe Tumbles As Banks Lose All 2014 Gains. European Financials, EUFN, Chinese Financials, CHIX, Far East Financials, FEFN, Australia Dividend, AUSE, Japanese Creditor, IX, Japanese Brokerage, NMR, Japanese Banks, MTU, MFG, SMFG, India’s Banks, IBN, HDB, Brazil’s Bank, BSBR, Argentina’s Bank, BSBR, BBVA, Peru’s Bank, BAP, Australia’s Bank, WBK, South Korea’s Banks, WF, KB, Spain’s Bank, SAN, Ireland’s Bank, IRE, Germany’s Bank, DB, UK’s Bank, BCS, Swiss Banks, CS, UBS, and the National Bank of Greece, NBG, traded lower, causing Global Financials, IXG, to trade lower.

 

With the trade higher in Japanese Yen, FXY, and the trade lower in the Euro, FXE, a number of popular Euro Yen Currency Carry Trades unwound. With the sharp trade lower in the EUR/JPY, investors deleveraged out of LUX, NXPI, PHG, VE, UN, E, TOT, RDS-B, ING, and GLOG,

 

All other Sovereign Currencies, with the exception of the Swedish Krona, FXS, traded lower, stimulating the US Dollar. $USD, UUP, to trade slightly higher. Mark Chandler remarks the Swedish Krona and Norwegian Krone have been in play recently as the former surprised with a 50 bp rate cut, and the latter sounded dovish.

 

Bloomberg posts Piggy Banks Being Raided Signal Swedish Housing Dilemma. Increasing numbers of Swedes are turning to family and friends for help in buying a home, sidestepping government efforts to cool soaring housing prices and growth in private debt.

 

While Zachs reports Alcoa Aluminum, AA, traded to a new high, as its earnings topped and turned to profit, Defensive Sectors, DEF, Agriculture, PAGG,International Energy, IPW, Global Utilities, DBU, and Insurance, KIE, traded lower. Industrial Textile Manufacturers, such as MHK, Fracking Companies, such as CJES, BAS, RES, EXH, Design Build Companies, such as TPC, URS, PWR, MTRX, ACM, Building Materials, such as HW, PGII, NTK, EWI, MAS, OC, AOS, BECN, and Sectors, XOP, OIH, CARZ, BJK, PKB, PSCI, PSCD, PSCC, XRT, TAN, WOOD, SLX, PICK, KOL, REMX, led World Stocks, ACWX, lower.

 

Debt trade investment, Blackstone, BX, traded lower. International Telecom, IST, International Dividend Dogs, IDOG, Leveraged Buyouts, PSP, Shipping, SEA, Global Utilities, DBU, and Water Infrastructure, FIW, led Yield Bearing Investments, DTN, lower.

 

The trade lower in International Energy,  IPW, such as E, TOT, RDS-B, SSL, STO, SU, IMO, CNQ, SNP, BP, CVX, XOM, ECA, Energy Services,  OIH, such as SLB, HAL, BHI, NGS, FET, WFT, PDS, NOV, OIS, and Natural Gas, UNG, and DNL, all of which are global currency carry trade investments, communicates that the Global Petro Dollar Empire is being relegated to the dustbin of history. These represent stranded investments; investors will not be committing any new capital investment to Global Natural Resources, IGE, development.

 

All of the Legacy Investment, which underwrite Global Industrial Production, IPN, Global Industrial Miners, PICK, Design Build, FLM, Steel, SLX,and Timber Production, WOOD sectors traded lower. Needless to say, the S&P 500, SPY, is now a failed investment.

 

The chart of the US Dollar, $USD, UUP, shows that it is in the middle of a consolidation pattern, and will soon fall lower.

 

Matthias Chang writes in Global Research The Global Financial Tsunami Endgame: The Petro-Dollar Regime is Finished

 

Peter Koenig writes in Global Research Russia’s Petro-Ruble Challenges US Dollar Hegemony As China Seeks Development of Eurasian Trade

 

Jim Willie CB writes in Market Oracle Ukraine As The US Dollar Waterloo

On July 10, 2014, Gold was established as a safe haven investment while Precious Metal Mining Stocks manifest bearish engulfing.

 

The investment demand for safe assets that began in June 2014 was confirmed, with Gold, GLD, and Silver, SLV, trading higher.

 

The Precious Metal Mining Stocks, GDX, GDXJ, SIL, and SILJ, such as Gold Miner, FNV, AWM, and Silver Miners, SSRI, FSM, manifested bearish engulfing and traded lower; these appear to be topped out in value, while only God knows how much higher gold will go. Bloomberg reports Gold Reaches 16-Week High as Portugal Spur Haven Buying. The Google Finance chart of the Gold Miners, GDX, shows a 26% rise year-to-date, compared to 10% for Gold, GLD. Look for the Gold Miners to disconnect from the price of Gold, GLD, and tumble lower with all fiat wealth investments into the Pit of Financial Abandon.

 

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.53%, with an objective seen lower, somewhere between 2.51% and  2.49. Aggregate Credit, AGG, traded weakly higher. Junk Bonds, JNK, traded strongly lower, down 0.4% for the week.  European Credit, EU, traded lower as Bloomberg reports Greece Cites Market Conditions as Bond Sale Misses Target. Portugal’s bonds led a selloff in securities from the region’s so-called periphery nations this week on instability in that nation’s banks. Greece’s transaction went ahead “despite very unfavorable conditions in international markets and especially in periphery, today and yesterday,” the Finance Ministry in Athens said in a statement.

 

On Friday, July 11, 2014, credit guarantees are seen as worthless. The age of credit featured Wildcat Finance, a Doug Noland term, an era where financiers, bit, ripped and tore each other apart to be top dog banker in investment deals. The age of debt servitude, will feature, Wildcat Governance, where tyrants, bite, rip, and tear one another apart, to be top dog ruler in public private partnerships.

 

Credit guarantees, fraud, and corruption have fueled China’s credit bubble. Mike Mish Shedlock posts Credit Guarantees, Fraud, Corruption Fuel China’s Credit Bubble; Bankruptcies Rock Loan Guarantors; Beginning of the End?

 

Zachary Tracer and Clea Benson of Bloomberg report US Regulators Stiffen Standards for Mortgage Insurers. Radian Group and MGIC Investment are among mortgage insurers that would need to fill a financial gap under new financial strength rules proposed by the Federal Housing Finance Agency. Radian said it would need about $850 million to meet the standard now and expects to be able to comply within a two-year transition period allowed under the rules. MGIC didn’t provide a figure and said it faced a ‘material shortfall.’ Genworth Financial said yesterday that it may need as much as $550 million. U.S. regulators are seeking to stiffen standards for mortgage insurers that back loans sold to Fannie Mae and Freddie Mac to prevent a repeat of the losses the government-backed firms faced in the 2008 financial crisis.”

 

Bloomberg reports McClendon Wildcats For Junk Funding. Aubrey McClendon is returning to his wildcatter roots as the ousted co-founder of Chesapeake Energy Corp. prepares to tap the junk-bond market to help finance what will be the most highly leveraged energy exploration company.

A unit of McClendon’s American Energy Partners LP, NOA, is seeking $1.4 billion, according to a statement from Moody’s Investors Service, which assigned the debt a Caa1 rating. That grade, denoting securities of “very high risk” and “poor credit standing,” reflects undeveloped reserves and “prospective” acreage in Permian Basin drilling rights being purchased from closely held Enduring Resources.

American Energy management and two partner firms are putting up $1.15 billion of equity, leaving potential creditors to finance the bulk of the purchase in a business that will be the most highly leveraged among energy exploration and production companies rated by Moody’s, according to the statement. McClendon previously saddled Chesapeake with $13.3 billion of debt and turned to asset sales in 2012 after falling gas prices led the company to warn it might not be able to service its obligations.

Energy exploration and production companies are the biggest subset of borrowers in the Bloomberg USD High Yield Corporate Bond index, making up more than 7 percent of the $1.44 trillion gauge.

The company’s leverage would be higher than other exploration and production companies rated by Moody’s, which calculates that metric based on debt in relation to reserves and production.

 

India, INP, SCIN, SCIF, SMIN, EPI, traded lower as Keith Jones of WSWS reports India: BJP Tables Right Wing, Pro Investor Budget. The Jaitley budget launched a drive to slash and ultimately eliminate food, fuel and fertilizer-price subsidies. And Jaitley said that increased revenue is a key part of the government’s fiscal consolidation, ie, deficit reduction, strategy. In the budget the government vowed that within the next twelve months it will complete negotiations with the states to replace various state and national taxes with an all-India Goods and Services Tax. Most advanced capitalist countries already have such a consumption tax and it has been an important instrument for implementing a fiscal counter revolution in which the burden of taxation has been shifted ever more from big business and the most privileged to working people. And the government is counting on disinvestment, the partial or complete privatization of public sector companies, to significantly bolster government revenue.

 

The BJP budget outlined ambitious plans to give business, through so-called Private Public Partnerships (PPPs), a pivotal role in the building and administration of all manner of physical and social infrastructure. Jaitley boasted that India is already the world’s largest PPP market.

 

Indian big business is desperate for a quick boost in economic growth so as to escape from large debt-burdens and revive foreign investors’ interest in the Indian economy.

 

This week nation investment loss leaders included:  SCIN, 12.6%, SCIF, 12.3, SMIN, 9.1, PGAL, 9.0, GREK, 7.5, SMEZ, 5.7, EWI, 5.2, EWO, 4.8, IWC, 4.8, EWP, 4.7, EWN, 4.4, EZU, 4.2, INP, 3.7.

 

This week sectors loss leaders included: EPI, 6.4,  TAN, 5.7, SOCL, 5.0, ENY, 4.8, EUFN, 4.3, RZG, 4.3, XOP, 4.2, PSP, 3.9, DFE, 3.8, IAI, 3.9, KCE, 3.8, RZV, 3.7, CQQQ, 3.6, BJK, 3.5, KRE. 3.4.

 

On July 10, 2014, the Banker Regime’s coinage of fiat wealth experienced strong debasement, as investors no longer trust the monetary policies of the world central banks to stimulate investment gains, the development of Global Natural resources, IGE, provide for Global Growth, DNL, procure Nation Investment, EFA, and Emerging Market Nation Investment, EEM.

 

It is out of waves of Club Med, that is Portugal, Greece, Italy and Spain, sovereign, banking, and corporate insolvency, that diktat coming through the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude as the way of life, as investors derisk out of debt trades and deleverage out of currency carry trades.

 

The final phase of the Business Cycle, that is Kondratieff Winter, is an experience in debasement of everything, as destructionism replaces inflationism.

 

Debasement of the coinage of fiat wealth commenced on Monday, July 7, 2014, on fears that Greece, GREK, is an insolvent sovereign, and its bank the National Bank of Greece, NBG, is an insolvent bank,

 

Debasement of the coinage of fiat money, specifically debt deflation in Sovereign Currencies, commenced on July 11, 2014, with a sell by the currency traders of the Canadian Dollar, FXC,

 

Eventually it will be as in Venezuela, where William Neuman of the NYT posts Profits Vanish in Venezuela After Currency Devaluation.

 

 

2) … The world pivots into Kondratieff Winter, the final phase of the Business Cycle.

The Business Cycle is one of investing, and it is an experience in boom and bust caused by the expansion and contraction of credit, where people come to trust in monetary policies of sovereigns, who provide seigniorage, via monetary policies and schemes of control, for economic life.

 

The Cycle’s Abundant Summer came in 1971, when President Nixon went off the gold standard to fund the Vietnam War with Treasury Debt, TLT, and the sovereignty of the Milton Friedman Free To Choose paradigm, underwrote money flows across borders, as credit expanded via the speculative leveraged investment community, with the result that international trade supported investment as the way of life, developing Global Natural Resources, IGE, and establishing global growth, DNL.

 

The Business Cycle’s Bountiful Harvest began in Q2, 2012, with a plummeting of European periphery yields via the Mario Draghi “Do Whatever It Takes” Pledge of LTRO 1, and 2, and completed in Q2, 2014, with a plentitude of credit issuance, that is money creation, as Doug Noland reports in 2014 vs 2007.

 

This year’s booming M&A market has posted the strongest activity since 2007. Second quarter global M&A volume of $1.06 TN was up 72% from the year ago period. Here at home, M&A more than doubled year-on-year to $473 billion, pushing record first-half volume to $749 billion. The proliferation of deals was fueled by the loosest Credit conditions in years. First-half global corporate bond issuance hit an all-time high $2.29 TN. A record $286 billion of junk bonds were issued globally, as average junk yields traded to the lowest level ever. At $642 billion, first-half U.S. investment-grade company bond sales easily posted an all-time high. The first six months of 2014 also saw record issuance of collateralized loan obligations (CLOs). A record number of global IPOs were sold in the first half, with $90.6 billion of offerings 54% above comparable 2013. Led by technology and biotechnology issues, U.S. IPO sales enjoyed the strongest first-half since the height of the technology bubble back in 2000. According to Dealogic, year-to-date total global sales of corporate stock and equity-linked securities reached an unmatched $510 billion, outpacing 2007’s record pace.

 

The entrance into the final phase of the Business Cycle, Kondratieff Winter, is marked by debasement devaluation, and economic deflation. This is seen in the trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower on July 1, 2014.

 

Following, on Tuesday, July 8, 2014, fiat wealth, that is the coinage of the Banker Regime, traded lower in value as fears of Greek insolvency arose, as Mario Draghi pressed Greece for reforms in exchange for a Third Greek Bailout, and as fears of Portugal banking insolvency arose.

 

Then, on July 11, 2014, investors sold out of Commodiites, DBC, DJP; specifically a trade lower in Oil, USO, OIL, BNO and Agricultural Commodities, RJA,  and that together with a sell by the currency traders of the Canadian Dollar, FXC, caused Commodity Currencies, CCX, to trade lower. The Loonie is the first of Banker Regime’s coinage of currencies, to experience debasement.

 

The Banker Regime’s coinage of fiat wealth experienced debasement, as investors no longer trust the monetary policies of the world central banks to stimulate investment gains, nor support  Energy Production, XOP,  the development of Global Natural resources, IGE, provide for Global Growth, DNL, procure Nation Investment, EFA, and Emerging Market Nation Investment, EEM.

 

Economic recession leading to economic deflation is at hand, as BBC reports Falling North Sea Oil Revenue To Hit UK Government Finances.

 

Debt deflation, specifically competitive currency devaluation, is an inherent part of the final phase of the Business Cycle, it doesn’t come though nations selling their currencies, rather it comes through the combined action of bond vigilantes and currency traders carrying out a war of economic destruction against the world central banks; the result of which will be global economic deflation as reported by Nancy Hanover For Profit Education Chain Corinthian College Implodes. Corinthian College plans to sell or close its colleges and trades schools, affecting 72,000 students in the US and Canada.

 

Political will and vision capitulate as the world pivots into Kondratieff Winter. Kathleen Geier posts Dems Abandon Economic Inequality Talk.

 

Syncretism, that is the formation of new religious ideas from multiple distinct sources, emerges as the world enters into Kondratieff Winter. Charisma News reports Heresy Rising: Christian Pastors Embracing New Age Syncretism

 

The economic life experience in Kondratieff Winter is one of debt servitude. Kenneth Rogoff writes in Project Syndicate Europe’s Debt Wish  It is difficult to see how Europe can revive economic growth without significant debt restructuring or rescheduling. Europe’s politicians seem utterly unable to contemplate this scenario, thus placing a huge burden on the ECB.

 

Beginning in 1971 when President Nixon took the US off the gold standard to fund the Vietnam War, the world has been based upon a debt based monetary system. The Eurozone’s debt cannot, and will not forgiven; there will be no debt jubilee.

 

All of the Eurozone debt will be applied to every man, woman, and child in the EU. Through regional framework agreements, the EU will become a panopticon of debt servitude where former citizens of democratic nation states become zines of regional economic governance, these regional debt serfs will be economic zombies living in a land of austerity. Periphery nations will be hollow moons orbiting around Planet Brussels and Planet Germany. The Telegraph reports Germany Gives Green Light To European Banking Union. With the laws, Germany is pressing ahead of EU requirements in protecting German taxpayers from having to foot the bill when a bank gets into trouble. Instead, in a process dubbed a “bail-in”, creditors and owners will have to take losses from 2015, a year before EU rules take effect. The European Central Bank will begin supervision of big banks across the 18 countries that use the euro later this year in a first step in banking union.

 

Kondratieff Winter is characterized by revolution, regional wars, and multiple global wars.

 

Revolution. Marketwatch posts Portugal’s Banking Turmoil Revives Darkest Nightmares About Europe. And Peter Wise of FT reports The Espírito Santos Are No Strangers To Trouble. In the wake of Portugal’s 1974 revolution, several members of the banking dynasty were imprisoned for months by the radical left wing military. After their release, they fled in disguise across the Spanish border to escape probable rearrest. Forty years later, Portugal’s most influential business family again finds itself at the centre of a storm. Fears over the health of Banco Espírito Santo, one of the country’s biggest banks, have triggered a European stock market sell-off and raised questions over Lisbon’s capacity to fend for itself after withdrawing from an international rescue programme. Ricardo Espírito Santo Salgado, 70, head of a business dynasty that goes back almost 150 years, is being forced to step down early after 22 years as BES’s executive chairman as regulators detach the management of the bank from a family riven by rivalries and facing deep financial difficulties.

 

Regional war. Andrea Thomas of Dow Jones reports Germany warned that its economic growth rate slowed in the second quarter because of the Ukraine-Russia conflict and an unusually weak seasonal pick-up this spring, but it stressed that the economy’s overall upward trend was intact. The warning from the country’s economics ministry shows that the stand-off between western countries and Russia over the future of Ukraine has already hurt German companies, the biggest of which are highly exposed to the Russian market.

 

Global war. Turkey, TUR, is very much the World’s Cross Road, and it is continually seeking to retain it status as a viable nation investment destination; this status will end soon.

 

Remo Kernizi remarks Iraq’s recent banning of cargo flights to Erbil and Suleymaniah was meant to punish Turkey and Kurdistan since the only way left for Turkey to export its goods to Iraqi cities is by air (road transport is cut off). It is time Kurdistan declares its independence, own its air space and right to export its crude w/o prospect of legal challenge from Baghdad once and for all.

 

Turkey is going to be the doormat, transit center, and fulcrum point for the Bible prophesied Psalm 83 War, the Ezekiel 38 War, and the rise of the Sovereign to his rule in Jerusalem.

 

Gospel And Prophecy relates Turkey At The Crossroads. Jerusalem was ruled by Turkey a century ago. It had been a part of the Ottoman Empire for four centuries.

 

Over two millennia ago, the kings of the North and South fought repeatedly over the territory of what was then Judah, the ancient nation of the Jews. The two dynasties were the successor states to Alexander’s Greek Empire. Daniel 11 contains a detailed prophecy from the sixth century B.C. that was largely fulfilled in the second century before Christ. However, it was not fulfilled in its entirety. Verses 40-41 of the chapter shows that the final part of the prophecy is still future: “At the time of the end the king of the South shall attack him; and the king of the North shall come against him like a whirlwind, with chariots, horsemen, and with many ships; and he shall enter the countries, overwhelm them, and pass through. He shall also enter the Glorious [Holy] Land, and many countries shall be overthrown.”

 

(Being at the crossroads), the country now known as Turkey will be involved in these end-time events

 

Specifically it is out of waves of Club Med, that is Portugal, Greece, Italy and Spain, sovereign, banking, and corporate insolvency, that diktat in the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude as the way of life, as investors derisk out of debt trades and deleverage out of currency carry trades.

 

The emergence of a new way of life of debt servitude is seen in the Bloomberg report Turkish Current Account Recovery Exposes Deficit of Trust. Analysts are questioning whether the improvement in Turkey’s, TUR, current-account deficit is sustainable as mounting export risks and prospects for rising imports highlight a key financial vulnerability.

The shortfall narrowed to $3.4 billion in May, according to data published by the central bank today. That took the gap to $19.8 billion in the first five months, down 39 percent from the same period last year. While Turkey’s two-year note yields have posted the second-biggest decline in emerging markets in 2014, analysts including Philippe Dauba-Pantanacce at Standard Chartered Plc say investors aren’t counting on the deficit to keep dropping.

While the central bank is entering a rate-cutting cycle that may boost domestic demand, fighting in neighboring Iraq and a euro-region recovery facing new financial shocks are threatening prospects for exports to Turkey’s biggest markets. The current account is the nation’s “Achilles’ heel,” and improvement may prove “temporary,” Dauba-Pantanacce said.

“A softening of European demand combined with steep headwinds for exports via land on the southern borders might dent the successful export story,” he said by e-mail yesterday. “On the import side, Turkey remains vulnerable to any pickup in domestic demand.”

 

To emphasize, a New Beast, seen in Revelation 13:1-4, is rising to replace the Creature from Jekyll Island. It is headed by A New Charlemagne, seen in Revelation 13:5-10, and a New Monetary High Priest, seen in Revelation 13:11-18. These are rising in sovereignty and seigniorage, to establish the new coinage of totalitarian collectivism it will be the medium of exchange that all trust in for economic life experience.

 

The Banker Regime was characterized by democratic deficit, specifically regulatory capture and  financial intermediation, that is by crony capitalists, such as Johnson and Johnson, JNJ, and by financial intermediaries, such as the Primary Dealers, KCE, such as MS, who benefited from POMO.

 

John Cochrane writes in the WSJ, Ideas for Renewing American Prosperity. Washington is stuck because that serves its interests. Long laws and vague regulations amount to arbitrary power. The administration uses this power to buy off allies and to silence opponents. Big businesses, public employee unions and the well-connected get subsidies and protection, in return for political support. And silence: No insurance company will speak out against ObamaCare or the Department of Health and Human Services. No bank will speak out against Dodd-Frank or the Securities and Exchange Commission. Agencies from the Environmental Protection Agency to the Internal Revenue Service wait in the wings to punish the unwary … in the end, only an outraged electorate will bring change, and growth.

 

The Beast Regime will be characterized by the most extreme type of democratic deficit, specifically regulatory oversight of the factors of production, and economic intermediation, by regional fascists.

 

Open Europe posts May Comes Under Fire For Decision To Opt Back Into European Arrest Warrant;

Grayling relates the whole area of EU justice and home affairs needs to be renegotiated. During yesterday’s Commons debate about the UK opting back in to 35 EU crime and policing laws, Home Secretary Theresa May justified the decision to opt back in to the European Arrest Warrant on the basis that UK law had been changed to introduce a proportionality test, and to allow extradition requests to be turned down if they relate to actions which took part in the UK but are not classified as criminal offences in the UK.  However, the government came under fire from a number of Conservative backbenchers for effectively transferring new powers to the EU. May confirmed that once negotiations between the UK, the European Commission and other member states have been concluded, MPs will vote on the final package.  Justice Secretary Chris Grayling argued that under a majority Conservative government, “The whole area of justice and home affairs needs to be part of [the EU] renegotiation process.” FTTelegraphIndependentTimesGuardianGuardian: Editorial

John Redwood posts European Criminal Justice And The Sovereignty Of The British people. Yesterday, Parliament debated whether to opt back in to 35 of the EU Criminal Justice measures. We have recently rightly opted out of all 135 measures, as we were entitled to under our version of the centralising Lisbon Treaty. I and others told  Parliament why we do not wish to opt back in to anything.

On June 15th 1215 at Runnymede the King conceded an important grant of liberties to Englishmen called Magna Carta. Though this was just one of many evolving constitutional documents thrown up in our history of curbing the powers of  executive government and building a stronger democratic Parliament to curb excessive state power, it has become one of the earliest and most iconic. It gave Englishmen the right to fair trial under English law with proportionate punishments for the guilty. It set up a forerunner of Parliament, an elected council of 25, to supervise the settlement and check up on the government’s good faith in implementing it.

The government plans to celebrate and commemorate this event next year. It is no way to do so by passing control of these important matters of justice to the European Union. I and like minded colleagues fully understand the need for cross border police collaboration, for some common investigations of cross border crime with agencies from other countries, and the need from time to time to extradite possible criminals for trial elsewhere. We do this by Extradition Treaty or agreement with other countries in all but the EU.

The EU wishes us to have different arrangements in the EU, submitting our control and jurisdiction to EU and European Court jurisdiction. This to me is a step too far, and a needless sacrifice of the sovereignty of the British people.

The government argued that the European Arrest Warrant was necessary to get back nasty criminals for trial who had travelled to EU countries. We explained to them that we too wish to see serious crime pursued across frontiers. We wish to have an Extradition Treaty with the EU just as we have such treaties with many non EU countries. That is a better route than putting ourselves under the control of the ECJ and the Commission. We can change, influence or cancel an Extradition Treaty if we wish. Once we have opted into EU criminal justice we are powerless to change anything unless 27 other EU countries, the Commission and the European Parliament agree.

In Kondratieff Winter, austerity is one’s life experience.

WSWS posts It’s Inhumane: Detroit Water Shutoffs Hit Families, Ill And Elderly Residents. Thousands more Detroit families had their water shut off this week as part of the city administration’s plan to cut service to 150,000 households who are overdue on their water bills.

 

Late stage speculative credit bubbles grow into wild animals, for example The Bad Bitch, that is Scarlet Harlot known as Mystery Babylon, seen in Revelation 17:1-5.  God, is calling His People, that is the Elect of God, to come out from the Empire of Deceit, with its slave economy, to experience life in Christ, and the freedom of the economy of God, as presented by the Apostle Paul in Ephesians 1:10.

 

3) … Living in the inner city, that is the downtown area, I have consistently been a bone for psychopaths to chew on.

Skinny Hippo posts Profile of a Psychopath

 

4) … Gold is the only safe asset.

Credit Bubble Stocks posts Silver Is A Very Crowded Long Again. The Silver Miners are in the “sweet spot” being short at today’s price of 20.57. Currently, the market price of Silver is determined by industrial demand. And inasmuch as the world has just entered Kondratieff Winter, the price of silver will soon fall lower with the debasement of all things that takes place in the final phase of the Business Cycle. Beginning in 2015, future price rises above 19.50, the current 200 day moving average, should be bought as such a rise would indicate an investment demand for silver. Gold should be bought and stored in a physically safe place, as it is the only safe haven investment available.

 

5) … Like Duane and Shelly Muir, for me it’s Vacation Time.

Jesus said in Luke 21:28, When these things begin to take place, stand up and lift up your heads, because your redemption is drawing near. Enjoy Johnny Cash, Goin By The Book.

 

Peak Wealth And Peak Money Attained … The World Transitions Fully Into Kondratieff Winter On The Failure Of Credit

July 5, 2014

Financial Market Report for the Week Ending Thursday, July 3, 2014

This post is available in Google Document Format here

Introduction

On Tuesday, July 1, 2014, Credit, AGG, specifically the 30 Year US Government Bonds, EDV, the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, failed, as the Bond Vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, with the result that the world fully entered into Kondratieff Winter, the final phase of the Business Cycle, which commenced when the European Financials, EUFN, the European Small Cap Dividend Stocks, DFE, and the nations of Greece, GREK, and Ireland, EIRL, traded lower in value, on the death of the Euro, FXE, in June 2014.

This inquiring mind asks, Does or did the US Federal Reserve have an anti-inflation mandate or a full employment mandate?

Clearly, the Great Recession and weak recovery are the economic past, what lies ahead?

1) … Global debt deflation is underwriting disinvestment, as the world enters Kondratieff Winter, the final phase of the Business Cycle; with the result that regional economic governance is emerging to replace democratic nation state governance.

In the first half of 2014 hot money flowed into the Australia Dollar, FXA, as investors pursued yield, as is seen in the Bloomberg report Big Four Lead Bond Charge Abroad as Costs Fall  … I relate that the carry trade into Australia, EWA, and KROO, as well as its peer New Zealand, ENZL, is history.

Bloomberg posts Yen Bears Say BOJ Exit Distant as Swaps at ’05 Low: Japan Credit. Interest-rate swaps are signaling the Bank of Japan will lag far behind the Federal Reserve in ending record stimulus, adding pressure on the yen to weaken … I relate that the carry trade in Japan, EWJ, JSC, DFJ, continued vertically higher on July 1, 2014, on the debasement of the Japanese Yen, FXY.

Bloomberg posts Memphis Bond Traders See Ongoing Low Treasury Interest Rates … I relate that the Memphis Bond Traders have it wrong, the Benchmark Interest Rate is moving continually higher, as the Bond Vigilantes have control of this Bow of Economic Sovereignty, as on October 23, 2013, Jesus Christ opened the First Seal of the Scroll of End Time events, and released the Rider on the White Horse, who has the Bow without any Arrows, to begin to effect coup d etats worldwide.

Beginning in July 2014, out of an ever rising Benchmark Interest Rate, ^TNX, climbing from 2.49%, the Bond Vigilantes will soon cause derisking out of debt trades, like those which occurred in the European Financials, EUFN, and deleveraging out of currency carry trades, like those which occurred in the European Small Cap Dividends, DFE, the Eurozone Stocks, EZU, and the Eurozone Nations such as Ireland, EIRL, Greece, GREK, and Austria, EWO. Those invested in EU Equities, were the first casualties in an ongoing war waged by the Bond Vigilantes against the Banker Regime.

World Stocks, ACWX, and Nation Investment, EFA, and Global Financial Institutions, IXG, will be trading lower when Commodity Currencies, CCX, such as the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar, FXC, start to fall lower than the Yen, FXY, on the ongoing exhaustion of the world central banks’ monetary authority, as investors increasingly fear that the monetary policies of The Titans have crossed the rubicon of sound monetary policy, and have made “money good” investments bad. This will be seen in the ongoing Yahoo Finance Chart of CCX, FXY, ACWX and EFA. Look for the ratio of EUO to YCS, that is EUO:YCS, to become increasingly negative, forcing investors out of Euro Yen carry trade, that is EURJPY currency carry trades, as well as out of currency carry trades worldwide.

Given that the world operates on a debt based money system, the tug of war between the world central banks and the Bond Vigilantes, has, and always will create money. Trust in the nations’ ability to make good on its debt has underwritten the legitimacy of fiat money.  Now on July 1, 2014, fiat money is dying, as exemplified in the Euro, FXE, trading lower; and diktat money is being established to provide one’s economic life experience.

This inquiring mind asks, What is the origin of our current economic experience? And just like who is coding our economic life experience  now?

Hollywood has it right, in Prometheus like fashion, the Bond Vigilantes are creating a new monster. The Creature from Jekyll Island, is morphing to become something more terrible, that being The Beast Regime of Regional Economic Governance and Totalitarian Collectivism. It is gestating and will be rising out of disinvestment and out of economic deflation, to establish policies of diktat in every one of the world’s ten regions, and schemes of control throughout all of mankind’s seven institution, as foretold in Bible prophecy of Revelation 13:1-4. New Titans will rule this monster, just as the former Titans, Janet Yellen, Ben Bernanke, Mark Carney, Haruhiko Kuroda, have rule the former monster.

Fiat money, defined as the combination of Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, is starting to die; as exemplified in the Euro, FXE, and is being replaced by diktat money, defined as the diktat of regional sovereign leaders for regional security, stability, and sustainability; with the result that regional economic governance is replacing democratic nation state governance.

On Monday, June 30, 2014, Automatic Earth postsIt’s A Case Of Bad Debt Driving Out Good Money. The difference between debt and equity is the same as that between debt and money. And McNally wrote a great piece on how debt drives out equity in our world, and reaffirms Gresham’s law.

Ralph Atkins, the FT’s capital markets editor, relates Euro Debt Constraining Growth discusses high private sector debt levels in the eurozone with Moritz Kraemer, S&P’s chief sovereign ratings officer. Mr Kramer says Europe is ‘in for the long haul’ on debt deleveraging.

Global ZIRP began in 2008 with Paulson’s Gift, which became Ben Bernanke’s QE1, where the worst of investments, that is Distressed Investments, such as those traded by Fidelity Mutual Fund,FAGIX, were traded out for money good US Treasuries; according to Morningstar, Fidelity Capital & Income isRanked number 1 out of 742 like investments.

The final phase of Global ZIRP, is known as peak finance, and is producing a stupendous moral hazard based peak wealth, which has come via the three economic dynamos of creditism, corporatism, and globalism.

The ongoing Yahoo Finance Chart of the Russell 3000, IWC, illustrates how Stock Buybacks are part of Peak Finance. David Stockman writes Bubble Finance At Work: How The Share Repurchase Mania Is Gutting Growth And Leaving Financial Wrecks. With the stock market returning tobubble territory, stock buybacks for the Russell 3000 amounted to$567.6 billion in 2013. Share repurchases, in the previous bubble, hit an all-time high of$728.9 billion in 2007; right before the financial crisis of 2008 unfolded. It seems, indeed, as if corporate executives become intoxicated by bull markets in stocks. Can you say “buyback fever”?

For followers of Austrian economics, it is understood that stock market bubbles are fueled by the Federal Reserve’s monetary pumping; which goes hand-in-glove with artificially low interest rates engendered by the Federal Reserve. Consequently, misleading interest rate and price signals can cause businessmen to make costly errors in judgment. Since stock buybacks, misguidedly, are consideredinvestments in one’s own business, are we not witnessing a massive clustering of errors with innumerable executive management teams authorizingmalinvestment on a grand scale? Instead of businessmen misreading market signals and mal investing in capital and producers goods, many are male investing in shares of their own companies via stock buybacks.

Peak Finance came through the terminal excesses of the speculative leveraged finance of Minsky Capitalism and is seen in capital flows into High Beta ETFs, such as the IPOs traded by FPX.

Katie Roof of Fox Business reports IPO Mania. The first half of the year is off to the best start since 2000 for U.S. IPOs, according to Dealogic. There have been 154 IPOs raising $36 billion in the first six months of the year, compared to 235 IPOs and $67 billion in the first half of 2000. Leading the pack with the most IPOs is the healthcare sector, which has seen 55 IPOs raising $4.1 billion, largely stemming from a biotechnology boom. Technology has seen the most volume, with $10 billion raised from 33 offerings… Venture-backed IPOs have had a strong turnout with 63 IPOs, compared to 30 in the first half of last year. The last time venture-backed IPOs had a stronger start was in 2000, with 166 deals priced in the first 6 months. In terms of volume, this has been the best year ever for financial sponsors. Fifty-five private equity-backed IPOs have raised $24 billion so far this year.

On Monday June 30, 2014, Commodities, DBC, traded lower on lower Agricultural Commodities, RJA, as CORN, WEAT, JJG, SGG,  and SOYB, traded lower, which turned theDefensive Sector, Global Agriculture, PAGG, lower.

On Tuesday, July 1, 2014, the world passed through a historic economic inflection point, asCredit Investments, that is Aggregate Credit, AGG, specifically the 30 Year US Government Bonds, EDV, the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, failed, as the Bond Vigilantes called the Interest Rate on the US Ten Year Note,  ^TNX,  higher from 2.49% to 2.56%, and which in so doing traded lower from a double top high.

The trade lower in the US Sovereign Debt, means the end of the era of US Dollar Hegemony, establishes the beginning of the end of the US Dollar Empire, and communicates the end of Global Finance.  Inverse Credit Investments, such as JGBS, SAGG, TMV, DTYS, and TTT, traded higher.

Dan Sanchez posts in Medium War Is the Health of The…Economy?   I  reply war has been the health of the economy; but with the trade lower in US Treasuries, US Dollar Global Hegemony is being replaced by regional fascism of the Ten Toed Kingdom of regional economic governance and totalitarian collectivism.

And of  note, the Bond Vigilantes also steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX; seen in the Steepner ETF, STPP, steepening.

Currency traders called the Japanese Yen, FXY, lower, and the British Pound Sterling, and two Commodity Currencies, CCX, these being the Australian Dollar, FXA, and the Canadian Dollar, FXC, higher, with the result that most Equity Investments, that is World Stocks, ACWX, traded to new rally highs, as funds flowed out of the Credit Investments, that is Aggregate Credit, AGG, as global debt deflation commenced on July 1, 2014.

The failure of Credit, AGG, on Tuesday, July 1, 2014, propelled the world into Kondratieff Winter, is a painful economic experience, as it involves a see saw destruction of Fiat Wealth, such as the Eurozone Stocks, EZU, and Eurozone Nations, such as Ireland, EIRL, and Greece, GREK.

Junk Bonds, JNK, traded parabolically lower; these are now a failed investment.  Reuters reports Global Investors Pare Risky Bond Holdings, Brace For Sell-off

The 30 Year US Government Bonds, EDV, and the 10 Year US Government Notes, TLT, traded decisively lower. The Pursuit of Yield Rally, that commenced in January 2014, ended on July 1, 2014.

Confirmation of the end of the Pursuit of Yield, comes from 1) Dividends Excluding Financials, DTN, trading below their June 24, 2014, rally high, 2) all of the High Yielding Debt, such as High Yield Municipal Bonds, HYD, with the exception of European Credit, EU, traded lower in value, and 3) risk free money, that is Floating Rate Notes, FLOT, traded sharply lower on July 1, 2014.

Vox writes Managing Credit Bubbles. That is an impossibility! The Global Bond Bubble burst on July 1, 2014, communicating the failure of credit has commenced, with the result that the world is starting to pivot from the age of credit and currencies, and into the age of diktat and debt servitude.

The trade lower in Credit Investments, AGG, is a profound historic change, as debt has been the engine of growth; the global economic future is one of economic deflation, now that debt is trading flower in value.  The Jeremy Warner Telegraph analysis comes too late. We [in the UK] must end this addiction to debt as the engine of growth. There has been no serious attempt to get to grips with the financial cycle, which requires moving away from debt as the engine of growth.

The fact that destructionism is starting to replace inflationism establishes the fact that the world has entered into Kondratieff Winter, the final phase of the Business Cycle.

When Sovereign Currencies, trade lower, debt deflation in Equity Investments, that is World Stocks, ACWX, will get strongly underway as the death of currencies commences.

On July 2, 2014, High Beta Investments, such as Large Cap Nasdaq, QQQ, and  Consumer Service IYC, such as DIS, led Equity Investments,  ACWX,  to a new rally high.

Gulf States, MES, Taiwan, EWT, Greece, GREK, Italy, EWI, Ireland, EIRL, Japan, EWJ, JSC, India Small Caps, SCIN, The US Small Caps, IWM, IWC, Peru, EPU, Columbia, GXG, Vietnam, VNM, Thailand, THD, Argentina, ARGT, The UK, EWU, EWUS, and Canada, EWC, CNDA, led Nation Investment, and Small Cap Nation Investment, EFA, higher to its June 24, 2014 high..

Regional Banks, KRE, Argentina Banks, BMA, GGAL, BFR, BBVA, India Bank, HDB,  Japanese Banks, MTU, SMFG, NMR, IX, Panama Bank, BLX, and, Columbia Bank, CIB, led Global Financials, IXG, higher; but these remain below their June 2014, rally high.

Japanese Small Dividends, DFJ, India Earnings, EPI, Emerging Market Small Cap Dividends, DGS, International Telecom, IST, Shipping, SEA, Leveraged Buyouts, PSP, Global Utilities, DBU, Premium REITS, KBWY, Water Investments, FIW, Emerging Market Infrastructure, EMIF, Global Infrastructure, IGF, Energy Partnerships, AMJ, EMLP, MLPJ, and Regional Banks, KRE, led Yield Bearing Investments higher; while Utilities, XLU, and Mortgage REITS,  REM, traded lower.

On Wednesday, July 2, 2014,  Copper Miners, COPX, Steel Producers, SLX, Global Industrial Miners, PICK, Healthcare Providers, IHF, traded higher, taking World Stocks,  ACWX, to a new rally high, drawing Copper, JJC, and Base Metals, DBB, higher.  Of note, Tesla, TSLA, traded lower.

The chart of the S&P 500, $SPX, SPY, shows a trade higher, to a new all time high.

Australian, EWA, KROO, China Financials, CHIX, Hong Kong, EWH, China, YAO, and Taiwan, EWT, led Asia Excluding Japan, EPP, to a new rally high. The Gulf States, MES, India, INP, Russia, RSX, Eastern Europe, ESR, Thailand, THD, Peru, EPU, Denmark, EDEN, Mexico, EWW, and Argentina, ARGT, traded higher; while Brazil, EWZ, EWZS, BRF, traded lower on a lower Brazilian Real, BZF. Poland, PLND, EPOL, traded lower. China Investments traded higher as Bloomberg postsChina Debt Set for Biggest Quarterly Gain in Two Years on Easing.

In Yield Bearing Investments, Electric Utilities, XLU, such as Dominion Resources, D, traded parabolically lower, leading Dividends Excluding Financials, DTN, lower. Water Investments, FIW, and International Telecom IST, traded lower.  Leveraged Buyouts, PSP, traded to a rally high.  Gulf Dividends, GULF, Australis Dividends, AUSE, China Dividends, CHXF, China Real Estate, TAO, traded higher.

The Bond Vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, strongly higher, and steepened the 10 30 US Sovereign Debt Yield Curve, seen in the Steepner ETF, STPP, trading higher, which drove Aggregate Credit, AGG, strongly lower, on lower 30 Year US Government Bonds, EDV, US Ten Year Notes, TLT, High Yield Municipal Bonds, HYD, Long Duration Corporate Bonds, LWC, Corporate Bonds, LQD, Mortgage Backed Bonds, MBB, and Municipal Bonds, MUB.

Currency Hedged Stocks, HEDG, traded lower, communicating that the way is now down for all stocks.

The nature of our current world is that it operates on a debt based economic system, and this begs the question, what is money?

Libertarian Mark Thurston of The Mises Institute, ask What Is Money?

Social Democracy posts Alfred Mitchell Innes on the Credit Theory of Money

Money is defined as the combination of Aggregate Credit, AGG, together with Major World Currencies, DBV, and Emerging Market Currencies, CEW.

And I present the Modern Credit Theory of Money. Money is defined as the credit and flow that proceeds from a sovereign for one’s economic life experience. Money is the trust of people in the sovereign authority’s monetary policies and schemes for economic life experience; it will either be one of prosperity or austerity; and is determined by the viability of the sovereign’s debt, and the Interest Rate there upon.

Inasmuch as the Bond Vigilantes have called the Benchmark Interest Rate, $TNX, consistently higher from 2.49% to 2.56 on July 1, investors no longer consider the Banker Regime’s credit viable, and as a result, July 1, 2014, establishes peak money, and marks a pivoting from the age of prosperity to the age of austerity.

The Banker Regime’s fiat money, was based upon policies of investment choice and schemes of credit liquidity; it is giving way to the Beast Regime’s diktat money, which is based upon policies of diktat and schemes of debt servitude.

The Banker Regime’s coinage was reworked with Global ZIRP beginning in 2008 with Paulson’s Gift, which became Ben Bernanke’s QE1, where the worst of investments, that is Distressed Investments, such as those traded by Fidelity Mutual Fund, FAGIX, were traded out for money good US Treasuries.

That coinage has topped out in value; it is becoming debased as investors no longer believe that the sovereign’s policies and schemes can stimulate investment gains in the acquisition of Risk Assets, such as Small Cap Pure Growth Stocks, RZG, such as the Fracking Companies, or Small Cap Pure Value Stocks, RZV, such as the Automobile Dealers, or procure global economic growth.

The ongoing printing of money by the US Fed, has resulted in a relentless rise in the Money Supply which has debased our currency, and is now starting to create Headline Inflation, as reported by numerous news sources.

A new coinage, that being the trust of people in the mandates of fascist regional leaders will be increasing in value, establishing regional kings in each one of the world’s ten regions, as the Ten Toed Kingdom of regional economic governance and totalitarian collectivism (presented in Daniel 2:25-45)  grows in greater economic viability (as foretold in Revelation 17:12).

To be official, money bears the stamp of its sovereign, in the case of the US Dollar, the Pyramid on the back of the US Dollar, and in the case of diktat money, it bears the seal of Mario Draghi.

Eventually out of the total failure of diktat money, the Sovereign, and the Seignior, will rise to rule the world from Jerusalem, in a One World Government, and in a One World Religion, with One Coin To Rule Them All, that is the Charagma Money System, presented in Bible Prophecy of Revelation 13:18, where one takes the Sovereign’s Mark in order to conduct any economic activity.

On Thursday, July 3, 2014, Gold, GLD, traded slightly lower as the Dow, DIA, topped 17,000, and as the S&P 500, SPY, traded to a new rally high, producing peak wealth, coming as investors have sold out of Credit Investments, AGG, as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher to close the week at 2.65%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TNX, seen in the Steepner ETF, STPP, steepening.

It was a slaughter house in Credit Investments, as the 30 Year US Government Bond, EDV, and US Ten Year Notes, ^TNX, traded strongly lower.

While the world has achieved peak wealth and peak money, Bonds, BND, are no longer a viable investment. The world is transitioning into the final phase of the Business Cycle, that is Kondratieff Winter, on the failure of credit, that is the failure of Credit Investments, as the Bond Vigilantes have called the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.

European Credit, EU, is now trading lower; in fact all Credit Investments are now trading lower from their rally highs.

Bond King, Bill Gross, is going the wrong way.  Bloomberg reports Pimco’s Bill Gross Bets $200 Million Of His Own Cash On Low Rates.  Bill Gross has wagered almost $200 million of his own money on a bet that interest rates will stay low.

Since 2008, the Banker Regime’s policies of investment choice and schemes of credit liquidity provided six years of  risk-free investing leading to a fantastic swell of Equity Investments.

Today was  no exception, in a strong but of risk-on investing, the legacy sectors, Timber Producers, WOOD, Metal Manufacturing, and Steel, SLX, traded higher. Small Cap Pure Value Stocks, RZV, Small Cap Pure Growth Stocks, RZG, Semiconductors, SOXX, Global Industrial Producers, FXR, Transportation, XTN, Smartphone, FONE, China Technology, CQQQ, Networking, IGN, Media, PBS, Internet Retail, FDN, Biotechnology, IBB, Health Care Providers, IHF, Global Miners, PICK, Copper Miners, COPX, Coal Miners, KOL, Rare Earth Miners, REMX, Automobiles, CARZ, and Consumer Discretionary sectors, Global Consumer Staples, KXI, Global Consumer Discretionary, RXI, Retail, XRT, Consumer Services, IYC, traded higher, taking World Stocks,  ACWX, to a new blow off market top high.

Credit Services, such as AXP, V, MA, DFS, CIT, ECPG, FCFS, PRAA, as well as HEES, URI, traded higher.

China Financials, CHIX, Argentina Banks, BRF, BMA, BBVA, GGAL, and Mexico’s Bank, BSMX, traded higher, taking Emerging Market Financials, EMFN, higher.  Regional Banks, KRE, Investment Bankers, KCE, Insurance Companies, KIE, and Asset Managers, traded higher, taking Global Financials, IXG, higher, to match its previous rally high.

The Philippines, EPHE, China, YAO, ECNS, Hong Kong, EWH, and Taiwan, EWT, led Asia Excluding Japan, EPP, to a new rally high.

Columbia, GXG, Peru, EPU, Mexico, EWW, Argentina, ARGT, Chile, ECH, and Egypt, EGPT, led the Emerging Markets, EEM, to a new rally high.

New Zealand, ENZL, and Netherlands, EWN, both high-beta nation investments, recovered all of last weeks’ losses. The UK, EWU, Canada, EWC, CNDA, Denmark, EDEN, and the Russell 2000, IWM, rose to a new rally highs, taking Nation Investment, and Small Cap Nation Investment,  EFA, to a new rally high.

As a group Yield Bearing Investments, traded unchanged. Electric Utilities, XLU, and Mortgage REITS, REM, plummeted; while China Real Estate, TAO, India Earnings, EPI, and Emerging Market Small Cap Dividends, DGS, China Dividends, CHXF, and Leverage Buyouts, PSP, traded to new all time highs.

Gold, GLD, traded slightly lower, as the US Dollar, $USD, UUP, and US Stocks, VTI, traded higher, as the highly volatile Swedish Krona, FXS, the Australian Dollar, FXA, the Swiss Franc, FXF, and the Euro, FXE, traded lower; Commodity Currencies, CCX, traded parabolically lower.

Please consider that not only has the failure of credit commenced in July 2014, with Aggregate Credit, AGG, trading lower, but also the death of currencies, has commenced as well, with the trade lower in the Swedish Krona, FXS, the Swiss Franc, FXF, and the Commodity Currencies, CCX, such as the Euro, FXE, and the Australian Dollar, FXA.

A new father for a new age. The Monetarist Milton Friedman be dead; and the Regionalist Mario Draghi is rising to take his place.

The debt based money system is starting to crumble, the Milton Friedman Free to Choose paradigm of Floating Currencies is being relegated to the dustbin of history, and in its place the Mario Draghi paradigm of Regional Diktat is rising to provide economic life experience.

Although I am not an Austrian Economist, they correctly champion the principle of the Business Cycle, and the world is entering Kondratieff Winter, its final season, as investors are selling Bonds, BND, on the reality that the monetary policies of the world central banks and their schemes of credit liquidity, that is massive torrents of Fed money-printing, have crossed the rubicon of sound monetary policy and have made money good investments bad, these include Eurozone Stocks, EZU, European Financials, EUFN, and Eurozone Nations, such as Ireland, EIRL, Greece, GREK, and Austria, EWO.

I buy into the Austrian line that gold is economic freedom and QE is slavery. Like the Austrian Economists, Robert Murphy, Robert Wenzel, Lew Rockwell, and Mike Mish Shedlock, I believe that physical possession of gold bullion, is the only reliable, sound, and sustainable investment; and I encourage one to dollar cost average into the purchase, possession, and safe storage of this hard asset.

Noah Smith writes Austrian Economists And Brain Worms Austrianism wraps itself in the rhetoric of personal freedom and conservative politics, laying the free-market rhetoric on thick.

I do not champion personal freedom, nor do I have any free-market convictions, rather I have been force fed the Red Pill by God, and thus have succombed to the concept of the Apostle Paul in Ephesians 1:10, that Jesus Christ acts in dispensation, that is in stewardship of all things political and economic, bringing them to completion and perfection. And having produced peak liberalism, meaning freedom, from the government, that He is now introducing authoritarianism, where regional fascist leaders will establish regional economic governance and totalitarian collectivism, and rule in policies of diktat and schemes of debt servitude.

2) … Will the world move towards a Global Fed or towards regional economic governance?

Towards a Global Fed?

Liberal Economist Brad Delong of the Center for Equitable Growth posts The Federal Reserve Needs to Fulfill Its Global Role. The Federal Reserve these days is focusing well-nigh completely on the state of the US economy. It is broadly happy with its policies. I am not happy with its policies, not even from a narrow domestic demand-management perspective. Since mid 2007 policy has been and remains insufficiently expansionary: behind the curve.

The United States is not just another large open economy in a world of flexible exchange rates capable of following its own monetary policy. The United States is a global hegemon. The Federal Reserve is thus a global central bank: the central bank for the world as well as the United State.

It has a responsibility not just to stabilize output, employment, and inflation and ensure financial stability in the United States. It has a responsibility to successfully manage the world economy in its entirety: that means crafting policy in the interest of the world as a whole, and that means that its policy should take into account and compensate for market, institutional, governance, and policy failures elsewhere. One such areas of concern is the health and stability of growth in emerging markets as they attempt to (a) gain the benefits of capital inflows for development, (b) satisfy North Atlantic demands for open financial markets, and yet (c) manage the resulting instability created by “hot money”, the carry trade, irrational exuberance, and overshooting.

The most extraordinary problem facing the global economy today is the crisis of Europe, and of euros. Europe cannot resolve this crisis. It lacks the institutions of global governments to do so. What needs to happen is the northern and southern Europe need to rebalance their costs this is best done through insulation in the north rather than through deflation in the south. The problem is that European institutions within the euro zone cannot at least as presently constituted, deliver that outcome.

That is a mammoth failure–in labor market flexibility, in the construction of the institution of a single currency that far exceeds what is justifiable on optimal currency-area principles, in what groups and interests are represented to what degree in the governing councils, and in the policies adopted–that it is the Federal Reserve’s duty to craft global monetary policy to attempt to offset and neutralize, to the limited degree that it can.

The fact that the eurozone lacked the labor market flexibility that would make it an optimal currency area meant that adjustment via the regional reallocation of economic activity would be glacial. The fact that the eurozone was a fixed currency zone ruled out adjustment via nominal depreciation.

There were only two roads to recovery: reflation in northern Europe to push up relative costs and boost the north’s demand for exports from the south to allow it to pay off its debts and deleverage, or deflation in southern Europe to push down its relative costs–at the price of deep depression and lost decades. It is in the strong medium- and long-run interest of United States not to have to deal with a Europe swirling with political currents that at the least flirt with nationalism, authoritarianism, and fascism. A world in which the United States has a proven record of fulfilling the trust it has taken on by assuming the role of global economic hegemon–and thus in which the United States is trusted to manage the global economy for the collective common good–is a much better world for the United States then one in which it is not trusted, and in which global macroeconomic management becomes the emergent result of nation-level race to the bottom policy struggles that at best zero-sum.

Or Towards Regional Economic Governance?

With the trade lower in Aggregate Credit, AGG, specifically the 30 Year US Government Bonds, EDV, and the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, coming as the Bond Vigilantes calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the US Fed be dead.

The call of the Benchmark Interest Rate, higher from 2.49% to 2.56%, by the Bond Vigilances, has done what Ron Paul and the Libertarians have consistently called for: an end to the Fed.

The Bond Vigilantes call of the Benchmark Interest Rate, ^TNX, higher from 2.49% to 2.56% on July 1, 2014, ended the Fed, at least the Fed, as it is construed in masterminding Interest Rates lower.

US Treasury Debt is no longer the driving economic force in the world, and as a result the Dollar Standard, Super Imperialism, and the US Dollar Hegemonic Empire, as described by Michael Hudson, just like the previous global empire, the British Empire, is being relegated to the dustbin of history.

The modern day, debt based, fiat money system failed on July 1, 2014, as the Bond Vigilantes, called the Benchmark Interest Rate higher, $TNX, higher from 2.49% to 2.56%.  Throughout history, nation states and empires have died when their debt is no longer seen as trustworthy. The death of the US Dollar Empire occurred on July 1, 2014 as Credit investors were displaced by the Bond Vigilantes calling its 10 Year Note Interest rate higher.

From 2008 onward, the Global ZIRP monetary policies of the world central banks were really never designed for attaining price stability and employment, and thus have not provided economic recovery; rather the monetary policies were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being awesome fiat wealth inflation.

In contrast, the June 5, 2014 Mario Draghi ECB Mandate for NIRP and Targeted LTRO, together with theJune 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, address secular stagnation, defined as low growth, low employment, and low inflation.

These serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out of debt trade investments and deleverage out of currency carry trade investments.

The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014.

The Eurozone sovereigns, that is the Eurozone Nation States, with their policies of investment choice and credit liquidity, no longer support investment gain.  Because they are insolvent sovereigns their investment seigniorage has failed.  News reports communicate that the Eurozone periphery nations, such as Portugal, Italy, Greece and Spain, are loaded with all types of debt, not just Treasury Debt  that cannot be repaid; this includes The WSJ Report Bad Property Loans Stick to Italian Banks. A Fraction of bad loans has been bought by investors.  Other news reports consistently communicate that prosperity has been relegated to the dustbin of history by economic deflation; this includes the CNBC report Eurozone Retail Sales Stall As Households Feel Pain.

Failed sovereigns and failed seigniorage cannot, and does not provide ongoing economic experience; such only provide economic deflation and economic chaos.

The Bond Vigilantes, are in control of the Bow of Economic Sovereignty, and in calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.49% have effected an investment coup d etat, destabilizing sovereign authority in the Eurozone, and in the US. They will be increasingly successful, in calling the Benchmark Interest Rate progressively higher.

In the Eurozone, a new sovereign, Jean Claude Juncker, and a new seignior, meaning top dog banker who in the process of coining money takes a cut, Mario Draghi, will lead the way forward in establishing regional economic governance as well as in providing new seigniorage of diktat money, to establish regional security, stability and sustainability.

Liberal Economist asks Are Calls for Income Redistribution Based on Envy or Justice?

In the new normal Mario Draghi economy of shared sovereignty, and the new normal Jean Claude Juncker economy of negotiated government, the call of liberals for income redistribution will not be met, as the mandates of these two Eurozone Titans and their soon to be appointed regional fascist leaders, will establish increasing austerity for all of the EU’s citizens.

The Eurozone will serve as the headquarters, and template, for the development of the Beast Regime of regional economic governance and totalitarian collectivism, which is synonymous with the Ten Toed Kingdom, which is replacing the US Dollar Hegemonic Empire now that the 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, are trading lower on the Bond Vigilante’s Call of the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.

3) … Times are changing: the world central bankers are now communicating their common intention to develop macroprudential regulation tools for financial system stability, and turn away from traditional interest rate policies.   

FT writes Fed Must Not Linger Too Long On QE Exit.

David Wessel posts in the WSJ Central Bankers Appear to Line Up their Defenses … And Create The Macroprudential Maginot Line.  It looks like there has been some international coordination of monetary policy rhetoric lately.

With price and wage inflation not a concern right now, we aren’t going to raise interest rates and throw a lot of people out of work to avoid excesses in financial markets or to head off possible asset bubbles, they said. There may come a day when our worries about financial stability will prompt us to hike interest rates, but rates are “the last line of defense.” Not now. The “first line of defense” is making the financial system more resilient so it can better withstand shocks and using our supervisory and regulatory “macroprudential tools” to rein in excesses, as we are doing now.

This inquiring mind asks, just what are “macroprudential policies”, and “macroprudential tools” for financial system stability? And what might they include?

Macroprudential tools are central bank regulations designed for financial stability; frankly they are quite blunt central bank clubs. Mike Mish Shedlock posts Spain Issues Retroactive 0.03% Tax on Bank Deposits to “Boost Economic Growth and Job Creation”. Via translation fromLibre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation. Other tools might be exit taxes from bond funds, another might be capital controls, and yet another might be for banks everywhere to be integrated with the government and be known as the government banks or gov banks for short. In the US most every bank, that is Money Center Banks and Regional Banks, have US Government Treasury Notes, TLT, residing at the Fed. As the Benchmark Interest Rate, $TNX, rises banks might be tempted to withdraw these monies from Mother Fed. So I believe the Fed will put a hold on such action and start to integrate banks into the Fed.

The Fed will be changing and morphing into the North American Fed, and will become the Atlantic compliment to the ECB, that is a North American Continent, that is Canada, Mexico, and America Regional Central Bank, which will serve as the singular banking institution for CanMexAmerica, that is the Regional Financial Hub, for the soon coming North American Union.

4) … LBJ’s Grandchild start to receive assistance.

Manchester, Clay County, KY, 40962, is a place of rural concentrated poverty. The Rural Blog posts 6 E. Ky. Coal Counties Are Among U.S.’s 10 Hardest To Live In, New York Times analysis says.

Down With Tyranny posts Politics And Race In Those 10 Worst Counties To Live In In America.

Can you guess where the political sympathies of these poor desperately difficult counties lie? Romney won each white majority county and Obama won each black majority county.

Viral Spell posts Clay County Is The Most Difficult One To Live In Among All US Counties.

PRB posts Clay County Has A Child Poverty Rate Of 50%

WSON Radio reports 2 Eastern Kentucky Labor Unions Endorse Republican Mitch McConnell. Campaign officials announced Monday that officials with the American Federation of Government Employees correction officer locals in Clay and McCreary counties endorsed Mitch Mcconnell because of his history of constituent service. McConnell has pushed for national right-to-work legislation, which many labor unions oppose. McConnell’s Democratic challenger Alison Lundergan Grimes has been endorsed by the Kentucky chapter of the AFL CIO and has promised to vote against right-to-work legislation.

WYMT TV reports Coordinator Chosen For Promise Zone In Kentucky. Kentucky Highlands Investment Corp has picked a program coordinator for the Promise Zone program in eight counties in southeastern Kentucky. Sandi Curd will manage implementation of the Promise Zone strategic plan. She’ll also serve as liaison between Promise Zone communities and the KHIC, which is regional administrator for the initiative. The area of Bell, Harlan, Letcher, Perry, Leslie, Clay, Knox and part of Whitley counties were awarded one of five national Promise Zone designations. The regions will be targeted for tax incentives and federal grants aimed at improving the economy and expanding educational opportunities.

Town Hall/AP posts Obama Unveils First 5 ‘Promise Zones.  President Obama offered a glimpse at his coming State of the Union address and its expected emphasis on economic disparities while announcing five communities that will be targeted for tax incentives and federal grants under a government “Promise Zone” program.

“We’ve got to make sure this recovery, which is real, leaves nobody behind,” he said. “And that’s going to be my focus throughout the year.”

Obama named the new zones, a blend of rural, urban and tribal communities, at a bipartisan White House assembly, underscoring the type of administrative actions Obama wishes to employ that don’t all require congressional action.

Amid a slow recovery that has not reached many at the lowest rungs of the economy, addressing poverty has become an emerging issue in Washington. Obama has made it a central part of his agenda, and leading Republicans, including potential 2016 presidential contenders, are using the 50th anniversary of President Lyndon B. Johnson’s War on Poverty to offer policy proposals aimed at the poor and struggling workers.

Among those attending the White House event Thursday were Senate Minority Leader Mitch McConnell, R-Ky., a frequent critic of Obama economic policies. McConnell says he supports the “Promise Zone” designation for eight economically hard hit counties in his state, though he said the hardship endured in that coal region of the state is partly a result of the Obama administration’s energy policies. Kentucky’s junior senator, Republican Rand Paul, also attended the White House even

5) … In the News

The Mexico American Border is the test bed for developing martial law, and the emergence of Blue Helmet Order in the United States. The WSJ reports Obama Plans Executive Action to Bolster Border Security. President to act after declaring Immigration Legislation dead for this year.

Bloomberg suggests Hartford CT, and Providence RI, are The Riskiest Housing Markets In America.

Marianne Arms of WSWS posts Italian  Comedian Beppe Grillo’s Five-Star Movement Joins Ranks With The Far Right. The alliance with UKIP is confirmation of the right-wing character of Beppe Grillo’s M5S.

Nick Beams of WSWS post Another Global Financial Crisis In The Making, Bank for International Settlements Warns The BIS report is the latest in a series of warnings that the present financial boom is creating the conditions for another crisis.

Lance Roberts of STA Wealth Management posts in Zero HedgeThe Great American Economic Growth Myth.

Forbes postsAustria Falls Out With Bavaria Over Zombie Banks. There’s a nice little storm brewing in the Eurozone core. Reuters reports that the German province of Bavaria is considering legal action against Austria. And it is seeking support for its action not only from the German federal government, but also from the EU.

Open Europe reports Nicolas Sarkozy Placed Under Investigation For Corruption.  Former French President Nicolas Sarkozy has been placed under official investigation on suspicions of “active corruption” and “influence peddling”. He allegedly promised a high-ranking French judge a lucrative job in Monaco in return for confidential information about other investigations relating to the financing of his presidential campaign in 2007. A judge will decide whether Sarkozy will have to stand trial once the investigation is concluded. Meanwhile, a leader in the Times argues, “As the 2017 [French] presidential election draws near – in the same year as a likely British referendum on Europe – [the French Socialists] can also be expected to resort to anti-British obstructionism as a sop to the hard left.” SpiegelEUobserverHandelsblattTimes Reuters DELe MondeLe FigaroFT: CarnegyOpen Europe blogTimes: LeaderBBC

Mike Mish Shedlock posts New Orders for Manufactured Goods Down More than Expected, Inventories Up 18 of 19 Months, Highest Since 1992

RT reports Ukraine’s Reverse Gas Flow From Europe Is Artificial, Putin Says.  And RT reports Legality Of Reverse Gas Deliveries From Europe To Ukraine Are Under Doubt .  And RT asks  Is It legal? Ukraine Seeks To Fill Gas Gap With Reverse Flows.

Mike Mish Shedlock posts Full-time Employment Falls By 523,000!

Money is the trust of people in the sovereign authority’s monetary policies and schemes for economic life experience; it will either be one of prosperity or austerity; and is determined by the viability of the sovereign’s debt, and the Interest Rate there upon. Bloomberg reports that the first sovereign nation to experience a failure of sovereignty and seigniorage is Puerto Rico. Puerto Rico’s Lifeblood Choked Off as Credit Access Ends.

On July 1, Moody’s Investors Service cut the island’s rating to B2, five steps below investment grade. No local government has borrowed at that level, according to data compiled by Bloomberg. Prices on its general-obligation debt yesterday plummeted to record lows.

“They’re done,” said Matt Dalton, chief executive officer of White Plains, New York-based Belle Haven Investments, which oversees $2.1 billion in munis. “They’re not going to be issuing any more debt on the island. I don’t see how they can bring people back to the trough at this point.”

Puerto Rico and its agencies have operated for years on borrowed money — racking up $73 billion, Bloomberg data show — andWall Street made $910 million since 2000 by structuring its debt sales.

If the government can’t sell bonds at affordable rates, it will have to curtail services for its 3.6 million residents, 45 percent of whom live in poverty.

Like U.S. states, Puerto Rico can’t file for bankruptcy protection. Without the ability to issue debt, it will have to limit all spending to preserve money for health, public safety and education, said Sergio Marxuach, policy director at the Center for a New Economy, a research group in San Juan that focuses on economic development

The commonwealth had already begun closing about 100 schools to help balance the fiscal 2015 budget.

“We need to have guards in prisons,” Marxuach said. “We need to have public-school teachers teaching.”

Anything else, he said, “could be fair game.”

Puerto Rico’s economy has contracted about 11 percent since 2006, according to its Planning Board. The unemployment rate of 13.8 percent is more than double the U.S. average.

Still, returns generated by the island’s risky debt made investors eager to lend and allowed the commonwealth to paper over budget gaps. The securities, which are tax free in all states, are held in two-thirds of muni mutual funds.

The commonwealth is trying to put the brakes on. Garcia Padilla last week signed a bill that allows some public corporations to restructure debt outside bankruptcy. While the governor promoted the move as a way to protect general-obligation debt, creditors took it as an affront. Franklin Templeton Investments and OppenheimerFunds  are challenging the law. The Moody’s downgrade followed.

The Puerto Rico Electric Power Authority, which provides almost all the island’s electricity and is a prime candidate for restructuring, may have to choose between paying bondholders and keeping the lights on, Marxuach said.

The utility, which carries $8.6 billion in debt, paid investors for maturing bonds July 1. It now faces $617 million of bank lines of credit that expire this month and next.

Prepa, as the agency is known, may have to implement rolling blackouts on residential customers so hospitals, schools and businesses can function, Marxuach said.

I comment that Puerto Rico is an insolvent sovereign and has neither investment seigniorage nor fiscal seigniorage; it is a candidate for bondholders to literally own the electricity and water infrastructure and charge whatever rates they may for essential public services. Without access to credit, the people may come to be beholding to the sovereignty of investment funds such as Franklin Templeton and OppenheimerFunds, and will most assuredly be living out their lives in perpetual debt servitude.

Hot money flowed to Australia seeking sovereign yield in the first half of 2014, driving Australia, EWA, its Bank, WBK, and Australia Dividends, AUSE, as well as Bae Metal Commodities, DBB, strongly higher.  Bloomberg reports Australian Bonds Delivered The World’s Biggest Gains To Global Investors Last Quarter.  An index of government securities due in more than a year returned 5.5 percent including currency appreciation versus the US Dollar, the most of 26 markets tracked by Bloomberg and the European Federation of Financial Analysts Societies.

Australian bonds also had the best returns for yen- and euro-based investors at 3.6 percent and 6.1 percent, the data show.

Benchmark 10-year bonds yielded 3.55 percent, following a 54-basis-point drop last quarter, the most in two years. Investor demand pushed the yield down to 3.52 percent last week, the lowest level in a year.

The premium over U.S. Treasuries narrowed to 93 basis points, a level not seen since 2006.

Reserve Bank of Australia Governor Glenn Stevens signaled July 1 that investors can rely on the central bank’s 2.5 percent rate, second only to New Zealand’s among major developed nations. Investor demand at sovereign bond auctions last quarter was the strongest since 2012. Stevens warned today that investors are under-estimating the probability of a “significant fall” in the currency.

While the RBA’s benchmark of 2.5 percent is at a record low, it compares to the Federal Reserve’s target range of zero to 0.25 percent. The Bank of Japan’s main rate is close to zero, and that of the European Central Bank is 0.15 percent

I comment that what has amounted to free credit, that is free money, has driven up currency carry trade investment and debt trade investment in quite speculative fashion seen in the ongoing Yahoo Finance chart of Australia, EWA, its Bank, WBK, and New Zealand, ENZL.

Bloomberg reports Riksbank Abandons Debt Fight as Ingves Overruled on Rates.  Sweden’s central bank left containing the consumer debt boom to the government after policy makers made the biggest cut in interest rates since 2009, overruling Governor Stefan Ingves who pushed for a smaller reduction.

Ingves, who advocated a quarter-point cut, was on the losing side of a 4-2 vote as other board members acted to shield the largest Nordic economy from the threat of falling prices. Policy makers, led by Ingves, have been reluctant to lower borrowing costs amid concern it would fuel further growth in record household debt and surging home prices.

“What will this mean for the housing-price market?” Knut Hallberg, an analyst at Swedbank AB, said by phone. “It will go bananas with a big boost to home prices.”

With rates back to levels last seen during the financial crisis, the central bank said it’s now up the government and the regulator to deal with the fallout of the borrowing binge. Property prices have almost tripled since 1995 while consumer debt has almost doubled to a record 175 percent of disposable incomes. Danes owe more than 300 percent and Norwegians about double.

Well-anchored inflation expectations are “incredibly central,” Deputy Governor Cecilia Skingsley said in a speech today in Visby,Sweden. It’s now even more important for the government to take responsibility for debt growth, she said.

Swedes have already responded to the prospect of lower rates. They raised their use of variable-rate mortgages — defined by the Financial Supervisory Authority as risky — to 77 percent of new loans in June. The ratio was 63 percent in 2012, according to data from state-owned lender SBAB.

Swedbank, Sweden’s biggest mortgage lender, cut its three-month mortgage rate by 0.10 percentage point to 2.59 percent yesterday. Svenska Handelsbanken AB, the second-biggest, lowered its three-month rate by 0.05 percentage point to 2.61 percent

The government has been increasing capital requirements for its banks, capped loan-to-value ratios and are pondering how to make more Swedes amortize on their mortgages. Sweden’s financial industry is one of the biggest in Europe relative to gross domestic product, with assets equivalent to four times the $560 billion economy. That’s left Swedes more vulnerable than most to bank crises.

The Riksbank said yesterday that need for action has become more urgent now and that regulators should take aim directly at consumers

The bank has faced criticism and split internally over how to address its dual policy concerns. Nobel laureate Paul Krugman have been among those lambasting the bank and in April described its policy as an example of “sado monetarism” that was creating a deflationary spiral. Lars E. O. Svensson resigned from the Riksbank board last year after failing to convince the majority to focus more on inflation and unemployment.

On July 3, 2014, in immediate response to the Swedish Central Bank lowering of rates, investors fled the Swedish Krona, FXS, and sold out of Sweden, EWD, but not its Automobile Parts Manufacturer, ALV.  The liberal monetary policies of the Swedish Central bank have caused debased of its currency, and disinvestment out of Sweden.

The economic experience of credit growth and currency growth is over.  The new normal economic experience is not only one of the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014, but also, as is seen in the case of Sweden, EWD, the death of currencies.

Steve Filips and Don Barrett of WSWS relate The Militarization Of American Public Schools: Syracuse, New York’s Fowler High School To Be Reformed  The high school will be closed and transformed into an academy focusing on training students for the military.

And Steve Filips and Dan Barrett also write Syracuse, New York housing in shambles. The low income workers in Syracuse, NY are left little choice but to live in substandard housing.

John Vidal of the Telegraph reports Water Supply Key To Outcome Of Conflicts In Iraq And Syria, Experts Warn. Security analysts in London and Baghdad say control of rivers and dams has become a major tactical weapon for ISIS.

Isis Islamic rebels now control most of the key upper reaches of the Tigris and Euphrates, the two great rivers that flow from Turkey in the north to the Gulf in the south and on which all Iraq and much of Syria depends for food, water and industry.

Rebel forces are targeting water installations to cut off supplies to the largely Shia south of Iraq,” says Matthew Machowski, a Middle East security researcher at the UK houses of parliament and Queen Mary University of London.

“It is already being used as an instrument of war by all sides. One could claim that controlling water resources in Iraq is even more important than controlling the oil refineries, especially in summer. Control of the water supply is fundamentally important. Cut it off and you create great sanitation and health crises,” he said.

Isis now controls the Samarra barrage west of Baghdad on the River Tigris and areas around the giant Mosul Dam, higher up on the same river. Because much of Kurdistan depends on the dam, it is strongly defended by Kurdish peshmerga forces and is unlikely to fall without a fierce fight, says Machowski.

Last week Iraqi troops were rushed to defend the massive 8km-long Haditha Dam and its hydroelectric works on the Euphrates to stop it falling into the hands of Isis forces. Were the dam to fall, say analysts, Isis would control much of Iraq’s electricity and the rebels might fatally tighten their grip on Baghdad.

Securing the Haditha Dam was one of the first objectives of the American special forces invading Iraq in 2003. The fear was that Saddam Hussein’s forces could turn the structure that supplies 30% of all Iraq’s electricity into a weapon of mass destruction by opening the lock gates that control the flow of the river. Billions of gallons of water could have been released, power to Baghdad would have been cut off, towns and villages over hundreds of square miles flooded and the country would have been paralysed.

Some academics have suggested that Tigris and Euphrates will not reach the sea by 2040 if rainfall continues to decrease at its present rate.

News events herald the soon coming Psalms 83 War.  Jason Ditz of Antiwar posts Israel Vows Aid To Prevent Invasion of Jordan

6) … What constitutes a sound investment strategy?

Jeremy Hill of Forbes writes Smart Equities For Creeping US Inflation. Basic materials is the primary sector for long positions to take advantage of creeping inflation.

But such thinking fails to perceive that inflationism in fiat wealth is over through and done.

Global debt deflation is introducing destructionism of every form. Deleveraging out of currency carry trades and derisking out of debt trades is going to literally destroy fiat wealth.

The chart pattern in two of his recommendations show completion. LyondellBasell Industries NV, LYB, a popular currency carry trade, manifested a massive dark cloud covering candlestick; and International Paper, IP, a popular debt trade, manifested a blow off market top candlestick.

One could commence a short selling investment strategy, and use these Inverse Market ETFs as the basis of collateral, as a huge number of short selling opportunities exist, such as Manufactured Home Builder, CVCO, Tool Manufacturer, MKTAY, and Property Manager, Z, all of which are at their market peak.

The best investment strategy is one designed for the failure of credit and the death of currencies.

Short Side of Long postsJune Sentiment Report Hedge Funds Have Been Covering Their Short Bets On PMs. Technically speaking, PMs sector still remains in a downtrend and have to overcome quite a few resistance levels before a bull market is to return.

My take is that those covering their shorts will capitulate, asEquity Investments, VT,  Nation Investment, andSmall Cap Nation Investment, EFA,Global Financial Institutions, IXG, andYield Bearing Investments, such as DTN, trade lower, and that an investment demand for gold, GLD, commenced on June 21, 2014, as a wild bout of purchasing of Gold Mining Stocks, GDX, drove Spot Gold, $GOLD, from $1,275 to $1,315.

I expect the US Dollar, $USD, UUP, to trade higher for a brief period of time asSovereign Currencies trade lower for a while, and thus for Spot Gold, $GOLD, to trade lower to $1,285, before it soars ever higher on the failure of Credit, AGG, and the death of Currencies, DBV, CEW, that is on the death of fiat money. Gold is in the middle of an Elliott Wave 3 Up, that is in the middle of the most sweeping of all economic waves, specifically the one which creates the bulk of the wealth on its way up to an Elliott Wave 5 High.

The trade lower in the price of gold, if it does occur, makes for an excellent buying opportunity, as in a bull market one buys into price dips, just as in a bear market, one sells into pips.

In understanding the value of gold, it is helpful to understand its relationship to empire. Robert Ramsey posts Hidden Secrets of Money II, The 7 Stages of Empire. One of the hidden secrets of money is that each empire goes through 7 stages.      

I recommend that one start to dollar cost average an investment in the physical possession of gold bullion; it can be held

  • in audited vaults, and spread around the world for safety, and covered by an insurance policy.
  • in physical Internet Trading Platforms, such as GoldMoney or BullionVault, and sold as needed.
  • in the Merk GOLD TRUST, the deliverableGold ETF (OUNZ).  It’s an ETF with the option to take physical delivery of gold.

7) … Please consider that out of the Additive Process of 2 Peter 1:5-7, one has experience in Christian ethics.

Economics is defined as one’s life experience in the credit and flow coming from sovereign authority. One’s economics comes from the isms of life, that is the process of branding, where a sovereign establishes identity and experience.

Many will be of the fascist and totalitarian brand of the Beast Regime, and give homage to it, for Bible Prophecy of Revelation 13:3-4, communicates they worshiped and followed after the Beast, saying who can make war against it.

Jesus Christ is the ism of God, that is thedivine nature of theGodhead, by which some come to know the identity of God and have experience in God. The experience of His Sovereignty is one of holiness and of truth as presented in Ephesians 1:4, Hebrews 1:3, and John 14:7.

it is out of this practice that one has identity as a Christian and life experience in Christian ethics, which is defined as the quality and type of relationships one has with others; ethics is the one’s set of moral principles; which are established by one’s values, that is one’s framework for thinking, and activities which motivate.

When one takes Christ’s brand, that being the Gospel, which translated into English means the Good News, then one has identity and experience in His Sovereignty, and becomes a Christian.

There are many other isms; these include Socialism, Communism, Capitalism, and Libertarianism.

When one embraces personal sovereignty and individualism for identity and experience, one practices Libertarianism, and becomes a Libertarian.

One cannot serve two authorities, one will yield to one, and turn away from the other.

Thus, one cannot be a Libertarian and a Christian. An individual is one or the other. And it was a choice made in eternity past by God. One decides to follow Jesus, but that choice is one made by The Sovereign of All, as he looked down the hallways of time and decided to have mercy on who ever he would; it was a decision not based on one’s meritocracy but upon God’s infinite grace and mercy.

It’s my hope that one will follow the Apostle Paul, and be God’s economist, that is one who has life experience out of the sovereignty of Jesus Christ. As one Has life, one comes to greater trust, and grows the credit and flow of His holiness; and one grows in personal satisfaction of His brand.

One’s character, defined as the aggregate of moral and ethical traits, will come out of the person of Chirst  and form the nature of a person.  

Christian faith is not compatible with philosophy, which I define as the vision that guides human action in every field of human endeavor; for those interested in a pursuit of philosophy I recommend The History of Philosophy.

Christian faith is no compatible with the doctrine of Libertarianism as presented by Chris Rossini writing in Economic Policy Journal  Economic Follies With Google’s Larry Page   as Christians believe God alone is sovereign and that his son acts in Dispensation, Ephesians 1:10, providing Divine Action in all things.

8) … A new direction for your blog author.

I feel fortunate that God has given me insight to blog on sovereignty and seigniorage since May of 2010, when Herman van Rompuy, announced that there will be no default on Greek Debt, and came forward with Greek Bailout I.  I am seeking a new experience, I do not know what that will be.

What I really desire to do, is to work as an Economist, Financial Analyst, and Short Selling Strategist, recommending specific stocks to be sold short.

The Trade Lower In Ireland, Greece And The European Financials Terminates The Pursuit Of Yield Investing And Nation State Investing … Eurozone Leaders Appoint Juncker As Regional Sovereign

June 29, 2014

This post is available in Google Documents format here.

Financial Market Report for the week ending June 27, 2014

I.  … Introduction …. Across the Curve posts the Brown Brothers Harriman report EU Summit. The heads of state meet on Thursday June 26, and Friday June 27.

There are two issues, economics and politics.  Fiscal and structural reform plans will be reviewed.  Here, France, Spain and Italy, in what appears to be more a concert of interests rather than a coordinated position (which is why it is difficult to conceptualize this as a bloc), are pressing in different ways for a more liberal interpretation of the fiscal mandates.  Germany may be able to make some concessions on the condition that the Stability and Growth Pact is itself not amended.

The high drama may be seen in the political agenda.  The immediate issue is the European Commission President.  The operative treaty requires the heads of state to take into account the parliamentary election results in naming the new president.  The two main blocs in the European Parliament must choose a lead candidate to represent them.  The center-right (EPP) won a plurality, but not a majority of votes.  About one in four votes were cast for parties that are anti-EU.  Juncker, who was the EPP’s candidate due to his extensive experience in European politics, was identified with the status quo.  Moreover, even though Juncker was a head of state for many years, he is seen as a federalist who seeks greater authority for the European Union.

Juncker may not be very well liked, but the UK’s prerogative and obstructionism is less well liked.  As more decisions are decided on a qualified majority basis rather than unanimity, the value of the UK’s veto is eroded. In the past, it has effectively vetoed EC presidential candidates.  UK Prime Minister Cameron’s public objections may be a part of a principled position (against federalism), but seems poor politics and exposure the UK’s isolation.  If Cameron had been more adept at negotiating and trading horses, as the case may be, he might have been able to have greater influence.

Recall that Cameron took the Tories out of the EPP coalition, in which Merkel’s CDU is a key participant, and recently formed an alliance with the AfP (Germany’s anti-EU party). There are three state elections in Germany in Q3 and the AfP, which did not meet the threshold for participation in the national parliament, will likely win some seats in these state elections.  The AfP campaigns to the right of Merkel and may take votes from the CDU.

Cameron faces his own challenge in the form of the UKIP, which did well in the recent local and EU Parliament elections.  Cameron has promised a referendum on the EU if he is reelected next year.  There is a not very subtle threat:  If there are not concessions forthcoming for the UK, it will withdraw from the EU, for which is accounts for a third of the budget, and this includes the EC President.

Yet, a recent YouGov poll (conducted for The Sun) found that by a 44-36 margin, British people wanted to remain in the EU.  This was the widest margin since the survey began in September 2010.  This dovetails with other reports that suggested that many who voted for the UKIP also want the UK to remain in the EU.  Ironically, the kind of federalism Cameron eschews in Europe, he wants Scotland to accept within the UK.

Jean Claude Juncker, is an elite insider, and the consummate European Federalist, who has a vision for a Federal Europe, specifically who seeks greater centralized authority for the European Union and therefore will very likely be approved to be the next EU President.

The Telegraph reports Italy Will Use Its Six Month Presidency Of The European Union To Push For A “United States of Europe”, Prime Minister Matteo Renzi, said, in a move likely to raise hackles in Britain. Launching an appeal to convince European leaders to show “that a stronger and more cohesive Europe is the only solution to the solve the problems of our time”, Mr Renzi said: “For my children’s future I dream, think and work for the United States of Europe.”

He further called for “courageous leaders” to work towards achieving that goal – something that Britain has always objected to. In 1988 Margaret Thatcher, then prime minister, dismissed the idea that the United States might be a model for the future of Europe and David Cameron is actively trying to prevent the election of a committed federalist, Jean-Claude Juncker, to the head of the European Commission.

Italy takes over the rotating EU presidency from Greece on July 1. Its job will be to steer the EU at a time when the so-called “European Project” is coming under renewed attack, in the wake of an EU-wide surge in support for Eurosceptic parties in the recent European elections.

Mr Renzi, whose country will preside over the EU until December, said the only effective response to the outcome of the European elections is to offer “an idea of Europe that corresponds to an attractive adventure, rather than just a financial or economic exercise.” He said it was vital to show that the EU “is not only a common past but a common destiny.”

Two other pillars of the Italian presidency will be the push for growth over austerity, and greater help with the migration crisis in the Mediterranean. More than 50,000 people have arrived in Italy by boat from North Africa this year.

Mr Renzi’s comments, in a speech in Florence last week, come amid a growing storm over the nomination of Mr Juncker as president of the European Commission. David Cameron will call for a vote from fellow EU leaders at Thursday’s summit in Ypres if there is an attempt to rubber-stamp Mr Juncker in the role. Mr Cameron opposes the candidacy of the former prime minister of Luxembourg, whom he sees as preventing EU reforms and is seen by some as a politician with an instinct for ever-closer European integration.

Meanwhile, the incoming Italian presidency has caused a stir after ruling that its official website will only be published in English and Italian, meaning it will not be translated into French or German for the first time since 2007. In order to save money, it will not be translated into any of the other 24 official languages of the EU.

II … In this week’s trading

On Tuesday June 24, 2014, the see saw destruction of fiat wealth got strongly underway, as Equity Investments, VT, Global Financials, IXG, Nation Investment, EFA, Small Cap Nation Investment, and Yield Bearing Investments, joined Credit Investments, AGG, in trading lower; this coming on the trade lower in Ireland, EIRL, in Greece, GREK, and the European Financials, EUFN.

The loose monetary policies of the world central banks have finally stirred up inflation and have finally resulted in turning investment sentiment from greed to fear, specifically fear that the world central banks’ monetary policies have crossed the rubicon of sound monetary policy, and have “money good” investments bad

Gold Miners, GDX, GDXJ, Silver Mines, SIL, SILJ, Energy Production, XOP, Global Integrated Energy, IPW, FILL, Energy Service, OIH, IEZ, Solar Energy, TAN, Consumer Staples, KXI, Consumer Discretionary, RXI, Consumer Services, IYC, Timber Producers, WOOD, Automobiles, CARZ, Design Build, FLM, Aerospace and Defense, PPA, Semiconductors, SOXX, Global Industrial Producers, FXR, Metal Manufacturers, XME, Transportation, XTN, Coal Miners, KOL, and Copper Miners, COPX, led World Small Cap Stocks, VSS, and World Stocks, VT, lower, with the result that  the world entered into the final phase of the Business Cycle, that is Kondratieff Winter, providing the perfect short selling opportunity of selling from an equity market top, more specifically an Elliott Wave 5 High. Fat Pitch posts Bullish Extremes

Ireland’s Bank, IRE, Greece’s Bank, NBG, Switzerland’s Banks, UBS, CS,  and the UK’s Banks, RBS, LYG, BCS, and Germany’s DB, led European Financials, EUFN, lower; Argentina’s Banks, BMA, GGAL, BFR, traded lower; and Stockbrokers, IAI, Regional Banks, KRE, and Investment Bankers, KCE, traded lower, leading Global Financials, IXG, lower.

Gulf States, MES, Egypt, EGPT, Ireland, EIRL, Greece, GREK, Finland, EFNL, Austria, EWO, Spain, EWP, Portugal, PGAL, Italy, EWI, Argentina, ARGT, Emerging Africa, GAF, The UK, EWU, EWUS, Norway, NORW, Turkey, TUR. Thailand, THD, Canada, EWC, US Small Caps, IWM, IWC, New Zealand, ENZL, and Australia, EWA, KROO, led Nation Investment, EFA, lower.

Yield Bearing Investments, traded lower as Mortgage REITS, REM, and Residential REITS, REZ, traded lower, Industrial Office REITS, FNIO, traded lower, forcing Vanguard REITS, VNQ, lower.

Also, Eurozone Small Cap Dividend, DFE, Gulf Dividend, GULF, Australia Dividend, AUSE, Emerging Market Dividend, EDIV, Global Infrastructure, IGF, International Small Cap Dividend, DLS, Emerging Market Small Cap Dividend, DGS, Shipping, SEA, Smart Grid, GRID, Leveraged Buyouts, PSP, Water Resources, FIW, Global Telecom, IST, International Dividend Dogs, IDOG, Real Estate, IYR, Dividends Excluding Financials, DTN, such as Apple, AAPL, traded lower.

Junk Bonds, JNK, traded to a new all time high, as Aggregate Credit, AGG, was led higher by the 30 Year US Government Bonds, EDV, the 10 Year US Notes, TLT, and the Long Duration Corporate Bonds, LWC, which forced the Interest Rate on the US Ten Year Note, ^TNX, lower  to 2.59%.

Credit Bubble Stocks posts “High Yield” Coal Bonds.  Coal has had some rough times because of competition from cheap natural gas the past few years. Some of the coal companies have had negative income and even operating profit for multiple years in a row. You’d think maybe there’s be some distressed debt opportunities, but the bonds are extremely expensive.

  • Alpha Natural Resources – mines coal in VA, WV, KY (higher cost) in addition to WY. EBIT less than interest expense the past three years. Highest yielding bond 13%.
  • Armstrong Energy – Illinois basin coal (better), but operating income hasn’t covered interest expense  since 2009, yet bond only yields 8.7%.
  • Peabody (BTU) – good coal but highest yielding bond less than 7%.
  • CLD – Powder River Basin (good coal), but highest yielding bond only 5.6%. Is profitable and covering interest expense though.
  • Consol – highest yielding debt 5.5%.
  • Westmoreland – yielding about 5%

This is probably the type of debt thatyield hunger funds have shorted the long bond to buy.

The Bull Flattening continuing, as is seen in the Flattner ETF, FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened as is seen in the Steepner ETF, STPP, trading lower in value.

An inquiring mind asks will inverse bond ETFs such as SAGG, HYND, and AGND, preserve one’s wealth, which can seen in their ongoing combined Yahoo Finance Chart?

Perhaps, but they are dollar based fiat wealth, and will not participate in the increase in wealth that comes from the demand for safe haven hard assets, such as the physical possession of gold bullion, GLD.

Soon the US Dollar, $USD, UUP, will buckle and trade lower with the rest of the World Major Currencies, DBV, as well as the Emerging Market Currencies, CEW, which will invigorate the investment demand for Gold, GLD, whose price will rise from its current range of $1,240 to $1,320.

Gold is in the middle of an Elliott Wave 3 Up, and as such only God knows how high it will go.

Wealth can only be preserved by investing in and taking physical possession of gold bullion.

Doug Noland described money manager capitalism as being characterized by wildcat finance, where bankers waived magic wands of credit creation. The new normal economic experience of regionalism will be one of wildcat governance where regional fascist leaders warn with clubs of debt servitude.

Disinvestment out of debt trade investments such as Coal Mining Stocks, such as ANR, Rental Landlord, Blackstone, BX, Wireless Provider, S, Rental and Leasing Companies, HEES, URI, Rubber and Tire Manufacturer, GT, Leveraged Buyout Company, DLPH, which had underwritten the most risky of debt, and deleveraging out of currency carry trade investments, in particular the European Financials, EUFN, the European Small Cap Dividends, DFE, Gulf Dividends, GULF,  and Water Investments, FIW, brought Pursuit of Yield Investing to an end on Tuesday, June 24, 2014, and in so doing terminated the Banker Regime’s power of Global ZIRP, which has been largely responsible for the dynamos of creditism, corporatism, and globalism, which served to create the investor as the centerpiece of economic activity.

The Tuesday, June 24, 2014, trade lower in the European Financials, EUFN, such as NBG, IRE, RBS, LYG, BCS, terminated Pursuit of Yield Investing, which came via Global ZIRP, and marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude, where the investor and investment gain is no longer the centerpiece of economic activity, but now, the debt serf and debt servitude is the centerpiece of economic activity.

The age of investment choice is over and the age of debt servitude has commenced. There is no amount of reform that can be done to reinvent Ireland, Greece, France, Italy,  or any of the Eurozone nations.

Periphery Europe, that is Portugal, Italy, Greece, and Spain, as well as France, are socialist nations characterized by truly staggering amounts of sovereign and municipal debt; and their banks loaded to the gills with such debt, as well as real estate debt.  For all practical purposes these are insolvent sovereigns and insolvent financial institutions, whose seigniorage, that is whose moneyness, comes courtesy of the Liquidity Announcements of the ECB Chairman, Mario Draghi.

It is disinvestment out of debt traded and currency carry traded Ireland, EIRL, and Greece, GREK, that is leading World Stocks, ACWX, lower. This comes as Gigaom posts Apple’s Irish Tax Avoidance Schemes Come Under Formal European Investigation European authorities want to know if the Irish tax authorities’ deal with Apple, AAPL, unfairly advantages the company or a specific group of companies. If it does, it may constitute illegal state aid.

European authorities have launched a probe into whether Apple’s, AAPL, corporate income tax arrangements in Ireland are legal, or whether they qualify as unlawful state aid.

Ireland is the base of choice for many large tech firms’ international operations, largely because of a low corporation tax rate and favorable laws that enabled complex avoidance tricks like the legendaryDouble Irish arrangement (set to beshut down starting in January 2015 after U.S. lawmakers complained about Apple, AAPL, paying nearly no corporation tax anywhere).

The particular issue here is the “tax rulings” that were issued by the Irish authorities in Apple’s, AAPL, favor, confirming that the iPhone maker could continue with its transfer pricing schemes. If these rulings are found to specifically advantage the company, or indeed a group of companies, then they rulings may be seen as illegal state aid.

In a Statement, The European Commission has also opened similar probes in regard to Luxembourg and the carmaker Fiat, and the Netherlands and coffee peddler Starbucks.

As many know Interest is the cost of money, and its rate is determined by the battle between the bond vigilantes and central banks.

Despite the Credit Bubble Stocks report Treasury Implied Volatility Very Low $TLT, the Creature from Jekyll Island was struck a deadly blow by the bond vigilantes, who tenaciously have yielded the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, calling it higher from 2.49%, and sustaining it at 2.59%, which destroyed Credit Investments, that is Aggregate Credit, AGG, beginning June 2, 2014.

Debt deflation is underway, and it has led to the Euro, FXE, the British Pound Sterling, FXB, and, the Swedish Krona, FXS, trading lower in value. Soon, debt deflation will commence in Emerging Market Currencies, CEW, turning the Emerging Markets, EEM, and the Frontier Markets, EMFM, FRN, lower, making the Bloomberg report Norway’s $880 Billion Wealth Fund to Target Frontier Markets, a most unfortunate thing for the people of Norway.

America’s foreign policy will be shaped by the three factors. First, the dissolution of its Dollar global hegemonic authority and power. Second, the powering up of the dynamo of regionalism, on the powering down of the dynamos of creditism, corporatism, and globalism. Third, the ongoing pull of neocons responding to the security interests of the nation of Israel.

Please consider the bible prophecy of Revelation 13:1-4, which foretells that out of waves of economic recession and turmoil in the Club Med nations, coming largely out of derisking out of debt trade investments, and deleveraging out of EUR/JPY currency carry trade investments, that the Beast Regime will rule in every one of the world’s ten regions and occupy in all of mankind’s seven institutions, as the singular dynamo of Regionalism powers up, when leaders meet in summits to renounce national sovereignty, and to announce regional framework agreements that provide for regional pooled sovereignty which develop regional fascism to establish regional security, stability and sustainability.

Regional fascist leaders will be appointed and announce diktat policies of regional economic governance and schemes of totalitarian collectivism which will develop the debt serf as the centerpiece of economic activity, replacing the investor as the focal point of economic activity.

On Wednesday, June 25, 2014, the see saw destruction of fiat wealth intensified, as World Stocks, ACWX, traded lower, Frontier Markets, FM, and Nation Investment, EFA, traded lower, on the ongoing trade lower in European Financials, EUFN, in advance of the EU Summit; this comes as  currency traders are long Major World Currencies, DBV, such as the Canadian Dollar, FXC, Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, as well as Commodity Currencies, CCX, such as the Australian Dollar, FXA, as investors sought “safe haven” investment in Credit Investments.

Hedged Equity ETFs, Global Hedged Equities, HEDJ, and Emerging Market Hedged Equities, DBEM, were pulled lower by the trade lower in World Stocks, ACWX, and Nation Investment, EFA, despite sovereign currencies trading slightly higher.

Nation states, led by the UK, EWU, Sweden, EWD, and Switzerland, EWL, are losing their investment seigniorage, as leaders are poised to discuss policies for European regional economic sustainability.

The June 25, 2014, trade lower in World Stocks, ACWX, and Nation Investment, EFA, documents the failure of the sovereignty of democratic nation state governance, which is one half on the Creature from Jekyll Island’s investment seigniorage, the other half is Global Financials, IXG, which lost value yesterday.  The global money system is breaking down.

Soon the monster, which through Global ZIRP created the investor as the lynchpin of economic activity, is going to be replaced by the Beast Regime of Regional Economic Governance and Totalitarian Collectivism, presented in Revelation 13:1-4, as investors derisk out of debt trade investments, and deleverage out of currency carry trade investments.

Soon policies of diktat and schemes of debt servitude, will govern economics in an effort to minimize economic deflation and global political instability, replacing policies of investment choice and schemes of credit liquidity which have governed economics for global growth and investment gain.

The trade lower on Tuesday, June 24, 2014, in Yield Bearing Investments, such as the European Financials, EUFN, European Small Cap Dividends, DFE, International Dividend Dogs, IDOG, Global Telecom, IST, and Leveraged Buyouts, PSP, documents the failure of Global ZIRP, to stimulate Dividend Investing, DTN. Risk-on investing has turned to risk-off investing. The peaking out of risk free money, FLOT, confirms the end of risk-on investing.

The trade lower on Tuesday June 24, 2014, in Yield Bearing Investments, was an “extinction event” that terminated not only Fixed Income Investing, DTN, but all forms of investing as well: Nation Investment, EFA, Banking Investment, IXG, and Global Stock Investing, ACWI.

The Eurozone, EZU, was led lower by EFNL, EIRL, GREK, EWO, EWQ, EWG, EWP,  EWI, and EWN.  However, US Stocks, VTI, were the exception to the Nation Investment, ACWX, sell off on June 25, 2014, as the sectors which sold off yesterday, traded higher, as investors clawed back losses from yesterday; these included Solar Energy, TAN, Energy Service, OIH, Social Media, SOCL, Energy Service, XOP, Internet Retail, FDN, Small Cap Pure Value, RZV, Consumer Services, IYC, Transportation, XTN, Medical Devices, IHI,  Automobiles, CARZ, Steel Producers, SLX, Consumer Discretionary, RXI, Homebuilders, ITB, as well as Investment Bankers, KCE, and Regional Banking, KRE; but not Aerospace and Defence, PPA.

Refineries VLO, MPC, PSX, HFC, broke sharply lower, and Global Integrated Energy, IPW, FILL, continue to trade lower from yesterday.

On Wednesday, June 25, 2014, Credit Investments, AGG, traded higher, as investors sought safe investment from falling Nation Investment, EFA, and World Stocks, ACWX, and traded higher in front on the European Summit.

Demand for Credit Investments was so strong that the Benchmark Interest Rate, ^TNX, fell to 2.56%.

It was Eurozone, Credit, EU, trading higher in front of the European Summit, that drew up all Credit Investments; these were led by the Long Duration Corporate Bonds, LWC, 30 Year US Government Bonds, EDV, International Corporate Bonds, PICB, Global Government Bonds, BWX, US Ten Year Notes, TLT, Emerging Market Bonds, EMB, and Mortgage Backed Bonds, MBB, which traded up near its late May 2014 high.

Credit mania is seen in the Bloomberg report China Banks Join Japan’s With 50% Surge in Aussie Loans. China’s banks, expanding overseas to gain the experience they need to compete with global lenders in their domestic market, have boosted loans in Australia by more than 20-fold over six years. Japanese finance providers, flush with low-cost money from the Bank of Japan’s stimulus program, have helped fund companies including Sydney Airport and Newcastle Coal Infrastructure Group Pty.

Banks led by Australia & New Zealand Banking Group Ltd. have syndicated $39.7 billion of Australian loans this year, a 22 percent gain on the same period of 2013, Bloomberg-compiled data show. Sumitomo Mitsui and Mitsubishi UFJ Financial Group Inc. helped to arrange the most after Australia’s four largest domestic banks.

The Australian 10-year yield was 3.59 percent as of 12 p.m. today in Sydney, compared with 0.57 percent for comparable Japanese paper.

Japanese and Chinese lenders were among the 19 banks and five export credit agencies involved with this year’s biggest Australian syndicated loan, a $7.2 billion facility to enable the development of an iron ore project by billionaire Gina Rinehart’s Roy Hill Holding Pty.

But, on June 25, 2014, Junk Bonds, JNK, traded lower, from their June 24, 2014, market top high, confirming that risk appetite has turned to risk avoidance; this at a time when Bloomberg reports Debut Bond Sales Swell in Europe as Risks Mount.  Companies are debuting a record amount of bonds in Europe as investors demanding higher yields show greater tolerance for untested borrowers who are seeking to diversify funding as banks curtail lending.

Bloomberg reports New Zealand’s N.Z. Dollar Approaches Record High. The New Zealand Dollar climbed to within 0.7 percent of a post-float record after stronger-than-expected exports added to the currency’s allure amid signs of an uneven recovery in the U.S. economy.

New Zealand’s currency rose this month after Reserve Bank Governor Graeme Wheeler increased interest rates for a third time in 2014. Borrowing U.S. dollars to buy the kiwi in what’s known as a carry trade has returned 8.4 percent this year, the most among developed-nation peers. A gauge of the dollar against 10 major counterparts was set for the worst first-half performance in three years as weaker-than-expected U.S. economic data supported bets borrowing costs will remain near zero. The yen advanced to a five-week high versus the greenback.

“Given the momentum behind the kiwi at the moment, the prospects are really quite high in the near term that we reach the record,” said Kymberly Martin, a market strategist in Wellington at Bank of New Zealand Ltd. “Interest-rate differentials and low volatility are currently both in favor of the New Zealand dollar.”

The New Zealand dollar was little changed at 87.85 U.S. cents as of 1 p.m. in Tokyo after climbing to 87.94, approaching the high of 88.43 set on Aug. 1, 2011, that was the strongest since exchange-rate controls were scrapped in 1985.

The Bloomberg Dollar Spot Index lost 0.2 percent to 1,005.91 after sliding to 1,005.80, a level unseen since May 9. The gauge, which tracks the greenback against 10 major counterparts, has fallen 1.3 percent since Dec. 31, the first drop within the first six months of any year since 2011.

The demand for New Zealand Dollars is supported by low volatility.

The yen rose 0.4 percent to 101.35 per dollar after climbing to 101.32, the highest since May 21. Implied three-month volatility in dollar-yen fell to 5.64 percent yesterday, the least in data compiled by Bloomberg going back to December 1995. The U.S. currency traded at $1.3623 per euro, down 0.2 percent this week.

Deutsche Bank AG’s FX Volatility Index, (that is currency volatility index) fell to 5.28 percent on June 19, the lowest in figures dating back to August 2001.

The absence of price swings is encouraging investors to borrow in currencies where interest rates are low and use the proceeds to buy assets in economies where they are relatively high, such as in New Zealand, by reducing concern that large exchange-rate movements would wipe out any profits.

New Zealand’s 3.25 percent key rate compares with near-zero benchmarks in the U.S., Japan and the euro area. The nation’s central bank is the only one among advanced economies to have tightened monetary policy this year.

The Bull Flattening continuing, as is seen in the Flattner ETF, FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened as is seen in the Steepner ETF, STPP, trading lower in value.

The Tuesday, June 24, 2014, trade lower in the European Financials, EUFN, such as NBG, IRE, RBS, LYG, BCS, terminated Pursuit of Yield Investing and the subsequent June 25, 2014, trade lower Nation Investment, EFA, coming on more losses in the European Financials, EUFN, marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude.

Under liberalism, meaning freedom from the state, it was the bankers, corporations, government, entrepreneurs, and citizens of democracies who were the legislators of economic value and the legislators of economic life that shape one’s means and one’s ends.

Now, under authoritarianism, it is the currency traders, bond vigilantes, and regional fascist leaders working in public private partnerships and in regional governance, who are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

Raúl Carrillo asks Where Does Money Come From? That’s Our Question.

With the rise to power of the British Empire and then the US Dollar Hegemonic Empire, the world economic system has based upon a debt based money system featuring currencies and credit.

Liberalism, meaning rule by oligarchs, featured fiat money, defined as sovereign currencies, backed up by treasury debt of democratic nation states; examples of sovereign money include the Australian Dollar, FXA, the British Pound Sterling, FXB, the Swedish Krona, FXS, the India Rupe, ICN, and the Brazilian Real, BZF.  Through the liberal monetary policies of  the world central banks and schemes of credit liquidity, the world has attained peak money, as is seen in Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading to rally highs, on soaring World Treasury Debt, BWX.

Authoritarianism, meaning rule by tyrants, features diktat money, defined as the mandates of regional fascist leaders for regional security, stability and sustainability, backed up by trust in regional framework agreements.

Out of a global credit bust and financial breakdown, the Ten Toed Kingdom of Regional Economic Governance, with toes built in the mire of diktat and totalitarian collectivism, will emerge. The world will be based upon a new debt based money system featuring diktat and debt servitude.

Formerly one was a citizen of a soveign nation state residing under the rule of law. Now one is a resident residing in a region of economic governance under policies of diktat and schemes of control.

Soon there will be a run on money, beginning first with the Bond Mutual Funds, Bond ETFs, and then the Money Market Funds; look for exit restrictions and exit taxes of all types.

The Speculative Leverage Investment community created, administered, and regulated, the flow of economic resources; it has established peak sovereignty and peak seigniorage, providing peak wealth and peak fiat money. Soon regional fascist leaders will direct the factors of production, oversee fiscal spending, exact taxes, and manage banks, which will be integrated with the government and be known as government banks, or gov banks for short.

Money is the script of government; an example is SNAP Food Stamps. Sovereigns coin money out of their sovereign authority. Seigniorage belongs to the sovereign power that issues money. Sovereigns provide seigniorage, that is moneyness for economic experience, specifically for one’s life experience either in prosperity or in austerity.

Central banks, together with corporate banks have provided seigniorage; increasingly regional fascist leaders will provide seigniorage as Jesus Christ, operating in the economy of God, a concept presented by the Apostle Paul in Ephesians 1:10, on October 23, 2013, opened the First Seal of the Scroll of End Time Events, and released the Rider on The White Horse, who has given the Bow of Economic Sovereignty, to bond vigilantes to effect global coup d etats to call treasury interest rates higher, and in so doing transfer sovereignty from democratic nation states to regional sovereign leaders; these having sovereign authority are establishing the seigniorage of diktat, and are providing diktat money for one’s economic life experience.

Media Stocks, PBS, rose 3% as Breakout reports Supreme Court Kills Aereo, And Cord Cutters Dreams. To the dismay of cord-cutters everywhere, the Supreme Court put the kibosh on Internet television service Aereo.

The court ruled that Aereo, which transmits broadcast TV channels over the Internet to its subscribers, was just like a cable television service, which must pay licensing fees to broadcasters in return for showing copyrighted programs. Aereo had argued it merely rented a tiny, dedicated broadcast antenna to each of its thousands of customers, who have a right to watch the copyrighted programs and shouldn’t have to pay licensing fees.

Stocks of broadcasters, which had sued to shut Aereo down, shot up on the ruling, led by Sinclair Broadcasting (SBGI), up 15%, and CBS (CBS), which gained 6%. More-diversified network owners Walt Disney (DIS), Twenty First Century Fox (FOXA) and Comcast (CMCSA) were up about 1%.

A ruling in favor of Aereo could have upset the current system that requires cable providers to pay billions of dollars a year to broadcasters such as CBS and Sinclair. Cable companies could have set up their own multiple antenna systems, mimicking Aereo, for example.

On Thursday, June 26, 2014, Peter Schwarz of WSWS posts EU summit In Ypres: The End Of The European Union In Its Current Form In the runup to the Ypres summit, the debate over who should be the next president of the European Commission escalated to a point that makes any compromise virtually impossible.

The president of the European Council, Herman Van Rompuy, is opening today’s EU summit in the Belgian city of Ypres. The 28 heads of state and government are due to pay tribute to the hundreds of thousands of troops who died on the battlefields of the First World War around the town in Flanders. “It will be a moving ceremony as we will be testifying to what Europe is: a project of peace, solidarity and cooperation”, Van Rompuy commented.

In fact, Ypres is likely to be a symbol for the opposite: national discord, social conflict and war; and for the end of the European Union in its current form.

In the run-up to the summit, the conflict over who should be the future president of the European Commission escalated to a point that makes any compromise virtually impossible. British Prime Minister David Cameron is determined to prevent the election of former Luxembourg government leader Jean-Claude Juncker, who is supported by the majority of the EU parliament and of government heads. A vote, which Cameron will lose, seems inevitable. For the first time in the history of the EU, the influential head of the Brussels bureaucracy with its 33,000 employees will not be determined by consensus.

Cameron has become a victim of the genie he himself released from the bottle. In order to stanch the influence of the anti-EU UKIP party and EU-skeptics in his own Tory Party, he has denounced Juncker as the embodiment of European “federalism”. The British tabloid press has eagerly taken up the theme, with the Daily Mail describing Juncker as a man “notorious for fanatical federalism” and someone who has “pursued with dogged determination a vision of political and economic union which defies popular will, cultural identities, democratic principles and the merest common sense”.

This is a gross exaggeration. The Luxembourg Christian Democrat, who in his 19-year reign transformed the Grand Duchy with its half million inhabitants into a tax haven for banks and large corporations, shares similar views to Cameron on many political issues. As head of the Euro Group, Juncker played a key role in rescuing ailing banks with billions of euros in public money. The British charges against him contain a kernel of truth, however, in that he is suspected of placing the interests of the euro zone countries above those of the City of London.

What bothers Cameron in particular about Juncker is the fact that he was proposed by the European Parliament for the post of president of the Commission. Cameron is of the opinion that the head of the Brussels bureaucracy should be nominated exclusively by the heads of state and government as representatives of nation states, rather than by the parliament, a central EU institution.

The Ypres summit takes place in the shadow of May’s European elections, which saw a massive popular backlash against almost all the ruling parties in Europe and the EU as a whole. Well over half of the electorate stayed away from the ballot box, while a fifth voted for parties that criticize or reject the EU. Under conditions where the Social Democrats and the European left support the EU, right-wing, nationalist parties were able to profit from the anti-EU sentiment. In the UK, UKIP emerged with the biggest vote, and in France, the National Front.

While the UK increasingly distances itself from the EU, the proponents of a strong EU are reacting to the election result with fresh attacks on the working class. This is the essence of the dispute over the future handling of the Stability Pact, which, along with the controversy over Juncker, dominated the run-up to the summit.

French President François Hollande and Italian Prime Minister Matteo Renzi, both Social Democrats, have expressed their support for Juncker—but only under the condition that the stringent austerity targets of the Stability Pact be applied more flexibly. They have the support of the German SPD chairman Sigmar Gabriel, who is Economics Minister in Merkel’s grand coalition. Gabriel took part in a meeting of Social Democratic government leaders earlier this week in Paris to prepare the EU summit.

The goal of the Social Democrats is not to stop the massive social cuts made in recent years. On the contrary, the relaxation of austerity targets is aimed at giving necessary time to implementing massive reforms to the labor market, thereby improving economic competitiveness at the expense of the working class. Renzi has set himself the goal of catapulting Italy from 65th place in the world competitiveness rankings of the World Bank to 15th place. His role model is the “Agenda 2010” introduced by SPD Chancellor Gerhard Schröder (1998-2005), which created a huge low-wage sector in Germany.

The Süddeutsche Zeitung summarized the plans of the Social Democrats as follows: “Governments ready to impose noticeable changes on their citizens—e.g. loosening up the protection against dismissal, abolition of automatic pay increases or reducing subsidies—should get more time to reduce budget deficits and debt.”

European governments are aware that this will provoke massive social resistance. On the eve of the summit, and largely ignored by the media, the relevant European ministers adopted provisions for implementing a so-called “solidarity clause”, which regulates the Europe-wide deployment of military, police and other security forces in crises which have a “serious impact on people, the environment or property”. This includes control of protests and riots.

Also on the agenda of the Summit is the signing of the economic part of the Association Agreement with Ukraine. Refusal to sign this agreement led to the coup against former Ukrainian President Viktor Yanukovych, which was spearheaded by fascists and backed by the EU.

Originally the summit was also to decide on increased sanctions against Russia. Following a retreat by the Russian president, however, this will probably not take place. With the signing of the Association Agreement, however, which binds Ukraine tightly to the EU, the summit will makes clear that the EU is maintaining its aggressive offensive against Russia.

In June 26, 2014, financial marketplace trading Nation Investment, EFA, traded unchanged, as Asia Excluding Japan, EPP, was led higher by CHXF, EWH, KROO, YAO, ECNS, ENZL, EWT, EPHE, as China stocks rose as the first IPOs in four months were well-received, while India, INP, SCIN,  Poland, EPOL, ESR, and Turkey, TUR, traded lower.

World Financials, IXG,  traded unchanged as European Financials, EUFN, and Emerging Market Financials, EMFN, traded lower.

World Stocks, ACWX, traded higher, as Metal Manufacturing, XME, such as AA, CSTM, HAYN, CVR, SXT,  KALU, SLCA, CENX, and Global Miners, PICK, and Steel, SLX, traded higher on higher Base Metals, DBB.

Commodities, DBC, traded lower as Oil, USO, and Natural Gas, UNG, traded lower.

The Bull Flattening continued, as is seen in the Flattner ETF,  FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as is seen in the Steepner ETF, STPP, trading lower in value. The 10 30 yield curve appears to have achieved maximum flattening, suggesting that the rally in US Treasuries, TLT, while it may continue, is approaching completion.

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.53%, and appears that it could fall once again to 2.49%. Of note, Premium REITS, KBWY, Closed End Funds, GCE, Mortgage REITS, REM, and Energy Partnerships, AMJ, EMLP, MLPJ, Global Real Estate, DRW, Financial Preferreds, PGF, traded to a new all time highs on the lower rate; and Leveraged Buyouts, PSP,  Global Utilities, DBU, and International Telecom, IST, traded near their previous highs, while Dividends Excluding Financials, DTN, traded lower.

The trade lower in the Benchmark Interest Rate, ^TNX, reinvigorated the debt trade, and carry trade darlings, that is the Global Wireless, Utility, and Telecom Stocks, great short selling opportunities.

On Thursday, June 26, 2014, a double top high in Credit Investments, AGG, was nearly achieved as the European Summit convened, and as investors sought a “safe haven” investment from falling World Stocks, ACWX. Chinese Credit, DSUM, traded to a new rally high, supporting the Chinese Yuan, CYB. And Eurozone Credit, EU, rose near its previous multiple top rally high, supporting European Stocks, EZU, from selling off, despite a falling EUR/JPY, coming from a rallying Yen, FXY, over a failing to rally Euro, FXE. The stronger Yen, FXY, has driven the Japanese Small Caps, JSC, much higher over Japanese Stocks, EWJ.

Lorenzo Totaro of Bloomberg reports “As Italy’s borrowing costs fall to new lows, its debt is rising to the most ever. The country owed 5% more in April compared with a year earlier, with debt reaching 2.15 trillion euros ($2.9 trillion) (presented in Yahoo Finance Chart, ITLY.  That matches the outstanding borrowing of Germany, the largest economy in Europe and the most of any country on the continent. While Germany is scheduled to grow 2% this year, Italy will expand 0.3% in 2014. This year, Italy foresees increasing its debt ratio to 135% of gross domestic product from 133% in 2013”.

The take-away concept is that the investor’s greed has turned, specifically that the monetary policies of the world central banks monetary policies have  crossed the rubicon of sound monetary policy and has made money good “investments bad”, with the European Financials, EUFN, and Nation Investment in Ireland, EIRL, Greece, GREK, Europe Small Cap Dividends, DFE, are the worst of risk assets. Clearly NBG, IRE, DB, CS, UBS, and BCS, are failed investments. And Aerospace and Defense Investments, PPA, such as GT, GD, LMT, NOC, HRS, ESL, MOG-A, are comprised investments, at risk for going down the drain as a political initiative emerges to kill the Ex-Im Bank.

BrainyQuote relates Grover Norquist as having said, Our goal is to shrink government to the size where we can drown it in a bathtub.

Arnold King ask When To Kill The Export-Import Bank?  Under current conditions mercantilism works, so this is exactly the moment when ending an export-support program really would cost jobs. Pointer fromMark Thoma. I say that the right time to kill it is any time you can. If killing the Ex-Im bank istea-party mischief, then I say let’s have more such mischief.

The AEI’sTom Donnelly writes, The worst thing about the defense loan program is that it only applies to our richest and best allies, NATO Europe, Israel, Japan, South Korea, the ones who can most afford to finance arms purchases on their own,  and does nothing for real at-risk states in Africa, Latin America or the Middle East. The FMS-DELG duo has hampered, not helped the Pentagon’s security “partnering” efforts. In today’s environment, and particularly when China aims to replace Russia as the alternate, non-US source of front-line military equipment, the United States government needs a bigger, better and more aggressive export credit agency. The Congress should rejuvenate, not exterminate, the Ex-Im Bank. His case for the Export-Import Bank speaks for (i.e., against) itself.

The Eurozone’s leading banks are insolvent financial institutions, and the European periphery  countries such as Ireland and Greece are insolvent sovereigns.  Insolvent banks and insolvent nations cannot provide investment seigniorage, and cannot support regional and global economic growth.

As foretold in Bible Prophecy of Revelation 13:1-4, out of waves of Club Med, sovereign, banking, and corporate insolvency, new sovereignty, that of the Beast Regime, and new seigniorage, that is the seigniorage of regional fascism, will rise to provide governance and economic experience through diktat money, that is the mandates of regional fascist leaders for regional security, stability, and sustainability.

The Banker Regime has developed peak moral hazard; the world’s debts cannot be repaid, and under the Beast Regime, seen in Revelation 13:1-4, Europe’s forthcoming Sovereign, seen in Revelation 13:5-10, and its Seignior, seen in Revelation 13:11-18, will rise to rule the world, seen in Daniel 9:25, and apply all debts, to all the people, that is every man, woman and child on planet earth, as is seen in Revelation 13:19.

On Friday June 27, 2014, Canada,EWC, CNDA, traded higher on a higher Canadian Dollar, FXC. Mexico, EWW, traded higher. The National Bank of Greece, GREK, and Banco Santander, SAN, led the European Financials, EUFN, lower.  Emerging Market Financials, EMFN, and Far East Financials, FEFN, traded lower. Canada’s Bank, RY, BMO, BNS, Mexico’s Bank, BSMX, Panama’s Bank, BLX, Columbia’s Bank, CIB, and US Bank, BK, traded higher. Greece, GREK, and Spain, EWP, led the Eurozone, EZU, lower. Sectors PBS, ITB, OIH, IGN, CQQQ, RZG, RZV, and FONE, traded higher. In Yield Bearing Investments, Global Infrastructure, IGF, Financial Preferred, PGF, Energy Partnerships, AMJ, EMLP, AMJ, Utilities, XLU, Global Real Estate DRW, traded to  new rally highs.

The bond vigilantes, have tenaciously yielded the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, calling it higher from 2.49%, to its close this week at 2.53%.

Junk Bonds, JNK, traded lower, confirming that Pursuit of Yield Investing is history. Demand for risk assets, that came via money manager capitalism, is being relegated to the dustbin of history. An investment demand for gold, GLD, has commenced as investor seek genuine safe haven investment in the physical possession of gold bullion.

With the see saw destruction of fiat wealth underway, that is with World Stocks, ACWX, Nation Investment, EFA, and Global Financial Institutions, IXG, underway, and Credit Investments, AGG, moving to a double top high, global economic deflation will get seriously underway as investors deleverage out of Currency Carry Trade Investments, and derisk out of Debt Trade Investments, as well as out of High Yield Debt, such as JNK, LWC, EU, EMB, HYD, EMLC, BABS, HYXU, PZA, in Leveraged Buyouts, PSP, such as DLPH, in Real Estate Investment, such as BX, and in Global Banks, such as SAN, and in Regional Banks, such as EGBN is being relegated to the dustbin of history.

The bond vigilantes will have a hay day, together with the currency traders, in effecting coup d etats world wide, resulting in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, and in driving the Benchmark Interest Rate, ^TNX, ever higher, sparking a dramatic rise in inflation, be a source of economic deflation, and birth the new normal government of regional fascism, replacing all current forms of government such as Crony Capitalism, European Socialism, Greek Socialism, Chinese Communism, where the investor and investment choice, is replaced by the debt serf and debt servitude as the centerpiece of economic activity.

An inquiring mind asks what has driven stocks ever higher? Benson te writes Stocks Continues On With Record Run. Record stocks in the face of contracting economy, so what’s the connection?  Who says stocks are about the economy? Aside from retail investors driving record stocks, and the just off the record in margin debt, a bigger factor has been corporate buybacks.

Sigmund Holmes notes According to Reuters, 1st quarter share weighted earnings amounted to $258.8 billion. So companies in the S&P 500 spent 93% of their earnings on buybacks and dividends. It’s been all the rage in this cycle to look at “shareholder yield” which is a combination of buybacks and dividends, something I find too clever by half considering the past track record of management led buybacks. But if you think that is a useful metric, you have to ask yourself, is a 93% payout ratio sustainable? I guess we do have the answer to one question though. We know why capital spending has been so punk.

The rising price of Gold, GLD, reflects risk avoidance, and communicates that an investment demand for safe assets has commenced. Wealth can only be preserved by dollar cost averaging into the physical possession of gold bullion.

Those into short selling may want to consider using a basket of daily managed Inverse ETFs, as collateral, such as STPP, XVZ,  MLPS, GLD, GYEN, GEUR, GGBP, EUO, YCS, as well as DDG,  EUM, YXI, DOG, SEF, EFZ, PSQ, REK, MYY, RWM; with the latter Proshares 100% Bear Market ETFs, presented in their combined ongoing Yahoo Finance Chart.

I foresee rising currency volatility, as investors start to derisk out of debt trade investments, and deleverage out of currency trade investments, as greed has to turned to fear, specifically fear that the world central banks monetary policies have crossed the Rubicon of sound monetary policy and have made money good investments bad, as well as the fear that said policies no longer stimulate global growth and trade; this being seen in the Global Growth And Trade ETF, DNL, trading lower.

Therefore I expect the Short of the Euro, EUO, to increase in value over the Short of the Yen, YCS, which is presented in in their combined ongoing Yahoo Finance Chart; and this straddle of the two currencies should expand and could serve as the basis for collateral in a short selling strategy.

Look for the Proshares 200% Bear Market ETFs, such as SQQQ, DUG, SGG, BZQ, RXD, SKF, EPV, SCC, SZK, and EFU, as is seen in their combined ongoing Yahoo Finance Chart, to start to trade higher

And look for the Direxion 300% Bear Market ETFs, such as GASX, SOXS, FAZ, ERY, EDZ, DPK, DRV, BRZS, YANG, and EURZ, as is seen in their combined ongoing Yahoo Finance Chart, to start to trade higher

III …  In the News

TradingFloor posts Saxo Bank Chief Investment Officer Jakobsen relates Why Juncker’s EU Appointment Would Be A Violation. If as expected, Jean-Claude Juncker is soon appointed President of the European Commission, it would be a “total violation” of the results of last month’s European elections which saw a big rise in support for anti-Europe parties.

UK Conservative MP John Redwood posts What Difference Will The Appointment Of Mr Juncker Make?  The new President of the Commission will be very powerful, because he will be the master of compromises between individual member states and between the Council and Parliament, driving relentlessly forward with the usual centralising agenda. At the end of this new Commission, like its predecessors, member states will have lost more  power and the EU will have gained it.

The Telegraph posts Jean Claude Juncker Appointed To Head Up The EU. Keeping Britain in the EU “has got harder”, the Prime Minister said, after he was outvoted by 26 to two in his attempt to prevent Mr Juncker becoming the European Commission president.  The result emboldened Eurosceptic MPs and Ukip supporters who want to leave the EU. However, Mr Cameron said he would wage a “long, tough fight” to reform Brussels before campaigning for Britain to remain in the EU in an in-out referendum he has promised to hold in 2017.

Testosterone Pit posts Last Time Lenders Did This, They Triggered The Financial Crisis. During the first quarter, 3.7 million credit cards were issued to subprime borrowers, up a head-scratching 39% from a year earlier, and the most since 2008. A third of all cards issued were subprime, also the most since 2008, according to Equifax. That was the glorious year when “subprime” transitioned from industry jargon to common word. It had become an essential component of the Financial Crisis. As before, subprime borrowers pay usurious rates. These are people who think they have no other options, or who have trouble reading the promo details, or who simply don’t care as long as they get the money. In the first quarter, the average rate was 21.1%, up from 20.2% a year ago, while prime borrowers paid an average of 12.9% on their credit cards, and while banks that are lending them the money paid nearly 0%.

USA Today posts Chicago Lays Off 1,150 Teachers And Staff

Cecchetti & Schoenholtz call for overnight lending facility for overnight lenders, and for facilities to deal with bank runs within the shadow banking system Reverse Repo Risks.

Zero Hedge posts Spain To Create Tax On Bank Deposits.

Reuters reports Risks Rising For China’s Commodity Traders. Pledging commodities to a bank using a warehouse receipt as proof of ownership, while agreeing to buy the cargo back at a set point in future, is a popular way to raise finance in global commodity markets.

It took off in China as traders sought to profit from the difference in global interest rates in the wake of the 2008 credit crisis: borrowing in dollars to invest in China’s sizzling shadow banking market often through non traditional wealth management products linked to property where the gap between returns and funding costs could be as much as 10 percentage points.

ETF Daily News reports Up to $80 Billion Gold Backed Loans Are Falsified, Chinese Auditor Warns

Reuters reports Argentina Deposits Debt Payment, But US  Court Blocks Payout

In Iraq News, Pentagon Sets Up Iraq Command: 500 Troops in Iraq, More Comin. And UNZ reports It May Be Too Late for a Unity Government. And Antiwar reports Iraq’s Shiite MPs Preparing to Replace Maliki.

Peter Van Buren & Tom Engelhardt post in Antiwar Shredding the Fourth Amendment in Post-Constitutional America.  

The Times of Israel posts US House Panel Approves Expanded Hezbollah Sanctions.

Reuters reports Obama Administration Expands Affordable Housing Plan. The Obama administration said on Thursday it would tap Treasury funds to bolster the construction of affordable rental housing and extend the life of a program aimed at helping homeowners avoid foreclosure. The announcement by Treasury Secretary Jacob Lew was timed to coincide with the fifth anniversary of the Making Home Affordable program, an Obama administration initiative launched at the height of the economic crisis in 2009 to revitalize the housing market.

Bamboo Investor posts China Ting Group, A Garment Maker, Said Two Borrowers Defaulted On Entrusted Loans It Made Through Ningbo Bank Corp And Bank of Communications.  Bloomberg News reports China Ting Says Borrowers Default on Entrusted Loans. China Ting Group Holdings Ltd. (3398), a garment maker, said two borrowers defaulted on entrusted loans it made through Ningbo Bank Corp. and Bank of Communications Ltd. The stock fell.

Zhongdou Group Holdings Ltd. and Hangzhou Zhongdou Shopping Centre Co. failed to make interest payments on schedule on loans worth 160 million yuan ($26 million), China Ting said in a Hong Kong exchange filing yesterday. Entrusted loans, advances between companies arranged through banks, are part of China’s shadow banking system that regulators are seeking to rein in. Some of the entrusted funds, which totaled 8.2 trillion yuan as of the end of 2013, were being directed to industries that face lending curbs from the government, according to the People’s Bank of China.

Bespoke Investment posts Global Home Price Values. The real winner among the 11 economies is New Zealand.  Home prices there have gone up by more than 93% since 2000, the best performance of any advanced economy.  It’s no surprise then that the Reserve Bank of New Zealand hiked interest rates at their last meeting.

The New Yorker posts The Rise Of The Absolutist. Ted Cruz is an unyielding debater, and the far right’s most formidable advocate.

Daily Bell posts Opt-out of Common Core, Opt-into the Ron Paul Curriculum

Barry Gray of WSWS posts Drone Memo On Drone Killings Of US Citizens Makes Case For Presidential Dictatorship. The Obama administration memo constitutes prima facie evidence of crimes against international law, the US Constitution, and the democratic rights of the American people. And PopSci posts Lockheed’s Vision: Autonomous Drones With Lasers

Across The Curve posts Detailed Analysis of the Situation in Iraq. The Long War Journal blog has a lengthy post on the situation in Iraq and how it may play out. The authors paint a gloomy picture and think that it will be difficult for the government to overcome the insurgents without outside help.

Robert Wenzel posts Warning Financial Troubles Mount for Puerto Rico Signaling worsening financial trouble for the island, Puerto Rico’s governor, Alejandro Garcia Padilla, on Wednesday proposed a legal means to revamp the debt of some its largest public corporations, which provide vital services like electricity, Michael Corkerywrites in DealBook. The new law is meant to quell concerns that Puerto Rico’s inability to file for federal bankruptcy protection would set off a chaotic scramble among creditors in the case of a default. Investors say the proposal raises the threat that one of Puerto Rico’s agencies could falter soon.

Reuters reports Puerto Rico agency debt slumps on downgrades, restructuring law. Puerto Rico public corporation debt slumped on Friday after a new law that allows agencies to restructure their debts sparked fears of an imminent default and led to a slew of downgrades on the electricity, highway, and water authorities.

There are many vulnerabilities in the municipal bond market right now. Yesterday, I reported on problems in Harvey, Illinois (SEE: Tip of the Iceberg in Illinois? SEC Obtains Court Order to Halt Fraudulent Bond Offering by City of Harvey, Ill.)

Frank Dimora posts Bible Prophecy Foretells Of Two Soon Coming Middle East Wars, these being the Psalms 83 War which is centered upon Syria, and the Ezekiel 38 War which is centered upon Israel.

Mr Dimora relates The War spoken about in Ezekiel 38 takes place when Israel thinks they are living in safety without any walls to protect them, we believe the Psalms 83 war will take place at the time Israel and the Arabs are still calling for peace and safety and, at the time when Israel is protected by all their bars, gates, and walls.

The Bible prophesied Psalm 83 War emerged in the Middle East on June 23, 2014, as Jason Ditz of Antiwar posts Israeli Airstrikes Kill 10 Syrian Soldiers.  Attack Destroyed Tanks, Artillery Inside Syria.  The war will soon expand as The Times of Israel posts Jordan May Ask Israel to Go to War Against ISIS, and as Antiwar post US-Backed Syria Rebels Crumbling in Face of ISIS.

Russia will be fully engaged in the Ezekiel 38 War, as God relates, “I will turn you around and put hooks in your jaws to lead you out with your whole army, your horses and charioteers in full armor and a great horde armed with shields and swords: it will suffer a terrific loss as it moves into Syria. The Northern Bear is starting to growl, as is seen in the Zero Hedge report Putin Fires Warning Shot.

The Daily Sheeple reports Red Heifer Discovered – Major Obstacle To The Rebuilding Of The Jewish Temple Removed. Up until now, one of the major barriers to the rebuilding of the Jewish Temple in Jerusalem has been the lack of a red heifer.  A qualified red heifer has not been seen in the land of Israel for nearly two thousand years, and without one it would not be possible to resume Temple worship.  But now a candidate has been found that could change everything.  The Temple Institute in Jerusalem has released stunning video footage of a red heifer that they believe meets the Biblical requirements.

This red heifer was born in the United States, and the owners of the red heifer contacted the Temple Institute in order to receive instructions about how to care for it.  It is hoped that this red heifer will eventually be transported to the land of Israel and be used for the purification of the priests and the vessels that will be used in a rebuilt Jewish Temple.

This is a very big deal, because without a red heifer the Temple would never be rebuilt.  So needless to say, the video footage that you are about to see is creating quite a stir in Jewish communities throughout the world.  The Temple Institute contacted a documentary filmmaker to film this red heifer, and this video was just released to the public earlier this month

If you are not familiar with the Temple Institute, it is an organization located in the heart of Jerusalem that is dedicated to making preparations for the rebuilding of the Jewish Temple.  The Institute has created a whole host of items that are intended to be used in a future Temple including priestly garments made to Biblical specifications, a seven-branched Menorah made of pure gold, a golden Incense Altar and a golden Table of Showbread.

But without the ashes of a red heifer, all of those preparations are in vain. Before the Temple can be rebuilt and Temple worship can be resumed, a perfect red heifer must be found. And now one has been discovered.

According to Orthodox Jewish authorities, a suitable red heifer cannot even have a single black hair.  So finding such a creature is not easy.  According to Jewish tradition, only nine such red heifers were found during the entire time when the first two temples were standing.

All of this has huge implications for world events.

Traditionally, many Orthodox Jews have believed that the spotting of a red heifer would herald the coming of the Messiah.

And if this red heifer does indeed turn out to be a suitable candidate, one of the biggest obstacles to rebuilding the Jewish Temple in Jerusalem will have been removed.

For Christians, this is an extremely exciting development as well.

The Bible tells us that there will be a Temple standing in Jerusalem in the last days, and that the Antichrist will defile it.

But that Bible prophecy could never be fulfilled until a red heifer was found.

Yes, there are still many more obstacles standing in the way of the Jewish people rebuilding the Temple.  For one, the Islamic world would go into convulsions if Israel tried to build anything on or near the Temple mount at this point.

However, the Temple Institute and a whole host of Orthodox Jews are absolutely determined to make the rebuilding of the Temple a reality, and now they appear to be one giant step closer to achieving that dream.

Mike Mish Shedlock posts French Private Sector Contracts Second Month. “France is back in recession, with rising costs and falling output prices as well. Thank the socialist policies of Francois Hollande for this result.” I relate that the report highlights that the much feared economic deflation has intensified.

Mr. Shedlock continues, “Government spending accounts for close to 57 percent of French GDP, a truly inane percentage.” I relate that France is a failed socialist nation; its economy is defined by municipal government and agricultural production, and these no longer provide economic seigniorage, that is economic moneyness to support France as a sovereign nation.  Socialist France is a cancer within the common currency union known as the Eurozone.

Bloomberg reports Ukraine to Extend Cease-Fire as President Signs EU Pact. Ukraine will extend a cease-fire in its fight against separatist rebels today after President Petro Poroshenko signed a European Union accord rejected by his predecessor that sent the country spiraling into crisis

IV … A new direction for your blog author.  I’ve been blogging ever since April of 2010 when Greece was shut out of the bond market by the bond vigilantes and Herman Rompuy engineered Greek Bailout I, on the concepts of sovereignty and seigniorage.

Greece gave birth to democracy; as Greek Left Review communicates in Review Of The Greek Debt Crisis, Greece has become a wretched society and failed nation state within the common currency union known as the Euro.

It is now time to move on and do a new thing.

Perhaps the new thing will be focusing on narcissism, that is the ism of the psychopath and the sociopath, that is the morally insane individuals; these are the ones with a mask of sanity, that is just a facade of normalcy.

Benjamin Buehne writes in Conscious Life News Psychopaths. There is a theory that is gaining a foothold on the internet known asPonerology (the science of Evil).  The antisocial motivation of essential psychopaths is seen in the Silvia Cattori Political Ponerology remark “They also learn very early how their personalities can have traumatizing effects on the personalities of non-psychopaths, and how to take advantage of this root of terror for purposes of achieving their goals”

Claudia Moscovici providesa clear example on the psychopathic mindset when it comes to hypocrisy.  Although she speaks of psychopaths in terms of romantic relationships, the mindset she describes is consistent regardless of the context.

“Honesty” means “My truth,” or “Saying whatever gets me what I want at the moment.”

“Nothing’s ever my fault. If I do something harmful, it’s because you (and others) weren’t good enough for me.” Unless you learn to decipher the psychopathic code, you’re likely to be “lost in translation.” If I put my mind to it, I could write a whole dictionary of “psychopath-speak” and its translation into regular human language.

Every so-called “truth” psychopaths utter is momentary and contingent upon their immediate gratification. Since their feelings are shallow, so is their truth-value. If you add “for now” to their declarations of love, they may sometimes ring plausible. For instance, during the euphoric seduction phase, psychopaths may believe when they tell a girlfriend that they love her and want to spend the rest of their life with her. But, as my novel, The Seducer, illustrates, their passion isn’t grounded in any empathy, love or commitment.

180 Rule asks Why Do Psychopaths Lie. Why lie about innocuous details such as what they had for lunch? Actually there is a method to their madness. The psychopath’s lies are usually 180 degrees the opposite of the truth. These lies serve the purpose of misdirection.

V … The New Normal Weather is Extreme Weather. NBC Nightly News with Brian Williams Heavy Rains Flood Season,With Extreme Weather: The threat of flooding, hail and tornadoes is expected in regions throughout the nation and June has proven to be a month of weather extremes.

VI … Conclusion. Out of disinvestment from debt trade investments and currency carry trade investments resulting in a soon coming credit bust and global financial system breakdown, known as Financial Armageddon, as prophesied in Revelation 13:3-4, new sovereignty and new seigniorage is coming.

The new normal governance is regional pooled sovereignty replacing democracy; and the new normal moneyness is diktat replacing investment choice, as the singular economic dynamo of regionalism powers up establishing regional security, stability and sustainability.

The Global ZIRP monetary policies of the world central banks have not provided economic recovery, as they were not designed for such; rather they changed the primary function of money to serve as the basis of fiat wealth investment, and birthed the investor, and investment gain, as the centerpiece of economic activity, as can be concluded by countless news reports.

My Budget 360 posts The Chasm Between The Real Economy And The Stock Market. And USA Watchdog reports Corporate Empire Created Failed Global Economic System. And Gavyn Davies in FT Blog asks How Close Is The Fed To Mission Accomplished? And House of Debt posts Terrible Recovery. Here is real GDP indexed to the quarter before each recession for all 10 recessions since 1950, taking into account this morning’s revision. Notice the significant bend downward in the last quarter for the 2007-2009 recession (solid red line). It makes the recent recovery look even  worse relative to previous recoveries

Global ZIRP began in 2008 with Paulson’s Gift, which became Ben Bernanke’s QE1, where the worst of investments, that is Distressed Investments, such as those traded by Fidelity Mutual Fund, FAGIX, were traded out for money good US Treasuries; according to Morningstar, Fidelity Capital & Income is Ranked number 1 out of 742 like investments.

The final phase of Global ZIRP, is known as peak finance, and has produced a stupendous moral hazard based peak wealth, which has come via the three economic dynamos of creditism, corporatism, and globalism, providing support for investing characterized by

1) Purchase of High Yielding Debt, JNK, LWC, EU, EMB, HYD, EMLC, EMCD, BABS, HYXU, PZA,

2) Purchase of Pursuit of Yield Investments, DBU, XLU, DRW, FNIO, REM, REZ, KBWY, SEA, AMJ, DTN; this as Financial Sense posts Fixed Income Risk Appetite Headed For Euphoria. As Aggregate Credit rose to a double-top high,  Global Real Estate, DRW, also put in a double-top high.

3) Pursuit of Nation Investment in these eight nations, SCIN, INP, EPHE, ENZL, EWA, EDEN, EWP, GXG, as well as these eight nations TUR, THD, ARGT, GAF, EWZ, EGPT, VNM,  EWS,

4) Purchase of Energy Production and Energy Service Investments XOP and IEZ,

5) Purchase of Defensive Equities, IPW, OIH, KIE, PAGG, KXI, XLU, IHF, IYR,

6) Purchase of  Global Growth and Trade Investments, TAN, SOXX, PJP, FONE, IBB, QTEC, COPX, XTN, FXR,

7) Safehaven investing in Popular Notes And Bonds, SHY, EU, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, MBB.

Inveterate, buy and hold investor, Eddy Elfenbein posts Falling Earnings, Higher PEs. As investors, our concern isn’t the macro economy but corporate profits. Monday is the end of the second quarter, and soon Corporate America will report earnings results. What’s interesting is that this earnings season will be the first one in several quarters in which we haven’t seen forecasts lowered just before earnings came out. As we all know, Wall Street loves playing the game of guiding analysts lower, then beating those much-reduced expectations.

This time, earnings forecasts have come down some, but not much. The consensus on Wall Street is for the S&P 500 to report earnings of $29.40 for Q2 (that’s an index-adjusted figure). That’s down about 2.5% in the last year, which is very small compared with recent quarters. Typically, analysts overestimate early on, and the forecasts are gradually pared back as earnings season approaches. For now, Wall Street expects full-year earnings of $119.60 for the S&P 500, which means the index is going for about 16.4 times this year’s earnings.

Yet, in a pivotal change, on Tuesday June 24, 2014,the see saw destruction of fiat wealth got strongly underway, as Equity Investments, VT, Global Financials, IXG, Nation Investment, EFA, Small Cap Nation Investment, and Yield Bearing Investments, joined Credit Investments, AGG, in trading lower; this coming on the trade lower in Ireland, EIRL, in Greece, GREK, and the European Financials, EUFN, and as a result we will see falling PEs, not increasing PEs.

Disinvestment out of debt trade investments such as Rental Landlord, Blackstone, BX, and deleveraging out of currency carry trade investments, in particular the European Financials, EUFN,  such as NBG, IRE, RBS, LYG, BCS, the European Small Cap Dividends, DFE, Gulf Dividends, GULF, International Dividend Dogs, IDOG, Water Investments, FIW, brought Pursuit of Yield Investing to an end on June 24, 2014, and in so doing terminated the Banker Regime’s power of Global ZIRP, which has been largely responsible for the dynamos of creditism, corporatism, and globalism, which served to create the investor as the centerpiece of economic activity.

Tuesday June 24, 2014, marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude, where the investor and investment gain is no longer the centerpiece of economic activity, but now, the debt serf and debt servitude is the centerpiece of economic activity.

Please consider that the June 5, 2014 Mario Draghi ECB Mandate for ZIRP and Targeted LTRO, together with the June 21, 2014, Mario Draghi ECB Press Announcement, address secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation; and serve as the EU Economic Manifest, that is the Charter Call and Club, for Eurozone regional governance, and have birthed the debt serf, and debt servitude, as the centerpiece of economic activity.

Just as President Nixon in taking the US off the gold standard was the genesis event of the Banker Regime, in like manner, the two Mario Draghi Announcements of June 2014, were the genesis event that created the Beast Regime, where European Citizens have been called upon to share some sovereignty now. As time goes on ever increasing sharing of sovereignty will be required.  Monetary sovereignty, and banking sovereignty, now resides in Frankfurt; soon fiscal sovereignty and economic sovereignty will exist in Brussels and Berlin; fiscal federalism will establish a One Euro Government.   Eventually the periphery nations will be like hollo moons, revolving around planet Belgium and planet Germany.

Economic life experience will no longer center around buying and selling (or lending) national currencies for US treasury bills, nor will it be centered around the issuance of Treasury Debt by Eurozone Nations such as Italy or any nation for that matter.

The two two Mario Draghi announcements of June 2014, have commenced the end of national currencies, and have birthed regional currencies, regional exchanges, and  regional economic governance.

Dollarization, defined as the tie that binds countries together, is coming undone. As the economic dynamos of creditism, corporatism, and globalism, wind down as investors derisk out of debt trade investments and deleverage out of currency carry trade investment, sovereign currencies, will sink into the Pit of Financial Abandon; and Dollarization will be a relic of a bygone era.

Doug Noland speaks to Dollarization, asking Sound or Unsound?  During the past 22 years, ROW holdings of U.S. Financial Assets have inflated $21 TN, or over 1,000%. Essentially, the U.S. has unrelentingly flooded the world with dollar balances. This helps explain a lot.

The consequences of the massive inflation/devaluation of the world’s reserve currency have for a long time been readily apparent.

After ending the ’90s at $6.209 TN, ROW holdings of U.S. Financial Assets doubled (again) in just over six years. The mortgage finance Bubble period (2002-2007) saw ROW holdings surge $8.7 TN, or 116%, to $16.2 TN. It’s my view that the historic dollar devaluation during this period played a major role in precarious Bubble excess throughout the Eurozone (especially at the periphery). The crisis year 2008 saw U.S., European and global financial chaos. During that year, ROW holdings dropped an unprecedented $813bn to $15.386 TN.

In the 21 quarters since the end of 2008, ROW holdings have jumped $7.585 TN, or 49%. The world was once again literally flooded with dollars. The global government finance Bubble thesis posits that these dollar balances inundated the emerging markets, fueling unprecedented Credit growth, financial Bubbles and economic malinvestment. China, in particular, succumbed to Bubble Dynamics on an historic scale.

Is Global Finance sound or unsound?

Please consider that Dollarization and Global Finance came to an end with the June 5, 2014 Mario Draghi ECB Mandate for ZIRP and Targeted LTRO, and together with the June 21, 2014, Mario Draghi ECB Press Announcement, which addresses secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation; and through its call for sharing of sovereignty, serve as the EU Economic Manifest, that is the Charter Call and Club, for Eurozone regional governance, and have birthed the debt serf, and debt servitude, as the centerpiece of economic activity.

The singular dynamo of regionalism will be winding up on the failure of Credit, AGG, and the death of currencies, DBV, and CEW. Regionalism is predicated  upon the process of de-dollarization.

Given the world’s debt based money system, money cannot exist without trust in sovereigns; fiat money existed as people trusted in the monetary authority of the world central banks, such as the US Fed, the ECB, together with asset managers, such as Blackrock, BLK and Eaton Vance, EV.

Fiat currency is coming to an end; the nature of money is changing; it has been based upon investment choice and credit; it will increasingly be based upon diktat and debt servitude.

Monetary nationalism is being replace with monetary regionalism, where people trust in the monetary authority and economic authority of regional leaders. Seigniorage profit will be retained within the region of origin; and supply chains will be regional rather than global.

The father of the Euro, Robert Mundell’s seminal article, “A Theory of Optimum Currency Areas,” asks the question, “What is the appropriate domain of the currency area?” He relates  “It might seem at first that the question is purely academic,” and he observes, “since it hardly appears within the realm of political feasibility that national currencies would ever be abandoned in favor of any other arrangement.”

Beyond the Euro, optimum currency areas, are now emerging via regional framework agreements, which feature undollar bargaining economic transactions, a case in point being the China Russia Energy Deal, whereby oil is no longer priced in Dollars, and which birthed Eurasia as a region of economic governance; eventually ten such regions will become well defined, and eventually ruled by a king within each region.

Voice of Russia reports De-dollarization Continues: China Starts Direct Currency Trading With UK.  A rejection of Bretton Woods is underway. The US Dollar is no longer the world reserve currency; increasingly, in places like Cambodia, and Sierra Leone, and Vietnam, the Dollar will no longer be King. Dedollarization is the process of establishing new monetary sovereignty and new seigniorage.

The dollar’s privileged status as global money is coming to an end. The Milton Friedman liberalization of money has come to an end as the Mario Draghi regionalization of money has commenced.

Dollarizing countries, such as the Philippines, EPHE, will soon be giving up independent monetary policy as a tool of government macroeconomic management; and will be participating in regional monetary and economic policy.

Dollar Hegemony, and the US Dollar Hegemonic Empire, is literally dissolving into a Ten Toed Empire, presented in bible prophecy of Daniel 2:25-45, where ten toes of regionalism, that is ten regions of economic governance and totalitarian collectivism, are emerging.

Economic globalization is coming to an end; that is the international trade liberalization and financial liberalization accompanied by a significant increase in flows of goods and services, and an even larger increase in the gross flows of capital well above the needs to finance trade observed by Crotty in 2009, and described by Matias Vernengo, is a characteristic of the bygone era of credit and age of currencies.

Economic regionalization is commencing, and is characteristic of the new age of diktat and debt servitude. What Jeffrey Frankel calls “credibility in a bottle”, will be the word, will and way of regional economic leaders, and characterize the era of diktat and age of debt servitude.

I’ve been thinking on International Living, and relocating to Panama, a dollarized nation.

Simon Black, The Sovereign Man posts Notes From The Field Date: March 8, 2012 Reporting From: Panama City, Panama. Panama is a dollarized economy. In fact, since Panama’s independence wasengineered by JP Morgan in 1903, the country has never circulated its own currency. Officially, Panama’s currency is the ‘Balboa’, though it has been pegged to the US dollar at parity since inception, and US dollar notes are the only currency in circulation.

The United States can print all it wants, and, at least until now, export the worst of the inflationary effects overseas to those poor suckers in Asia who keep buying Treasuries. Panama cannot export its inflation to the same extent, so rising prices have made a permanent home down here in the tropics over the last few years.

Perhaps Costa Rica may be a better International Destination.

Out waves of Club Med, that is the PIGS, sovereign, banking and corporate insolvency, and its resulting economic deflation, the new money, diktat money will emerge as the standard for economic life experience, as people come to trust in the mandates of regional fascist leaders, for regional security, stability and sustainability.

VII … Investment Strategy: I recommend that one start to dollar cost average an investment in gold bullion.

Gold bullion can be held in audited vaults, and spread around the world for safety, and covered by an insurance policy.

Gold can be held in physical Internet Trading Platforms, such as GoldMoney or BullionVault, and sold as needed.

Gold can be held in the Merk GOLD TRUST, the deliverable Gold ETF (OUNZ).  It’s an ETF with the option to take physical delivery of gold.

 

The Mario Draghi ECB Mandate Of June 5, 2014, And The Announcement Of June 21, 2014, Serve As The EU Economic Manifest, That Is The Charter, Call, And Club, For Eurozone Regional Governance

June 22, 2014

This post is available in Google Documents format here

Financial Market Report for the week ending June 20, 2014,

1) … Introduction. Credit becomes surreal as Shinzō Abe announces Third Arrow and the BoJ prepares to sell GJBs and purchase equities, and as investors pursue the most toxic of Junk Bonds and Emerging Market Bonds.

1A) … BoE’s Mark Carney, sees things as they really are, that there is a war of economic sovereignty between the bond vigilantes and the world central banks; and has communicated the truth that a rate hike is coming sooner than the market thinks; this drove the British Pound Sterling, FXB, yet higher; its chart looks like it has peaked out. Since April 1, 2014,, a stronger British Pound Sterling, FXB, has been driving the UK Stocks, EWU, higher, yet the UK Small Caps, EWUS, lower.

Ed Yardeni, writes The UK Is Hot (excerpt), but it is bound by the bond vigilantes, who having the Bow of Economic Sovereignty, are starting to call interest rates higher world wide.

1B) … Reuters reports Shinzō Abe Announces Third Arrow.

Japan’s government late Monday released a draft of Prime Minister Shinzo Abe’s long-awaited growth strategy.

This included already-flagged policies such as a plan to cut the corporate tax rate and other steps like a promise to ease regulation in agriculture and allow more foreign workers to be employed in the housekeeping and nursing sectors.

“I think the latest moves out of the Abe administration will be very important for sentiment, especially for global investors who had lost some faith in the reform efforts,” said Charles Blankley, CIO at Gemmer Asset Management in San Francisco.

“I think that [sentiment] will clearly turn around in the second half of this year,” he told CNBC Asia’s “Squawk Box” Tuesday.

1C) … Tyler Durden posts Liquidity Is Becoming A Serious Issue As Japan’s Bond Market Death Goes Global.

While we noted last week the death of the Japanese bond market as government intervention has killed the largest bond market in the world; it is now becoming increasingly clear that the dearth of trading volumes is not only spreading to equity markets but also to all major global markets as investors rotate to derivatives in order to find any liquidity.

Central planners removal of increasing amounts of assets from the capital markets, thus reducing collateral availability, leaves traders lamenting “liquidity is becoming a serious issue.” While there are ‘trade-less’ sessions now in Japanese bonds, the lack of liquidity is becoming a growing problem in US Treasuries (where the Fed owns 1/3rd of the market) and Europe

Japan’s bond market is dead; and so is its stock and FX market. As Bloomberg reports Bank of Japan’s Bond Paralysis Seen Spreading.  Ten-year bonds yielded 0.595 percent as of 12:55 p.m. in Tokyo, the lowest globally. The benchmark rate fell to an all-time low of 0.315 percent on April 5, 2013, the day after the BOJ unveiled record stimulus, before surging to 1 percent the following month.

“It’s difficult because the (retail JGB) business is shrinking,” Hiroshi Kunimura, the director of fixed-income trading in Tokyo at Barclays Plc, one of the 23 primary dealers obliged to bid at government bond auctions. “Because we’re in an environment where traders take positions at auctions only to sell them at BOJ buying operations, trading volumes with investors struggle to increase.”

Kuroda on June 13, 2014 kept the BOJ’s pledge to accumulate 50 trillion yen of JGBs a year, equal to 42 percent of planned issuance for the fiscal year started April 1 in a bid to boost inflation to 2 percent.

Easing expectations. Forty-two percent of economists forecast Japan’s central bank will expand monetary stimulus in October, which displaced July as the most popular pick for action, according to the Bloomberg survey conducted June 3-6.

Japan’s government bond market is becoming increasingly reliant on BOJ easing, leaving it vulnerable to shocks, according to Deutsche Securities Inc.

“Investors in Japan assume that the BOJ will continue to buy JGBs vigilantly next year and the year after,” said Makoto Yamashita, the chief Japan rates strategist at Deutsche Securities, a primary dealer.

“They take it for granted they can sell those bonds bought expensively to the BOJ as more and more notes disappear from the secondary market. It’s too frightening to think what might happen when the BOJ tapers.”

Sumitomo Mitsui and Daiwa Securities Group Inc. said in April there’s no effective strategy in Japan’s low-yield, low-volatility environment.

Japan’s notes due in more than a year were the worst performers since Dec. 31 among the 26 debt markets tracked by Bloomberg and the European Federation of Financial Analysts Societies, gaining 1.2 percent. Government debt returned 2.9 percent in the U.S. and 4 percent in Germany.

“It’s sad how idle the JGB market is,” said Toru Yamamoto, a former trader for foreign bonds, derivatives who is now the chief strategist at Daiwa Securities Co. in Tokyo. “Coping with BOJ purchases is like running a marathon, if it’s short-distance, you can still push yourself, but in a long run, you will run out of energy.

The Bank of Japan’s unprecedented asset purchase program has released a creeping paralysis that is freezing government bond trading, constricting the yen to the tightest range on record and braking stock-market activity.

“All the markets have been quiet,” said Daisuke Uno, the Tokyo-based chief strategist at Sumitomo Mitsui Banking Corp. “We’ve already seen the BOJ dominance of JGBs since last year, but recently participants in currency and stock markets are also decreasing as those assets have traded in narrow ranges.”

“The flows on both the buying side and selling side continue to fall,” said Takehito Yoshino, the chief fund manager at Mizuho Trust & Banking Co., a unit of Japan’s third-biggest financial group by market value. “Falling volatility is a very serious problem for traders and dealers who are unable to get capital gains.”

Chart shows The US is getting that way as the Fed owns one third of the market

The world shifts to derivatives trading to find liquidity. The boom in fixed-income derivatives trading is exposing a hidden risk in debt markets around the world: the inability of investors to buy and sell bonds.

Bloomberg reports Bond’s Liquidity Threat Is Revealed In Derivatives Explosion. As bond trading has slumped, the notional value of over-the-counter contracts soared fivefold in the past decade to a record $710 trillion, based on the latest data from the Bank for International Settlements compiled by Deutsche Bank AG.

Volume on Italian futures, which give buyers the right to purchase the nation’s debt at a future date and price, has soared more than 800 percent since trading of the contracts began in 2009, data compiled by Bloomberg show. By contrast, average daily trading in Italy’s $2.43 trillion market for government bonds, Europe’s largest, has tumbled 57 percent in the past decade, according to the Ministry of Finance.

For 10-year note futures, a total of 140.4 million contracts have traded in the first five months of the year, approaching last year’s total of 149.8 million, the most on a year-to-date basis going back to 2007, according to CME Group Inc.

Weekly trading of Treasuries with maturities between seven years and 11 years has fallen to $96.3 billion, a 32 percent drop from a year ago, data compiled by the New York Fed show.

“This is a global phenomenon,” Yvette Klevan

No one knows how badly this will end.  “There is risk that people won’t be prepared,” Richman said by telephone June 9. “The move in yield could be quicker and more dramatic than it has in the past. That’s something we are on the lookout for.”

“Investors in Japan assume that the BOJ will continue to buy JGBs vigilantly next year and the year after,” said Makoto Yamashita, the chief Japan rates strategist at Deutsche Securities, a primary dealer. “They take it for granted they can sell those bonds bought expensively to the BOJ as more and more notes disappear from the secondary market. It’s too frightening to think what might happen when the BOJ tapers.”

And with that not only have the central planners broken the largest and historically most liquid markets in the world but have forced investors into leveraged derivatives positions (in order to find liquidity for their exposure-seeking) which themselves are entirely over-promise (relative to the underlyings) and under-collateralized with any quality collateral.

As we concluded previously. assume tomorrow the real black swan appears and all the liabilities: traditional and shadow, promptly demand collateral delivery. Well, the $11 trillion shortage would mean that risk values of, for example the S&P, would be haircut by a factor of, say, 75%. Or back to the proverbial 400 on the S&P 500.

Still think owning real high quality collateral, not of the paper but of the hard asset variety such as gold, is a naive proposition, best reserved for fringe lunatic, tin foil hatters and gold bugs? Go ahead then: sell yours.

1D) … In credit market news

Bloomberg reports Sewage-to-Fertilizer Plan Shows No Junk Bonds Stink

WSJ reports Ecuador, Kenya Government Bonds Entice Yield Hunters. In the race for bigger returns, investors are clamoring for debt issued by countries with less-than-stellar credit ratings.

Ecuador sold $2 billion worth of 10-year bonds Tuesday, marking a return to international capital markets after defaulting in 2008. That deal came on the heels of Kenya’s first-ever international-bond sale, which attracted $8 billion worth of orders for two chunks of bonds totaling $2 billion. The Kenya deal was the largest-ever debt sale by an African country.

These two deals, which carry junk ratings, are the latest in a string of bond sales by countries off the beaten track. Many investors now are embracing issuers—and the hefty interest payments on their bonds—that have been shut out of global credit markets until lately. Driving the demand for this debt are the easy-money policies of the world’s major central banks, which has depressed yields on debt of wealthy nations.

Many money managers consider Ecuador and Kenya to be “frontier” markets, a loosely defined term used to refer to countries that are a step below emerging markets but often have better growth prospects.

In 2008, the South American country defaulted on $3.2 billion in debt. Mr. Correa at the time called the debt “illegal” and “illegitimate.”

Bloomberg reports Busier-Than-Heathrow Ambition Spurs Turkey’s Biggest Loan. Banks are buying into Turkey’s ambition to create one of the world’s busiest aviation hubs as they prepare to finance the country’s largest corporate loan. Five Turkish companies contracted to build Istanbul’s third airport are going to banks for about 4.5 billion euros ($6.1 billion). Corporate finance is flowing in Turkey as the lira stabilizes and government borrowing costs decline amid an alleviation of political tension since regional elections in March. The nation is investing in aviation infrastructure to support Turkish Airlines, THYAO, as it builds a long-haul business to compete with European rivals. The call for funds comes as Turkey faces heightened geopolitical risks from neighboring Iraq.

Bloomberg reports JGB Selloff Looms as Post Office Joins GPIF’s Cuts Prime Minister Shinzo Abe’s success in spurring inflation risks triggering a Japanese government debt selloff as the second-biggest JGB holder may begin switching to higher-yielding assets.

Japan Post Holdings Co. sold an unprecedented 15.7 trillion yen ($154 billion) of the notes in the fiscal year ended March 31. It has about 178.9 trillion yen remaining. That’s more than double the total of all domestic bond holdings at Government Pension Investment Fund, the third-largest owner, which is

shifting into stocks and overseas securities.  The appeal of notes that offer the world’s lowest yields is

waning as Abe’s stimulus policies succeed in spurring the fastest consumer-price increases since 1991. Citigroup Inc. expects Japan Post’s units to offload as much as 63.8 trillion yen of the debt and  increase the weight of equities as it readies for an expected listing next year.

President Nishimuro said in April Japan Post wants to list its banking and insurance units soon after the parent company’s offering, which he had earlier indicated may take place by April 2015. Nishimuro said at the time the company shouldn’t change its investment strategy and will keep its JGB holdings.

“Japan Post units have risks they can take and cannot take, so they wouldn’t simply follow GPIF,” said Ryutaro Kono, the chief Japan economist in Tokyo at BNP Paribas SA. “The government is telling GPIF to buy stocks to boost prices, but it’s not the case with Japan Post.”

The yen’s 18 percent plunge last year, the sharpest annual drop since 1979, has helped boost price growth by increasing import costs. The currency traded at 102.22 per dollar as of 4:48 p.m. in Tokyo yesterday. Consumer prices excluding fresh food rose 3.2 percent in April from a year ago, equivalent to a 1.5 percent increase when the effects of a sales tax increase that month are excluded, according to the Bank of Japan. Some of the major insurance companies that are not state owned are already seeking higher returns by investing in foreign debt. Nippon Life Insurance Co., Meiji Yasuda Life Insurance Co. and Sumitomo Life Insurance Co., announced plans in April in increase purchases this fiscal year. “We are revising allocations as inflation picks up,”

JGBs due in more than a year were the worst performers since Dec. 31 among the 26 debt markets tracked by Bloomberg and the European Federation of Financial Analysts Societies, gaining 1.3 percent. Government debt returned 2.6 percent in the U.S., 2.8 percent in the U.K., and 4.1 percent in Australia. “The risk is that there wouldn’t be any companies that will buy JGBs when the BOJ exit becomes closer,” said Yasuhide Yajima, the chief economist at NLI Research Institute in Tokyo.

Bloomberg reports Japan’s Exports Decline In May On Weak US Asian Demand

2) … In this week’s financial marketplace trading.

2A) In Monday June 16, 2014, financial marketplace trading, the great unwinding of Equity Investments coming from the world central banks’ stimulus, appeared to picked up steam from the prior June 11, 2014 sell off, as Middle East geopolitical tensions drove Gulf States, MES, Turkey, TUR, Egypt, EGPT, Russia, RSX, ERUS, Poland, EPOL, and Developing Europe, ESR, lower.  South Africa, EZA, traded lower. Philippines, EPHE, and Indonesia, IDX, IDXJ, traded lower as Emerging Market Currencies, CEW, traded lower.  India, INP, SCIN, traded lower as the currency traders called the India Rupe, ICN.  The Argentine stock market, ARGT, has literally started to crash, as The Guardian posts Argentine Debt Crisis Fears Grow After US Supreme Court Ruling. And Reuters reports Argentines Want Debt Deal As Economic Woes Pile Up.

Dividends Excluding Financials, DTN, Energy Partnerships, MLPJ, AMJ, EMLP, Global Integrated Energy, IPW, Energy Production, XOP, such as FANG, WLL, CLR, EOG, CRZO, PXD, XEC, COP, NBL, BCEI, Energy Service, OIH, Semiconductors, SOXX, and Medical Devices, IHI, traded to new all time highs. Utilities, XLU, traded higher, but remain below their recent highs. Gulf Dividends, GULF, traded lower.

Emerging Market Local Currency Bonds, EMLC, Emerging Market Bonds, EMB, and Emerging Market Corporate Bonds, EMCD, traded lower, as bond vigilantes began call Emerging Market Interest Rates higher.

Bloomberg reports Kurds Grab Fourth-Largest Iraq Oilfield Amid ISIL Advance. Kurdish troops were defending Iraq’s fourth-biggest oilfield against Islamist militants after deploying outside their semi-autonomous region in the country’s north to seize the deposit claimed by the central government. More than 100,000 Kurdish fighters, known as peshmergas, are guarding a “front line” from Iraq’s eastern border with Iran to the northern town of Fishkabur near Turkey

Business Insider reports There’s A Staggering Humanitarian Crisis On The US Border, And It’s Only Going To Get Worse.

Wave of humanity': Border Patrol overwhelmed by flow of illegal immigrants. At daybreak in this border town, two women from Guatemala, one with a small child strapped to her back, wait patiently on the levee overlooking the Rio Grande.

Ed Yardeni posts Eurozone Recovery Remains Lackluster (excerpt)

2B) … In Tuesday June 17, 2014 marketplace trading, the see saw destruction of fiat wealth seemed to intensify, (this commenced with the June 5, 2014, Mario Draghi ECB Mandate for NIRP and TLTRO), as greed seemed to turn to fear, specifically the fear that the world central bank’s monetary authority has crossed the rubicon of sound monetary policy and has made money good investments bad.

The bond vigilantes have control on the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, $TNX,  and are calling it higher from the recent 2.49%, to 2.65%, thus causing disinvestment out of Credit Investments, causing Aggregate Credit, AGG, to trade lower.

Junk Bonds, JNK, the lever of debt trade investing, traded lower.

Asset Managers, such as BEN, AMP, VOYA, Regional Banks, KRE, such as OZRK, SIVB, FITB, HBAN, SBNY, BBNK, Stockbrokers, IAI, Investment Bankers, KCE, Insurance Companies, KIE, The Too Big To Fail Banks, such as BK, BAC, WFC, USB, PNC, as well as by the most speculative of investments, such as TAN, SOXX, PNQI, XRT, CQQQ, SOCL, IGN, SKYY, FDN, XRT, the most risky of investments, such as RZG, RZV, Manufactured Housing, CVCO, Materials, such as PYZ, PKB, SLX, XME, COPX, Paper & Packaging, Industrial Electrical Equipment, International Industrial Companies, Electronics, Diversified Industrial Producers traded higher; the S&P 500 Midcaps, MDY, having a PE of 19, traded to a new rally high.

Eurozone Small Cap Dividends, DFE, and UK Small Caps, EWUS, traded lower.

Global debt deflation, is underway, coming from the bond vigilantes calling the Benchmark Interest Rate, ^TNX, higher, and calling Interest Rates higher world wide as well, with the result that currency traders have commenced competitive currency devaluation, successfully selling Major World Currencies, DBV, and Emerging Market Currencies, CEW.

Australia, EWA, KROO, and Australia Dividends, AUSE, led Asia Excluding Japan, EPP, lower, as the currency traders sold the Australian Dollar, FXA, as Business Week reports Aussie Declines as Central Bank Says Recovery Uncertain.

The Emerging Markets, EEM, were led lower by Egypt, EGPT, Columbia, GXG, The Philippines, EPHE, Nigeria, NGE, and Chile, ECH.  Brazil, EWZ, and Brazil Small Caps, EWZS, traded lower, as the currency traders sold the Brazilian Real, BZF, and the Emerging Market Currencies, CEW, as the bond vigilantes once again called the Emerging Market Interest Rates higher, as is seen in Emerging Market Local Currency Bonds, EMLC, and Emerging Market Bonds, EMB, trading lower.

And the currency traders sold the Japanese Yen, FXY, in anticipation of the BoJ announcing further monetary easing, causing Major World Currencies, DBV, to trade lower.

Credit is peaking out, as is evidenced in Floating Rate Notes, FLOT, topping out, and as is evidenced by World Stocks, VT, topping out over Aggregate Credit, AGG, that is VT:AGG,

FT in Video Report posts Don’t Worry About Inflation.

Out of the soon coming failure of credit, that is out fear that borrowers will not repay lenders, Headline Inflation is seen increasing; this is confirmed by the ratio of the Long Term Tips, LTPZ, to 10 Year US Government Notes, TLT, that is LTPZ:TLT, trading higher, and the Proshares UltraPro 10 Year TIPS/TSY Spread, UINF, trading higher. Headline Inflation was reported by Reuters April Consumer Prices Post Biggest Gain In 10 months; and was reported by DSShort May Consumer Inflation Rises To Fed Target. Inflation is the investor’s warning sign to exit fiat investments and to invest in hard assets, that is to start to dollar cost average into the possession of gold bullion.

Under Janet Yellen’s leadership, The Fed Reserve will be developing an exit strategy; it will be one of establishing Financial Stability, this will complement the June 5, 2014, Mario Draghi, ECB Mandate of NIRP and TLTRO, as well asThe June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 And Quantitative Easing To Include Not Only Government Bonds, But Also Private Sector Loans, As Well As To Surrender Some Sovereignty, to address secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation.

The ECB posts June 21, 2014, Telegraaf Interview With Mario Draghi, Daghi says unlimited liquidity through 2016 is the ECB signal on rates, and when prompted The ECB has taken many measures, but has not undertaken any quantitative easing, i.e. has not purchased bonds, the ECB Chariman responds, “Quantitative easing can include not only government bonds, but also private sector loans. We will discuss that when the time comes.”

AP reports ECB President Draghi Says Eurozone States Should Surrender Some Financial Sovereignty

In the interview with Dutch newspaper De Telegraaf published Saturday, June 21, 2014, Draghi said “economic policy cannot be a purely national matter” because of the impact European countries’ policies have on each other.

Much has been undertaken to close the gaps in Economic and Monetary Union, stricter budget rules and a banking union. Is everything now in place?

“The banking union is a major step forward in the direction of a more complete monetary union. The crisis has shown that the economic policies of one country have a clear impact on other countries. Economic policy cannot be a purely national matter. Where fiscal policy is concerned, a certain degree of Union-wide discipline is already given. But the marked imbalances between euro area countries are due to a lack of structural reforms in some countries. The next step to be taken is to subject structural reforms, too, to Union-wide discipline.”

Current economic policy coordination in the euro area is merely a first step?

“Yes, indeed, it is merely a first step.”

What will the second step look like?

“That is a matter for the political domain to decide. In the case of the budget agreements, sovereignty has been shared among Member States. That should also be done with respect to the labour market, competitiveness, bureaucracy, agreements on the internal market. Sovereignty needs to be shared at a level other than the national sphere. That is where I stop. Because now there are several options for politicians to choose from. You could grant greater powers to the European Commission, or to the Member States within the European Council, or you could create new European institutions. That is not for me to decide.”

The contention of some politicians that EMU is complete is thus not correct?

“No, far more is necessary for a perfect monetary union.”

Is a budgetary authority necessary at the euro area level, a fund for the compensation of weak countries?

“That is a highly political issue. Compliance with existing rules would be enough. But it is clear that my predecessor in office, Trichet, made a strong case for a budgetary authority.”

The Mario Draghi ECB June 5, 2014, Announcement of NIRP and TLTRO, and the June 21, 2014, Press Conference Statement calling for a surrender of some sovereignty, come to represent the important assertion of a unified experience, and serves as an early statement in the long process to establish Eurozone economic governance, where diktat provides seigniorage, that is moneyness, replacing democratic nation governance, and the traditional seigniorage of economic choice

Out of soon coming credit crisis and global financial system meltdown, coming from the rise of the Interest Rate on the US Ten Year Note, ^TNX, as well as derisking out of debt trades, and deleveraging out of currency carry trades, Money Market Funds, such as Vanguard’s VMMXX,  Regional Banks, KRE, such as HBAN, and Asset Managers, such as STT, BLK, will be integrated into the government, and become known as the Government Banks, or Gov Banks for short. Please note that said fund charges a fee in excess of its yield, in order to maintain its constant one dollar value.

The Primary Dealers, who hold Interest Rates Swaps, that they were literally gifted under POMO, and thus are short Treasuries, and whose customers are short 10 Year US Government Notes,  TLT, will likely be forced into becoming Gov Banks as well.

Across The Curve posts Reverse Repo. Citing FT article New York Federal Reserve Takes On Key Role In Repo Market. While the growing presence of the Fed in the market has been welcomed by money market funds keen to transact with the central bank, it comes with risks for the central bank and the broader financial system.

Bill Dudley, New York Fed president, warned last month that if use of the repo facility were to grow too quickly it might “result in a large amount of disintermediation out of banks through money market funds and other financial intermediaries into the facility. This could encourage further enlargement of the shadow banking system.”

Without a cap on use of repo with the Fed, investors who ordinarily lend to banks could instead flock to the central bank in times of market stress, exacerbating a flight from funding of banks, he warned

Other market participants have been supportive of the Fed’s new role.

“The facility could also enable the Fed to become a ‘dealer of last resort’, just as it is a lender of last resort to regular banks. This would ensure a troubled shadow bank could always find a counterparty in the market,” Paul McCulley, chief economist at Pimco, wrote in an opinion piece for the Financial Times this week.

Fitch said the relationship between banks and government money market funds had changed since the Fed launched the RRP. The likes of Citigroup, Bank of America, Crédit Agricole, Goldman Sachsand RBCnow rely less on money market funds for funding, while BNP Paribas, Deutsche Bankand Barclays conducted the largest volumes of repo funding with these players as of May 31, 2014.

The first step in developing the Exit Strategy will be capital controls, specifically an exit charge, that is an exit levy, on withdrawing funds from bond funds as well as money market funds. David Stockman posts A Horror Show Called “Fed-Gate” May Be Coming To Your Bond Fund Soon.

The historically rising value of M2 Money Stock reflects that money market funds have served as risk adverse savings accounts. Their constant one dollar value cannot be sustained now that the Benchmark Interest Rate, ^TNX, has risen from 2.49% to 2.62%, and as both 1-3 Year Treasury Bonds, SHY, and Mortgage Backed Bonds, MBB, have fallen in value, on the failure of trust in the monetary policies of the world central banks to sustain investment growth as well as global growth and trade.

Fiat money is defined as the combination of Major World Currencies, DBV, Emerging Market Currencies, CEW, and Aggregate Credit, AGG.

Through the monetary policies of the world central banks and abundant choices of debt trade investing such as KATE, LAMR, and KR, and carry trade investing, MKTAY, PUK, NMM, money has become cheap, credit has become surreal, and wealth has become totally fiat.

The failure of money has commenced, as all three of its components are now trading lower from their market top highs. The death of currencies, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, the Chinese Renminbi, CYB, CHLC, CNY,  and the Indian Rupe, ICN, communicates the soon coming beginning of extinction of all investors, specifically the risk adverse investor, the fixed income investor, and the risk purposeful investor. These are like the wooly mammoth, who was frozen instantly in place, by a rush of freezing air or water, as presented By John D. Keyser in Earth Rings and Frozen Mammoths.

Wealth can only be preserved by investing in and taking physical possession of gold bullion and by savings held in gold based Internet trading accounts such as Gold Is Money and Bullion Vault.

Reuters reports Fewer Roadblocks To Bondholder Bailins The Bank Recovery and Resolution Directive published last week in the EU Official Journal is an important building block for effective resolution and underpins our view that extraordinary support for senior creditors is becoming less likely, Fitch Ratings says. Some aspects of resolution are still evolving, but there was sufficient uncertainty about sovereign support to prompt our Outlook revisions in March: around 60 EU bank ratings are now on Negative Outlook because of diminishing support. The Directive gives authorities a comprehensive suite of resolution tools. We believe the bail-in tool to be the most effective because there are fewer practical hurdles.

2C) ... In Wednesday June 18, 2014 marketplace trading, Nation Investment, World Stocks,  Junk Bonds, Emerging Market Bonds, and Emerging Market Local Currency Bonds, soared to new highs as investor continued risk on investing and pursuit of yield investing on Janet Yellen comments.  

Investors drove Equity Investments strongly higher on comments from Janet Yellen on the lack of any over valuation, by rebounding economic activity, by the expectation of economic expansion to proceed at a moderate pace, and by the recent inflation data as heading towards the Fed’s target.

Reuters reports Fed Keeps Faith In Recovery. At an afternoon news conference, Fed Chair Janet Yellen provided a long list of reasons for short run confidence, from resilient household spending to an improving jobs market. Though officials slashed their growth forecast for 2014 from 2.9 percent to a range of between 2.1 percent and 2.3 percent, Yellen said that was the result of “transitory” factors like a severe winter and that a rebound was underway.

“Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace,” she said. “The economy is continuing to make progress towards our objectives” of full employment and 2 percent inflation”

But Yellen said there had been “a slight decline of projections pertaining to longer term growth” that prompted Fed officials to lower their view of the expected long-term federal funds rate from 4 percent to 3.75 percent. That is below the 4.25 percent historical level identified by New York Federal Reserve President William Dudley.

Nation Investment, EFA, traded to a new rally high, being led so by Japan, EWJ, and Japan Small Caps, JSC, as Reuters reports BOJ to Provide Almost 5 Trillion Yen to Banks to Boost Lending; and in Asia, by EWT, ENZL, EZA, EWC, CNDA, EWS, EWSS, EWT, EWA, KROO, VNM, EWM, EPHE, in Europe by EWU, NORW, EDEN, EFNL, EWN, GREK, EWP, EWI, in the Emerging Markets, EEM, EWX, DBEM, by ARGT, EWZ, EWZS, GXG, TUR, ECH, EWW, and also by worldwide by RSX, ERUS, ESR, EPOL, EZA, EWC, YAO.

Ireland, EIRL, traded lower, as Seamus Coffey of Irish Economy asks Will there be a “state aid” investigation? RTE isreporting that [t]he European Commission is to open a formal investigation into Apple’s tax arrangements with Ireland. An announcement is expected to be made by Competition Commissioner Joaquin Almunia tomorrow. If the Commission decides not to progress with an formal investigation there would only be a limited reputational bump for Ireland but there would have been benefits in terms of reduced uncertainty.  If a formal investigation is announced it is bad news for the certainty of the Irish corporation tax regime. The best outcome for Ireland would be a short (< 12 months) investigation.  The actual outcome would, perhaps surprisingly, not be the most important factor.

World Stocks, VT, traded to a new rally high, being led so by Precious Metal Mining, GDX, GDXJ, SIL, SILJ, Materials, PICK, SLX, XME, COPX, and High Beta ETFs, IHI, CQQQ, IGV, PBS, RXI, PNQI, FDN, SOCL, XTN, IBB, PJP, CARZ, IYC, PBJ, RZG, SKYY,  XRT, RZG, TAN, CVCO.  Of note, Consumer Services, IYC, has a stunning PE of 20. Semiconductors, SOXX, traded lower.

The S&P 500, SPY, traded to a new higher, with Fedex, FDX, blasting strongly higher.

Global Financials, IXG, traded higher, approaching its former high, being led higher by Japanese Stock Broker, NMR, Japanese Banks, MTU, MFG, SMFG, Brazil Banks, BBD, ITUB, India Banks, IBN, HDB, Mexico Bank, BSMX, and Asset Managers, such as BLK, BEN, PFG, AMP, BX.

Defensive Stocks, DEF, traded to new rally highs, being led so by IPW, OIH, PAGG, KIE, KXI, XLU, IHF, IYR, DBU.

In Yield Bearing Investments, DTN, traded vertically higher, as Utilities, XLU, Telecom, IST, Global Utilities, DBU, Global Infrastructure, IGF, International Dividend Dogs, IDOG, Leveraged Buyouts, PSP, European Small Cap Dividend, DFE, Euro Stock 50, FEZ, traded higher.  Energy Partnerships, AMJ, and, MLPJ, traded lower; but EMLP, traded higher.

Commodities, DBC, traded higher, being led higher by Base Metals, DBB. Gold, GLD, and Silver, SLV, traded higher.

The rally in Equity Investments was so strong that it upset the recent gains of currency traders, who were forced out of their short positions in the Brazilian Real, BZF, and the Australian Dollar, FXA. Major World Currencies, DBV, traded up to its previous rally high. Emerging Market Currencies, CEW, traded strongly higher, but remains below its recent rally high.

All Credit Investments, with the exception of European Credit, EU, traded higher, taking AGG, higher, but not enough higher to offset the destructionism of the bond vigilantes who on June 2, 2014, forced a strong sale in debt investments. The Benchmark Interest Rate, ^TNX, traded lower from yesterday’s 2.65% to 2.62%, which stands slightly higher from its Friday June 13, 2014 value of 2.60%. US Ten Year Notes, TLT, are a loss leading Credit Investment.

Junk Bonds, JNK, surged to new highs. Emerging Market Local Currency Bonds, EMLC, and Emerging Market Bonds, EMB, traded vertically higher, attaining their previous highs.

2D) … In Thursday June 19, 2014, marketplace trading. Nation Investment, EFA, traded strongly higher to a new rally high, as the US Dollar, $USD, UUP, capitulated and trades lower, turning Major World Currencies, DBV, lower, from their ongoing rally high, as currency traders call all other sovereign currencies higher.

Spain, EWP, and Banco Santander, SAN, traded to new rally highs, as European Credit, EU, traded higher on the day.

Japan, EWJ, JSC, rallied higher, to their early January 2014 highs.

Asia Excluding Japan, EPP, traded higher, as Australia, EWA, KROO, traded up to their previous rally highs and Australia Dividends, AUSE, recovered; while Vietnam, VNM, and Indonesia, IDX, IDXJ, traded lower.

Canada, EWC, CNDA, the UK, EWU, Denmark, EDEN, Taiwan, EWT, Golumbia, GXG,  Peru, EPU, and Chile, ECH, traded higher.

China, YAO, ECNS, CAF, ASHS, ASHR, Russia, RSX, ERUS, India, INP, SCIN, Brazil, EWZ, EWZS, Norway, NORW, and European Small Cap Dividends, DFE, traded lower. Reuters reports Argentina Says Next Bond Payment ‘Impossible’, Default Looms

Global Financials, IXG, traded higher as Far East Financials, FEFN, trade higher, and as China Financials, CHIX, Emerging Market Financials. EMFN, and Stockbrokers, IAI, traded lower,

World Stocks, VT, traded higher, being led so by Gold Miners, GDX, GDXJ, Silver Miners, SIL, SILJ, Copper Miners, COPX, Global Industrial Miners, PICK, Consumer Staples, KXI, Small Cap Consumer Staples, PSCC, Food and Beverage, PBJ, Medical Devices, IHI, International Energy, IPW, Energy Production, XOP, Energy Service, OIH, Automobiles, CARZ.  On the other hand, China Technology, CQQQ, traded lower, on lower Chinese Financials, CHIX.  Solar Energy, TAN, traded lower. Retail, XRT, traded lower from its rally high; CNBC reports Coach Closing 70 Sores As Sales Suffer

Pursuit of Yield Investments traded higher, being led so by North American Energy Partnerships, EMLP, Smart Grid, GRID, Utilities, XLU, International Dividend Dogs, IDOG, Premium REITS, KBWY, Leveraged Buyouts, PSP, and Dividends Excluding Financials, DTN.

Commodities, DBC, traded higher, being led higher by Base Metals, DBB and Gold, GLD, and Silver, SLV, which exploded higher.

Peak wealth has been attained with Utilities, XLU, topping out; its 2.6% rise this week evidences that pursuit of yield investments has run its course; and Global Integrated Energy, IPW, and Global Agriculture, PAG, topping out, evidences the termination of defensive stock investing.

An Elliott Wave 5 High has been attained in the S&P 500, it has come via ever rising Major World Currencies, DBV, and Emerging Market Currencies, CEW, and Aggregate Credit, AGG. In other words, peak moral hazard of the world’s debt based money system has been attained via a zenith in fiat money.

The US Dollar as the international reserve currency, together with the sovereignty of democratic nation states is at its peak, and has produced awesome seigniorage based upon fiat money, which in turn has defined the investor as the centerpiece of economic activity.

Now, with the bond vigilantes, having the bow of economic sovereignty, they together with the currency traders, are effecting coup d etats world wide, with the result being that regionalism is replacing creditism, corporatism, and globalism.

And now The Islamic State in Iraq and the Levant (ISIS), a jihadist group, who carry the Black Flag, as seen in CFR Report, has overnight created a rapidly expanding nation in Iraq and Syria, that threatens to overrun the Kurds in northern Iraq as well as the Shiites in Baghdad.  It is a proto-state, that is an unrecognized nation, having de facto sovereignty, which is active even in Lebanon, destabilizing there with an attempted assassination attempt.

The Telegraph reports in video Islamic Army Of Iraq Founder: Isis and Sunni Islamists Will March On Baghdad. The Founder of Islamic Army of Iraq, who was once described by the US as a top terrorist target, explains how the fight against ‘American or Iranian occupation’ has united Isis and other Sunni Islamists in the Battle for Baghdad.

Patrick Martin of WSWS posts Obama Exploits Iraq Crisis As Pretext For War Against Syria  The Obama administration made clear on Thursday that a major deployment of US forces in the Middle East will include military strikes beyond the borders of Iraq.

Elaine Meinel Supkis posts US To Bomb Al Qaeda In Iraq While Increasing Arms To Al Qaeda In Syria: Thank You, AIPAC

John Redwood United Kingdom Member of Parliament writes The Outbreak Of Religious War In Iraq Should Not Lead To UK Or US Military Intervention.

Frank Dimora posts Bible Prophecy Foretells Of Two Soon Coming Middle East Wars, these being the Psalms 83 War which is centered upon Syria, and the Ezekiel 38 War which is centered upon Israel. It’s easy to imagine that the US will be involved.

Psalm 83 tells us the Ishmaelites, Edom, Ammon, Amalek, Hagarenes, Gebal, and the Philistines will attack Israel.  Who are these nations described as Old Testament territories?  In our modern times, these are the nations of Jordan, Lebanon, Iraq, Saudi Arabia, Egypt, the Palestinians, and Syria.

The War spoken about in Ezekiel 38 takes place when Israel thinks they are living in safety without any walls to protect them, we believe the Psalms 83 war will take place at the time Israel and the Arabs are still calling for this Peace and safety and, at the time when Israel is protected by all their bars, gates, and walls.

The new sovereignty of regional economic governance is rising, as is seen in the emergence of Eurasia, through the Russia-China energy compact as well as The June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 and Quantitative Easing to Include Not Only Government Bonds, But Also Private Sector Loans, as Well As  A Call To The Surrender Of Some Sovereignty.

And a new seigniorage based upon diktat money, is emerging; it features regional statism to establish regional security, stability, and sustainability, where the debt serf is the centerpiece of economic activity.

The pursuit of yield rally, the defensive equity rally, the emerging market rally, and the European nation rally, are now complete, as is seen in the ongoing Yahoo Finance chart of Utilities, XLU, India Small Caps, SCIN, India, INP, Spain, EWP, Turkey, TUR, and Brazil, EWZ, topping out, evidencing the end to debt trade investing and currency carry trade investing.

Investments in Spain, EWP, such as its bank SAN, exemplifies the zenith of debt trade investing.

Investments in Emerging Markets, such as in India’s, Tata Motors’, TTM, Turkey’s TKC, Brazil’s  BRFS, CPL, TSU, ELP, CIG, EBR, seen in combined ongoing Yahoo Finance Chart, exemplifies the zenith of currency carry trade investing, which has been based upon the lowering of yield of sovereign debt. The rising value of debt of these democratic nation states has produced currency carry trade leverage over the Japanese Yen, FXY, to produce stunning investment gains.

The genius of Milton Friedman’s floating currencies, and the genius of Ben Bernanke’s Global ZIRP, has come to an end now that the bond vigilantes, are in control of the Bow of Economic Sovereignty, that is the Benchmark Interest Rate, ^TNX, and are calling interest rates higher globally.

Speculative leveraged investing, that came via Asset Managers, has come to an end. Companies which have securitized and traded in financial products, such as Voya Financial, VOYA, are tombstones on the bygone era of credit and the age of currencies.

The Bear Steepening that commenced in early June 2014, continued the week ending June 20, 2014, as The 30 Year US Government Bonds, EDV, The 10 Year US Government Notes, TLT, and Long Duration Corporate Bonds, LWC, traded lower.  Risk Free Credit, FLOT, traded to a new all time high.

The Bull Flattening of the 10 30 US Sovereign Debt Yield Curve $TNX:$TYX, came to an end on June 2, 2014, as is seen in Steepner ETF, STPP, steepening in value in June. The surge in Oil, USO, and the  investment demand for Gold, GLD, as well as the failure of the government in Iraq and an enduring civil war in Ukraine, has not yet been priced into inflation; there has only been a tiny rise in the ratio of Long Term Tips. LTPZ, to US Ten Year Notes, TLT, that is in LTPZ:TLT.

Junk Bonds, JNK, traded lower. The Long Term Corporate Bonds, LWC, is now tied with Emerging Local Currency Debt, EMLC, and European Debt, EU, in leading all of the High Yield Debt, JNK, LWC, EU, EMB, HYD, EMLC, EMCD, BABS, HYXU, PZA, lower, on the exhaustion of the world central bank’s monetary authority.

It is Jesus Christ, who on October 23, 2013, opened the First Seal of the Scroll of End Time Events, and released the Rider on the White Horse, seen in Revelation 6:1-2, who has the Bow of Economic Sovereignty, to begin economic coup d etats world wide, by empowering the bond vigilantes to commence calling the Benchmark Interest Rate higher from 2.49%.

And it is Jesus Christ, who on June 11, 2014, opened the Fourth Seal of the Scroll of Scroll of End Time Events, and released the Rider on the Pale Horse, seen in Revelation 6:7-8, (compelling Equity Investments to trade lower on the trade lower in the EURJPY, following the ECB Mario Draghi Mandate of NIRP and LTLRO) who introduces economic deflation replacing economic inflation, the result of which is economic death replacing economic life.

A see saw destruction of the components of fiat wealth, these being Equity Investments, and Credit Investments, is underway, on the failure of Sovereign Currencies, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, and the India Rupe, ICN, trading lower in value.

2E) … In Friday, June 20, 2014, financial marketplace trading, the stock market actually pivoted from a bull market to a bear market.

With the trade lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, the June 5, 2014 Mario Draghi ECB Mandate of NIRP and TLTRO becomes the EU Economic Manifest that serves to pivot the world from the age of credit and currencies and into the age of diktat and debt servitude.  The June 5, 2014 Mario Draghi Mandate becomes the “manifest direction” for regional economic governance in Europe.

All currencies are either peaking or have peaked out in value, reflecting the failure of democratic nation state sovereignty. Out of soon coming economic chaos, more specifically a credit bust and global financial system breakdown, termed Financial Apocalypse, and foretold in Revelation 13:3-4, regional sovereign leaders will provide diktat to drive regional economic activity.

Nation Investment, EFA, traded lower from its market top high, as Asia Excluding Japan, EPP, traded lower with Emerging Asia, GMF, Taiwan, EWT, Singapore, EWS, EWSS, South Korea, EWY, Australia, EWA, and New Zealand, ENZL trading lower.

The Emerging Markets EEM, EWX, traded lower, on lower Emerging Market Currencies, CEW, and lower Emerging Market Local Currency Bonds, EMLC. Currency hedging no longer provides positive investment gains, as is seen in Hedged Emerging Markets, DBEM, trading lower. Vietnam, VNM, Turkey, TUR, Indonesia, IDX, IDXJ, Emerging Africa, GAF, and Emerging Europe, ESR, traded lower.

Canada, EWC, CNDA, traded to a new rally high, on a rising Canadian Dollar, FXC, which reflects the rally in Oil, USO, and Gold, GLD, which Canada produces. Sweden, EWD, traded lower on a lower Swedish Krona, FXS.

Global Financials, IXG, traded lower from its rally high, as Emerging Market Financials, EMFN, European Financials, EUFN, and Far East Financials, FEFN, traded lower.

In Yield Bearing Investments, Dividends Excluding Financials, DTN, traded to a new rally high; while Emerging market Dividends, EDIV, Emerging Market Infrastructure, EMIF, Global Infrastructure, IGF, Utilities, XLU, International Telecom IST, Gulf Dividends, GULF, traded lower.

World Stocks, VT, traded unchanged at its rally high, as Energy Services, OIH, traded higher, while Energy Production, XOP, topped out, and Global Integrated Energy, IPW, traded lower.  Other sectors trading lower included Global Agriculture, PAGG, Insurance, KIE, and Steel, SLX, with World Steel Association posting May 2014 Crude Steel Production Exceeds Last Year’s Production.  

The pivoting from a bull stock market to a bear stock market is seen in the Emerging Market Bear Market ETFs, EUM, EEV, and EDZ, trading higher; the periphery sell off will soon proceed to become core sell off, as sovereign currencies trade lower on debt deflation.

Most of the Inverse Market ETFs, STPP, XVZ, EUO, YCS, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM, are now trading higher, evidencing that peak wealth has been attained; these could be used as collateral for the basis of short selling.

The pivot from bull market to bear market is seen in  Convertible Securities, CWB, topping out in value, and the 20 20 Target Date ETF, TDH, trading 1.5% lower, and the International Quality Dividend Defensive, IQDE, trading 2.0% lower, and the S&P Buy Write, PBP, trading 2.1% lower in value for the week.

The age of financialization and securitization is over, though, finished, and done, as is seen in the Proshares Short MSCI EAFE, EFZ, trading higher in value. The age of regional economic governance has commenced with the June 5, 2014, Mario Draghi ECB Mandate of NIRP and TLTRO.

The peaking out in risk assets comes with rising headline inflation, and has produced an investment demand for Gold, GLD, and Silver, SLV. The demand for safe assets, that is gold and silver, is seen in the rallying value of gold relative to sovereign currencies, and is presented in the ongoing Yahoo Finance chart of the ETFs, GLD, GYEN, GGBP, and GEUR.

John Templeton said “Bull markets are born on pessimism, grow on scepticism, mature on optimism and die of euphoria.”

The economic data reports scheduled for next week, on consumption and on consumer confidence may be the actual triggers which propel the stock market lower.

Aggregate Credit, AGG, traded higher with Junk Bonds, JNK,  which traded to a new rally high, suggesting that Total Credit has surged and is now trading lower from its grand swell higher.

3) … In this week’s news and in commentary

3A) ... Fred Brauer answers the question, “Why did Dave Brat beat Eric Cantor in Virginia’s Republican primary”, relating Yes, Brat’s Victory Was About Immigration.  I reply that those Inside The Beltway wanted a “pure Republican”, that is one who makes “no compromise” with Democrats. Of note, Dave Brat had support from right wing pundits Ann Coulter and Laura Ingram.

3B) … Just exactly where do the 1% reside?

Wikipedia relates that they reside in million dollar homes, in such places as The Beltway’s Potomac, MD, or the Upper West Side of Manhattan, or Upper East Side of Manhattan. And wealth demographer Stephen Higley relates they reside in the Higley Elite 100 Neighborhoods, such as the Carderock-The Palisades neighborhood, which is one of The 25 Richest Neighborhoods in America.

Betsy Schuman relates the Palisades community in Bethesda is a small neighborhood of approximately 79 homes in a park-like setting near the canal off MacArthur Boulevard. The Palisades is filled with both traditional and transitional colonials and contemporary homes on lovely treed lots. The lot sizes range from approximately .80 – 3.24 acres.

El Observatorio del Desarrollo Urbano y Territorial posts America’s 1,000 Richest Neighborhoods.

And Richard Florida of City Lab posts America’s 1,000 Richest Neighborhoods. America’s “one percent” are a privileged bunch. It takes an adjusted gross income of almost $400,000 to be counted among those who make up the country’s top earners. Together, the top 1 percent account for nearly 20 percent of reported taxable income in the US.  Overall, the one percent are heavily concentrated along the East and West Coasts. And despite all the talk about gentrification and the movement of the uber-affluent back to the cities, their numbers are overwhelmingly concentrated in the upscale suburbs of America’s increasingly bi coastal economy – places like Greenwich, Connecticut; Bethesda and Potomac, Maryland; Coral Gables, Florida; and Newport Beach, California

Des Moines, Iowa, is not where the 1% reside, but it is a major center of the US insurance industry and has a sizable financial services and publishing business base. In fact, Des Moines was credited as the “number one spot for U.S. insurance companies” in a Business Wire article and named the third largest “insurance capital” of the world; it is known as Hartford of the West. Zip Code is 50301. In 2010, Forbes magazine ranked the Des Moines metropolitan area first on its list of “Best Places For Business And Careers,” based on factors such as the cost of doing business, cost of living, educational attainment, and crime rate.

3C) … I reside in a jungle of abuse with the vilest of predators.

Here in downtown Bellingham, WA, it’s a world characterized by melancholy, alienation, bleakness, disillusionment, disenchantment, ambiguity, moral corruption, and evil of every type; many psychopaths and their girlfriends live here; such be alpha males and their alpha females, who go around biting, ripping, and devouring whoever they may; these have used me many times as a fire hydrant to piss on; and I can assure you it is a most unpleasant experience. There is no law against intimidating or harassing people. I have come to appreciate The Third Man, a film noir; yes it really appeals to me. Distance Learning presents The Five Rules of Film Noir

AMC Filmsite relates Film noir genre films (mostly shot in gloomy grays, blacks and whites) thematically showed the dark and inhumane side of human nature with cynicism and doomed love, and they emphasized the brutal, unhealthy, seamy, shadowy, dark and sadistic sides of the human experience. An oppressive atmosphere of menace, pessimism, anxiety, suspicion that anything can go wrong, dingy realism, futility, fatalism, defeat and entrapment were stylized characteristics of film noir. The protagonists in film noir were normally driven by their past or by human weakness to repeat former mistakes.

Fog’s Movie Reviews relates The Third Man is set in Vienna, in the aftermath of WWII. The film was shot on location there, and the recovery is still evident. Rubble and wreckage are often present, as are scaffolding and repair efforts. The city is policed by multi-national security forces. The locals suspicious and untrusting. It’s a destabilized world.

Enter Holly Martins. He’s an author of pulp novels who’s a bit down on his luck. He’s been offered a job by his college friend, Harry Lime. When he arrives in Vienna, however, he discovers his friend Lime is dead. He was struck by an automobile and killed just prior to Martins’ arrival.

While attending Lime’s funeral, he is shocked yet again. He’s informed that Lime was an unscrupulous war profiteer. A notorious black market racketeer.

Harry Lime is not dead at all. In legendary movie moment, a light suddenly turned on from a window above illuminates a man hiding in the shadow of a doorway. It’s Harry Lime. His death was faked.

Now that he’s revealed himself to Martins, Lime also reveals his motivations. In an infamous scene, Martins and Lime ride a ferris wheel and discuss his crimes. It’s a chilling scene. The smug, cold-blooded Lime espouses his self centered world view, demonstrating no remorse whatsoever for his victims. Instead, he shows a callous disregard for human life, even boasting that his profits came without income tax. He alternately threatens and attempts to bribe Martins to join him.

Harry Lime’s girlfriend-mistress, Anna Schmidt, being passionately in love with Harry, seen in image here, remains loyal to him as the movie’s drama unfolds.  The more review continues here.

Geri Jeter writes Z is For Zither Composed for the zither by Anton Karas, who also played the solo instrument, The Third Man score often is described as a stellar example of the film composer’s art.

According to a November 1949 Time magazine article: “The picture demanded music appropriate to post-World War II Vienna, but director Reed had made up his mind to avoid schmalzy, heavily orchestrated waltzes. In Vienna one night Reed listened to a wine-garden zitherist named Anton Karas, [and] was fascinated by the jangling melancholy of his music.” Roger Ebert wrote, “Has there ever been a film where the music more perfectly suited the action than in Carol Reed’s The Third Man?”

If one were to ask Anna Schmidt, “Why were you passionately in love with Harry Lime?” The answer would come back, “I loved the rebel”. There are some women who before the age of fiveteen, who have crossed the rubicon of morality so many times, that they come to love only evil men, and give themselves passionately to them in every way, mentally, sexually, and emotionally. Nothing should be done to help these women, as nothing can be done to help them; they live in emotional quicksand. The only thing one can do is refer them to Donna Anderson who writes Why You Can Become Addicted To A Sociopath/Psychopath.

The bad thing about their love addiction is that in their passion, they lose all moral perspective and become incapable of virtuous speech and behavior, as well as incapable in manifesting in good ethical regard for others.

I know a number of women like Anna Schmidt; and they consistently tell me “I am free”’; to which I say nothing, but very much want to say, “no you are a slave to sin”. And I know some women, who are so Godly, that I have come to believe, they were made God’s child in the womb. Some might say they had no adult conscience, and have not reached the age of reason, and could not have been born again. I reply what constitutes reason?  Some women, are nudged by God in the womb, and respond with an “uh-huh”, and thus are born again at that time, and emerge into the world, God’s child. Such be the election of grace.

3D) … Who is a libertarian? What is Libertarianism

Victor J. Ward posts in Economic Policy Journal Libertarian-Socialism = Righteous-Wickedness.  He writes “I agree with everything mentioned in the post: It’s Here: Libertarian-Socialism. But I wanted to comment on one section of Will Moyers’ article.

Moyers says: How can we combat racism? Property rights and non-agression. How should humans approach sexuality and gender? Property rights and non-agression. What is the place of hierarchies in society, whether it’s families or workplaces or financial classes? Property rights and non-agression. What role — if any — should religion and superstition play in society? Property rights and non-agression.

And to Moyers, I say: Yes, that’s correct. Moyers writes in an attempt to say that libertarians have an extremely limited answer to some of life’s most pressing questions. In truth, however, continue reading”

I am not a libertarian; I am a christian; one cannot be both; I am beginning to understand, that under libertarianism, there is individualism and no public anything; no public roads, no public transportation, no public schools; no public statue, not even of Murray Rothbard. The flag of the libertarian is Don’t tread on me; and the banner of the libertarian reads The Individual way is the right way. For libertarians, justice is freedom from public ownership.

3E) … Are you a feminist? Do you need feminism?

Economic Policy Journal posts  I Don’t Need Feminism Because

3F) … WSWS posts Bulgaria suspends construction of South Stream pipeline.

The EU and US have forced Bulgaria to halt construction of a pipeline that would allow Russian gas supplies to Europe to bypass Ukraine

3G) … Democracy fails in Iraq.

The WSJ reports Iraq’s Top Shiite Cleric Calls for New Government. ‘Effective’ Government Needed That ‘Avoids Past Mistakes’.

Zero Hedge post Iraq Fighting Intensifies, Battle For Refinery, PM On The Rocks.

Dan Sanchez posts in Lew Rockwell Cheney Launched A War That He Knew Would Be Futile And Catastrophic Simply To Establish Republican Rule.

3H) … Mankind seeks the sovereign experience of God, that is to create human life.  Bible prophecy relates that as it was in the days of Noah, so it shall be in the days of the coming of the Son Of Man, Matthew 24:37-39.  Back in Noah’s time, fallen angels had sex with women, as an attempt to modify the gene pool, and corrupt the lineage of the forth coming Messiah and Redeemer of mankind. Today, scientists seek the sovereign authority of God, that is to create human life.

Technology Review posts Genome Editing. The ability to create primates with intentional mutations could provide powerful new ways to study complex and genetically baffling brain disorders.

NPR posts The Transhuman Future: Be More Than You Can Be  How is it that we define a human? Is it our body? Our genome? Our behaviors? Our self-awareness? Our compassion? Our minds? All of these and then something more? What now may be obvious to most people about being human will become less so as we become progressively more integrated with technology both inside and outside our bodies. Transhumanism, according to the dictionary on my Apple laptop, is defined as “the belief or theory that the human race can evolve beyond its current physical and mental limitations, especially by means of science and technology.”

3I) … As described in Daniel 2:25-45, God is a empire builder.

And He labors in dispensation, that is in the household stewardship of the economy of God, to perfect every age, bringing it to completion, much like a ship’s captain completes the manifest before setting sail, as is described in Ephesians 1:10.

Jesus Christ stirred the investor’s greed so as to leave no debt trade unbought, (ie KR, and NMM) and for no carry trade investment unsecured (ie Columbia, GXG).

Investment mania produced peak moral hazard, what is properly described as an Empire of Debt, on Thursday June 19, 204.

Elaine Meinel Supkis posts Obama Sends More Troops, Drones, Bombs To Iraq.

Her article describes the empire building activity of God, which was foretold in the second year of the reign of Nebuchadnezzar by the prophet Daniel in the interpretation of the King’s Statue of Empires dream as presented in Daniel 2:25-45, where two iron legs would rise to rule the world in hegemonic power; these have been the British Empire and the United States.

Now with the end of the US Dollar as the international reserve currency, and disinvestment out of debt trades and deleveraging out currency carry trades, the global kick ass, might makes right, final Global Hegemon, is literally dust blowing in the wind.

Ms Supkis misportrays the future relating “Europe is going to get yet another lesson in Realpolitik, Antiwar reports Russia Halts Ukraine Gas Shipments.  This will wreck the economy in Western Europe and include a flood of criminals pouring out of Ukraine to exploit open borders and the devolution of Europe dissolving into fragments will continue while the British Royals parade multiple babies about the planet, crowing about ruling the remnants of their old empire”.

US Dollar Hegemony, as well as the US Dollar as the international reserve currency is history as Brandon Smith of Alt-Market.com, posts in Zero Hedge Energy Markets Are On The Brink Of Crisis.

Modern wars are rarely, if ever, fought over resources, despite what the mainstream gatekeepers might tell you. If a powerful nation wants oil, for instance, it lines the right pocketbooks, intimidates the right individuals, blackmails the right officials or swindles the right politicians. It has no need to go to war when politicians and nations are so easily bought. Modern wars, rather, are fought in order to affect psychological change within a particular country or population. Wars today are fought to cover up corrupt deals and create desperation. Oil is used as an all-encompassing excuse for war, but it is never the true cause of war.

In reality, oil demand has become static and is even falling in many parts of the world, while new oil and gas-producing fields are discovered on a yearly basis. Petroleum is not a rare resource — at least, not at the present. And the propaganda surrounding the “peak oil” Armageddon scenario is pure nonsense. Oil prices, unfortunately, do not rise and fall according to supply – instead they rise and fall according to market tensions and, most importantly, the value and perceived safety of the U.S. dollar. Supply and demand have little to do with commodity values in our age of fiat manipulation and false investor perception.

A very real danger within energy markets is the undeniable threat that the U.S. dollar may soon lose its petrodollar status and, thus, Americans may lose the advantage of relatively low gas prices they have come to expect.

The U.S. dollar’s world reserve status is nearing extinction. Multiple major economies now trade bilaterally without the use of the dollar; and with foreign conflicts on the rise, this trend is going to become the norm.

In the past week alone, Putin adviser Sergey Glazyev recommended to the Kremlin that a coalition of nations be formed to end the dollar’s reserve status and initiate a form of economic warfare to stop “U.S. aggression”.  Of course, anyone familiar with the escapades of international banking cartels knows that it is the money elite that dictate U.S. aggression, just as they dictate the policy initiatives of Russia.  I would note that there is only one currency exchange structure that could be used at this time to shift global forex reserves away from the dollar system, and that is the IMF’s Special Drawing Rights.

The argument has always been that the IMF is a U.S. controlled institution, however, this is a faulty assumption.  The IMF is a Global Banker controlled institution, a front organization for the Bank of International Settlements, which is why the recent refusal by the U.S. Congress to vote on new capital allocations for the IMF has resulted in the world’s central bank threatening to remove U.S. veto power.

The IMF is owned by a cartel of banksters and it is ready to replace the USD with SDRs, as is seen in their PDF report.

Aside from the potential impact on oil prices which will compound on the growing global inflationary pressures, a regional conflict will destabilize global trade, as Benson te has written; and will  be a genesis factor in the rise of regional economic governance.

Bible prophecy of Revelation 13:1-4 foretells that out of waves of Club Med sovereign, banking and corporate insolvency, the Beast Regime is rising to replace the Banker Regime. There will be no exit by any nation from the Eurozone. Leaders will meet in summits to renounce national sovereignty and announce regional pooled sovereignty where regional fascist leaders will work in policies of diktat and schemes of control to establish regional security, stability and sustainability.  The EU will serve as a model for regional integration, for all of the world’s ten regions, where totalitarian collectivism unifies people in gulags of debt servitude.

Germany will once again rise to be a military power. Peter Schwarz writes in WSWS The German President’s Call To Arms. At the end of a three-day visit to Norway, the German president reiterated his call for a more aggressive German foreign policy. And Johannes Stern writes in WSWS The Crisis In Ukraine And The Return Of German Militarism. And Johannes Stern writes German Militarism And The US Debacle In Iraq. The German bourgeoisie is responding to the debacle of US imperialism in Iraq by intensifying its campaign for militarism and war. Ulrich Ripper writes in WSWS German Foreign Minister Steinmeier Agitates For War. The demand for a German leadership role in Europe and the world has never been so shamelessly and forcefully raised.

Shipping Stocks, SEA, traded decisively lower, on Wednesday, June 17, 2014, evidencing the rise of the region of Eurasia, as Bloomberg reports China Blocks European Shipping Pact, Sending Maersk Down. China blocked the formation of a global alliance by the world’s three biggest shipping lines in a surprise move that ignored Western approval of the plan and sent AP Moeller-Maersk A/S MAERSKB shares tumbling the most in two years.

God will soon fulfill his word of prophecy of  Revelation 13:5-10, which presents there is waiting in the wings of Europe stage, the most capable of sovereigns, perhaps this one is Jean Claude Juncker.  Out of the European Debt Crisis, the Sovereign will step into the limelight, and through cunning and shrewdness rise in power to rule, as is seen in Daniel 8:6-8, and be accompanied in power by the Seignior, that is top dog banker, who in coining money, takes a cut, as foretold in Revelation 13:11-18. Their word, will and way will provide economic direction unifying all of the Eurozone. This New Charlemagne and his Monetary High Priest, will eventually come to rule the world, in a one world religion, from their capital in Jerusalem, as foretold in Daniel 9:25.

3J) … The stage is being set for the rise of a King of the North … as well as for the rise of a King of the South.

Will Egypt’s Sisi rise to be the prophesied King of the South?  Johannes Stern of WSWS reported in March 2014 Egyptian Coup Leader al-Sisi Announces Presidential Candidacy.  Sisi is a US backed dictator prepared to use fascistic methods to suppress the working class at the behest of its imperialist patrons and international finance capital.

Or will an Islamic Caliphate from the nation of ISIS, rise to be the prophesied King of the South? Blessed Economist posts Isis Iraq

Bible prophecy of Daniel 11:11 and Daniel 11:40-42 foretells that a confederation of North African and Middle East countries will form an Islamic Empire, which will produce the King of the South, who will eventually go to war against the King of The North, that is Europe’s soon coming Sovereign, presented in Revelation 13:5-10, who is the Prince who is to come, that being the Prince of the people.

Daniel 11:11 “And the king of the South shall be moved with rage, and go out and fight with him, with the king of the North, who shall muster a great multitude; but the multitude shall be given into the hand of his enemy.”

Daniel 11:40 “At the time of the end the king of the South shall attack him; and the king of the North shall come against him like a whirlwind, with chariots, horsemen, and with many ships; and he shall enter the countries, overwhelm them, and pass through.”

Scott at Prophecy Update wrote in August 2013 EU Convenes Emergency Meeting On Egypt: EEAS Back In The News. We know from Daniel 9:27 that the coming antichrist will “confirm” the covenant with the many, and part of any confirmation of a peace deal in the Middle East will include some kind of peace-keeping forces. It requires some degree of speculation, but it seems obvious that any plan will have to consider a combination of border control forces and forces on the streets to maintain peace. The EEAS was formed for this very purpose, and the fact that this group was born in the revived Roman Empire becomes a compelling story for a prophecy watcher.  If the EEAS is considering involvement in Egypt it is very easy to see similar maneuvering whenever the covenant of Daniel 9:27 is confirmed. This story is worth watching closely.

3K) … The creation of the debt serf is underway in France. Pierre Mabut of WSWS posts Socialist Party Government Ignores Mass Protest To Attack French Culture Workers’ Jobless Benefits Ten thousand entertainment industry workers protested outside the Ministry of Culture in Paris on Monday as part of strike action throughout France.

Anthony Torres of WSWS posts Workers Speak Out Against Privatization Of French Railways. Approximately 1,000 demonstrators gathered in Paris on June 17 to protest the Socialist Party government’s planned privatization of the French railways.

3L) … Elaine Meinel Supkis posts Obama Claims Unilateral War Powers Thanks To Bush Jr. War On Terror Act

3M) … Business InsiderMark Cuban Warns That A Housing Bubble-Like Bust Is Coming To America’s Colleges.

3N) … Pagan Events and Festivals for the Summer Solstice

Bad Witch posts Pagan Events and Festivals for the Summer Solstice.

Facebook posts Crop Circles And UFO Community.  Matthew Williams provides us his latest wonderful short aerial Youtube Video on yesterdays crop circle near Alton Barnes, Wiltshire, UK,  Woodborough Hill Crop Circle 20-6-2014.

Please consider that Stonehenge was built in circular form, as a landing site for UFOs piloted by fallen angels. Bible UFO posts There Are Ten Bible Verses That Describe Chariots As Vehicles. And Bibliotecapleyades posts Ezekiel’s Wheel

It was the pre-Christians, who over the centuries, warred with the Druids, who were judges, doctors, diviners, sages, and mystics, and who worshipped the fallen angels; the pre-Christians finally succeeding in tearing down the “Altar to the Gods”. Druidry fosters love of the land, earth and the wild, Stonehenge relates; of course Christianity fosters love of God and others.

The University of North Carolina Chapel Hill posts Fall Of The Druidesses. The introduction of the Christian religion was the final blow that ended the egalitarianism of Celtic society.

4) … Conclusion: The extinction of the investor is underway, as the Mario Draghi ECB Mandate Of June 5, 2014 And The Announcement Of June 21, 2014, serve as the EU Economic Manifest, that is the Charter, Call, and Club, for Eurozone Regional Governance.

Outside of the embrace by President Nixon of Milton Friedman’s Free To Choose concept of floating currencies, in 1971, the June 5, 2014, Mario Draghi Mandate of NIRP and TLTRO, together with The June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 And Quantitative Easing To Include Not Only Government Bonds, But Also Private Sector Loans, As Well As A Call To Surrender Of  Some Sovereignty, is the singular most important event of modern economic history, as some investors are coming to the realization that the monetary policies of the world central banks have crossed the rubicon of sound monetary policy and have made traditional “money good” investments bad, and as such have sold out of European Small Cap Dividends, DFE; this at a time when Spain, EWP, and its bank, Banco Santander, SAN, have been trading to new rally highs, as demand for European Credit, EU, has remained strong.

Global ZIRP birthed the investor as the centerpiece of economic activity. Central bank monetary policies of credit liquidity funneled money to the investor for investment gain.

Zero Hedge reports Global Millionaires Increase By Most Since Dot Com Bubble, Control Record $52 Trillion In Wealth. In similar presentation, Keven Warsh and Stanley Druckenmiller of the WSJ post The Asset-Rich, Income-Poor Economy. The Fed’s balance-sheet recovery hasn’t stirred business investment, an opportunity killer for workers.

The Great Financial Recovery produced peak moral hazard the week ending June 20, 2014, as Total Credit likely flowed to its grand finale high.

Beginning June 2, 2014, the bond vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49% to 2.62%, and are yielding this Bow of Economic Sovereignty to effectively establish coup d etats globally, enabling the currency traders to introduce competitive currency devaluation, causing some investors to derisk out of debt trades, such as Shipping, SEA, and others to deleverage out of currency carry trades, such as European Small Cap Dividends, DFE, resulting in a see saw destruction of fiat wealth, that is destruction of both Equity Investment, and Credit Investments, such as the Zeroes, ZROZ, the 30 Year US Government Bond, EDV, and the  US Ten Year Notes, TLT, which are leading Aggregate Credit, AGG, lower.  World Stocks, VT, are no longer able to leverage higher over World Debt, AGG, as is seen in the combined chart, VT:AGG, flowing lower.

Dissolution of the Banker regime is underway as investors are selling out of Nation Investment, in particular the Gulf States, MES, Argentina, ARGT, Egypt, EGPT, Turkey, TUR, Indonesia, IDX,  IDXJ, and the Philippines, EPHE.

The dynamos of the age of credit and the era of currencies, are winding down on the failure of credit and the death of currencies, these being creditism, corporatism, and globalism; and are starting to cause the extinction of the investor, which will be similar to the extinction of the wooly mammoth, who was frozen instantly in place, by a rush of freezing air an/or water, as presented By John D. Keyser in Earth Rings and Frozen Mammoths.

The singular dynamo of the age of diktat and the era of debt servitude, is winding up on the derisking out of debt trades and deleveraging out of currency carry trades, this being regionalism, and together with the emergence of Eurasia, through the Russia-China Energy Compact, as well as the June 5, 2014, Mario Draghi Announcement of NIRP and TLTRO, and The June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 And Quantitative Easing To Include Not Only Government Bonds, But Also Private Sector Loans, As Well As A Call To Surrender Some Sovereignty, like a spring of warm water, has birthed the debt serf for debt servitude.

Just as the Magna Carta is seen to be a seminal document of English history, so the Russia-China Energy Compact and the two June 2014 Mario Draghi ECB Announcements are seminal announcements that serve as the EU Economic Manifest, that is “Charter, Call and Club”, for Eurozone regional economic governance, which will be replicated in every one of the world’s ten regions, and in totalitarian collectivism unifying all of mankind’s seven institutions, establishing The Beast Regime, out of waves of Club Med sovereign, banking, and corporate insolvency, in fulfillment of bible prophecy of Revelation 13:1-4.

Josh Snyder posts in Economic Policy Journal Anarcho-Capitalism – In One Lesson. While reading Lew Rockwell’sAgainst the State: An Anarcho-Capitalist Manifesto, I encourage you to re-read 1984.

It’s clear that we need a revolution, not of violence but of words.  The pen is truly mightier than the sword and the real checks and balances on perpetually expanding government across the world are not the Magna Cartas and the Constitutions, it’s books like Lews, ones that spread the reality and expose the State for what it truly is – a malevolent entity, hellbent on enriching itself at the expense of the rest of us. Lew reminds us of this throughout, this is NOT the theoretical foundation of the movement,For a New Liberty and the Ethics of Liberty are the groundwork, but this is a brilliant “Lesson” on why this movement is necessary and growing by providing real examples of how the current American regime is so tortuous and so disastrous for the world that there is only one survivable alternative Anarcho Capitalism

Frankly there is no survivable alternative; there is only one hopeful outcome, that being reliance upon the Oikonomia of Jesus Christ.

Lew Rockwell, in building on Libertarians concepts of Rothbard, Spooner, Molinari, Hans Hoppe, and others, has failed to build on the Greek word Oikonomia, from which we derive economics, and which implies a financial component to intentional kinship options, where a steward, who acis in dispensation, that is in management of all things, for the completion of every age, brings all things therein to completion, as presented by the Apostle Paul in Ephesians 1:10.

Furthermore Mr Rockwell, has failed to build on the Gospel, that is the Good News, of The Revelation of Jesus Christ, that is the unveiling and manifestation of Jesus Christ, as presented by the Apostle John, who in his 90s, while living in exile, on the Isle of Patmos, was given a dream by angels of end time events, specifically, “Those things which must shortly come to pass”, as presented in Revelation 1:1.

And Mr Rockwell has failed to build on the Bible prophesied, dissolution of the US Dollar Hegemonic Empire; and its replacement by the Ten Toed Kingdom of Regional Economic Governance, featuring ten regions of toes of iron diktat and clay totalitarian collectivism, as presented in the Statue of Empire prophecy of Daniel 2:25-45.

The Oikonomia of Jesus Christ, provides a life experience of holiness, meaning divinity, upon which one grows in grace, meaning resource, and in truth, meaning that which is reliable for belief, or which is a trustworthy promise.

A gold rally developed on June 20, 2014, as risk assets peaked out in value. A number of investors fear that the June 5, 2014, Mario Draghi Mandate of NIRP and TLTRO, has crossed the rubicon of sound monetary policy and has made traditional “money good” investments bad.  And hence an investment demand for gold arose on Thursday June 19, 2014, as is seen in the chart of the Gold ETF, GLD, blasting higher.

Spot Gold, $GOLD, closed high at $1,320, as the US Dollar, $USD, UUP, closed lower at $80.40. With the rise in the Benchmark Interest Rate, ^TNX, from 2.49%, in June 2014, to 2.62%, which is going to destroy all fiat money and feat wealth, Gold has commenced its Elliott Wave 3 of 3 higher; these are the most dynamic and powerful of all up waves, and they produce the bulk of the wealth increase on the way up to their Elliott Wave 5 High. In the age of debt servitude, the physical possession of gold bullion, and the diktat of regional fascist leaders will be the only form of enduring wealth.

The currency traders in selling the world’s leading sovereign currencies, following the bond vigilantes, in calling the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note,  ^TNX, higher from its October 23, 2013, value of 2.49% to 2.62%, and in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening from its June 2, 2014, low, have underwritten the currency traders in commencing the final phase of the business cycle, that being Kondratieff Winter.

Risk-on investing is over; risk-off investing is the new investment normal. Risk assets, having been inflated by Global ZIRP’s pursuit of yield, have topped out in value, and is driving the wily to derivative contracts and to take physical possession of safe assets, these being gold bullion and some silver bullion.

The World Enters Kondratieff Winter On The Trade Lower In The Euro

June 14, 2014

Financial market report for the week ending June 13, 2014,

This post can be found in Google Documents format here

1) … Introduction. The June 11, 2014 trade lower in the Euro in response to the June 5, 2014, ECB NIRP Mandate of Mario Draghi, pivots the world into the Ten Toed Kingdom of Regional Economic Governance and commences Kondratieff Winter, the final phase of the business cycle. Libertarian Chris Rossini writes in Economic Policy Journal Man-Made Laws Are Never Permanent. If there’s one thing that is perfectly certain, it’s that government is not omnipresent, not omniscient, and certainly not permanent. The Roman Empire is no longer here, neither are the Mongols, nor the Spanish, Portuguese, or British Empires. No doubt they all saw themselves (and their man-made rules) as permanent too. But nothing that is man-made is permanent. The saying “from dust to dust” has been around for so long, yet enough people still can’t grasp its truth. Governments spring up, they loot until they reach the limit, and then the intense desire for survival kicks in to reverse course. If the reversals were never to occur, that would be it! Humanity would be finished.

 

There be an omnipresent and omniscient God, who in bible prophecy, ordained from eternity past that there be sovereign governments, issuing sovereign currencies, that is in fiat money; and that one day a Ten Toed Kingdom, seen in Daniel 2:25-45, known as the Beast Regime, seen in Revelation 13:1-4, arise out of waves of Club Med sovereign, banking, and corporate insolvency, to rule the world in diktat money, via policies of diktat in every one on the world’s ten regions, and via schemes of debt servitude, in all of mankind’s seven institutions, to establish regional security, stability, and sustainability.

 

By God’s ordination, the China Russia Deal has destroyed The US Dollar as the International Reserve Currency, and has given notice that undollar bartering agreements will be the basis for the new Eurasia region of economic governance, the WSJ reports Paul Volcker Calls For A New Bretton Woods Conference. Former Federal Reserve Chairman Paul Volcker called last month in Washington for a new Bretton Woods, the 1944 conference of World War II Allies that set up an international gold-exchange regime; his remarks received little media attention. GATA reports Russian Companies Prepare To Pay For Trade In Renminbi.

 

Since 1913, with the creation of the Creature from Jekyll Island, the world has been operating on a debt based money system, and will do so to the end of time. Public debt cannot be repudiated; it will be applied to every man, woman and child on planet earth; furthermore human government cannot be nullified; nor can it be ever be thrown off; it will rule, under the sovereignty of Jesus Christ, until He  returns.

 

With the 1971 Milton Friedman Free To Choose mandate of sovereign currencies implemented by President Nixon, the US Dollar Hegemonic Empire rose in power to replace the British Empire. The most recent empire came to its zenith with the Thursday, June 5, 2014, Mario Draghi, ECB Mandate, of TLTROs and a Negative Interest Rate Policy.  His word, will and way is the economic law of the Eurozone, and has pivoted the entire world from liberalism’s economic systems of capitalism, socialism, communism, into the singular economic system of regionalism.

 

The week ending June 13, 2014, the US Dollar, $USD, closed at 80.62, up from its June 6, 2014, close of 80.42.

 

Doug Noland writing in Safehaven Sound or Unsound? As follow-up to last week’s quarterly “flow of funds” analysis, I’ll take a brief look at the Rest of World (“ROW”) category. ROW now holds an incredible $22.971 TN of U.S. Financial Assets. To put this number into some perspective, ROW holdings began the nineties at $1.874 TN. Ballooning U.S. Credit and attendant unprecedented Current Account Deficits saw ROW holdings surge $4.335 TN, or 230% during the nineties. During the past 22 years, ROW holdings of U.S. Financial Assets have inflated $21 TN, or over 1,000%. Essentially, the U.S. has unrelentingly flooded the world with dollar balances. This helps explain a lot.

 

The consequences of the massive inflation/devaluation of the world’s reserve currency have for a long time been readily apparent.

 

In the 21 quarters since the end of 2008, ROW holdings have jumped $7.585 TN, or 49%. The world was once again literally flooded with dollars. The global government finance Bubble thesis posits that these dollar balances inundated the emerging markets, fueling unprecedented Credit growth, financial Bubbles and economic malinvestment. China, in particular, succumbed to Bubble Dynamics on an historic scale.

 

It is my view that if not for the massive inflation of U.S. Credit (dollar devaluation), it would have been impossible for the Chinese Credit system to have operated without any constraint for so long. Unfettered cheap Chinese finance has allowed massive overinvestment throughout scores of industries (not to mention apartment units!). The world now faces the consequences: “disinflationary” pressures on many things as well as the specter of major unfolding Chinese financial issues.

 

On Wednesday, June 11, 2014, pent-up disinflationary pressures released as global debt deflation commenced, as the chart of the EUR/JPY currency carry trade showed a strong turn lower, as the currency traders called the Yen, FXY, higher, and the Euro, FXE, lower, on the failure of trust in the monetary policies of the world central banks to continue to stimulate investment gains, as well as global growth, with the result that investors derisked out of World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, and by which the world passed through an inflection point and entered into Kondratieff Winter, the final phase of the Business Cycle, where regional fascist leaders rule in diktat, to establish regional security, stability and sustainability.

 

2) … Details of this week’s financial marketplace trading reveal derisking out of debt trades and deleveraging out of currency carry trades, has introduced destructionism replacing inflationism.

 

2A) … On Wednesday, June 11, 2014, Competitive currency devaluation, coming at the hands of the currency traders calling the Euro, FXE, lower, caused investors to deleverage out of currency carry trades with the result of a stock market reversal from its Elliott Wave 5 High Top. The trade lower in Equity Investments commences the beginning of Kondratieff Winter, and evidences the beginning of the extinction of the investor.

 

Nation Investment, EFA, was led lower by Eurozone Small Caps, DFE, such as TNP, Eurozone Stocks, EZU, such as PT, IR, LYB, CBI, ALU, PHG, BUD, SNY, NVO, NXPI, ERIC, ENL, LUX, UN, and Eurozone Nations, such as Portugal, PGAL, Italy, EWI, Ireland, EIRL, Greece, GREK, and Spain, EWP.  Airbus stock falls sharply as Bloomberg reports Emirates Cancel $16 Billion Of New Airbuses.  Major Countries, Denmark, EDEN, Norway, NORW, Sweden, EWD, Switzerland, EWL, traded lower.

 

The Emerging Markets, EEM, and EWX, were led lower by Turkey,TUR, India, INP, India Small Caps, SCIN, Indonesia, IDX, Chile, ECH, and Argentina, ARGT. Yet Columbia, GXG, traded higher.

 

Global Financials, IXG, were led lower by European Financials, EUFN, such as DB, UBS, CS, NBG, SAN, IRE, India Earnings, EPI, Stock Brokers, IAI, such as TROW, AMTD, SCHW, Investment Bankers, KCE, such as JPM, MS, Regional Bankers, KRE, such as HBAN, FITB, RF, SNV, The Too Big To Fail Banks, such as BAC, C, KEY, USB, WFC, Life Insurance Companies, such as GNW,  PFG, PUK, LFC, AEG, AEL, PRI, LNC, TMK, MET, and Asset Managers, such as BLK, IVZ, CG, LAZ, BEN, AMP, JNS, VOYA, CNS, LM, BR, IVZ, STT, BK. Columbia’s Bank, CIB, traded higher.

 

World Stocks, VT, were led lower by Airlines, such as DAL, UAL, AAL, US Infrastructure, PKB, Automobiles, CARZ, Manufactured Housing, CVCO, Homebuilders, ITB, Transportation, XTN, Global Industrial Producers, FXR, Aerospace, PPA, Consumer Services, IYC, Food And Beverage, PBJ, Small Cap Pure Growth Stocks, RZG, and Small Cap Pure Value Stocks, RZV.

 

Yield Bearing Sectors were led lower by Utilities, XLU, PUI, Smart Grid, GRID, China Real Estate, TAO, Global Infrastructure, IGF, Emerging Market Infrastructure, EMIF, Real Estate, IYR, and Shipping, SEA, such as SBLK, DRYS, DLNG, DAC, SB, and TNP. Their trade lower evidences the beginning of the extinction of the fixed income investor; this comes as Tyler Durden posts The Baltic Dry Index Is Having Its Worst Year Ever. Of note Shipping Stocks, SEA, relative to The Baltic Dry Index, $BDI, that is SEA:$BDI, has levitated into the moon, on pursuit of yield investing.

 

Dividends Excluding Financials, DTN, were led lower by BA, D, NEE, HD, ADP, HPQ, WM, JWN, GE. JNJ, PEP, F, GPC, MSFT, DOW, DIS. MCD, and HON.

 

Agriculture, PAGG, such as CAT, traded lower.

 

Materials, MXI, such as EXP, MLM, VMC, and USCR, traded lower.

 

Miners, PICK, such as RIO, AA, and SCCO, traded lower.

 

Credit Services, such as AXP, DFS, V, MA, HEES, and URI, traded lower.

 

Closed End Funds, GCE, traded lower.

 

Gold and Silver Miners, GDX, GDXJ, SIL, SILJ, traded higher from their recent lows, as Gold, GLD, traded higher with the trade lower in Equity Investments.

As of June 11, 2014, most all Equity Investments began trading lower from their rally and market top highs, commencing an investment demand for gold.

 

Base Metals, DBB, traded lower, with Tin, JJT, Aluminum, JJU, Copper, JJC, Nickel, JJN, and Lead, LD,  as the WSJ reports Owners May Move Metal From China. Operators of metals warehouses in South Korea and Taiwan are receiving inquiries about moving metal held in the Chinese port of Qingdao to their facilities in the wake of an investigation into potential irregularities at the port, according to people at three warehouse companies. Metal owners are looking to shift their stocks from China to warehouses in the region that are licensed by the London Metal Exchange

 

Aggregate Credit, AGG, traded higher, yet resides below May, 28, 2014, rally high, having been led lower by the 30 Year US Government Bonds, EDV, the US Ten Year Notes, TLT, and Long Term Corporate Bonds, LWC.  Emerging Market Bonds, EMB, and Junk Bonds, JNK, traded lower. Thus all Credit Investments are trading lower from their rally and market tops, evidencing the failure of credit. Zero Hedge reports Bank of America Shocker: New Commercial Loan Plunge Is Largest Since Lehman.

 

The currency traders in selling the world’s leading sovereign currencies, following the bond vigilantes, in calling the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note,  ^TNX, higher from its October 23, 2013, value of 2.49% to 2.64%, and in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, have underwritten the currency traders in commencing the final phase of the business cycle, that being Kondratieff Winter.

 

Hans Mikkelsen of Merrill Lynch Research relates Bond Funds In Retreat. As our interest rate strategists have highlighted one of the key contributors to lower interest rates this year has been short covering of bearish Treasury positions, as institutional investors capitulated on the view that interest rates should go up. The retail investor version of this capitulation manifested as tapering inflows and outflows from interest rate defensive products, such as short term high grade funds and loans, and the return of sizable inflows to assets whose returns are adversely impacted by rising rates – such as HG (ex. short term) and EM. Of course on the retail side (mutual funds/ETFs) we have found that flows tend to follow returns and, with HG (ex. short term) and EM leading financial markets with class leading performance in the first part of the year, this shift is no surprise in hindsight. However, as interest rates have increased this month the relative return performance has flipped.

 

Needless to say economic growth is impossible given that investors are starting to derisk out of debt trades and deleverage out of currency carry trades. A lower Euro, relative to the Yen, and higher interest rates are incompatible with global economic growth.

 

It is Jesus Christ, who on October 23, 2013, opened the First Seal of the Scroll of End Time Events, and released the Rider on the White Horse, seen in Revelation 6:1-2, who has the Bow of Economic Sovereignty, to begin economic coup d etats world wide, by empowering the bond vigilantes to commence calling the Benchmark Interest Rate higher from 2.49%.

 

It is Jesus Christ, who on June 11, 2014, opened the Fourth Seal of the Scroll of Scroll of End Time Events, and released the Rider on the Pale Horse, seen in Revelation 6:7-8, (compelling Equity Investments to trade lower on the trade lower in the EURJPY, following the ECB Mario Draghi Mandate of NIRP and LTLRO) who introduces economic deflation replacing economic inflation, the result of which is economic death replacing economic life.

 

With a see saw destruction of the components of fiat wealth underway, and a trade higher in most of these Inverse Market ETFs, (STPP, XVZ, EUO, YCS, CMD, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM) the short selling opportunity of a lifetime has commenced.

 

Soon the US Dollar, $USD, UUP, will buckle and trade lower with the rest of the World Major Currencies, DBV, as well as the Emerging Market Currencies, CEW, which will invigorate the  investment demand for Gold, GLD, whose price will rise from its current range of $1,240 to $1,260.  Gold is in the middle of an Elliott Wave 3 Up, and as such only God knows how high it will go.

 

Doug Casey of Market Sanity posts US In Eye Of Gigantic Financial Hurricane

 

Zero Hedge posts New Commercial Loan Plunge Is Largest Since Lehman

 

Bloomberg reports Currency Carry Trades Rise In ECB’s Negative Rate World

 

Reuters reports Hundreds Killed As ISIL Gains Ground in East Syria

 

UNZ reports Battle To Establish Islamic State Across Iraq/Syria.

 

McClatchy reports Maliki Seeks State Of Emergency After al-Qaeda Seizes 2nd Largest Iraqi City

 

NYT reports Exhausted And Bereft Iraqi Soldiers Quit Fight

 

Zero Hedge reports Al-Qaeda Jihadis Loot Over $400 Million From Mosul Central Bank, Seize Saddam’s Hometown.

 

Zero Hedge reports Al Qaeda Militants Capture US-Made Black Hawk Helicopters In Iraq.

 

Antiwar post Yesterday Mosul, Today Tikrit: Al-Qaeda Seizing Much of Iraq’s NW

 

Antiwar posts Not What the US Planned: Al-Qaeda Tears Down Syria-Iraq Border

 

WSWS reports Al Qaeda Offshoot ISIS Captures Mosul From Iraqi Government Forces.

 

Business Insider reports ISIS Now Controls A Shocking Percentage Of Iraq And Syria/

 

CS Monitor posts Why Mosul’s Fall Is a Signature Moment in Iraq

 

Bloomberg reports Maliki Turns to Militias to Halt al-Qaeda Onslaught. As his army flees from an al-Qaeda splinter group, Iraqi Prime Minister Nouri al-Maliki is rallying Shiite militias to defend his government, raising the specter of civil war in OPEC’s second-biggest oil producer. In a televised news conference yesterday Maliki urged citizens to take up arms after the Islamic State of Iraq and Levant group seized control of the northern city of Mosul, stealing weapons and helicopters from police and army bases as Iraqi government forces fled. He vowed to build an army of volunteers to “pull the thorns out by ourselves.”

 

CS Monitor posts Hezbollah Stronger Than An Arab Army, Israel Documents

 

Bloomberg reports Iraq Bonds Slump on Mosul Seizure as Stocks Drop Most Since 2012. Iraqi bonds plunged and stocks fell the most in two years after fighters from a breakaway al-Qaeda group took control of Mosul in a move highlighting Prime Minister Nouri al-Maliki’s weakening grip on the country.

 

Reuters reports Palestinian Reconciliation Pact Threatened by Disunity

 

Business Insider posts How Google’s New Satellite Company Is Going To Change The World.

 

The WSJ reports Alibaba Launches U.S. Shopping Site 11 Main

 

Ukraine Rejects Gas Offer as Talks End Without Deal. Ukraine rejected a Russian proposal for the price of future natural-gas deliveries as European Union-brokered talks in Brussels ended without an agreement.

 

The largest government bond market in the world saw no futures trades in the morning session last night.  Zero Hedge reports Japanese Bond Futures Volume Collapses To Zero Even As Service Sector Implodes.

 

David Stockman writes In Effect, The BOJ Is The Bond Market, That Is, The Buyer Of First, Last And Only Resort. After endless prodding by the Abe government, Japan Pension Fund Plans Massive Bond Dump Into Dead Mark. Japan’s pension system (GPIF) will now begin to massively dump hundreds of billion of JGBs, so that it can reduce its bond holding from 60% of its $1.3 trillion portfolio to 40%. This is being done, of course, to stimulate the Japanese economy by putting pensioners in harm’s way. The cash to be derived from this program of bond dumping will used to purchase Japanese and international equities, along with real estate, private equity, hedge funds and other “alternative asset” classes. And who will buy negative return bonds to be dumped by the GPIF? Why the BOJ. In Japan, all financial roads lead to the printing press.

 

Cantor said to leave house leadership on July 31.  Republicans have been jockeying for Eric Cantor’s leadership position after his election upset last night. Wall Street Lost A Friend Last Night. Adam Munter posts in Economic Policy Journal David Brat Unscrubbed  There is a lot of stuff in the news about David Brat’s victory over Eric Cantor. In the end, it matters little when one statist wins over another. And in Breitbart Profile Of David Brat, A native of Alma, Michigan, Brat attended Hope College, obtained a Masters in Divinity from Princeton Theological Seminary, and has a Phd. in economics from American University  As a professional economist, Brat says “the Austrians are pure theory with no data. I like them. The Road to Serfdom [by Hayek] is on the money.” But Brat does not consider himself a proponent of the Austrian school. “If you had to peg me, I’m close to the Milton Friedman, Chicago School,” he told Breitbart News.

 

2B) … On Thursday, June 12, 2014, World Stocks, VT, were led lower by a trade lower in Transports, XTN, Global Industrial Producers, FXR, Retail, XRT, Aerospace, PPA, Global Consumer Discretionary, RXI, Medical Device Manufacturers, IHI, US Infrastructure, PKB, Small Cap Pure Growth, RZG. and Small Cap Pure Value, RZV.

 

Automobile Dealerships, PAG, SAH, ABG, KAR, AN, KMX, LAD, traded lower from their market top highs evidencing the end of risk-on investing.

 

Aluminum Producers, Timber Producers, WOOD, Miners, PICK, Materials, MXI, Coal, KOL, Steel, SLX, and Metal Manufacturing, XME, as as Base Metals, DBB, Palladium, PALL, and Platinum, PPLT, traded lower.

 

Energy Producers, XOP, and Global Energy Producers, IPW, traded higher as Commodities, DBC, traded higher, to strong resistance, as Energy, DBE, Oil, USO, Brent Oil, BNO, Unleaded Gas, UGA, and Natural Gas, UNG, traded strongly higher.

 

Gold, GLD, and Silver, SLV, traded higher, taking Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, higher, confirming the beginning of the investment demand for gold.

 

The May 2014 Commerce Department Retail Sales Report shows Retail and food sales came in below expectations, rising by just 0.3 per cent, well below the 0.7 per cent rise expected by analysts. The report also revised the estimate for April 2014 Retail Sales growth from 0.1 per cent to 0.5 per cent.

 

Drug Stores, WAG, RAD, CVS, and Grocer, KR, DEG, and Department Store, DDS, M, led Retailers, XRT, lower, reflecting the failure of trust in the world central bank’s monetary authority and the death of currencies, in particular the Euro.

 

Nation Investment, EFA,were led lower by Thailand, THD, Indonesia, IDX, and Chile, ECH.

 

Global Financials, IXG,  traded lower on lower Emerging Market Financials, EMFN.

 

Dividends Excluding Financials, DTN, traded lower.

 

Closed End Funds, GCE, traded to a new rally high.

 

The Australian Dollar, FXA, continued to a new rally high, taking Major World Currencies, DBV, to a new rally high.

 

Robert Sinche of Pierpont Securities writes Japanese Pension Fund Asset Shift Weakens Yen. The adjustment, sought by the Abe Administration, is not only to attempt to increase returns that have lagged other large global funds (a Bloomberg report indicates that over the 9 years ended March 2013 the GPIF generated a 2.8% average return compared to 5.2% for the Norwegian Government Pension Fund and 7.3% for CalPers) but also to help generate faster growth within the Japanese economy. The latter claim seems a bit weak, resting on the assumption that the GPIF can allocate resources to fast-growing companies better than can “the market”, although the Abe Administration would like to claim this shift as part of their “growth strategy”. While a large allocation shift in favor of domestic equities may boost market indexes and wealth, that hardly qualifies as a “growth strategy” designed to increase the rate of potential growth within an aging economy. Much like the effort to raise inflation, the focus appears to be the outcome rather than the process to achieve it – higher inflation (the desired outcome) resulting from a weaker currency and higher consumption taxes hardly seems to be economic improvement.

 

Will US fixed income markets benefit from the potential allocation shift of perhaps $65bn into foreign debt? If concentrated in a short period into the Treasury market, such a flow might have a meaningful impact, particularly if concentrated in the long end of the curve. However, against the backdrop of the expected tapering of Fed monthly purchases from $85bn per month during most of last year down to zero by late this year, the proposed allocation shift does not appear to be a dominant factor in driving US Treasury yields meaningfully for anything more than a short period.

 

Is there an investable impact of the shift? Maybe it is a result of my traditional FX focus, but a weaker JPY seems to provide an more attractive investable theme. While a flow of about $125bn into foreign denominated assets (equities and bonds) may not be a huge factor when diversified among many countries, markets and securities, if it takes place all that flow would involve selling the JPY versus some other currency. Indeed, one could wonder whether the Abe Administration is partly (mainly?) viewing the asset allocation shift as another factor helping to weaken the JPY, a pricing shift that could both increase measured inflation and provide another (modest) boost to the export/corporate sectors.  In the historic context of a large current account (CA) surplus in Japan, a $125bn capital outflow might not have been a significant force weakening the JPY. But as we have noted on a number of occasions, the traditional CA surplus is  no more, primarily a casualty of the persistently strong JPY, rising energy imports after the earthquake/tsunami changed the composition of electricity production and sluggish global growth trends. Moreover, there is a possibility that the increased allocation to foreign assets by the GPIF encourages private-sector investors also to increase their non-JPY asset holdings, increasing the capital outflow from Japan.

 

Aggregate Credit, AGG, traded higher, on a higher 30 Year US Government Bond, EDV, and a higher US Ten Year Note, TLT, which forced the Interest Rate on the US Ten Year Note, ^TNX, lower to 2.59%.   The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as traded by the Steepner ETF, STPP, traded lower to 37.90, where it waits to spring to life, with a rising Benchmark Interest Rate, $TNX,  to utterly destroy Credit Investments, which are trading lower from their May 2014 highs.

 

2C) … On Friday, June 13, 2014, World Stocks, VT, traded slightly higher as Energy Service, OIH, Energy Producers, XOP, and Global Integrated Energy Companies, IPW, traded higher. Social Media, SOCL, Solar Energy, TAN, and Semiconductors, SOXX, traded higher. Design Build, FLM, traded lower.

 

Nation Investment, EFA, traded unchanged, as China, YAO, and Chinese Financials, CHIX, traded higher, on this week’s higher Chinese Yuan, CYB; and as South Korea, EWY, and its banks, KB, and SHG, traded lower; and as European Financials, EUFN, such as DB, LYG, UBS, CS, Greece, GREK, and its bank, NBG, traded lower.

 

UK Small Caps, EWUS, traded lower as the British Pound Sterling, FXB, rallied strongly, sustaining Major World Currencies, DBV, at its rally high.

 

India, INP, India Small Caps, SCIN, and India Earnings, EPI, traded lower as the India Rupe, ICN, traded strongly lower, forcing Emerging Market Currencies, CEW, to trade lower.

 

In Yield Bearing Investments, European Small Cap Dividends, DFE, Premium REITS, KBWY, Industrial Office REITS, FNIO, and Smart Grid, GRID, traded lower.

 

Closed End Funds, GCE, such as CSQ, AWP, PFL, RCS, EIM, UTF, IFN, HHY, and EMD, traded lower; their trade lower evidences the end of pursuit of yield investing; these have risen 7.5% YTD, and pay a 7% yield.

 

Gold, GLD, traded higher, taking Gold Miners, GDX, GDXJ, higher, confirming the beginning of the investment demand for gold. Spot Gold, $GOLD, rose its recent low of $1,240 to close at $1,275.

 

Aggregate Credit, AGG, traded lower on the day, and unchanged on the week as Junk Bonds, JNK, traded strongly higher, to a new rally high.

 

3) … At the end of the age of fiat wealth, credit flows like the Nile in flood stage.

 

3A) … Across The Curve relates Vivianne Rodrigues of the FT posts Investors Lap Up Ultra Long Corporate Bonds. An article regarding the robust demand for 50 year bonds and the explosion of issuance in that lightly issued sector. Once again it is the yield whores driving the trade. One investor noted how the 50 year bond he just bought yields 30 basis points more than the 30 year bond of the same company.

 

3B)  … Credit liquidity underwrites currency carry trade investing in the Emerging Markets, EEM,  in Emerging Market Bonds, EMB, and in Emerging Market Local Currency Bonds, EMLC, especially Columbia, GXG, and its bank, CIB.  

 

Andrea Jaramillo of Bloomberg reports Colombia Is Handing Carry Trade Investors The Best Returns In The World.  Investors who buy riskier assets with money lent from nations with lower borrowing costs have reaped a 9.47 percent gain in Colombia in the past three months as the central bank liftsinterest rates and the peso appreciates the most of any currency. The nation’s local debt has returned 13.2 percent in dollars, more than double the average gain for emerging markets.

 

WhileMexico surprised investors by cutting rates last week, Colombia increased benchmark borrowing costs for a second straight month in May to keep inflation in check as economic growth accelerates. With swaps indicating the central bank will raise rates by a full percentage point to 4.75 percent by year-end,Banco Bilbao Vizcaya Argentaria is recommending that investors snap up Colombian bonds due 2024.

 

“Colombia’s cycle calls for more rate hikes, opposite to a lot of these countries in the region,” Carolina Ramirez, a strategist at BBVA’s Colombia unit, said in a telephone interview from Bogota. “The carry trade is attractive.”

 

The latest central bank survey published May 12 shows analysts expectannual inflation to accelerate to 3.19 percent by year-end, which would be the highest annual rate since June 2012. The economy will expand 4.5 percent this year after growing 4.3 percent in 2013, according to the median forecast in a Bloomberg survey.

 

The peso has jumped 8.9 percent against the dollar in the past three months, data compiled by Bloomberg show.

“Larger returns given the hiking cycle add to the peso’s strengthening trend,” Armando Armenta, an economist at Deutsche Bank AG, said by phone fromNew York. “Colombia’s peso bonds should continue outperforming in dollar terms.

 

Banco de la Republica will raise borrowing costs to 4.25 percent by year-end to tame inflation, BBVA’s Ramirez said. She predicts yields on Colombia’s 2024 bonds will fall to 6 percent by September from 6.28 percent.

 

“Colombia is lifting rates for the right reasons,” Ramirez said. “The economy is growing and the central bank needs to keep inflation under control.”

 

3C) … Commodity backed lending spurred China investment. Daniel Inman, Fiona Law and Enda Curran of WSJ report The commodity-backed loans at the center of a probe into an alleged financial scam at a Chinese port are part of a ramp-up in offshore borrowing by Chinese companies that Beijing is looking to tamp down. As Chinese authorities tightened credit at home in the past year, local firms instead looked abroad for financing. Asian-Pacific banks alone had $1.2 trillion in loan exposure to China at the end of 2013, up two-and-a-half times from 2010, according to Fitch. A chunk of the borrowing has been by Chinese firms taking out short-term overseas loans backed by commodities, part of an effort to lock in gains by borrowing offshore at lower rates, and investing the money at higher rates on the mainland. This lending has complicated Chinese policy makers’ attempts to slow rapid credit growth in the nation’s so-called shadow banking sector.  Foreign banks have stepped up commodity-backed lending to China in recent years, a profitable business that now is looking increasingly shaky.

 

3D) … Credit for automobile purchases has risen to an all time high, and has underwritten a great swell in automobile sales and has produced record investment in the automobile industry.    

 

In the Great Financial Recovery, that is from 2008 to June of 2014, credit liquidity coming from Global ZIRP, and pursuit of yield investing, has underwritten automobile sales. and has underwritten investment in the Automobile Industry, CARZ, which traded lower from its rally high the week ending June 13, 2014, evidencing the failure of trust in the world central banks to stimulate investment gains and global economic growth.

 

The week ending June 13, 2014, Small Cap Pure Value Stocks, RZV, traded lower from their market top, as Automobile Dealerships, PAG, SAH, ABG, KAR, AN, KMX, LAD, traded lower from their highs evidencing the end of risk-on investing.

 

Katy Burn of WSJ reports More Loans Come With Few Strings Attached. Kate Spade, KATE, a junk rated company got a $400 million term loan requiring no regular financial targets.

 

Lending to weaker companies on easy terms is becoming more and more common as investors’ appetite for higher yielding debt grows stronger and the Federal Reserve keeps money flowing at ultralow rates. Since the financial crisis, companies have been able to borrow more without offering investors what were once considered standard protections against possible losses.

 

More than half of the loans in the $747 billion U.S. market for loans made to junk-rated companies don’t have financial “covenants,” triggers that could cause a borrower to shore up its health, including periodic tests of overall debt levels and cash flow to cover scheduled interest payments. Thus far this year through Thursday, 62% of leveraged loans lacked these regular requirements, up from 57% for all of 2013, according to S&P Capital IQ LCD.

 

Leveraged loans, including loans with and without financial covenants, now yield 5.03% as of Wednesday, compared with 3.81% for investment-grade corporate bonds, according to JP Morgan JPM data, and about 2.59% on the 10-year Treasury note.

 

By having fewer strings attached to their loans, borrowers are once again able to build flexibility to take on more debt or to pay dividends to owners such as private-equity firms.

 

Kate Spade, KATE, borrowed to refinance debt in April, and its $400 million term loan required the New York-based company to maintain no regular financial targets, according to Xtract Research.

 

Federal Reserve Governor Daniel Tarullo said in February that there was “greater investor appetite for risky corporate credits, while underwriting standards have deteriorated.”

 

Covenant-lite loans comprise 54% of loans in a leveraged-loan index run by J.P. Morgan Chase. That is the highest in the bank’s index data going back to 2007, and it is up from 46% at the end of last year.

 

Issuance of leveraged loans in the U.S. has reached $531 billion so far this year, compared with $549 billion to this point last year, which was the busiest pace since 1987, said Thomson Reuters’ LPC unit.

 

Auto World News reports The Auto Industry Had Its Strongest Annual Sales Rate Since Before The 2008 Recession.

 

Jalopnik reports Car Sales In The US  Exceeded Expectations In May as SAAR hit 16.8 million units, compared to a pace of 15.5 million last May, which makes it the strongest month since early 2007.  Freep relates May Auto Sales Soar To 7 Year High As Weather And Easy Credit Lure Buyers. New vehicle sales soared in May to levels not seen since last decade’s housing bubble, fueled.

Who is winning? People who sell trucks and crossovers, of course. Chrysler was up 17%, GM up 13%, and Ford up 3%. Toyota, as well, hit a 17% increase (on the back of a lot of incentives) and Nissan was up 19%.

 

Motor Trader reports New Car Finance Sales Rise 4% In April. The number of new cars sold on finance in April grew 4% to 69,030 units, according to the latest figures from the Finance & Leasing Association.

 

In the 12 months to April, numbers were up 18% to 847,047 vehicles, reflecting the huge surge in PCP sales over the period.

 

For used cars, sales on finance rose 9% in April to 88,741 units and in the 12 months to April were up 20% to 975,164 units.

 

Geraldine Kilkelly, Finance & Leasing Association, head of research and chief economist, said: April was a quieter month for the car finance market following a strong performance in March.

 

Consumer car finance growth remained robust, with volumes 19% higher in the first four months of 2014 than in the same period last year.

 

FLA motor finance providers are optimistic about future growth prospects.  The Q2 2014 Retail Motor Finance Survey results showed that more than 60% of respondents expected new business growth in excess of 10% in each of the new car, used car and light commercial vehicle finance markets over the next year, she said.

 

Atif Mian and Amir Sufi of House of Debt post Spending Worries? The growth in new auto purchases has been much stronger in low credit score zip codes over the past two years. In 2014, the growth was more than twice as strong in low credit score zips relative to high credit score zips.

 

So total spending is being driven in large part by auto purchases, and auto purchases are being driven in large part by purchases by low credit score individuals. What explains this pattern?

 

A very sharp rise in auto loans, especially to low credit score individuals. We showed this pattern in aprevious post. It also makes intuitive sense. Wage growth has been pretty stagnant, especially among middle and lower income Americans. So it makes sense that the only way low credit score individuals are able to buy cars is by taking on debt. They certainly haven’t seen improved income.

 

So what is the big picture? One view is that all of this is benign. Credit conditions were overly tight during the Great Recession, and now credit is flowing back to low credit score individuals who are purchasing cars at a fast clip. We should expect durable purchases by low credit score individuals to help fuel a spending recovery.

 

Another view, closely related to the secular stagnation idea, is that the only way we can generate real demand is by lending to individuals that have low income and low income prospects. The financial system is channeling funds toward individuals for whom economic circumstances remain poor, which offers only a fleeting boost to spending. This is closely related to arguments we make in our new book,House of Debt.

 

Can debt-fueled purchases of new autos continue to drive the spending recovery? This is a pattern worth watching closely.

 

Subprime automobile credit service company Nicholas Financial, NICK, traded slightly lower after Eddy Elfenbein posts The Nicholas Financial-Prospect Capital Deal Is Dead

 

Global ZIRP has incentivized risky lending and thereby established an unsound financial and economic system.

 

Sarah Mulholland of Bloomberg report Subprime Trading Like It’s ’07 in Car-Loan Bonds  In the market where auto loans to people with spotty credit are bundled into bonds, the difference in yield between the lowest-rated securities and the safest has narrowed to the least since August 2007, according to Wells Fargo & Co. data. Demand for the bonds is translating into cheap funding for lenders, allowing them to make even more loans though payments more than 60 days late are on the increase.

 

Investors are turning to riskier debt to boost returns as stimulus measures from central banks around the world suppress interest rates. The European Central Bank last week became the first to take one of its main rates below zero, underscoring the lengths to which policy makers are willing to go to jumpstart growth more than five years after the worst financial crisis since the Great Depression.

 

“People have to reach further and further,” said David Schawel, a money manager at Square 1 Bank in Durham, North Carolina. “The objective now is to reach a certain yield target instead of feeling good about the underlying credit.”

 

Issuance of securities backed by the debt has reached $10 billion this year, up 5 percent from the pace in 2013 through May 30, according to Wells Fargo. Total sales of $17.6 billion last year were more than double the $8 billion sold in 2010, when securitized-debt markets started to revive after all but shutting down amid the 2008 financial crisis.

 

Aided by low interest rates, the U.S. auto industry has been one of the bright spots of the economic recovery. Vehicle sales rose 11 percent to 1.61 million in May, bringing the annualized pace to 16.8 million, the most since February 2007, according to researcher Autodata Corp.

 

The economy contracted at a 1 percent annualized rate from January through March, the first decline in three years. An unexpected drop in spending on health-care services means gross domestic product probably shrank even more in the first quarter, according analysts at JPMorgan Chase & Co. and Pierpont Securities LLC

 

Tidewater Motor Credit, a Virginia Beach, Virginia-based lender, sold $145 million of bonds last week that are backed by 7,438 loans carrying interest rates ranging from 9.45 percent to 26.55 percent, deal documents show. The transaction marks the first asset-backed bond offering for the company since 2012, according to data compiled by Bloomberg.

 

GM Financial Inc., the subprime lender acquired by General Motors Co. (GM) in 2010, boosted its asset-backed bond sale by $200 million earlier this month to $1.4 billion in its largest such offering since 2007, according to data compiled by Bloomberg.

 

Bond investors were paid a yield of 120 basis points more than the benchmark swap rate to buy the bonds rated BBB and maturing in four years in the June 3 sale. That compares with a spread of 175 basis points on similar debt sold in November.

 

The subprime auto segment has ballooned since contracting following the financial crisis.  Private equity firms, attracted by the high margins, have flocked to the business during the past three years. New York-based Blackstone Group LP (BX) acquired Irving, Texas-based subprime lender Exeter Finance Corp. in 2011, the same year that Perella Weinberg partnered with CarFinance Capital LLC.

 

The influx of new players to the business has fueled concern that companies are lowering underwriting standards to win business.

 

“Subprime auto lending from banks, captive finance companies and credit unions continues to increase and is pressuring more traditional subprime lenders to lend to ever-weaker borrowers to maintain lending volumes,” Moody’s Investors Service analysts led by Peter McNally wrote in a January report.

 

The percentage of subprime auto loans that are more than 60 days late rose to 2.75 percent in March from 2.24 percent a year prior, Standard & Poor’s said in a report last month, citing the latest available statistics. The delinquency rate on loans to the most creditworthy borrowers was about flat at 0.28 percent.

 

Some lenders are pushing back against deteriorating underwriting standards, becoming less willing to extend loans to increasingly risky borrowers, according to Moody’s. Borrower credit scores for used car loans improved in the fourth quarter of 2013 for the first time since 2010, the rating company said in an April report.

 

Lengthening loan terms and rising debt burdens relative to the value of a vehicle show that lenders are still taking on more risk, the Moody’s analysts led by McNally wrote in the report.

 

“Since lenders will still continue to vie for borrowers, we don’t expect a major slowdown in subprime lending,” the Moody’s analysts said. “Competition will continue to pressure the credit quality of new originations as lenders fight for business.”

 

4) … The rise of the jihadist nation ISIS establishes the reality that a Ten Toed Kingdom of Regional Economic Governance is rising out of the meltdown of the US Dollar Hegemonic Empire.

 

CNS News posts Abu Bakr al-Baghdadi, Announces The Islamic State Of Iraq and Syria, ISIS. And Robert Fisk posts Sunni Caliphate Has Been Bankrolled by Saudi Arabia And Real Clear Politics posts Welcome To The Jihadi Spring.

 

Ruth Sherlock of the Telegraph reports Generals In Army Handed Over Entire City To al-Qaeda Inspired ISIS Forces. Three army deserters tell the Telegraph how Mosul, the second biggest city in Iraq, was given to terrorists by senior Iraqi army officials. Military deserters have painted a devastating picture of the inability of the Iraqi army to stand and fight, telling The Telegraph how entire divisions surrendered Mosul, Iraq’s second city, without firing a single shot. Speaking from the Kurdish city of Erbil, the defectors accused their officers of cowardice and betrayal, saying generals in Mosul ‘handed over’ the city over to Sunni insurgents, with whom they shared sectarian and historical ties. With Sunni insurgents now threatening the capital Baghdad the eyewitness accounts from the deserters’ reveal how sectarian enmity has, in the space of mere weeks, destroyed the Iraqi national army, which the US government spent billions of dollars to build.

 

Across The Curve posts Obama Channels Hamlet. The Leader of the Free World just concluded a statement and a truncated press conference before a flight to North Dakota and he stated that there would be no decision on Iraq for several days. I think that it took JFK and his associates less time to respond to missiles in Cuba in 1962 than it will have taken this Administration to respond to this real and present danger in Iraq. Maybe our role as super power is shifting and eroding as the pendulum of history swings in the direction of China but I think that the President highlights the fact when he insists that we need a change of attitude in Iraq and the cooperation of the major players there. For now we are the most powerful nation in the world and our interests are threatened. Why is he temporizing?

 

The Hill posts White House Faces Worst Case Scenario With Iraq Meltdown

 

Stratfor Intelligence reportsThe Logic Underpinning The Militant Offensive In Iraq. The transnational jihadist movement has since sought to exploit the ensuing anarchy in the region. The rise of the Iranian-led Shiite camp over the last decade or so has created an additional opportunity for jihadists to mobilize Sunni fighters from Muslim-majority countries and among Western expatriates.

Despite its audacious offensive, the Islamic State in Iraq and the Levant remains mindful that it has two still formidable Iranian-backed Shiite regimes blocking its path. To the west, the al Assad regime in Damascus has turned the tide against the rebels,giving rise to a stalemate. To the east, it faces the al-Maliki regime, though political and security conditions in Iraq have sharply deteriorated since the withdrawal of U.S. forces at the end of 2011. Power struggles among the country’s three principal groups (Shia, Kurd and Sunni) have weakened Baghdad’s writ, creating the opening that enabled the recent jihadist offensive. Refocusing on Iraq offers a way to force Iran and its Shiite allies to reallocate resources in Syria to defending their position in Iraq, which contains sites of greater significance to Shiite Islam. It could even help them break the stalemate in Syria. The shift toward Iraq enables the militant group to deflect criticism that it has been fighting with fellow Sunnis and even Salafist-jihadists in Syria.

The Islamic State in Iraq and the Levant knows that its opportunity in Iraq will not stay open for long given that demographic trends in Iraq favor the Shia. It also recognizes its limits among Iraq’s Sunnis. Most important, it understands the convergence of U.S., Iranian and Turkish interests that is underway; for different reasons, none of these three countries can tolerate its expansion in Iraq.

This means the group knows it is not in a position to seize Baghdad just yet. For now, it must try quickly to consolidate itself in the Sunni-dominated provinces of Anbar, Ninawa and Salah ad Din, as well as the mixed provinces of Kirkuk and Diyala. It knows that the outside countries will not send ground forces into Iraq’s Sunni areas and instead will rely on air power and special operations forces against its fighters.

Therefore, the Islamic State in Iraq and the Levant will limit itself to establishing a presence in western Iraq similar to what it has in eastern Syria, where outsiders will fear to tread and where neither the Shiite-dominated central government nor the Kurdistan Regional Government can impose its writ. If the jihadist group can survive, any amount of space where it can enjoy freedom of activity will suffice for its purposes of establishing an emirate in the roughly contiguous cross-border area, affording it strategic depth and a launchpad for later offensives against Baghdad and Damascus.

 

Stratfor posts Worsening Violence in Iraq Threatens Regional Security. The growing reach of the Islamic State in Iraq and the Levant has escalated an already brutal campaign in Iraq. Alarmingly quick advances by the militants across an important region of the Middle East could draw in regional powers as well as the United States.

Using hit-and-run tactics, the Islamic State in Iraq and the Levant, also known as ISIL, has sought to keep Iraqi security forces dispersed and under pressure. ISIL has achieved this by striking at areas where security forces are weak and withdrawing from areas where Baghdad has concentrated its combat power. The jihadists have been working hard to improve their tradecraft by developing skill sets ranging from staging complex ambushes to using Iraqi army equipment effectively in surprise raids. ISIL has also sought to better develop its ties with local Sunni communities.

As far back as the days of al Qaeda in Iraq and its predecessor, Jamaat al-Tawhid and Jihad, founded by Abu Musab al-Zarqawi, militancy has had a presence in Anbar province — and indeed in Mosul. During the Iraq War, the U.S. military considered Mosul one of the key gateways for foreign al Qaeda in Iraq fighters to enter the country. ISIL operations in Mosul and the wider Nineveh province are unsurprising. What is surprising is the degree of success that ISIL has managed to achieve in its latest offensive in the region.

Beyond Iraq, a number of countries are immediately affected by ISIL. The Syrian battle space bleeds heavily into Iraq due to a porous border, accelerated by the almost total collapse of Syrian army border crossing posts. Since January, ISIL has been heavily involved in fighting with more moderate Syrian rebel factions, as well as with Jabhat al Nusra, the official al Qaeda franchise in Syria. As the fighting has worn on, ISIL has gradually released its hold in western Syria and turned its attention to the Raqqah and Deir el-Zour governorates. Deir el-Zour was particularly important for ISIL as it allowed it to maintain a direct supply link with its established presence in western and northern Iraq, especially in Anbar province. Through this supply link, ISIL has been able to transfer experienced foreign fighters and captured Syrian army equipment to Iraq, including vehicles and anti-tank guided munitions. It has also replenished its stock of ammunition and explosives, greatly aiding operations in Iraq.

The Syrian conflict is affected by the ISIL push in Iraq in two ways. The first is that the jihadists may divert large numbers of fighters from Syria to its Iraq push, which would open ISIL to more pressure in Syria. The second impact is the withdrawal of large numbers of Iraqi Shiite militants,men that have been fighting alongside the Syrian army,leaving to concentrate their efforts back home against ISIL. Such a withdrawal would be unpopular in the Syrian regime because it would take away an important source of manpower.

Having succeeded in its Mosul operations, ISIL will continue to take advantage of its momentum and push its gains at a time when the Iraqi government is scrambling to recover from significant losses. As well as taking large portions of the city, ISIL militants seized many weapons and military vehicles as well as the contents of Mosul’s central bank. They also freed several thousand prisoners from a local prison, potentially adding more fighters to their cause.

Stretching from the north of Mosul through Tikrit to the south and toward Baghdad along the Tigris River Valley, ISIL is striving to maintain a continuous line of pressure running through what is practically the northern spine of populated Iraq. The Tigris River Valley contains a number of key strategic energy areas, including the oil refinery near Baiji. Although the refinery is still under state control at this time, the areas where ISIL is operating largely match areas where al Qaeda in Iraq was active during the height of the Sunni insurrection in Iraq from 2004-2006. As opposed to a first-time assault or new offensive, ISRAEL’s actions speak more of a resurgence into historical areas of operations.

As well as continuing to push forward, the Islamic State in Iraq and the Levant will largely seek to avoid stand-up fights against well-equipped and determined Iraqi army units, though they have held their ground against such forces in Al Fallujah and Ar Ramadi. The wide-ranging, mobile and rapidly dispersed ISIL forces have a key advantage when it comes to maneuvering in battle over the slower, mechanized units of the Iraqi army. While ISIL maximizes its impact against a disorganized Baghdad, the jihadist group seeks to consolidate its control over territory in heavily Sunni areas, where it has already made significant inroads with the local population. Ambitiously, these areas of control could include large portions of the north as well as Anbar Province.

More realistically, it would mean greater ISIL presence in the longer term and, in some cases, direct control in Anbar and possibly other provinces such as Nineveh and Salah ad Din. Working toward this goal, the Islamic State in Iraq and the Levant will continue to focus on its revitalized effort to dismantle the Awakening movement, a coalition of tribal elements that was instrumental in pushing al Qaeda in Iraq out of Anbar the first time, drawing Sunni tribes back into its fold in the process.

Ankara is also watching the events in Iraq with considerable attention. Not only are Turkish citizens directly implicated in the conflict, with a number of Turks reportedly seized by ISIL militants, but the Turkish government also maintains an important stake in energy development in northern Iraq. Ankara has long been involved in politics between Baghdad and the Kurdistan Regional Government on issues surrounding the delivery of energy. Turkey is also increasingly concerned about the growing reach of ISIL and has already clashed with militants on its border with Syria. Turkey is especially wary of the potential for attacks by ISIL, attacks that would exploit the long border that runs from the Mediterranean to Iran. While Turkey has been hesitant to directly send forces against ISIL in Syria, the fact that the Islamic State in Iraq and the Levant has seized large numbers of Turks, including the consulate staff from Mosul, may push Ankara to become more directly involved in the crisis.

Iran has long sustained the regime in Syria, as well as indirectly supporting al-Maliki’s government in its fight against Sunni jihadists in Syria and Iraq. The growing reach of ISIL, and its ever-closer presence to Iran, is sure to raise considerable anxiety in Tehran. Iran can therefore be expected to further bolster its support for al-Maliki as well as for Shiite proxies across Iraq. In supporting al Maliki’s fight, Tehran finds itself very much aligned with Washington.

The United States will avoid sending significant forces back into Iraq, but Washington will ramp up its efforts to contain the ISIL threat by delivering vital equipment such as helicopter gunships, Hellfire missiles, communications equipment, large volumes of small arms and ammunition. This assistance, coupled with a common regional interest to contain the Islamic State in Iraq and the Levant, will likely contain the threat to northern and western Iraq.

Though Iraq’s southern energy corridor will probably be spared, the Sunni belt in central Iraq and the territories disputed between the central government and the Kurdistan Regional Government will face rising sectarian stress, in line with ISIL’s designs for the region.

 

Miami Herald reports  Iranian Commander ‘In Charge’ in Baghdad Fight. And Antiwar reports Iran Deploys Troops to Baghdad to Fight Against al-Qaeda.And McClatchy reports Pro Iran Militias Become Iraq’s Only Defense Against ISIS Advance.

 

Patrick Cockburn asks in UNZ Birth Of A Sunni Caliphate Or Just Presage to More War?

 

Bloomberg posts Black Banner in Mosul as Caliphate Edicts Rule Iraqi Lives. The Islamist militants who swept into Mosul had a simple message for residents of the northern Iraqi city: The path to a caliphate comes with clear rules. Lots of them.

 

Jihadism comes of age as Mike Mish Shedlock posts New Rules for Iraqis: Repent or Die, Say 5 Daily Prayers, Women Not Allowed Outside; Grim Massacres

 

Justin Raimondo asks Iraq War III?

 

Economic Policy Journal posts Platts Map Shows Iraq’s Oil and Gas Pipelines Around Iraq’s Oil Hub of Kirkuk Kurdish forces took control of the Iraqi northern oil hub of Kirkuk on June 12 to protect the major oil field against advancing Sunni militants in a move that appeared to ease concerns over control of Kurdistan’s growing oil infrastructure. Iraq’s North Oil Company (NOC) headquarters in Kirkuk and the nearby Kirkuk oil field remains in government control, a senior NOC official said.

Armed groups allied to the Islamic State of Iraq and al-Sham, known as ISIS or ISIL, have attacked a number of oil facilities across the north of Iraq since Monday, including the 320,000 b/d Baiji refinery and Bai Hassan oil field. ISIS took over the major city of Mosul in a two-day offensive ending Tuesday, followed by a push further into the Salahaddin, Kirkuk and Diyala provinces. But Kurdish peshmerga fighters said they have moved to halt the militants advance. “We tightened our control of Kirkuk city and are awaiting orders to move toward the areas that are controlled by ISIL,” Brigadier General Shirko Rauf of the Kurdish peshmerga security forces told AFP.

The defensive moves means the militants are less likely to move further east to threaten oil fields being developed inside the semi-autonomous Kurdistan by foreign players.

 

Bill Roggio posts in The Long War Journal The Battle Plan Which ISIS Will Employ To Strangle Baghdad

 

Economic Policy Journal relates, Tyler Cowen, who teaches at Koch-funded George Mason University and is general director of the Koch-funded Mercatus Center calls for War For Economic Growth,

 

There be a sovereign Lord God, who ordained from eternity past that there be sovereign governments, issuing sovereign currencies, that is in fiat money; and that one day a Ten Toed Kingdom, seen in Daniel 2:25-45, known as the Beast Regime, seen in Revelation 13:1-4, arise out of waves of Club Med sovereign, banking, and corporate insolvency, to rule the world in diktat money, via policies of diktat in every one on the world’s ten regions, and via schemes of debt servitude, in all of mankind’s seven institutions.

 

5) … ACPAC fears the Obama Administration push for Palestinian technocratic government will lead to East Jerusalem becoming the Palestinian Capital,

 

ACPAC fears technocratic governance will lead to Jerusalem being shared, and thus precluding “Jerusalem as the undivided capital of Israel”.

 

The Jerusalem Post reports Unified Senate Sends Obama Message on Palestinian Unity

 

6)Money Market Funds and Banks will be integrated into the government and become known as the Goverment Funds and the Goverment Banks, or Gov Funds, and Gov Banks, for short.  

 

Across The Curve posts Money Fund Accounting. The SEC has been arguing and analyzing methodologies for harsher regulation of money funds for several years. The root of the discussion is the run on the funds which began following the Lehman bankruptcy and subsequent breaking of the buck at the Reserve Fund in the fall of 2008.

 

The SEC has before it two proposals. One would force riskier funds to float and the second proposal would hold the buck but would allow for a limitations on redemptions. I do not get it. Why not just tell the funds that they are required to mark to market each and every day with clarity and precision?

 

If investors are uncomfortable with the volatility which that produces they can by the three month bill or park their money in an FDIC insured account.

 

Compelling money funds to mark to market will enlighten and educate investors and would allow the market place to weed out those firms which take imprudent risk.

 

Under Janet Yellen’s leadership, The Fed Reserve will be developing an exit strategy; it will be one of Financial Stability.

 

Out of soon coming credit crisis and global financial system meltdown, coming from the rise of the Interest Rate on the US Ten Year Note, ^TNX, as well as derisking out of debt trades, and deleveraging out of currency carry trades, Money Market Funds, such as Vanguard’s VMMXX,  Regional Banks, KRE, such as HBAN, and Asset Managers, such as STT, BLK, will be integrated into the government, and become known as the Government Banks, or Gov Banks for short. Please note that said fund charges a fee in excess of its yield, in order to maintain its constant one dollar value.

 

The Primary Dealers, who hold Interest Rates Swaps, that they were literally gifted under POMO, and thus are short Treasuries, and whose customers are short 10 Year US Government Notes,  TLT, will likely be forced into becoming Gov Banks as well.

 

The first step in developing the Exit Strategy will be an exit charge, that is an exit levy, on withdrawing funds from bond funds as well as money market funds.

 

7) … Conclusion. The world enters Kondratieff Winter on the trade lower in the Euro, in response to Mario Draghi’s ECB NIRP and TLTRO mandate, which pivots the world out of liberalism, and into authoritarianism, where the diktat of regional sovereigns provides seigniorage.

 

The June 10, 2014, and June 11, 2014, trade lower in the Euro, FXE, evidences the death of currencies.

 

Fiat money, defined as the combination of Aggregate Credit, AGG, and Major World Currencies, DBV, in particular the Euro, FXE, and Emerging Market Currencies, CEW, in particular the India Rupe, ICN, is starting to die.

 

With the Euro, FXE, trading lower, coming on the failure of trust in the world central banks’ monetary authority to continue to stimulate investment gains and global growth, sovereign currencies, are no longer floating, they are sinking; and as a result, World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, are trading lower; fiat wealth is starting to die. On can follow the death of fiat wealth with this Finviz Screener of Common ETFs.

 

Robert Wenzel posts The Oil Industry Employment Boom. Energy sector technologies such as fracking and oil shale extraction are creating an employment boom in the oil sector.

 

The employment boom has come as investors have plowed great sums into the Leading Energy Producers,  CRZO, PXD, XEC, FANG, COP, CLR, EOG, NBL, BCEI, and WLL as well as the Leading Frackers, CJES, BAS, RES, and EXH.  The Energy Producers, XOP, and the Global Integrated Energy Companies, IPW, alike, are unable to leverage higher on the price of Oil, USO, and Natural Gas, UNG.

 

Economic growth that came during in the Great Recession was a byproduct of invesment gains, that came through debt trade investing in the most speculative of investments such as Real Estate Developer, BX, Industrial Office REITS, FNIO, Mortgage REITS, REM, Residential REITS, REZ,  Premium REITS, KBWY, as well as the most wild of currency carry trades, such as in Ireland’s, EIRL, MNK, IR, JHX, ICLR, RYAAY, COV, ACN, STX, and IRE.  Of note Bloomberg reports Condo Towers Rise From Boston to L.A. in U.S. Rebound. For the first time since the U.S. housing crash, new condominium towers are sprouting in downtown Boston, Seattle and Los Angeles as developers bet on the return of the riskiest type of residential real estate.

 

Global ZIRP produced the perfect moral hazard based prosperity. Now, ECB NIRP is introducing the most absolute austerity as foretold in Bible prophecy of Daniel 7:7, where fiat money and fiat wealth will be pulverized into dust.

 

There has been an economic death; and there has been a economic birth.

 

The death of sovereign currencies communicates, such as the Euro, FXE, and the Indian Rupe, ICN,  establishes that the sovereignty of the Banker Regime has come to an end. And, the June 5, 2014, Mario Draghi, ECB, Mandate for TLTROs, and a Negative Interest Rate Policy, that being a sovereign mandate, communicates that the sovereignty of the Beast Regime is rising to govern mankind’s economic, political and social life; it manifests as a Ten Toed Kingdom, ruling in the iron of diktat of regional governance in the all of the world’s ten regions, and occupying in the clay of totalitarian collectivism in every one of mankind’s seven institutions.

 

The seigniorage of investment choice came through the economic dynamos of creditism, corporatism, and globalism. Now, the seigniorage of diktat, comes through the singular dynamo of regionalism. The NYT reports Leader in Austerity Push Appointed Head of Greek Central Bank

 

There can be no popular action as perceived by Liberal economists such as Mark Thoma who weeps  Synthesis Lost. “I am coming around to the idea the intervention may also be needed to redistribute income as an offset for those who reap where they never sowed”.

 

There will ever be never be any human action, as presented by the Austrian economists such as Cato Institute’s, John Allison, an Objectivist, who advocates Free Markets, and who communicates The Importance Of Opportunity Cost.

 

There is only the divine action of the Son of God, specifically the stewardship of Jesus Christ for the perfection of every age, epoch, and time period, as presented by the Apostle Paul in Ephesians 1:10, who produced peak wealth the week ending June 6, 2014, and who pivoted the world into Kondratieff Winter, the final phase of the business cycle, the week ending June 13, 2014.

 

Jesus Christ prompted the ECB Chairman Mario Draghi to announce the NIRP and TLTRO Mandate of June 5, 2014, and in response the Euro traded lower, causing investors to derisk out of debt trade investments in European Grocer, DEG, and deleverage out of currency carry trades in European Financials, EUFN, Eurozone Stocks, EZU, European Small Cap Dividends, DFE, and EU Nations, such as Portugal, PGAL, Italy, EWI, Ireland, EIRL, Greece, GREK, and Spain, EWP, thus terminating the investor.

 

Having matured the paradigm and age of liberalism, meaning freedom from the state, where the investor was the centerpiece of economic action, Jesus Christ is now developing that of authoritarianism, where through the ECB Chairman Mario Draghi’s June 5, 2014, Mandate of NIRP and TLTRO, the debt serf is being established as the centerpiece of economic activity.

 

Having completed peak moral hazard, Jesus Christ is going to apply all the debts, public and private, to all the peoples of the world.

 

The Fifty Worst Neighborhoods In America

June 14, 2014

(This post is under development)

1) Mobile, AL,

Birmingham, AL,

Bakersfield, CA,

East Los Angeles, CA

Stockton, CA

Hartford, CT

New Haven, CT

Wilmington, DE

Gainesville, FL

Miami, FL,

 

11) Atlanta, GA

Danville, IL

Englewood, IL

Rockford, IL

Louisville, KY

New Orleans, LA, 70118

Springfield, MA

Philadelphia, MA

Detroit, MI

East St Louis, MO,

 

21) Jackson, MS

Hickory Lenoir Morganton, NC

Camden, NJ

Newark, NJ

Bronx, NY 10468

Buffalo, NY

Rochester, NY

Syracuse, NY

Cincinnati, OH

Dayton, OH

 

31) East Cleveland, OH

Wilkinsburg, PA

Harrisburg, PA

North Philly, PA

Pittsburgh, PA

South Philly, PA

Providence, RI

Greenville, SC

Spartanburg, SC

Knoxville, TN

 

41) Nashville, TN

Memphis, TN,

Lake Highlands, TX, 75231

Sunnyside, Houston, TX, 77033, home to Quanell X, whose real name is Quanell Ralph Evans

Beaumont, TX

Brownsville, TX

McAllen, TX

Huntington, WV

Charleston, WV

Washington, DC

These neighborhoods are characterized by high levels of crime, poverty, infant mortality, premature birth, and obesity.

Mario Draghi’s ECB June 5, 2014 Mandate Establishes Peak Fiat Wealth And Births The Beast Regime

June 9, 2014

Financial Market Report for the week ending June 6, 2014.

This post is available in Google Documents format here

1) … The world achieved peak wealth the week ending June 6, 2014 as Mario Draghi births the Beast Regime with the ECB Announcement of June 5, 2014 of a Targeted LTROs and a negative interest rate policy.

Russian scientist Kondratieff discovered that modern economies move through a series of four seasons and thus a business cycle of spring, summer, fall and winter exists. With the traded higher in World Stocks, VT, the week ending June 6, 2014, the world passed came to the climax of the fall season of economic experience, and is set to enter the final season that being Kondratieff Winter.

Ralph Nelson Elliott developed the Elliott Wave Theory in the late 1920s, which presents that stock markets and thus economies move through a series of five waves, with the fifth wave, producing a zenith. A stock market top, an Elliott Wave 5 High, was attained the week ending 6, 2014, and is set to enter an Elliott Wave 1 Down.

1A) … Monday June 2, 2014, marked an inflection point in world economic history, as Credit Investments traded lower, as currency traders sold the Japanese the Japanese Yen, FXY, on realization of The Failure Of Abenomics: Domestic Sales Collapse, Inflation Soars, Tyler Durden reports. Investors fear that the monetary policies of the world central banks have crossed the rubicon of sound monetary policy and have made “money good” investments, particularly credit investments, bad; resulting in a strong trade lower in Bonds, BND.

The lower Japanese Yen, FXY, stimulated Nation Investment in Japan, EWJ, JSC, and in Far East Financials, FEFN, to trade higher. And currency traders sold the Brazilian Real, BZF, which stimulated Brazil, EWZ, EWZS, and Brazil’s Energy Company, PBR, Home Builder, GFA, and Airlines, GOL, to trade lower.

Seeing US Government Debt, that is the US 30 Year Government Bonds, EDV, and the US Ten Year Notes, TLT, overvalued, the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher above 2.49% to 2.53%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the Steepner ETF, STPP, steepening, and the Flattner ETF, FLAT, flattening.

Risk-on investing turned to risk-off investing in Credit Investments. There was a credit market upheaval on June 2, 2014, as the ascending wave of credit that defined the paradigm and age of liberalism reversed. A review of Popular Notes And Bonds, shows Eurozone Credit, EU, Junk Bond, JNK, Global Junk Bonds, HYXU, Longer Duration US Corporate Bonds, LWC, US Corporate Bonds, LQD, International Corporate Bonds, PICB, Emerging Market Local Currency Bonds, EMLC, Emerging Market Bonds, EMB, Mortgage Backed Bonds, MBB, 30 Year US Government Bonds, EDV, US Treasuries, TLT, Municipal Bonds, MUB, and World Government Bonds, BWX, traded lower, on the failure of trust in the world central banks’ monetary authority. Bond Trader Across The Curve posts “There was real money selling today and the street had no capacity to absorb it”.

Philip Lane posts in Irish Economy Joint BoE/ECB Paper On Reviving The European ABS Market. Versions of QE depend on a well-functioning ABS market and this joint paper outlines the various reforms required for this market to operate at a sufficient scale ECB PDF Document Presented Here.

To the dismay of Austrian economists, the world has operated on a debt based money system. Since 1971, at the encouragement of Milton Friedman, investment in sovereign currencies has sustained Nation Investment and Small Cap Nation Investment, EFA, largely through the endeavors of Global Financial Institutions, IXG; all of which sustained Yield Bearing Investments such as the International Dividend DOGS, IDOG, and International Telecom, IST.

Since 1971, when the US went off the gold standard, floating currencies have been the wheels upon which the global economy has operated.

With the trade lower in Major World Currencies, DBV, in May 2014, and now with the trade lower in Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, as well as Credit, AGG, on June, 2, 2014, fiat money, defined as the combination of the two, is starting to die.

Soon fiat wealth, defined as the combination Equity Investments and Credit Investments, will start to die, as the former joins the latter in trading lower.

The sawing asunder of fiat wealth, coming from the bond vigilantes in calling the Benchmark Interest Rate, ^TNX, higher from 2.49%, will soon commence the start of Kondratieff Winter, the final phase of the Business Cycle.

Under the paradigm and in the age of liberalism, meaning freedom from the state, Global ZIRP produced the investor, as the centerpiece of economic action, driving up Risk Assets, such as Small Cap Pure Value, RZV, as well as Global Growth and Trade Assets, such as Energy Service, OIH.

Beginning in May, 2013, the bond vigilantes, not the world central banks, have been setting the Benchmark Interest Rate, ^TNX. And now on June 2, 2014, in calling it higher above 2.49 % to 2.53%, are in the process of terminating the investor as the centerpiece of economic activity, and have introduced the new paradigm and age of authoritarianism, where the debt serf is the centerpiece of economic action.

There no longer be any human action as perceived by the Austrian economists, there is only the destructive action of the bond vigilantes, who having the power of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, and its enforcing authority of The Rider on the White Horse, galloping with greater intensity over planet earth, seen in Revelation 6:1-2, will continue to be hiking interest rates, and that at a rather quick pace.

The bond vigilantes are literally busting apart the sovereignty of the Banker Regime of world central banks and democratic nation states. Out of its ruins, the Beast Regime of regional governance and totalitarian collectivism will rise to rule the world, establishing regional fascism in each of the world’s ten regions and totalitarian collectivism in the world’s seven institutions, as foretold in bible prophecy of Revelation 13:1-4, where sovereign regional leaders rule in policies of diktat and in schemes of control.

The age of Disney, DIS, and its Magic Kingdom, as well as the age of fixed income investing ended June 2, 2014, with the Interest Rate on the US Ten Year Note, ^TNX, rising above 2.49% to 2.53%.

Martin Frost writes Today, we are faced with another Kondratieff Winter (depression) when the majority of the world anticipates economic expansion. Each individual needs to weigh the risk of depression in light of Kondratieff’s work.

The bond vigilantes effected a historic global economic coup d’etat on June 2, 2014, by calling the Interest Rate on the US Ten Year Note, ^TNX, higher above 2.49% to 2.53%. Liberalism’s dynamos of economic activity, creditism, corporatism, and globalism, failed on June 2, 2014, with the result that inflationism has turned to destructionism.

This inquiring mind asks just who are the bond vigilantes? They are the Primary Dealers and their clients!! Zero Hedge posts Clients Are The Most Net Short Treasuries Since 2006, JPMorgan warns.

As investors derisk out of debt trades, and delverage out of currency carry trades, regionalism will be the new dynamo of economic activity establishing the paradigm and age of authoritarianism, whereby out of soon coming Financial Armageddon, that is a global credit bust and financial breakdown, leaders will meet in summits to renounce national sovereignty and announce pooled regional sovereignty to establish regional security, stability and sustainability, this being foretold in bible prophecy of Revelation 13:1-4, and Daniel 2:25-45.

US Government Debt is no longer a safe haven investment. The rally in Bonds, BND, that started in January 2014, came to an end on June 2, 2014, as the longer duration US Government Debt, EDV, are now starting to sell off faster than the medium duration US Government Debt, TLT, this seen in the ratio of EDV:TLT, trading lower. Bonds, BND, and US Treasuries, TLT, are no longer safe assets.

The death of currencies commenced in May 2014, as is seen in Major World Currencies, DBV, such as the Euro, FXE, the British Pound Sterling, FXB, the Swiss Franc, FXF, and the Swedish Krona, FXS, trading lower; and the death of currencies, is accelerating in June 2014, with the Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, trading lower. And, the failure of credit commenced in June of 2014, as is seen Aggregate Credit, AGG, trading lower.

Credit Investments failed on June 2, 2014, as the Yen, FXY, traded lower on the failure of Abenomics; confirmation comes from Floating Rate Notes, FLOT, trading lower from its late May 2014 high.

Quote of the Day “The single biggest threat to the global economy is the threat of deflation.” says CNBC commentator Ron Insana. Economic deflation will come like a viper out of the failure of fiat money and fiat wealth, destroying the very fabric of societies across the globe. Economic deflation is already underway in Italy, and it is a result of the tremendous level of corruption in society, coupled with paralysis cause by socialism’s resistance of economic reforms.

Ambrose Evans Pritchard of the Telegraph reports Europe remains a jobless swamp, despite the Spanish miracle. Italy lost 68,000 jobs in April, according to the country’s data agency ISTAT. The total employed fell to 22,295,000. Italian unemployment rose to 13.6pc. For youth it has climbed to a modern-era high of 43.3pc, implying very serious damage to Italy’s long-term economic dynamism due to labour hysteresis. The employment rate dropped to 55.2pc. Ageing workers are giving up the search for jobs, chiefly in the Mezzogiorno, and returning to their patches of land in impoverished early retirement.

As Eurozone Stocks. EZU, top out on EUR/JPY currency carry trade investing, and as European Small Cap Dividend Stocks, DFE, top out on European Credit, EU, liquidity, the economic gap between capitalized Germany and socialized France is greater than ever.

Zero Hedge posts The Most Worrying Chart For Europe’s Stability, A Bloomberg Brief. The difference in economic performance (and mood) between France and Germany, often referred to as the European “engine,” is at a record high. This disparity is likely to weaken France and isolate Germany further, heightening political tensions and indecision in the euro area.

Eurozone Credit, EU, traded lower as Zero Hedge posts Here Comes QE In Financial Drag. David Stockman viaContra Corner blog relates the WSJ report The ECB And Bank of England Outline Options to Boost Asset-Backed Securities Market. The European Central Bank and Bank of England on Friday outlined options to reinvigorate the market for bundled bank loans, which was “tarnished” by the global financial crisis, saying a better-functioning market for asset-backed securities can help boost lending to the private sector, particularly small businesses.

Yes, the ECB is now energetically trying to revive the a market for asset-backed commercial paper (ABCP) – the very kind of “toxic-waste” that allegedly nearly took down the financial system during the panic of September 2008. The ECB would have you believe that getting more “liquidity” into the bank loan market for such things as credit card advances, auto paper and small business loans will somehow cause Europe’s debt-besotted businesses and consumers to start borrowing again thereby reversing the mild (and constructive) trend toward debt reduction that has caused euro area bank loans to decline by about 3% over the past year. What they are really up to, however, is money-printing.

Here’s the thing. The ABCP market is not a place where hard-pressed business borrowers or consumer’s can find a new source of credit outside the banking system. Instead, it is a financial engineering arena in which banks will have a chance to mint phony overnight profits through an accounting expedient known as “gain-on-sale”.

What that means is that when credit card receivables or small business loans are “bundled” by their commercial bank issuers and sold into an off-balance conduit which issues ABCP against these “assets”, the life-time profits of these loans can be booked instantly. Indeed, modern technology allows the credit card swipe to be booked as a profit nearly the same nanosecond as it happens, and accounting convention allows the profits from a 7-year car loan issued at 110% of the vehicle’s value to be recorded virtually at the time it rolls off the dealer lot.

In short, Europe has more than enough inflation and doesn’t need a revived ABCP market to generate loans for the un-creditworthy. Today’s announcement is just part of Draghi’s desperate attempt to deliver QE next week in a manner which will not elicit a loud “nein!” from his German overseers.

Jenny Cosgrave of CNBC reports Eurozone Manufacturing Growth Slowest In 6 Months

Premium REITS, KBWY, such as Retail REITS, SLG, GGP, Residential REITS, such as EQR, AVB, ESS, AIV, MAA, Global Infrastructure, IGF, such as MIC, Industrial Office REITS, such as BXP, STWD, Hotel REITS, such as CHSP, HST, SOHO, Regional Banks, KRE, and the Chinese Financials, CHIX, traded higher. Base Metals, DBB, traded higher, stimulating Global Miners, PICK, slightly higher.

A review of the Leading S&P 500 Companies, shows that the S&P 500, SPY, and Transportation, XTN, led by Delta Airlines, DAL, and Disney, DIS, and Energy Service, OIH, and Global Industrial Producers, FXR, led by Halliburton, HAL, and Illinois Tool Works, ITW, traded to a new all time high on a slightly lower price of Oil, USO.

Arin Ray of Celent posts Big Banks Exit Commodity Trading The retreat of the big banks from commodity business has been driven by tighter regulation, stricter capital requirements, increasing political pressure and lower profitability in recent times.

1B) … On Tuesday June 3, 2014, The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening. Credit Investments continued to trade lower on the exhaustion of the world’s central banks’ monetary authority, reflecting a historic inflection of one of the two components of fiat wealth, with the other being Equity Investments.

The bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher. Loss leading Aggregate Credit ETFs, AGG, of the day included EDV, TLT, EMB, LWC, MBB, LQD, and EMLC, reflecting that investors abandoned longer duration and the emerging market local currency debt.

Since the first of the year running through the end of May 2014, the wise credit investor has been long duration and long the worst of debt, as is seen in the ongoing Yahoo Finance Chart of the Flattner ETF, FLAT, and Distressed Investments, FAGIX, Junk Bonds, JNK, Build America Bonds, BABS, Long Term Corporate Bonds, LWC, The Zeroes, ZROZ, and Defensive Stocks, DEF, trading higher.

Yet liberalism’s debt trade investing, seen in High Yield Debt, JNK, LWC, EU, EMB, HYD, EMLC, BABS, HYXU, PZA, in Leveraged Buyouts, PSP, in Real Estate Investment, BX, in Spain’s Bank, SAN, as well as currency carry trade investing, seen in European Small Cap Dividend, DEF, is being relegated to the dustbin of history, as signs of risk-on investing are waning, and signs of risk-off investing in Nation Investment are emerging, such as the trade lower in Eurozone periphery nations, Portugal, PGAL, Ireland, EIRL, Italy, EWI, Greece, GREK, but not yet Spain, EWP, coming on the trade lower in the Euro, FXE.

Debt trade returns YTD have been JNK 5%, LWC 10%, EU 2%, EMB 87%, HYD 10%, EMLC 4%, BABS 13%, HYXU 3%, PZA 9%; these are now part of a bygone era.

The end of the age of investment choice is at hand, and the age of debt servitude awaits.

The Guardian posts Mario Draghi Faces Moment Of Truth As Man With Power To Steady Eurozone The European Central Bank governor has charmed the markets with words. But this week he must make bold policy decisions to unite a region increasingly driven by economic disparities … And Bloomberg posts Draghi Primes ECB as Inflation Scarcity Alarms Officials … And Mark Dow of Yahoo’s Daily Ticker says “There’s no way out”: Not much ECB can do to help Europe’s economy,

Questions arise. Will the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note, ^TNX, jump higher? Will European Credit, EU, tumble? Will Aggregate Credit, AGG, trade lower with Credit Investments across the board trading lower? Will the Euro, FXE, that took a hit in May 2014, on anticipation of Mario’s Move, take another hit? Will Equity Investments trade lower?

Equity Investments are headed lower for sure, as the ratio of World Stocks, relative to Aggregate Credit, that is VT:AGG, is topped out; with underlying credit investments selling off, Equity Investments are destined to sell off as well, as Sober Look posts Markets Now Expect Shock And Awe From The ECB. Unless we see “shock and awe” from the central bank, global markets will be quite disappointed.

The end of the pursuit of yield is at hand as “shock and awe” will not be forthcoming, and World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, will trade lower, and an Elliott Wave 5 High completion of the S&P 500, presented in Safehaven chart article TheWaveTrading Weekly Technical/Elliott Wave Analysis (SPX, DOW, NDX, XLF, IWM) is at hand.

Thus, fixed income investing will be a losing proposition, and Yield Bearing Investments, such as Dividends Excluding, DTN, will be led lower by debt trade investments such as Leveraged Buyouts, PSP, and carry trade investments such as Water Resources, PHO, and Global Utilities, DBU, and International Telecom, IST, as is seen in their ongoing combined Yahoo Finance Chart with the Zeroes, ZROZ.

Soon it will be global ZIRP no more, as the Bond Vigilantes continue to manifest, having seized the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, beginning in May of 2013, from the Creature from Jekyll Island.

With the trade lower in Credits Investments, seen in Bonds, BND, trading lower on June 2, and June 3, 2014, the world is passing through a historic inflection point where the investor, most importantly, the fixed income investor will be going extinct, and the nature of governance will be changing from the democracy of nation states to the fascism of sovereign regional leaders.

In bearish news Quartz posts The 35 Economic Charts From May You Really Should See

1C) … On Wednesday, June 4, 2014, the S&P 500, traded by the ETF, SPY, rose to a new all time daily high, as the Defensive Sectors, Health Care Providers, IHF, and Insurance, KIE, such as AIG, as well as the Growth Sectors, Semiconductors, SOXX, Design Build, FLM, Energy Service, OIH, Transports, XTN, and Apple, APPL, traded to new all time highs. China Technology, CQQQ, and Global Energy Producers, IPW, PBR, TOT, SSL, SNP, E, RDS-B, BP, traded lower, (while Energy Producers, XOP, CLR, APC, EOG, EQT, CRZO, and COP, traded higher on the day).

Regional Banks, KRE, such as SNV, HBAN, RF, BBNK, SBNY, OZRK, The Too Big To Fail Banks, RWW, such as WFC, Stockbrokers, IAI, Investment Bankers, KCE, and Far East Financials, FEFN, traded higher, while China Financials, CHIX, traded lower.

In Yield Bearing Sectors, Energy Partnerships, AMJ, MLPJ, EMLP, such as MMP, SEMG, TRGP, SXL, ACMP, ETE, OILT, MPLX, LNG, OKS, and Shipping, SEA, traded to new all time highs; while China Real Estate, TAO, Brazil Financials, BRAF, Australia Dividends, AUSE, and Smart Grid, GRID, traded lower.

Commodities, DBC, traded lower, as Gold, GLD, traded lower, and as Oil, USO, traded lower to the edge of a massive Diamond Triangle Consolidation Pattern, to close at 37.50, and as Agricultural Commodities, RJA, and Base Metals, DBB, traded lower, as Commodity Currencies, CCX, traded lower. Zero Hedge reports Copper’s Long-Term Bear Trend Is Resuming, BofA Warns. Southern Copper Corp, SCCO, traded lower, on a lower price of Copper, JJC, as Economic By Design posts Copper Exchange Stocks Approaching Pre Crisis Levels.

Closed End Funds, GCE, such as UTF, traded to a new rally high.

The investor’s trust in the monetary policies of the world central banks to continue to stimulate investment gains, as well as to continue global economic growth, has been the basis for World Stocks, VT, US Stocks, VTI, Eurozone Stocks, EZU, Asia Excluding Japan, EPP, and the Emerging Markets, EEM, rallying strongly from January 2014 through May 2014, as is seen in their combined ongoing Yahoo Finance chart.

Support for the bull market in Equity Investments has been underwritten by Major World Currencies, DBV, such as the Euro, FXE, and Emerging Market Currencies, such as the Brazilian Real, BZF, which have now fallen lower.

And support for the bull market in Equity Investments has been underwritten by the major types of Credit Investments, as seen in the combined ongoing Yahoo Finance Chart of Distressed Investments, FAGIX, US Ten Year Notes, TLT, Junk Bonds, JNK, 30 Year US Government Bonds, EDV, Mortgage Backed Bonds, MBB, European Credit, EU, and Emerging Market Local Currency Bonds, EMLC, all of which except for Distressed Investments are now trading lower.

Bond Trader, Across The Curve, posts Frothy Bulls. The WSJ reports Danger Territory: Bullish Sentiment Hits Extreme Levels. Bullish sentiment in the stock market is reaching rarified levels which in past cycles have augured for severe corrections. Prior highs came in August 1987 and October 2007.

An inquiring mind asks, will investors faith in the monetary policies of Mario Draghi be shaken by the ECB Policy Statement of Thursday, June 5, 2014? Will there be a strong stock market reversal?

Credit Writedowns posts Repairing The Transmission of Monetary Policy Through Asset-Backed Securitisation.

I comment that there is nothing wrong whatsoever wrong with the transmission of monetary policy of the ECB. To frame the conversation as Credit Writedown posts, is a distraction from reality, and drives the communication suggesting that the ECB’s policies are for economic growth; frankly they are not, just as the FED’s policies are not, and the BOJ are not, and the PBOC are not.

The policies of the world central banks, through Global ZIRP, have been investor centric, and any economic growth has been secondary in nature.

1D) … On Thursday, June 5, 2014, ECB money printing brought results. Investors took Mario Draghi’s, long awaited monetary policy announcement as credit stimulative. World Stocks, VT, Nation Investment, EFA, and Yield Bearing Investments, such as Dividends Excluding Financials, DTN, traded to new all time highs, leveraging higher over Global Financials, IXG, which traded to a new rally highs. The S&P 500, SPY, rose strongly to a new all time high.

Growth and trade leaders, Semiconductors, SOXX, Global Industrial Producers, FXR, Transportation, XTN, and traded to new all time highs. Energy Producers, XOP, traded strongly higher. Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, which have sunken terrifically in value, were buoyed by the ECB Chairman’s policy statement, which rallied Gold, GLD, and Silver, SLV.

The High Beta Sectors, Networking, IGN, Internet Retail, FDN, Nasdaq Internet, PNQI, China Technology, QQQQ, Software, IGV, and Aerospace, PPA, rose strongly

The riskiest of Equity Investments, that is European Small Cap Dividend, DFE, Small Cap Pure Value, RZV, such as HEES, URI, Small Cap Pure Growth, RZG, Small Cap Industrial, PSCI, Building Materials, Emerging Market Small Caps, EWX, and Credit Services, such as AXP, rose strongly, providing insight that investors see the ECB’s policy statement as supporting risk-on investing.

Eurozone Stocks, EZU, such as ORAN, rose to new rally highs, leading Norway, NORW, and Denmark, EDEN, to new all time highs.

Greece, GREK, Italy, EWI, Spain, EWP, France, EWQ, Austria, EWO, Finland, EFNL, Portugal, PGAL, and Netherlands, EWN, led the European Nations, and Nation Investment, EFA, to new rally highs.

Emerging Market Small Caps, EWX, and Egypt, EGPT, and Turkey, TUR, recovered from recent losses, and traded strongly higher, drove Emerging Markets, EEM, to new a new high, evidencing that investors perceived the ECB’s Chairman’s monetary policy statement, as supportive of the Banker Regime.

India, INP, and India Small Caps, SCIN, traded to new all time highs. Argentina, ARGT, and a number of its stocks, such as EDN, traded to a new rally high.

Malaysia, EWM, Vietnam, VNM, Philippines, EPHE, led Asia Excluding Japan, EPP, higher on the day. Japan, EWJ, and Japan Small Caps, JSC, traded higher, on the day.

US Stocks, VTI, traded to a new all time high.

Global Financials, IXG, were led higher by the credit sensitive Regional Banks, KRE, The Too Big To Fail Banks, RWW, Investment Bankers, KCE, Stockbrokers, IAI, and Chinese Financials, CHIX. European Financials, EUFN, such as Spain’s Banco Santander, SAN, and associated Brazil’s Banco Santander Brazil, BSBR, as well as Argentina’s Banks, GGAL, BFR, BMA, BBVA, and India’s HDB, IBN, traded to a new all time highs. Life Insurance companies, such as Netherland’s, ING, rose near their recent highs.

The most interest rate sensitive of the Yield Bearing Sectors, Gulf Dividends, GULF, Smart Grid, GRID, Water Utilities, PHO, and Electric Utilities, PUI, which had recently sold off, rose strongly.

The debt leveraged International Dividend Dogs, IDOG, Leveraged Buyouts, PSP, Global Utilities, DBU, such as China’s HNP, and International Infrastructure, IGF, traded strongly higher, rising up near their recent highs.

Ongoing pursuit of yield, drove Shipping, SEA, Energy Partnerships, AMJ, MLPJ, EMLP, Premium REITS, KBWY, and Industrial Office REITS, FNIO, to new rally highs. Residential Retail REITS, REZ, such as AIV, ESS, traded to new rally highs; these are likely the most credit leveraged investments of all time, and as a group have a stunning PE ratio of 38.

Closed End Funds, GCE, up 9%, YTD, traded to new all time highs.

Credit Investments, AGG, such as European Credit, EU, traded higher, as the Interest Rate on the US Ten Year Note, ^TNX, traded slightly lower to close at 2.58%. Junk Bond, JNK, up 5%, YTD, traded to a new all time high; it being the only Credit Investment that resides at an all time high, after all other debt traded lower earlier in the week, with the bond vigilantes calling the Benchmark Interest Rate, ^TNX, higher from last week’s close.

The ratio of Long Term TIPS, LTPZ, to 10-20 Year US Treasury Notes, TLT, that is LTPZ:TLT, and the Benchmark Interest Rate, ^TNX, trading above 2.49%, communicates that today’s strong rise in Equity Investments, is a blow off market top. Confirmation of such comes from the ratio of World Stocks, VT, relative to Aggregate Credit, that is VT:AGG, trading at a spectacular all time high.

Equity Investments cannot be sustained much longer over Credit investments. There is a limit to which the speculative leveraged investment community can drive stocks ever high.

Those who were invested long in Equity Investments patiently waiting for the June 5, 2014, Mario Draghi ECB Monetary Policy Statement were richly rewarded; their risk appetite satisfied, as Eddy Elfenbein posts The S&P 500 Rallied For The 14th Time In The Last 19 Sessions, and as Bespoke Investment reports The World is Overbought.

This inquiring mind asks, in what way does Mario Draghi’s ECB June 2014 Monetary Policy of cutting rates, imposing negative interest rates on its overnight depositors and offering banks new long-term funds, fight low inflation and boost the euro zone economy?

Merkelnomics writes ECB Enters Uncharted Territory – With one Foot. According to the ECB, these TLTROs will have a maturity of around 4 years. Counterparties will be entitled to borrow, initially, 7% of the total amount of their loans to the euro area non-financial private sector, excluding loans to households for house purchase, outstanding on 30 April 2014. Lending to the public sector will not be considered in this calculation. The maximum volume of such TLTROs could amount to around 400 bn euro. Two TLTROs will be conducted in September and December this year. Then, from March 2015 to June 2016, all counterparties will be able to borrow, quarterly, up to three times the amount of their net lending to the euro area non-financial private sector, excluding loans to households for house purchase, over a specific period in excess of a specified benchmark. The interest rate on these TLTROs will be fixed at the current ECB’s refi rate plus a fixed spread of 10 basis points. In our view, these TLTROs look like a reversed funding-for-lending scheme: the more lending commercial banks provide to the private sector, the more cheap funding they can get. Full allotment.

And this inquiring mind asks further, will Mario Draghi’s ECB’s LTRO monetary policy generate sufficient aggregate demand to pull the Eurozone economy up out of deflation? And does the new policy address the longer-term issue of government debt sustainability.

The bond vigilantes, that is the Primary Dealers, and their clients, have been in control of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, since May of 2013, and have been calling it higher from 2.49%, to 2.58% where it stands today. With the result that debt deflation commenced in Major World Currencies, DBV, and Emerging Market Currencies, CEW, and which in turn commenced destruction of Aggregate Credit, AGG, in June 2014.

Thus fiat money, defined as the combination of Major World Currencies, DBV, and Emerging Market Currencies, CEW, together with Aggregate Credit, AGG, is starting to die. The death of fiat money in June 2014, is an inflection point in mankind’s history.

The failure of Sovereign Currencies has commenced, beginning with the Swedish Krona, FXS, and the Brazilian Real, BZF; and is an economic and political coup d’etat, that has commenced destructionism which is seen in Nation Investment in Sweden, EWD, and Brazil, EWZ, EWZS, trading lower.

The deflationary potential of unwinding currency of carry trade investments and associated debt trades, countervails against anything the ECB has done, or has announced. The tailwinds of economic deflation will be the perfect storm to introduce Kondratieff Winter, which will produce many new normals, as the world has passed from the paradigm and age of liberalism, meaning freedom from the state, into that of authoritarianism, with the death of sovereign currencies in May 2014, and June 2014.

The Mario Draghi ECB NIRP of June 5,2014, introduces risk James Hamilton writes in Econobrowser It’s Unambiguously A Tax On The Banking System that undermines efforts to replenish capital buffers. If you have concerns about financial stability, such a move is contraindicated. A variety of institutions– money market funds, customers’ accounts with private banks, brokerage accounts, are all set up on the assumption that the customers won’t lose any money held in those accounts. Remember that “breaking the buck”– the possibility that investors would discover they’re vulnerable to a capital loss on money market funds– was a key concern of U.S. policy-makers in 2008 as something that could have triggered a run on some financial institutions and instruments.

All things have fathers, that is starters.

The Banker Regime was born in 1971 on the genius of Milton Friedman’s principle of Free to Choose Floating Currencies; and fiat money came of age, where QE1 and Global ZIRP birthed the investor as the centerpiece of economic activity.

The Beast Regime was born in June 2014 on the genius of Mario Draghi’s imposing NIRP, that is negative interest rates, on its overnight depositors; and diktat money has come of age, where the June 2014 Mario Draghi ECB Mandate birthed the debt serf as the centerpiece of economic activity.

Inflation was the economic dynamic of growth coming from the exercise of investment choice, which was supported by the dynamos by creditism, corporatism, and globalism; these engines of democratic nation state governance are winding down, on the death of sovereign currencies.

Destruction is the economic dynamic of deflation coming from derisking and deleveraging out of investment choice, which is countervailed by the dynamo of regionalism; this engine of regional economic governance is winding up, as leaders meet in summits and workgroups to renounce national sovereignty and to announce regional pooled sovereignty, coming from regional framework agreements, such as seen in the Russia China Energy Deal, which has created the Eurasia region of economic governance, and is creating diktat money, defined as the mandates of sovereign regional leaders to establish regional security, stability and sustainability.

In similar vein, Peter A. Petri and Michael G. Plummer report in Econobrowser that initiatives for regional trade facilitation and regional integration are underway. Asia Pacific Regional Integration. Even ardent champions of multilateralism like Jagdish Bhagwati are now advising governments to pursue regional negotiations. Relative to GDP the outward-oriented ASEAN economies of Vietnam (14 percent) and Thailand (8 percent) would gain most. Most encouragingly, launching a feasibility study of FTAAP has now emerged as a key Chinese objective as China hosts APEC in 2014. The idea is an ambitious, comprehensive, inclusive, outward-oriented FTA by 2020. In short, the mega regionals of the Asia-Pacific region offer pathways toward deeper economic integration. Asia-Pacific economic integration may well reinforce the global trading system. The region has always championed “open regionalism”, measures that emphasize trade creation and increasingly inclusive agreements. Mega regional accords in the Asia-Pacific could emerge as the ultimate “building blocks” of multilateralism.

Thus both peak fiat wealth, defined as the combination of Equity Investments and Credit Investments, as well as the Beast Regime were established by Mario Draghi’s June 5, 2014 ECB Mandate.

The Japan-like “pernicious negative spiral” of deflation will intensify as investors are forced to deleverage out of EUR/JPY funded currency carry trades in Eurozone Companies such as France’s debt trade Telecom Provider Orange, ORAN.

A lower Euro, FXE, is coming, but it will not help boost exports, as all currencies will be falling together into the Pit of Financial Abandon.

Up until today, the ECB has done as much as the northern Europeans would let it. Mr. Draghi has figured out how to get them to do even more. The negative interest rate announced by Mario Draghi in effect has regionalized the Eurozone’s banks; it has established a defacto banking union. Throughout the world, banks, via regionalism, will be absorbed into the regional government and become known as Government Banks or Gov Banks for short.

Tyler Durden writes NIRP Has Arrived: Europe Officially Enters The “Monetary Twilight Zone”. Kiss money markets, which together with Repos are one of the core components of shadow banking, goodbye. From Bloomberg “A deposit rate at zero will be of particular support to banks in southern Europe because it could help encourage some flow of credit,” said Callow. “A negative deposit rate can be damaging for money markets.” Negative rates would destroy the business model for money- market funds, which would face the prospect of paying to invest, said Societe Generale economist Klaus Baader.

Negative interest rates on bank excess reserves caused Germany’s Deutsche Bank, DB, to immediately trade 2.6% lower on the June 5, 2014 Mario Draghi ECB announcement.

The Mario Draghi, ECB Negative Interest Rate Policy of June 5, 2014, means that banks which have their monies parked overnight at the ECB will pay a security fee, that is a 0.1% surcharge for the privilege of participating in the economic stability and sustainability of the Eurozone. Welcome to the age of diktat money, where regional leaders are sovereign and issue mandates that establish regional security, stability and sustainability.

John Rubino posts Welcome to the Currency War, Part 16: Interest Rates Go Negative. (Mario Draghi’s policy) won’t stop the eurozone’s downward spiral because liquidity doesn’t fix insolvency. In other words, if the system’s collateral isn’t as valuable as the debt it supports, then the system is in trouble. And coercing banks into making more loans against inadequate collateral will not help the situation.

The euro will fall due to rising supply, which is the same thing as saying that the dollar will soar. This will be deflationary for the US, producing a string of “unexpected” misses in corporate earnings, GDP and inflation.

A deflating Euro is already turning US based corporations lower; the formerly soaring Refineries, VLO, MPC, PSX, HFC, are now trading lower, on the lower Euro.

Currency deflation coming from the hands of the currency traders selling the Euro against the Yen, and from the June 5, 2014, Mario Draghi mandate, are globally destabilizing things, which export economic deflation and create economic deflation worldwide.

My Budget 360 posts Central Banks And A Global Soft Default. Global central banks are fully addicted to the opiate of debt. The financial system has created a rentier class that chases investment yield even when the economy isn’t necessarily growing. Think about that for a second. Why should someone expect a guaranteed return at any point in an economic cycle if the real economy is actually contracting? The U.S. for example while trying to play the role of responsible manager of debt is going full throttle when it comes to debt issuance. We have a spending, revenue, and financial system problem in the way incentives are structured.

A soft default by any other name. The U.S. outside of a couple of years, has spent more than it takes in for well over a generation year over year. We continue to spend money we don’t have courtesy of foreign investors and our Fed that continues down the QE road. Yet these actions have consequences. You have global funds coming back home to roost for the elixir of cheap goods. The result? For most people we are now importing low wage capitalism. In many metro areas local families are now competing against big real estate investors and in some cases foreign investors merely to purchase a home to live in. There is always a cost to borrowing cheaply.

$6 trillion are now owed to foreign investors. Some tend to think this comes with no strings attached. Of course there are strings attached. A generation of people were able to enjoy a strong dollar, high wages, and plentiful cheap goods.

You can see that the Great Recession caused us to run some epic deficits. But what was the end result? Pricing out regular families from buying a home? Making college unaffordable to millions unless they commit to a lifetime of student debt? Giving access to healthcare but making premiums so high that most are seeing more of their funds consumed by these changes? Since most Americans are cash strapped and deep in debt, it appears that we have been auctioning off our debt to global yield chasers. The results for the top one percent have been fantastic. For the rest, not so much.

Assume that rates went up to 6 percent overall which is a low rate overall given the global risk in the market and we are looking at paying roughly $1 trillion per year simply on the interest expense without lowering any of the principal balance. So think about that next time you hear about taper talks and gear up for more non-reported inflation to consume most of your daily cost of living.

This is a soft default by any other name and central banks are going to do everything they can to inflate the debt on their books away.

I respond, yes it is a soft default, and through on going money printing operations, the central banks have indeed inflated the debt on their books, but that has finally come to an end with the Mario Draghi June 5, 2014 Mandate of Negative Interest Rates.

The wisest of all banks were those the Primary Dealers who demanded and received Interest Rate Swaps as part of POMO, and who went started to go short US Treasuries, TLT, beginning in January 2014, as the long-duration trade, EDV:TLT, and the flattening yield curve, FLAT, commenced, as now their shorts will start to increase in value and as their positions in Interest Rate Swaps soar as the Benchmark Interest rate increases in value.

Austrian Economist, Benson te, writes (The ECB’s Announcement) Is Really Camouflage For Perpetual Debt Accumulation. Aside from Negative Deposit Rates, the ECB has placed in the pipeline more easing measures. From ZH, the much anticipated additional measures have been revealed:

-DRAGHI UNVEILS PACKAGE OF TARGETED LTROS, WORK TO PREPARE QE

-DRAGHI SAYS INITIAL SIZE OF TARGETED LTRO PLAN IS 400 BLN EUROS

-ECB EXTENDS FIXED RATE FULL ALLOTMENT, SUSPENDS SMP STERILIZING

-DRAGHI SAYS PACKAGE INCLUDES PREPARATIONS FOR ABS PURCHASES.

In other words, even more actions along what was expected: keep in mind the last time the ECB did €1 trillion in LTROs it did exactly nothing to boost inflation or the “real economy.” Furthermore, the ABS purchases aren’t activated: just being “prepared.” However, what was not revealed was the biggest wildcard: European QE, which as we said repeatedly, won’t happen until Europe’s deflation is far worse, if ever.

All these represent no more than subsidies, as I previously commented. Governments around the world have been forcing a ‘reverse Robin Hood’ redistribution of plundering the Main Street in favor of the Wall Streets of the world through a variety of financial repression policies such as blowing bubbles, bank deposit haircut, negative deposit rates and more.

Yet there is no such thing as a free lunch. Every action has a consequence. Unproductive spending and malinvestments will backfire. As the great Austrian economist Ludwig von Mises presciently warned 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. As has been mentioned already, the British Government has asserted that credit expansion has performed “the miracle … of turning a stone into bread.”

A Chairman of the Federal Reserve Bank of New York has declared that “final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.” Many governments, universities, and institutes of economic research lavishly subsidize publications whose main purpose is to praise the blessings of unbridled credit expansion and to slander all opponents as ill intentioned advocates of the selfish interests of usurers.

The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

It is sad to see that that the average citizens of the world have been treated like guinea pigs by monetary authorities, for an age old experiment that not only transfers resources from society to the political class and their cronies but importantly has been DESTINED for failure: quasi booms morph into horrific busts. When real savings have been substantially diminished relative to misallocated capital, then expect and prepare for a global economic depression in a not so distant future.

Soon there is coming a day that will mark an inflection point in mankind’s history as the paradigm and age of investment choice will terminate, as investors derisk out of debt trades, such as seen in this Finviz Screener, and deleverage out of currency carry trades, such as seen in this Finviz Screener, and this Finviz Screener, and this Finviz Screener of Global Banks, on awareness that the monetary policies of the world central banks no longer support investment gain, or global growth and trade, and in so doing introduce the age of debt servitude.

As European leaders argue over Jean-Claude Juncker’s candidacy for the top job at the European Commission, Telegraph posts Jean-Claude Juncker profile: ‘When it becomes serious, you have to lie’.

1E) … On Friday, June 6, 2014, World Stocks, VT, rallied to a new all time high as the riskiest of Equity Investments such as European Small Cap Dividend, DFE, Small Cap Pure Value, RZV, Small Cap Pure Growth, RZG, Small Cap Industrial, PSCI, Emerging Market Small Caps, EWX, and Building Materials, rose strongly.

Global Growth, DLN, Sectors Energy Service, OIH, Transportation, XTN, Global Industrial Producers, FXR, Semiconductors, SOXX, Design Build, FLM, Automobiles, CARZ, Aerospace And Defense, PPA, Energy Production, XOP, as well as Defensive Sectors, Insurance, KIE, and Consumer Staples, KXI, rose strongly to new rally highs.

Global Financials, IXG, rose to a new all time high as Spain’s Banco Santander, SAN, led European Financials, EUFN, Credit Services, such as AXP, Regional Banks, KRE, Investment Bankers, KCE, strongly higher.

Yield Bearing Investments such as Brazil Financials, BRAF, India Earnings, EPI, Leveraged Buyouts, PSP, Water Resources, FIW, and Global Utilities, DBU, rose strongly,

Nation Investments, EFA, rose to a new all time high as the Emerging Markets, EEM, EWX, led by Vietnam, VNM, Philippines, EPHE, Thailand, THD, Developing Europe, ESR, Egypt, EGPT, Turkey, TUR, Argentina, ARGT, Brazil, EWZ, EWZS, popped to a new rally high as Emerging Market Currencies, CEW, traded strongly higher over the Japanese Yen, FXY; in particular India, INP, SCIN, EPI, traded strongly higher on a higher India Rupe, ICN. Developed nations Norway, NORW, Mexico, EWW, and Singapore, EWS, traded to a new rally high. South Africa, EZA, Russia, RSX, ERUS, Gulf States, MES, and Sweden, EWD, traded strongly higher.

The awesome Equity Investment rally of June 5, 2014, and June 6, 2014, was one of investor mania coming from the Mario Draghi ECB promise of Targeted LTROs, as well as NIRP, without checking out the details of exactly the announced monetary policy will provide sufficient stimulus to pull the Eurozone out of economic deflation.

Past credit stimulus has not provided sufficient inertia to pull the Eurozone out of economic deflation. David Stockman writes In truth, the Euro zone has had an explosion of bank credit growth to the private non-financial sector. Outstanding bank loans grew at a 7.5% CAGR during the 10-years ending at the eve of the financial crisis in early 2008. During those halcyon days there was obviously nothing wrong with the bank credit machinery—especially given the fact the euro zone money GDP grew during the same decade at only a 4.4% CAGR. Expressed in absolute dollar terms, the gain borders on a borrowing frenzy. During that decade, nonfinancial debt outstanding in the euro zone grew by the equivalent of $7 trillion—which is to say, by an amount equal to the entire loan book of the US banking system on the eve of the crisis.

The inflation trade in Equity Investments, that is World Stocks, VT, Nation Investment, EFA, Global Financial Institutions, IXG, and Dividends Excluding Financials, DTN, coming on the liberal monetary policies of the world central banks, was was a risk free trade.

Zero Hedge reports No More Risk: VIX Plunges Below 11 For The First Time In Years. The Inverse Volatility ETFs, XIV, SVXY, soared, and the Volatility ETFs, VIIX, VIXY, plummeted as is seen in their combined ongoing Yahoo Finance Chart.

Please consider the concept of the Apostle Paul presented in Ephesians 1:10, that being that Jesus Christ is in charge of the economy of God and appointed world central bank leaders, Ben Bernanke, Janet Yellen, Shinzo Abe, and Mario Draghi as his point men; and that these were the greatest liberators in history, and that they led the greatest liberation movement of all time. They set the investor free, to experience economic life in the world central bank’s monetary policies of investment choice and schemes of credit to pursue investment gains. .

The June 5, 2014 Mario Draghi ECB Announcement of NIRP and Targeted LTROs, produced a stunning moral hazard based prosperity in fiat money, and produced the zenith of liberalism, defined as freedom from the state, as investors drove World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, to produce peak Equity Wealth, while Peak Currency Wealth, DBV, and CEW, was achieved in the third week of May 2014, and Peak Credit Wealth, AGG, was achieved the week ending May 30, 2014.

The age of currencies and the era of credit came to an end the week ending June 6, 2014, as stock investors drove Equity Investments, manifesting as three long candlesticks in the weekly chart of the S&P 500, SPY, to their grand finale high, at a time when the bond vigilantes, called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.59%.

Peak Equity Wealth is seen in the chart of World Stocks, VT, relative to Aggregate Credit, AGG, that is VT:AGG, rising parabolically, and then peaking in value in the week ending June 6, 2014.

The Mario Draghi ECB announcement of NIRP and targeted LTROs produced a blow off stock market top on Friday June 6, 2014, and at the same time has birthed the Beast Regime, to replace the Creature from Jekyll Island, which ruled in liberal policies of investment choice and in schemes of credit. Soon out of the waves of Club Med sovereign, banking, and corporate insolvency, it will rise to rule the world in authoritarianism, in policies of diktat in every one of the world’s ten regions, and in schemes of totalitarian collectivism in all of mankind’s seven institutions.

The age of diktat and the era of debt servitude commenced on the June 5, 2014, with the mandate of Mario Draghi for a 0.1% surcharge on money held overnight at the ECB.  His word, will and way, will compel the debt serf, to experience economic life in regional fascist leader’s policies of regional economic governance, which establish regional security, stability and sustainability.

Thus the Mario Draghi announcement of NIRP and targeted LTROs was both a climax event, one of peak wealth. and also a genesis event, one of the beginning of a new economic age of authoritarianism.

In a stunning denial of reality, Reuters reports ECB’s Coeure: Rates To Diverge From UK, U.S. For Years. Euro zone interest rates will diverge from those in the United States and Britain for a number of years, European Central Bank (ECB) Executive Board member Benoit Coeure told France Inter radio on Saturday. Speaking after the ECB this week cut rates to record lows, Coeure said they would remain around that level for a long time, whereas central banks in the United States and UK would at some point raise rates. “Clearly what we wanted to indicate on Thursday is the fact that monetary conditions will diverge between the euro zone on one hand and the United States and the United Kingdom on the other for a long period, which will be several years,” he said. “We are going to keep rates close to zero for an extremely long period, whereas the United States and the United Kingdom will at some point return to a cycle of rate rises.” Coeure said this should help to weaken the strong euro, which is threatening economic recovery and importing disinflation. French President Francois Hollande has been calling for months for ECB action to weaken the currency.

Truth is that he bond vigilantes are in control of the Interest Rate on the US Ten Year Note, ^TNX, and are using this Bow of Economic Sovereignty, to effect coup d’etat worldwide, which have caused derisking out of debt trade investments such as Ireland’s Bank, IRE, and deleveraging out of currency carry trade such as Ireland’s, Software Manufacturer, FLTX, and Medical Lab, ICLR.

Through global debt deflation, coming at the hands of the currency traders, following upon the work of the bond vigilantes, all currencies, will be falling ever lower than the Japanese Yen, resulting in all Credit Investments, including European Credit, EU, trading ever lower, inducing the dreaded economic inflation worldwide.

All things have a beginning and an end.

The 1971 Milton Friedman Call for Free to Choose Investing and Floating Currencies, created a great fiat money swell. And the Ben Bernanke QE1 of trading out money good US Treasuries for Distressed Investments, regenerated the global financial system, whereby the Banker Regime birthed the investor, and has finally culminated the age of currencies and the era of credit, producing peak fiat money and peak fiat wealth. The June 5, 2014, Mario Draghi ECB announcement of NIRP drove Equity Investments to their Elliott Wave 5 High.

Now said announcement has birthed the age of diktat and the era of debt servitude, where the Beast Regime will rule in policies of diktat in regional governance in every one of the world’s ten regions, and in totalitarian collectivism throughout mankind’s seven institutions.

The short selling opportunity of a lifetime has emerged; and an investment demand for gold will soon arise.

On Friday June 6, 2014, the Inverse Market ETFs, as a group, traded strongly lower; these include XVZ, STPP, EUO, YCS, CMD, DNO, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM, These could be used selectively and under wise management to serve as the basis for collateral in a short selling investment strategy.

Thus it is failure of credit, and the death of currencies, that will cause the death of fiat wealth, which is defined as the combination of equity investments and credit investments. And as such, the short selling opportunity of a lifetime, in equity investments, is now. Better yet, an investment demand for gold will commence as investors seek safe investment in hard assets. One way to invest in gold is to start to dollar cost average into OUNZ, The Deliverable Gold ETF. The investor should start to dollar cost average into the purchase and possession of gold bullion.

The rally in Emerging Markets, EEM, such as TUR, THD, EWZ, GAF, IDX, EPHE, GXG, EGPT, and SCIN, that came via the pursuit of yield and the duration trade in Credit Investment is over, through, done, and over.

Since the beginning of 2014, the Japanese Topix, ITF, had been the worst performing stock developed stock market, as is seen in the ongoing Yahoo Finance chart of ITF, EZU, EEM, VTI, EPP, coming on debt deflation, as Investors went short the Yen, FXY, and long the Euro, FXE, driving the EUR/JPY, higher. Now with the death of currencies, it is time for all the other nations to experience debt deflation.

Bloomberg reports Shinzo Abe orders overhaul of Japanese Pension Fund’s Investments. The push to move the changes forward is good for the market,” said Masaru Hamasaki, a Tokyo based senior strategist at Sumitomo Mitsui Asset Management. “Revamping the allocations three months after the pension review came out will be quite a tight schedule, but if the prime minister has asked for this I think they’ll do it by then.”

Investors are watching for Japan’s cautious retirement-savings managers, led by the fund, to shift into shares as the Bank of Japan spurs inflation that risks eroding the value of bonds. The Topix index of equities slipped 5.3 per cent this year as of last week, adding pressure on Abe to prove his policies can spur a sustained economic recovery. Trust banks, which often buy and sell on behalf of pension investors, are putting the most money into local stocks in five years as foreigners sell, fuelling speculation that the fund is already buying.

The fund may change its strategy in August and putting 20 percent of its assets into local stocks would not be too much, Yasuhiro Yonezawa, who heads its investment committee, told the Nikkei this week. That compares with a current target of 12 per cent.

Trust banks made 250 billion yen in net purchases of Japanese equities last week, according to data from the Tokyo bourse. That was the most since the period ended March 27, 2009. The banks have added money to the stock market for five consecutive weeks as the Topix index climbed 2.7 percent and foreigners reduced holdings by 83 billion yen during the period.

“Given that it’s the biggest net purchase since stock prices plummeted during the financial crisis, you’d have to speculate that the fund or corporate pensions were doing the buying,” said Shoji Hirakawa, chief equity strategist at Okasan Securities. “It’s likely the fund is doing what it can to prepare for allocation changes. The market was expecting them to buy next fiscal year, but it looks like they’re already doing it.”

Trust banks have bought a net 574 billion yen of Japanese shares this year, while foreign investors sold 1.4 trillion yen, the TSE data shows. That contrasts with 2013, when Topix’s 51 per cent surge was accompanied by record foreign buying and the banks sold four trillion yen of shares.

The Topix slumped as much as 13 per cent this year up to an April 14 low as the yen strengthened and investor optimism about Abe’s revival strategies waned. The equity gauge has rebounded 8.8 per cent from that low as of Thursday. It remains the worst performer among developed markets.

2) … There be many new normals.

2A) …The new normal way of life is compliance to mandates of regional leaders.

Commodities, DBC, trading lower, and Aggregate Credit, AGG, trading lower reflect the reality that disinvestment out of debt trade investment and currency carry trade investments has pivoted the world out of the paradigm and age of liberalism into that of authoritarianism, where the Beast Regime rules.

This monster is completely different than the Creature from Jekyll Island; as it has feet of a bear, mouth of lion, and the stealth of a leopard, and is foretold to manifest most strongly out of Mediterrean, read Club Med, waves of sovereign insolvency, banking insolvency and corporate insolvency.

The former fiat of choice is being replace by the new fiat of diktat coming from the Beast Regime’s regional fascist leaders, which establishes regional security, stability and sustainability, and enforces debt servitude in each of the world’s ten regions, and throughout all of mankind’s seven institutions, this being foretold in Bible Prophecy of Revelation 13:1-4.

As investors derisk out of debt trades and deleverage out of currency carry trades, the Banker Regime’s dynamos of creditism, corporatism and globalism are winding down the fiat of credit and the fiat of currency; and the Beast Regime’s singular dynamo of regionalism is powering up the fiat of diktat and the fiat of debt servitude.

In an economic move establishing regional security, stability and sustainability, supply lines become regional replacing former global ones. Damien Cove of the NYT reports As Ties With China Unravel, US Firms Head to Mexico.

James Brewer of WSWS reports Michigan Senate Passes Detroit “Grand Bargain” Package. The legislation includes a financial oversight panel that will extend the bankers’ dictatorship over Detroit for at least another 13 years.

The new normal in the age of authoritarianism is that the word, will and way of fascist leaders directs economies. Bloomberg reports Obama Said To Propose Deep Cuts To Power Plant Emissions. Fox News reports Coal-state lawmakers rally against power plant emissions crackdown. Coal-state lawmakers, accusing President Obama of using a back door to impose strict emissions limits on power plants, are rallying to slam that door shut, claiming the plan would cost jobs and jack up electric bills. In Kentucky, West Virginia, and other states that rely on coal to fuel their own economies, and that help generate power for everybody else, officials vowed Monday to introduce legislation halting the newly announced EPA plan.

2B) … The new normal price system is the beastly price system.

Econbrowser posts Commodity Prices And Resource Scarcity. The technological advances that led to the broad trend of falling real food prices often seen in the graphs above are well understood. The Green Revolution, improvements in irrigation, fertilizer, pesticides, and hybridization, managed to keep significantly ahead of Malthus’s diminishing returns. One could make a case that Yamada and Yoon’s statistical trend lines, which see the world as still in the midst of a broad downward trend in the relative price of many agricultural products, will turn out to be a correct prediction of what we’ll see over the next decade.

I respond that the falling real food prices will increase, as the World’s Major Currencies, DBV, and Emerging Market Currency Prices, CEW, started to decline in May 2014, and it will take more of these to buy Agricultural Commodities, RJA, which are priced in US Dollars.

Econobrowser continues, The graphs below include a number of extractive commodities; for copper, tin, and lead, it’s more difficult to dismiss the price surge over the last decade as a temporary anomaly.

I respond that the price of Copper, JJC, has been inflated by liberal PBOC credit liquidity policies, by the China Shadow Banking practice of stockpiling copper as collateral for loans, and by ever increasing currency carry trades such as the EUR/JPY, until January 14, 2014, when it started to deflate.

Econobrowser concludes, There is no question that the relative price of any commodity is subject to competing long-run pulls from increasing marginal cost on the one hand and improving technology on the other.

I respond please consider that the relative price of commodities, especially agricultural commodities, is going to soar, as investors derisk out of debt trade investments and currency carry trade investments, and as authoritarianism’s singular economic dynamo of regionalism increasingly replaces liberalism’s three dynamos of creditism, corporatism and globalism.

A new price system is emerging; it will neither be afixed price system where prices are set by the government, nor will it be free price system; the new normal price system is the beastly price system, where prices operates on diktat money, and where prices are governed by the Four Horsemen of the Apocalypse, in particular, The First Horseman, and The Fourth Horseman; these are The Rider on the White Horse, seen in Revelation 6:1-2, who introduces regional governance via coup d’etats replacing democracies, and The Rider on the Pale Horse, seen in Revelation 6:7-8, who introduces economic deflation replacing economic inflation, the result of which is economic death replacing economic life.

Wikipedia relates “The fourth and final horseman is named Death. Known as “the Pale Rider“, of all the riders, he is the only one to whom the text itself explicitly gives a name. Unlike the other three, he is not described carrying a weapon or other object, instead he is followed by Hades (the resting place of the dead). However, illustrations commonly depict him carrying a scythe (like the Grim Reaper), sword or other implement.

The Rider on the Pale Horse introduced the beastly price system on Friday May 30, 2014, by forcing investors to sell commodity ETFs, DBC, and GSG, lower on May’s trade lower in the Major World Currencies, DBV.

Said another way, debt deflation, specifically currency deflation, coming at the hands of the currency traders, on fears that the world’s central banks’ monetary policies have crossed the rubicon of sound monetary policy and have made “money good” investments bad, has pivoted Commodities, DBC, GSG, lower in price, on lower Commodity Currencies, CCX, with the result that investors sold investments in Steel Producers, SLX, such as OSN, GSI, X, AKS, NUE, GGB, SID, MTL, PKX, Global Industrial Miners, PICK, such as VALE, RIO, BHP, Coal Miners, KOL, Uranium Miners, URA, and Rare Earth Miners, REMX.

Bond vigilantes and their partners, the currency traders, set the price system, with the result being economic deflation, as Jesus Christ as is presented in Revelation 6:6-8, has opened the Fourth Seal of the Scroll of End Time Events, and released the Rider of Pale Horse. A repeat of 1914 is underway, as Lord Grey famously said, “the lamps are going out all over Europe.” This time, it’s not a metaphor.

Ongoing currency carry trade disinvestment is going to be highly destructive economically. The result of debasement of the world’s currencies will be economic destabilization, economic deflation, and economic death.

Given currency deflation in the Euro, FXE, the British Pound Sterling, FXB, the Swedish Krona, FXS, and the Swiss Franc, FXF, as well as the India Rupe, ICN, and the Brazil Real, BZF, economic growth is impossible.

Economic growth was a largely a side benefit, that came from investment gains, flowing from the credit stimulus of Global ZIRP. Economic growth was a function of the investor pursuing investment gain in the bygone era of currencies, and the age of credit.

News reports illustrate economic death. BBC reports ‘Conflict Minerals’ Deadline Looms for US Technology Firms.

This inquiring mind asks what will become of the Alcoa Aluminum Ingots Manufacturing Plant, located in Ferndale, WA, given global debt deflation.

2C) … The new normal education system is the fascist education system

Nick Barrickman of WSWS posts New Orleans Recovery School District Set To Convert Entirely To Charter Schools. With the closing of its last five traditional public schools, New Orleans is set to become the largest city in the US with an all charter school district.

In 2010, the city was awarded $1.8 billion to renovate its schools as a part of the disaster assistance given by FEMA. One of the key stipulations of this funding permitted the city to construct new facilities which could then be handed over to private operators, rather than rebuild the remaining traditional schools. The Post story notes that many of these rebuilt schools have simply been given to charter operators free of charge.

The move to shutter the remaining traditional schools is unpopular with the city’s population; a recent poll conducted by the Cowen Institute for Public Education Initiatives at Tulane University showed that only 41 percent of New Orleans residents supported the move.

3) … Jane Stanton Hitchcock, relates Imagination Is The Key To Life.

News reports, books, literature, websites, television and radio programs, can inspire one to imagine worlds and people that do not exist, or they inspire one to properly perceive reality.

Blessed Economist posts Person: Imagination. The imagination is like the memory, but whereas the memory relates the past, imagination focuses on the future.

Dreams appear in our imagination. So do our daydreams. If they are from God, they can be powerful motivators. If they are from the devil, they can scare and cripple us.

The imaginations of evil men are full of evil. The Lord saw how great the wickedness of the human race had become on the earth, and that every imaginations of the thoughts of the human heart was only evil all the time (Gen 6:5). From their callous hearts comes iniquity; their evil imaginations have no limits (Ps 37:7). People who fill their imaginations with the benefits of evil will end up enjoying evil.

The spiritual powers of evil can put things into our imagination. When the devil appeared to Jesus, he may actually have appeared through Jesus imagination, because he does not have a physical body. We need to deny those false imaginations as soon as they come, by declaring the word of God.

When we are living in the Spirit, our imagination can perceive what is happening in the spiritual world. Understanding what is happening in the spiritual realms is really important for the Christian life. A few Christians perceive what is happening in the spiritual realms through their external senses. Most of us perceive it in through our imagination when the Holy Spirit displays what is happening there in our imaginations for us. More about this in Spiritual Realms.

Imagination creates empathy. If we can understand what life is like for another person, we can understand why they are behaving the way that we do. “Walk a mile in their shoes”. We should use our imaginations to increase our empathy for other people.

The imagination is a wonderful tool. We should use it for God, to increase our faith and hope, and grow our awareness of events in the spiritual realms.

Through my imagination, I see the Lord, as I listen to InVuBu posts of Lyrics By The Song Title: I See The Lord; and I also see Morpheus The God Of Dreams as I reflect throughout the day, who tells me “Be faithful unto death and I will give you the crown of life”. He does not look anything like a black man wearing sunglasses, but rather He is dark complected Mediterranean and has white flowing hair and red flaming eyes and is surrounded by shimmering leaves of light which are angels.

4) … Prophecy Signs of The Last Days.

4A) … A Prophecy Sign of the end times: Jerusalem The Burdensome Stone.

The prophecy sign of Jerusalem The Burdensome Stone, is found in Zechariah 12:3, ”On that day, when all the nations of the earth are gathered against her, I will make Jerusalem an immovable rock for all the nations. All who try to move it will injure themselves”

Ynet News reports US Congressmen Vow to Work to Keep Jerusalem Undivided.

But on the other side of the Middle East Divide, Hamas has acquiesced, that is has capitulated, that is has tacitly agreed, to recognizing Israel’s right to exist, by accepting the fascism of the Palestinian Authority’s technocratic governance, as Jerusalem Post reports Hamas Official: Formation Of Unity Government Is Surrender On Part Of Hamas

Reuters reports US Says To Work With, Fund Palestinian Unity Government. The United States said it plans to work with and fund the new Palestinian unity government formed after an agreement by the Fatah and Hamas factions, and Israel immediately voiced its disappointment with the U.S. decision.

Palestinian President Mahmoud Abbas swore in a unity government on Monday in a reconciliation deal with Hamas Islamists, who advocate Israel’s destruction.

The United States views Hamas as a “terrorist” organization and the U.S. Congress has imposed restrictions on U.S. funding for the Palestinian Authority, which typically runs at $500 million a year, in the event of a unity government.

Senior U.S. lawmakers said on Monday Washington should suspend aid to the new unity government until it is sure of the Islamist group’s commitment to pursuing peace with Israel.

In its first comment since the Palestinian government was sworn in, however, the State Department stressed that it regarded the new Cabinet as made up of technocrats and that it was willing to do business with it.

“At this point, it appears that President Abbas has formed an interim technocratic government that does not include ministers affiliated with Hamas,” State Department spokeswoman Jen Psaki told reporters at her daily press briefing.

“Based on what we know now we intend to work with this government but will be watching closely to ensure that it upholds principles that President Abbas reiterated today,” she said, referring to Abbas’ commitment to honor past peace deals and the principles underlying the peace process with Israel.

In Jerusalem, an Israeli official, speaking on condition of anonymity, said in a statement to reporters: “We are deeply disappointed by the State Department regarding working with the Palestinian unity government.”

Antiwar posts Israel to Build 3,300 Settler Homes in ‘Retaliation’ for PA Unity

4B) … A Prophecy Sign of the end times: The rise of the Ten Toed Kingdom Of Regional Governance and Totalitarian Collectivism.

The prophecy sign of the Ten Toed Kingdom is found in Daniel 2:25-45.

Robert Wenzel of EPJ posts Ron Paul is out with a video discussing a recent commentary written by neocon columnist Charles Krauthammer.

“Their enhanced partnership (that of China and Russia) marks the first emergence of a global coalition against American hegemony since the fall of the Berlin wall,” Krauthammer wrote of the deal, which will supply China with Russian gas for the next 30 years.

In response, Dr. Paul said in a video that the US is risking much more than Americans might realize by letting the China-Russia deal slip by. According to RP, the multi-billion-dollar agreements will not only cost the US its international influence in the long run, but will decimate the worth of the dollar. “We talked a lot over the years about military blowback: we do things and it comes back to haunt us and Americans ended up getting killed. But there is blowback that comes in different manner, and its economic blowback,” he said

Well yes, Dr. Paul has it correct. The China Russia Energy Deal just slipped by. The regional framework agreement births Eurasia as a region of economic governance where there are undollar bartering economic transactions. And via ECNS.CN The Renminbi Clearing Bank Opening In London This will be quite deflationary to the US Dollar. The China Russia Energy Deal is a fulfillment of the Prophet Daniel’s Statue of Empires, presented in Daniel 2:25-45, where the Two Iron Empires that have ruled the world since 1778, that is the British Empire and the US Dollar Hegemonic Empire, dissolve, and out of void a Ten Toed Kingdom with toes form in the world’s ten regions. These have a miry mixture of iron diktat and clay totalitarian collectivism, where Regional Economic Fascism replaces all current economic systems such as Crony Capitalism, European Socialism, Greek Socialism, Chinese Enterprise, and Communism; and is synonymous with the Beast Regime of Revelation 13:1-4. This governing substance cannot and will not last long.

As foretold in Daniel 7:7, the Wild Beast, the Fourth Beast of a one world government and a one world religion, will rise to govern all, by means of the word, will, and way, of the Sovereign, seen in Revelation 13:5-10, and the Seignior, seen in Revelation 13:11-18, who will provide the chargma money system, that is the 666 money system, where one is required to take the Sovereign’s Mark, seen in Revelation 13:18, in order to conduct any economic activity.

In related offshore investing news, courtesy of Dollar Collapse International Man posts 77,000 Firms Worldwide Sign Up For FATCA. And Daily Bell posts Facing The Invasive Onset Of GATCA, Take Human Action

Opposite Dr. Paul, on the left side of the political spectrum are the Progressives and the Liberals. Sociologist Daniel Little posts Basic Social Institutions and Democratic Equality. The author fails to perceive that God, that is the Sovereign Lord God of the Universe works through Empires, always has and always will; and that the paradigm and age of liberalism, meaning freedom from the state, is coming to an end and that of authoritarianism is commencing. The age of the investor is complete, and the age of the debt serf is underway.

Reuters reports Russia Faces Struggle to Wean Crimea Economy Off Ukraine Supplies

Haaretz reports Blowing Off World Outrage, Netanyahu Seeks New Sanctions Against Palestinian Govt

4C) … A Prophecy Sign of the End Times: A Strong Delusion

The prophecy sign of a strong delusion is found in 2 Thessalonians 2:11.

The IGM Economic Experts Panel presents The IGM forum polls responses to this statement: There is a social value to having institutions that issue liquid liabilities that are backed by illiquid assets. Not one of the economists polled disagrees.

An inquiring mind asks have you considered what constitutes an example of illiquid assets. Benson te provides a good example As Debt Surges, Malaysia’s Shadowy Fund Adds to Systemic Risk.

4D) … A Prophecy Sign of The End Times: The rise of the King of the South

The prophecy sign of the rise of the King of the South is found in Daniel 11:11 and Daniel 11:40-42 .

VOA News reports Egypt’s Sisi Wins 97 Percent; Iran Invited to His Inauguration

4E) … A Prophecy Sign of The End Times: The Mark of the Beast

The prophecy sign of the the Mark of the Beast is found in Revelation 13:18.

Bloomberg announces Amazon Planning to Unveil Smartphone to Vie With Apple’s.

One’s smartphone becomes one’s wallet. Mobile payment technology is now fully established and will serve as the basis for the 666 Charagma Mark of the Beast Money System.

All now be banked, the only unbanked are those without payments such as the genuine homeless.

Physical banks and physical credit unions are obsolete as tap mobile contactless payment technology, such as American Express’ Bluebird Checks with Mobile App, Tap2Pay™ and Tap & Go™, now provide instantaneous payments to others and vendors, and thus provides the foundation for the 666 Charagma Mark of the Beast Money System.

On Track Innovations Ltd announces oti Launches Trio Modular Payments Reader. The Trio Reader handles multiple payment methods in single solution for self service markets.

Secure ID News reports Retailers Create Custom Mobile Wallets With Airtag AIRSHOP enables retailers to launch their own self-branded mobile wallets for fast and advanced ordering, payment, loyalty, geo-location services and couponing.

Secure ID News reports The Macao Special Administrative Region of the People’s Republic of China Has Made The Switch To Contactless Smart Cards For Citizen ID. The card has many applications but one of the main reasons for the move to contactless was automated passenger clearance at the border. Contactless enables quicker throughput and transaction speed and also increases the lifespan of the card since a chip isn’t exposed.

4F) … Prophecy Sign of the End Times: Abnormal weather, drought, as well as rains, snow, and ice.

Zero Hedge posts US Q1 Productivity Misses; Plunges By Most In 6 Years. nonfarm productivity in the frost-bitten US in Q1 plunged at its fastest pace since Q1 2008.

4G) … Prophecy Sign of the End Times: Fraud

The Automatic Earth posts 3 Articles On The Mysterious Missing 100,000 Tons Of Copper And Aluminum that could have far reaching repercussions in commodities and financing markets. As if it’s not nuts enough to use metals as collateral for more metals, what if they were never even there? And how widespread is this?

Commodities Pivot Lower On Falling Currencies …. As The Banker Regime Produces Peak Money And Peak Wealth

May 31, 2014

This document can be found in Google Documents format here

 

Financial Market Report for the week ending May 30, 2018

 

1) … Article Summary: Peak money and peak wealth has been attained and is the culmination of the activity of Jesus Christ in the economy of God, that is His household stewardship of all things; and He has begun to pivot commodities lower on the debasement of fiat money.   

 

2) … As presented by the Apostle Paul in Ephesians 1:10, Jesus Christ is maturing and completing perfecting the paradigm and age of liberalism, which featured nation state central bank economic stimulus, much like a ship’s captain completes the manifest before setting sail. He will soon pivot the world into the paradigm and age of authoritarianism, which features regional fascist mandates.

 

As investors start to derisk out of money manager capitalism’s debt trades and currency carry trades, the world will enter the final phase of the business cycle known as Kondratieff Winter.

 

The age of currencies was fathered by Milton Friedman with his Free To Choose Manifesto, and the   the age of credit was fathered by Ben Bernanke with his QEs, Mario Draghi with his LTRO1, 2, and OMT, and Hiroki Kuroda, with this Abenomics.

 

Each of economic geniuses, Bernanke, Draghi, and Kuroda, provided his own credit stimulus for trust in risk on investing; these birthed and defined the investor as the centerpiece of economic activity.

 

God purposed for a debt based money system, and provided the Banker Regime to establish currencies and credit to achieve His purposes. It was by God’s design from eternity past, and ongoing fulfillment of His will that the central bank leaders’ provision of currencies and credit, provided seigniorage, that is moneyness, for investment gain, and very little stimulus for economic recovery since the Great Recession, as the investor was ordained from eternity past to be the centerpiece of economic activity.

 

God provided the Euro, FXE, as a platform for speculative leveraged investment purposes; its rise over the Yen, FXY, seen in the chart of the EURJPY rising, established great investment gain in currency carry trade investing, in companies such as Ireland’s ACN, MNK, RYAAY, JHX, COV, IR, Finland’s NOK, Netherland’s AER, LYB,  ENL, NXPI, UN, ST, PHG, Belgium’s DEG, BUD, France’s VE, SNY, ORAN, Luxembourg’s AGRO, Italy’s LUX, TI-A, and also debt trade investing, in Italy’s Debt, ITLY, and in European Financials, EUFN,  such as Spain’s SAN.

 

Jared Bernstein presents Hysteresis The phenomenon of cyclical weakness morphing into structural weakness.  I’ve got a very interesting piece on this coming out soon, if I may say so, and it shows the damage done to the growth rates on both our own and many other economies by the Great Recession and the series policy mistakes made in its wake. Not trying to be the skunk at the garden party here.  Just trying to keep it real and not lean too far over the skies as we glide over alleged green shoots that turn brown in the time it takes for a head fake.

 

Thus there was no fluke, error, or failure of policy, whereby employment and household debt relief were given little regard by the world central bank leaders in the Great Recession.

 

It’s important to reflect on the Club Med, that is PIGS, mentality and culture. Scott Sumner posts There is one thing we do know about Italy, the low level of per capita GDP (compared to France) is almost entirely due to an absolutely horrendous performance in southern Italy, where roughly 1/3 of all Italians live.  And there is a lot of circumstantial evidence that at least part of the difference between southern and northern Italy is cultural.  Not “cultural” in the sense that some people use the term (a code word for lazy.)  After all, southern Italians do quite well in America.  Rather cultural in the sense that everyone’s hobbled by a culture of corruption than no single Sicilian or Neapolitan is in a position to change. So I don’t believe you can think about France vs. the US without also thinking about southern Italy. That’s part of the rich mosaic that is the Welfare States of Europe (the WSE), just as South Dakota Indian reservations, and McAllen Texas, and rural Mississippi are part of the United States of America (USA), the world’s richest big economy.

 

Economics is defined as one’s life experience in sovereign money. Sovereign currencies, that is Major World Currencies, DBV, such as the Euro, FXE, began to trade lower in early May 2014; this loss of seigniorage communicates a historic dwindling of sovereign authority of the world’s democracies, and resulted in an unwinding of the Euro Yen Currency Carry Trade, that is EURJPY, which stimulated a sell out of nation investment in most of the peripheral Eurozone nations, specifically Portugal, PGAL, Italy, EWI, Ireland, EIRL, and Greece, GREK, but not Spain, EWP.

 

Out of soon coming global economic chaos, people will come to trust in new sovereign authority and monetary and economic policies of regional economic governance and schemes of debt servitude to establish regional security, stability, and sustainability, where the debt serf is the centerpiece of economic activity, and ever increasing poverty is the way of economic life.

 

Fiat money, defined as the combination of Major World Currencies, DBV, and Emerging Market Currencies, CEW, together with Aggregate Credit, AGG, will soon literally start dying. Out of soon coming Financial Apocalypse, seen in bible prophecy of Revelation 13:3-4, diktat money, defined as the mandates of regional fascist leaders for regional security, stability, and security, will underwrite all economic activity.

 

The Defensive Stocks, DEF, all of which are Dividend Payers, such as Insurance Companies, KIE, Health Care Providers, IHF, Global  Integrated Energy Companies, IPW, FILL, Real Estate, IYR, DRW, Global Agriculture, PAGG, Electric Utilities, XLU, PUI, Consumer Staples, KXI, and Global Utilities, DBU, are topping out, reflecting that the rally in stocks is coming to an end.

 

Soon the investor, most critically the fixed income investor will be going extinct, as investors derisk out of debt trade investments and currency carry trade investments.

 

The Precious Metal Commodities, JJP, were driven lower by the strong rally in credit sensitive stocks, and the trade lower in the Major World Currencies, DBV; both of which drove the Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, lower.

 

Global ZIRP has finally run its course, and as a result, the rotation out of High Beta Stocks, and into US Debt, such as US 30 Year Government Bonds, EDV, and US Ten Year Notes, TLT, and the pursuit of yield in High Yielding Debt, the proof positive of risk-on investing, as well as support for ongoing equity market investing and all credit market investing, is coming to an end.

 

The only safe haven investment will be in taking physical possession of, and safely storing, gold bullion; an investment demand for gold will soon commence on the failure of fiat money and fiat wealth which is defined as Equity Investments and Credit Investments.

 

The wisest investment one can is to start to dollar cost average investing in gold bullion. Buying gold bullion in price dips of gold will turn out to be outstanding investments as the price of gold will be going significantly higher on the soon coming utter failure of fiat money and fiat wealth.

 

The Apostle John relates in the opening remarks of the last book of the Bible, the contents of a dream given to him by angels while in his 90s, while living in exile on the Isle of Patmos, Revelation 1:1 “The Revelation of Jesus Christ, which God gave unto him, to shew unto his servants things which must shortly come to pass; and he sent and signified it by his angel unto his servant John”.

 

This inquiring mind asks, what must shortly come to pass? A global economic earthquake is imminent as investors will soon start to massively derisk out of debt trades, and deleverage out of currency carry trades, in Equity Investments, as well as Credit Investments, as the wisest of investors no longer trust in the monetary authority of the world central banks to provide investment gains and global growth.

 

The death of fiat money has commenced, seen in the Euro, FXE,  and European Credit, EU, trading lower, causing debt deflation in periphery Europe, specifically Portugal, Italy, Ireland, and Greece, but not Spain, trading lower.

 

Soon, the death of all fiat money will terminate the Banker Regime; and introduce the Beast Regime of Regional Governance and Totalitarian Collectivism, seen in bible prophecy of Revelation 13:1-4, which features diktat money.

 

Stockcharts.com reports The Volatility Index Sets New 52 Week Low, yet the Volatility, XVZ, traded slightly higher, as many investors are buying volatility ETFS.

 

3) … The short selling opportunity of a lifetime has arrived. Given that the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened at the end of the week of May 30, 2014, and given that Equity Investments are terrifically overbought, and given that US Government Debt, EDV, TLT, is approaching overbought, the short selling opportunity of a lifetime has arrived.

 

Just as one buys into dips in a bull market one sells into pips in a bear market; for those inclined to trade, now is the time to start short selling.

 

Global Financial Institutions such as Japan’s IX, NMR, Brazil’s BSBR, ITUS, Mexico’s BSMX, India’s IBN, HDB, the UK’s RBS, LYG, Canada’s BNS, TD, CM, BMO, Chile’s BCH, BCA  Spain’s STD, and Argentina’s BFR, will be trading strongly lower, leading Nation Investment, EFA, lower, as debt deflation picks up at the hands of the currency traders and the call of the bond vigilantes, and thus are excellent short selling opportunities .

 

Many short selling opportunities exist, in Savings and Loans, BOFI, in Asset Managers, PFG, AMP, BEN, VOYA, CNS, IVZ, LM, BR; in Retail, RAD, WAG; in Semiconductors, RFMD, TQNT, BRCM, AMKR, MU, GTAT, AVGO, RMBS, MXIM, RMBS, ISIL, IDTI, CAVM, TSM, INTC, FCS, NXPI, CODE, STM, MPWR, QCOM, ISSI, PLAB, AMD;  in Electronics, MXWL, MSI, AME, APH; in Data Storage, SNDK, WDC; in Basic Materials, AOS, EXP, GSM, ZINC, KALU; in Automobiles, F; in Aerospace and Defense, BA, LMT, GD, UTX, NOC, RTN, COL, TXT, BEAV, ERJ, LLL, HRS, ESL, MOG-A, HII, CW, VSEK; in Railroads, TRN, UNP; in Real Estate Development, TPL, HHC; in Rental and Leasing, URI, HEES; in Services, SNX, BAH, EEFT, LABL, HURN, RIES, RXPC, TTEC, EPAM, STB, SCOR, ASGN, KFY, ROL, CTAS; in Chemical Manufacturers, DOW, LYB, DD, CE; in Metal Manufacturing, AA; in Entertainment, DIS, TWX; in Telecom Services, VZ; in Airlines, DAL; in Transportation, FDX; in Consumer Staples, REV, SAFM, EL, PEP, GIS, IBA, DEO, TAP, ADM, CAG, KRFT, KMB, INGR, MJN, MDLZ, IFF, in Industrial Manufacturing IR, GE, MMM, CMI; in Technology, AAPL, in Nasdaq Internet, EQIX, NFLX, SATS, CMCSA, VIAB, PCLN, BIDU, GOOG, MSFT, INTU, AMZN,  in Specialty Chemicals, PPG; in Cloud Computing, XRX, ORCL; in Medical Devices, ABT, COV, in Semiconductor Equipment, AMAT; in Credit Services, MA, V; in Packaging, GPK; in Energy Production, EOG, COG, HP, in Energy Service, HAL, SLB; in Energy Production, COP; in Networking, CSCO; in Circuit Boards, FLEX, AVGO; in Biotechnology, GILD, CELG, BIIB; in insurance Companies, KIE, FNF, FNHC, UIHC,AFH, AFSI,; even in Small Cap Pure Growth, RZG, GSAT, SPB, NPO, TOWR, TRX, AAON, NTK, NP, MEAS, CIR, CFX, PKOH, AGX, TPC; and in Small Cap Pure Revenue, RZV, MCO, POOL, SIX, PAG, SAH, ABG, KAR, AN, LAD.

 

Those who are into short selling may want to consider using a portfolio of Inverse Market ETFs as basis for collateral; these might include STPP, XVZ, EUO, YCS, CMD, DNO, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, as well as, HDGI, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, which must be managed closely as they are volatile, and are not held to term but are traded on waves of buying and selling.

 

Efficient management of such a portfolio should produce a daily gain of 0.2%, and a weekly gain of 0.1%, before trading fees in and out of these ETFs.

 

The case for short selling comes from the fact of increased global insecurity. Elaine Meinel Supkis writesNATO Approves Of Full Military Attacks On Separatist East Ukrainians After Fake Election: Many Killed. Our bankrupt empire runs riot right on the front doorstep of Russia. This inquiring mind asks, when and how, that is in what way will war with Russia, and/or China breakout, and where will it erupt? Will it occur in Syria? or will it be in the Ukraine? or will it be in the Asia seas? It is apparent that the Ukraine is being divided up into Crimea becoming part of Eurasia, and Eastern Ukraine and Western Ukraine, becoming part of the Eurozone.

 

4) … On Wednesday, May 28, 2014, Macronomy reports Japanese pension fund buyers purchase US Debt, as they perceive them to be a safe haven investment. They bought the longer duration ones rather than the shorter duration ones, plowing greater sums into the 30 Year US Government Bond, EDV, than the US Ten Year Note, TLT.

 

There was a strong trade higher in Aggregate Credit, AGG, on May 28, 2014. The chart of the Interest Rate on the US Ten Year Note, ^TNX, shows an awesome trade lower from 2.52% to 2.44%, the lowest rate in 2014. Aggregate Credit, AGG, soared beyond its May 15, 2014, high, being driven parabolically higher by 30 Year US Government Bonds, EDV, US 10 Year Government Notes, TLT, and Mortgage Backed Bonds, MBB.  Junk Bonds, JNK, traded higher than their previous high which occurred on May 16, 2014. Credit Investments are near to topping out.

 

Bloomberg reports Bond Surge Worldwide Drives Index Yield to One-Year Low. A worldwide bond-market surge pushed yields to the lowest levels in a year on growing evidence central banks can keep stimulating economic growth without igniting inflation. Treasury 10-year note yields, fell to the least since June.  A rally yesterday drove the yield on the Bloomberg Global Developed Sovereign Bond Index to 1.28 percent, the lowest since May 2013. Australia’s (GACGB10) 10-year yield dropped to an 11-month low, Japan’s slid to the least in 12 months, while European bond yields were close to the lowest since the formation of the region’s shared currency. The U.S. sold $29 billion of seven-year notes at the lowest yield since October.

 

The dramatic flattening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, flattening, highlights the investors perceived concept of US Treasuries as “safe assets”.

 

Risk aversion stimulated the currency traders to sell the Major World Currencies, DBV, such as the British Pound Sterling, FXB, the Australian Dollar, FXA, and the Euro, FXE, as well as a whole host of Emerging Market Currencies, CEW, and bought the Japanese Yen, FXY.

 

The chart of the major currency crosses GBP/JPY, the AUD/JPY, and the EUR/JPY, all manifested lower; yet surprisingly there was only a slight follow through trade lower in Equity Investment, VT, and only a slight follow through trade lower in Nation Investment, EFA, and Small Cap Nation Investment.

 

Rudolf E. Havenstein posts The US Has Been Devaluing The Dollar Almost Continually For Over 100 Years.

 

Devaluation of the US Dollar intensified when currencies were established to float as President Nixon embraced the Milton Friedman Free to Choose, Floating Currency Manifest in 1971. The US went off the gold standard and the combination of US Dollar Hegemonic activity and Nation Investment birthed the investor as the centerpiece of economic, where fiat money has produce fiat wealth.

 

Now with currencies sinking at the end of May, 2014, the US will no longer be the world’s Hegemon, and the investor will be going extinct.

 

The world is at a historic inflection point. The death of currencies, such as the Euro, FXE,  is underway, on the failure of trust in the monetary policies of the world central banks to stimulate equity investment growth and global economic growth, with the result that the US Dollar, $USD, UUP, is trading somewhat higher.

 

The trade higher in US Dollar, $USD, UUP, coming largely from a purchase of the 30 Year US Government Bonds, EDV, and 10 Year US Notes, TLT, caused Gold, GLD, which is both a currency and a commodity, to trade strongly lower, falling out of a consolidation chart pattern. Its lower price presents a buying opportunity, as it is in a bull market, and will be in demand as fiat money and fiat wealth is now in a dying process. One should begin dollar cost averaging a purchase of gold bullion.

 

The trade higher in the US Dollar, $USD, UUP, and the trade lower in the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, on May 28, 2014, means a loss of the US Dollar as the world’s reserve currency, and as such the US Dollar Hegemonic Empire is starting to crumble.

 

This is foretold in bible prophecy of Daniel 2:25-45, where the two greatest global hegemonic empires of all time, these being the British Empire and the US, will collapse, and out of their ruin, a Ten Toed Kingdom of regional fascist government, with toes of iron diktat and clay totalitarian collectivism, will rise as a global empire to subdue mankind.

 

Inasmuch as currencies are the wheels upon which economics operate, currency devaluation at the hands of the currency traders, is totally destructive to all current economic systems, such a Crony Capitalism, European Socialism, Chinese Capitalism, and Russian Communism.

 

The three dynamos of creditism, corporatism and globalism are winding down on the destruction of the fiat money used for investment gain. And the singular dynamo of regionalism is establishing diktat money, where regional fascist leaders issue economic mandates for regional security, stability and sustainability.

 

The extinction of the investor has commenced, at the hands of the currency traders and at the club of the bond vigilantes; the first to be butchered are the investors in periphery Europe, that is  Portugal, PGAL, Italy, EWI, Ireland, EIRL, Greece, GREK, but not Spain, EWP. The birth of the debt serf has commenced.

 

Ever since Milton Friedman came out with the Free To Choose doctrine of floating currencies, the world has been operating on a debt based money system, and to the dismay of Austrian Economist, not a hard asset money system.

 

At the end of the age of liberalism, meaning freedom from the state, debt becomes money, as the fiat, that is the rule of the Banker Regime is coming to a climax.  And as is seen in May 28, 2014 financial marketplace trading, with 30 Year US Government Debt, EDV, and US Ten Year Notes, TLT, rising strongly in value, debt has become wealth.

 

The Distressed Investments, traded by the Fidelity Mutual Fund, FAGIX, have increased in value ever since the US Fed traded out “money good” US Treasuries for the worst of debt in QE1 in 2008, with the aim of restarting financial marketplace investing and regenerating the global economic system.

 

The US Fed’s monetary policies and the Banker Regime’s policies of credit choice were stunningly successful, in that they have produced terrific Equity Investment, VT, and Credit Investment, AGG. On May 28, 2014, the world is attaining peak wealth, it is an awesome moral hazard based wealth.

 

As the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, has flattened, seen in the Flattner, ETF,  FLAT, trading higher in value, Gold, GLD, has been pummeled, and Distressed Investments, FAGIX, and Junk Bonds, JNK, have come to be established as the most valued of all investments.

 

Soon physical possession of gold bullion will emerge as the only “safe asset”, as the fiat of the Banker Regime fails, as investors derisk out of currency carry trade investments and debt trade investments.

 

The new fiat of diktat coming from the Beast Regime’s regional fascist leaders, will emerge to establish regional security, stability and sustainability, and enforce debt servitude in each of the world’s ten regions, and throughout all of mankind’s seven institutions, this being foretold in Bible Prophecy of Revelation 13:1-4.

 

This monster is completely different than the Creature from Jekyll Island; as is has feet of a bear, mouth of lion, and the stealth of a leopard, and is foretold to arises out Mediterrean, that is Club Med, waves of sovereign insolvency, banking insolvency and corporate insolvency.

 

We see news of its rise in the Reuters report ECB Goes On 300 Million Euro Spending Spree For Bank Watchdog. ECB will spend 300 million euros this year and next in building an elite group to monitor top banks, with the lion’s share spent on generous pay for many of its staff.

 

Not only is the death of currencies underway, but the failure of trust is underway as well.  While there was only a slight follow through from the sale of the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, seen in only a slight trade lower in Equity Investment, VT, there was a sell in Regional Banks, KRE, beginning in April 2014, led by the weakest of banks, such as, MBFI, BBNK, UMBF, ABCB, SASR, ABCB, FRME. One reason for the trade lower in Regional banks, KRE, and its follow through into the US Small Cap Stocks, IWM, is that bankers do not like to see a flattening yield curve, and the other reason is that investor’s greed has turned to fear, specifically fear that regional banks can no longer serve as a transmission vehicle for the US Fed’s monetary policies.

 

In summary of financial market place trading, on Wednesday May 28, 2014,  US 30 Year Government Bonds, EDV, US Ten Year Notes, TLT, and Mortgage Backed Bonds, MBB, traded higher, as the Benchmark Interest Rate, ^TNX, closed at 2.44% in a process of coming to establish peak credit wealth, AGG.

 

If one is invested in a bond fund, then one is jubilant, as these have soared terrifically higher since the first of 2014. For example, the PIMCO Long-Term US Government C, PFGCX, has returned 8.9% this year, and at the same time yields 1.8%.

 

Investment manage Scott Grannis posts Onward and Upward. The market capitalization of global equity markets is now at a new all-time high, having gained $38 trillion from the March 2009 low. These are huge numbers, considering that the total market cap of the U.S. equity market is currently almost $23 trillion according to Bloomberg. Eurozone equities have been rising in line with the ongoing recovery in  U.S. equities for the past two years. In fact, Eurozone equities have recorded outsized gains over the past two years: the total return on the S&P 500, SPY, is 51%, while the Euro Stoxx 50 Index, FEZ, has posted a total return of 77%

 

And AEI author Jonathan Buchleiter posts A Call For Reform Of Conservative Thinking: A manifesto to rebrand the Republican Party to help the middle class attract voters.  In the YG Network’s new book “Room to Grow: Conservative Reforms for a Limited Government and a Thriving Middle Class,” Yuval Levin of National Affairs and Peter Wehner of the Ethics and Public Policy Center called for policymakers to look forward rather than fight past battles. Levin described how experimentation, evaluation, and evolution are essential to successful policies. The YG Network’s Reihan Salam advocated for a comprehensive rethinking of higher education to address ballooning tuition costs. And AEI’s Ramesh Ponnuru and Ross Douthat of The New York Times argued that conservatives can expand their electorate by demonstrating how their policies will enable Americans to prosper.

 

And Cecchetti & Schoenholtz post Economics Helps People Live Better Lives.

 

I respond to all three, that as presented by the Apostle Paul in Ephesians 1:10, Jesus Christ developed and has now matured the paradigm and age of of liberalism, which is defined as freedom from the state.

 

Beginning with the creation of the Creature from Jekyll Island, He perfected the Banker Regime, with its monetary policies of investment choice and schemes of credit, to produce peak prosperity and peak wealth.

 

Mankind’s peak economic experience has been attained, it came via the chieftain geniuses at the US Fed, the ECB, and the Bank of Japan, via their provision and enforcement of Global ZIRP that began with QE1 and TARP

 

Now, not only is the death of currencies underway, as is seen in the Major World Currencies, DBV, such as the Euro, FXE, and the Emerging Market Currencies, CEW, trading lower in value; the failure of credit, that is failure of trust in the Banker Regime is underway, and is seen in the Floating Rate Note, FLOT, paying 0.41%, starting to trade lower in value on May 28, 2014.

 

Of note, European Credit, EU, has traded lower in value, as Deutsche Bank posts in PDF document concerns over European social turmoil: the eurosceptic parties increased their share substantially, but winning parliamentary representation is not equivalent to gaining actual political influence.

 

As currency traders force derisking out of debt trades and deleveraging out of currency carry trades, by selling the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, and as the bond vigilantes force derisking out of credit investments, by calling the Benchmark Interest Rate, ^TNX, higher from 2.44%, both fiat money and fiat wealth will tumble, and being unable to underwrite safe assets, democratic nation state governance will crumble.

 

Soon, as is presented in Revelation 13:3-4, out of a global credit bust and financial system breakdown, known as Financial Armageddon, leaders will meet in summits to renounce national sovereignty, and to announce regional pooled sovereignty, and to appoint regional fascist leaders who direct regional economies in  economic policies of regional economic governance, and in schemes of debt servitude, and fully birth the debt serf as the centerpiece of economic activity. Welcome to the age of diktat and the era of debt servitude, where diktat money replaces fiat money.

 

5) … On Thursday, May 29, 2014,  risk on investing continued as Nation Investment, EFA, traded to a new all time high (up 3.4 YTD) as Gulf States, MES, Turkey, TUR,Singapore, EWS and Singapore Small Caps, EWSS, traded to new rally highs; Australia, EWA, and Argentina, ARGT, traded strongly higher; while Egypt, EGPT, Vietnam, VNM, and the Philippines, EPHE, traded lower from their rally highs, thus evidencing as market top is being achieved; other evidence of a stock market top is seen in the ratio of Stocks, VT, relative to Aggregate Credit, AGG, VT:AGG, topping out in value.

 

World Stocks, VT, and the S&P 500, SPY, (Up 4.1% and 4.6% YTD respectively) traded to new all time highs as Solar Energy, TAN, Energy Production, XOP, Energy Service, OIH, Food & Beverage, PBJ, Social Media, SOCL, Nasdaq Internet, PNQI, Cloud Computing, SKYY, Design Build, FLM, Internet Retail, FDN, Automobiles, CARS, Networking, IGN, Consumer Staples, KXI, Transportation, XTN, Biotechnology, IBB, Retail, XRT, and Semiconductors, SOXX, drove strongly  higher.

 

The two three investment sectors are Transportation, XTN,  up 13.5% YTD, Semiconductors, SOXX, up 12.5% YTD, and Energy Service, OIH, up 10.3% YTD.

 

Dividends Excluding Financials, DTN, traded to a new all time high; up 6.5% YTD

 

Global Financials, IXG, traded to a new all time high; up 2.2% YTD

 

In Yield Bearing Investments, Global Real Estate, DRW, Global Utilities, DBU, Preferred Financials, PGF, Shipping, SEA, Global Infrastructure, IGF, traded to a new all time high, and European Small Cap Dividend, DFE, Australia Dividend, AUSE, traded strongly higher in recovery from a sell-off.

 

Closed End Funds, GCE, traded to a new rally high; up 8.3% YTD

 

Aggregate Credit, AGG, traded unchanged at its rally highs as Emerging Market Bonds, EMB, and Junk Bonds, JNK, rose strongly higher, pressing on to new rally highs.

 

The bull market is acting like a bull market and in the process, peak fiat money and peak fiat wealth was achieved on Thursday, May 29, 2014, this being conveyed in the chart of Call Write Bonds, that is convertible securities, CWB, establishing a double top high. Other evidence of peak economic experience comes from Ludwig von Mises which posts The New Skyscraper Curse. And the high PEs of ETFs evidence a market top; these include the debt trades of Industrial Office REITS, FNIO, with a PE of 45, and Residential REITS, REZ, with a PE of 38.

 

The Nasdaq, QTEC, QQQ, rally is over as is seen in the strong rise in Netflix, NFLX,  and in Biotechnology leaders GILD, CELG, BIIB, coming to a screeching halt.

 

 

6) … On Friday May 30, 2014, the commodity ETFs, DBC, and GSG, pivoted lower on May’s trade lower in the Major World Currencies, DBV, and Emerging Market Currencies, CEW, with the result that investors sold investments in Steel Producers, SLX, such as OSN, GSI, X, AKS, NUE,  GGB, SID, MTL, PKX, Global Industrial Miners, PICK, such as VALE, RIO, BHP, Coal Miners, KOL, Uranium Miners, URA, and Rare Earth Miners, REMX.

 

The Commodity ETFs, DBC, and GSG, pivoted lower on Friday May 30, on the trade lower in the Major World Currencies, DBV, and Emerging Market Currencies, CEW, that occurred during May 2014. This loss of investment value is the birth pains of the new normal of destructionism replacing inflationism; and heralds that the paradigm of authoritarianism will replace that of liberalism. Thus  commodity price deflation came as the result of currencies trading lower during the month of May 2014.

 

The South African Rand, ZAR, dropped strongly lower stimulating a trade lower in South Africa, EZA. The Brazilian Real BZF, traded lower stimulating Brazil’s Integrated Energy Company, PBR, Brazil Financials, BRAF, and Brazil to trade lower. The India Rupe, ICN, traded lower, stimulating India Earnings, EPI, and India, INP, to trade  lower.  South Korean, Steel Producer, PKX, Electronic Manufacturer, LPL, Bank, SHG, KB, and Telecom Provider, KT, traded lower not on South Korea Won devaluation, but rather on Commodity, DBC, and GSG, deflation, which in turn stimulating South Korea, EWY, to trade lower.

 

Emerging Markets, EEM, traded lower as Indonesia, IDX, IDXJ, Philippines, EPHE, Egypt, EGPT, Russia, RSX, ERUS, Emerging Europe, ESR, Emerging Africa, GAF, Chile, ECH, Mexico, EWW, Turkey, TUR, traded lower.

 

The loss of Brazil’s, India’s, and South Korea’s seigniorage is an investment coup d etat, coming from the ever increasing power of global investment destructionsism, which is replacing inflationism.

 

Ongoing currency carry trade disinvestment is going to be highly destructive economically. The result of debasement of the world’s currencies will be economic economic destabilization and the much feared economic deflation.

 

Given currency deflation in the Euro, FXE, the British Pound Sterling, FXB, the Swedish Krona, FXS, and the Swiss Franc, FXF, as well as the India Rupe, ICN, and the Brazil Real, BZF, economic growth is impossible.

 

Economic growth was a largely a side benefit, that came from investment gains, flowing from the credit stimulus of Global ZIRP.  Economic growth was a function of the investor pursuing investment gain in the bygone era of currencies, and the age of credit. One follow the ongoing collapse of currencies with thisFinviz Screener of leading currencies.

 

Austrian economist Mike Mish Shedlock writesEmerging Fed Policy If employment growth stalls, tapering will slow or halt. Long-term, hikes are longer off than most realize. Also, the Fed will never sell anything. Assets will be held to term.

 

Under the power of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note,^TNX, and its enforcing authority of The Rider on the White Horse, galloping with greater intensity over planet earth, seen in Revelation 6:1-2, the bond vigilantes, not the Fed, has been in control of interest rates beginning in May of 2013, and will continue to be hiking interest rates, and that at a rather quick pace.

 

This inquiring mind asks, just exactly who are the bond vigilantes? It is the Primary Dealers!!! And of note, it is these who hold tremendous amounts of Interest Rate Swaps, literally given to them by the US Fed, as part of an incentive to sell US Debt under POMO. So not only did the Primary Dealers get an a cut on issuing of bonds, they got deferred payment in terms of bets against bonds!

 

Financial Post reports Mohamed El-Erian in Bloomberg News reports “Judging from data provided by the Commodity Futures Trading Commission, the movements in both rates and flows are catching many professional traders by surprise. Despite some recent repositioning, the net short position of non-commercial investors in 10-year Treasuries is the biggest in two years, meaning speculators have made bets designed to profit from an increase in yields and related outflows. Dealers are similarly positioned: Their net short in the largest in almost a year”.

 

As is seen in the trade lower in Portugal, PGAL, Italy, EWI, Ireland, EIRL, Greece, GREK, but not Spain, EWP, the failure of credit, that is trust in the monetary policies of the world central banks’ monetary authority has commenced, and will be evidenced by Global Financials, IXG, and Dividends Excluding Financials, DTN, Nation Investment, EFA, and World Stocks, VT, trading lower in value.

 

And the failure of trust in the Banker Regime is seen in Commodities, DBC, and GSG, pivoting lower in value on May 30, 2014, which has begun to terminate the age of credit and the era of currencies, and which is starting to birth the age of debt servitude and the era of diktat.

 

Economics is defined as one’s life experience in sovereign money and sovereign authority. With the ongoing trade lower in Major World Currencies, DBV, and a sustained trade lower in Emerging Market Currencies, CEW, a new sovereignty, that is the sovereignty of regional economic governance will emerge; and it will provide new sovereign money, that being diktat money to replace fiat money.

 

Out of a soon coming global credit crisis and worldwide financial system breakdown, known as Financial Armageddon, foretold in Bible prophecy of Revelation 13:1-4, nation state leaders will meet in summits to renounce national sovereignty, and to announce regional pooled sovereignty, and to appoint regional fascist leaders whose mandates will establish regional security, stability, and sustainability.

 

Carmax, KMX, traded lower, distinguishing itself as a loss leader amongst its peers and among Small Cap Pure Value Stocks, RZV, as is seen in the ongoing Yahoo Finance Chart of PAG, SAH, ABG, KAR, AN, LAD, and KMX. The auto dealers as a group have been the very definition of risk-on investing as well as the definition of the investor, not employment, not economic renaissance, as the centerpiece of economic recovery; this is confirmed in the My Budget 360 report Non Working America: Those Not In The Labor Force Up By 12,000,000 Since Recession Ended.

 

Clearly the investor was brought to the forefront of economic action by the US Fed’s monetary policies and schemes of credit stimulus. The economy existed for  the investor, and for the purpose of developing a moral hazard based prosperity. Spectacular investment results came to those who understood that Ben Bernanke’s Cool Aid would be the Juice of Juice and the Elixir of Stock Jockeys. The chart of the Small Cap Pure Value Stocks, RZV, shows these credit intensive stocks in the middle of a broadening top candlestick pattern; of which Street Authority relates, When you see the broadening top, the market will eventually drop.

 

Now with destructionism replacing inflationism, the debt serf will become the centerpiece of economic action; and all economic resources will be centered upon him.

 

South Africa, EZA, and South Korea, EWY, traded lower. Emerging Markets, EEM, traded lower as Indonesia, IDX, IDXJ, Philippines, EPHE, Egypt, EGPT, Russia, RSX, ERUS, Emerging Europe, ESR, Emerging Africa, GAF, Chile, ECH, Mexico, EWW, Turkey, TUR, Brazil, EWZ, EWZS, and India, INP, traded lower.

 

The South African rand dropped 2.6% this week, stimulating a 4.2% trade lower in South Africa, EZA.  Brazil’s Integrated Energy Company, PBR, and Brazil Financials, BRAF, traded lower on a lower Brazilian Real, BZF, and India Earnings, EPI, traded lower on a lower India Rupe, ICN. And South Korean, Steel Producer, PKX, Electronic Manufacturer, LPL, Bank, SHG, KB, and Telecom Provider, KT, traded lower not on South Korea Won devaluation, but rather on Commodity, DBC, and GSG, deflation. The loss of South Korea’s seigniorage is an investment coup d etat, coming from the ever increasing power of the First Horseman of the Apocalypse, as is seen in Revelation 6:1-2.

 

The WSJ reports Moody’s Warns on EU New Banking Rules. Rating Agency Says Directive Could Leave Stakeholders Vulnerable to Banking Crises. Moody’s Investors Service Inc. has become the latest of the three big debt rating firms to warn that new European Union rules could make stakeholders more vulnerable to losses in any future banking crisis. In response to the EU’s so-called Bank Recovery and Resolution Directive, under which shareholders, bondholders and some depositors may have to stomach big losses or commit to so-called bail ins to help rescue ailing banks, Moody’s has cut its long-term rating outlook on 82 European Banks, EUFN, to negative.

 

Reuters reports Israel Limits Cash Transactions Between Businesses To $1,400. Nation vows to fight money laundering and tax evasion. And Israel Today reports Israel Eyes Becoming a Cashless Society. A special committee headed by Prime Minister Benjamin Netanyahu’s chief of staff, Harel Locker, has recommended a three-phase plan to all but do away with cash transactions in Israel. The motivation for examining a cashless economy is combatting money laundering and other tax-evasion tactics, thereby maximizing potential tax collection and greatly expanding the tax base. This is important considering the enormous strain put on Israel’s national budget by the army, healthcare system and other public services. The committee estimated that the black market represents over 20 percent of Israel’s GDP, and cash is the facilitating factor. Cash enables tax evasion, money laundering and even financing terrorism.

 

7) … Signs of headline inflation are emerging. Headline Inflation is a result of a steepening yield curve, as well as currency deflation, and can be present even in economic deflation.

 

The chart of the Steepner ETF, STPP, reflects a slight steepening in the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX; it is out of this dynamic that headline inflation will eventually occur.  And headline inflation will increase as formerly sovereign currencies buy ever increasing Dollar denominated commodities.

 

The chart of the ratio of Long Term Tips, LTPZ, relative to the US Ten Year Notes, TLT, that is LTPZ:TLT, communicates that bond market investors expect price inflation to occur; and the Proshares UltraPro 10 Year TIPS/TSY Spread,UINF, is trading higher confirming the expectation of inflation on the failure of credit. Headline Inflation is seen in the Reuters reportConsumer Prices Post Biggest Gain In 10 months.

 

8) ..Brad Delong asks What Do We “Deserve” Anyway?  I relate that news reports document that there was a strong populist vote for new leadership in the Eurozone. voters in the EU have called for a break from past policies; the Europeans believe they deserve better;  yet strangely in their call of change, the European Debt Crisis has fallen from the public’s mind

 

The Telegraph posts The Race Is Wide Open For The European Commission’s Top Job. The lesson is simple: offer voters a binary choice between “more Europe” and “no Europe”, and eventually they will choose the latter. The answer must be sweeping reform.

 

Peter Schwarz of WSWS posts The European Elections And The Crisis Of The EU.  The SEP and PSG participated in the European elections in order to provide a perspective for the coming class battles and build sections of the International Committee of the Fourth International throughout Europe.

 

WSWS correspondents post Participants Speak At PSG’s Eve Of Poll Election Meeting.  The PSG were the only ones “who focused their election campaign on the danger of war,” a participant told the WSWS.

 

Alejandro Lopez of WSWS posts Spain’s Major Parties Hammered In European Elections. The ruling right-wing Popular Party (PP) and the opposition Socialist Party (PSOE) both had their worst results since the first elections in post-Franco Spain. And Jordan Shilton of WSWS posts Ireland’s Governing Parties Punished In Local And European Elections. The most significant result was the collapse of support for the Labour Party and the resignation of its leader.

 

Reuters posts Populist Advances Set To Hobble EU Integration. Tuning gains by anti-EU and populist parties in the European Parliament elections will prevent any new treaty on deeper Eurozone integration for the foreseeable future and may tilt Europe’s economic policy mix more towards expansion.

 

James G. Neuger of Bloomberg posts Protest parties racked up gains across the 28-nation European Union in elections to the bloc’s Parliament, turning the assembly designed to unite Europe into an echo chamber for politicians who want to tear it apart. The wave hit hardest in France, Greece and the U.K., undermining the leaders of those countries and making it more difficult to steer the EU as a whole. In all, protest parties won 30% of the Europe-wide vote, up from 20% in the current Parliament. Political forces suspicious of the U.S. made inroads across the continent, threatening to snag Trans Atlantic Trade talks the EU hopes will spur an economy struggling with the after-effects of the euro debt crisis. The U.K. Independence Party, which wants to yank Britain out of the EU, won the election in Britain, beating Prime Minister David Cameron’s Conservatives into third place. The protest vote ‘will have a huge impact on the parties and policies back home,’ said Pieter Cleppe, head of the Brussels office of U.K.-based think tank Open Europe. ‘They will make it harder to centralize powers in the EU, especially when it comes to managing the euro crisis.’

 

Bruegel posts New European Leadership Needs To Focus On Growth The EU and in particular the euro area suffer from two key problems.Growth and job creation is unsatisfactory and one can therefore not say that the crisis is over.The governance of the European Union is still far too complicated and ineffective to address crises and respond to citizens’ needs.A key message and mandate EU leaders should give to the post-election EU would therefore be to focus on what can actually be accomplished. The new European leadership consisting of the President of the European Commission, the President of the European Council and the President of the European Parliament should be able to act forcefully on growth. This will require the three individuals and their institutions to work together effectively. They will have to constantly remind the national leaders about the importance of enacting national reforms that not only create jobs but are also consistent with the prerogatives of monetary union. Putting public finances on a sound footing is one of the many challenges. But without a European growth initiative it will be hard to deliver on domestic fiscal targets. Therefore, the new EU leadership should develop a convincing European growth strategy.

 

I believe that we deserve that God fulfill his word of prophecy as presented in Revelation 13:5-10, which presents there is waiting in the wings of Europe stage, the most capable of sovereigns, perhaps this one is Jean Claude Juncker.  Out of the European Debt Crisis, the Sovereign will step into the limelight, and through cunning and shrewdness rise in power to rule, as is seen in Daniel 8:6-8, and be accompanied in power by the Seignior, that is top dog banker, who in coining money, takes a cut, as foretold in Revelation 13:11-18. Their word, will and way will provide economic direction unifying all of the Eurozone. This New Charlemagne and his Monetary High Priest, will eventually come to rule the world, in a one world religion, from their capital in Jerusalem, as foretold in Daniel 9:25.

 

Reuters reports Cameron Says Can’t Guarantee UK Staying In EU If Juncker Gets Top Job.  British Prime Minister David Cameron has warned he would no longer be able to guarantee that Britain would remain a member of the European Union if European leaders elect Jean-Claude Juncker as European Commission chief, Germany’s Spiegel said.

The European Commission president is selected by EU leaders but must be approved by the assembly, where Eurosceptics from the right made gains in last week’s election. The European People’s Party, which won the most seats in the vote, had chosen Luxembourg’s ex-premier Juncker as their candidate.

In a pre-publication copy of an article, Spiegel said Cameron had explained, on the sidelines of an EUsummit in Brussels on Tuesday, that if Juncker became Commission president, he would no longer be able to ensure Britain’s continued EU membership.

The magazine said participants understood Cameron’s comments on the sidelines of the meeting to mean that a majority vote for Juncker could destabilise his government to the extent that an “in-out” referendum would have to be brought forward.

 

Antiwar posts Obama Seeks to Heavily Censor Drone Memo. And adds Memo Outlines Obama’s Plan to Use the Military Against Citizens.

 

Zero Hedge reports that the failure of Avionics is causing price inflation in Japan. Abenomics Suffers Crippling Blow: Economy Sputters As Inflation Soars, BOJ QE Delayed Indefinitely.

 

Abenomics is a failed central bank economic stimulus initiative.

 

Reuters reports Japan Consumer Spending, Factory Output Skid After Sales Tax Hike. Japan’s household spending in April fell at the fastest rate in three years in a sign that consumption could be slow to recover from an increase in the nationwide sales tax, raising questions over the pace of economic recovery. Japanese household spending fell 4.6 percent in April from a year ago, more than the median market forecast for a 3.2 percent annual decline. That marked the fastest annual decline since March 2011, when an exceptionally powerful earthquake triggered a nuclear disaster. Compared to the previous month, spending tumbled by a record 13.3 percent in April, more than the 13.0 percent decline expected by economists. Government data published with the new figures show that household spending fell further after the April 1 sales tax hike than it did after the 3 percent sales tax in was imposed in 1989, and when it raised the tax to 5 percent in 1997.

 

Economics is defined as one’s life experience in sovereign money and sovereign authority. One’s economics comes from the isms of life, that is the process of branding, where a sovereign establishes identity and experience. Many will be of the fascist and totalitarian brand of the Beast Regime, and give homage to it, for prophecy of Revelation 13:3-4, communicates they worshiped and followed after the Beast, saying who can make war against it.

 

Jesus Christ is the ism of God, that is thedivine nature of theGodhead, by which some come to know the identity of God and have experience in God. The experience of His Sovereignty is one of holiness and of truth as presented in Hebrews 1:3, and John 14:7. His Apostle Peter, writes of addition of the elect in 2 Peter 1:5-7,  “Add to you faith virtue, to virtue knowledge,to knowledge self-control, to self-control perseverance, to perseverance godliness,  to godliness brotherly kindness, and to brotherly kindness love”; it is out of this practice that one has identity as a Christian and life experience in Christian ethics. When one takes Christ’s brand, that being the Gospel, which translated into English means the Good News, then one has identity and experience in His Sovereignty, and becomes a Christian.

 

There are many other isms; these include Socialism, Communism, Capitalism, and Libertarianism.

 

When one embraces personal sovereignty and individualism for identity and experience, one practices Libertarianism, and becomes a Libertarian.

 

One cannot serve two authorities, one will yield to one, and turn away from the other.

 

Thus, one cannot be a Libertarian and a Christian. An individual is one or the other. And it was a choice made in eternity past by God. One decides to follow Jesus, but that choice is one made by The Sovereign of All, as he looked down the hallways of time and decided to have mercy on who ever he would; it was a decision not based on one’s meritocracy but upon God’s infinite grace and mercy..

 

It’s my hope that one will follow the Apostle Paul, and be God’s economist, that is one who has life experience out of the sovereignty of Jesus Christ. As one Has life, one comes to greater trust, and grows the credit and flow of His holiness; and one grows in personal satisfaction of His brand.


Follow

Get every new post delivered to your Inbox.

Join 95 other followers