Turkey Is At The Crossroads, Economically, Politically And Biblically

I … Since the Federal Reserve’s QE ended on March 31, 2009, investment capital has flown into Turkey, as one can seen in the chart of its ETF, TUR, but on Friday October 15, 2010 World Stocks, Currencies And Bonds Trade Lower As Concerns Grow Over US Mortgages And Debt Monetization Coming With QE II.  An inquiring mind asks: will yen carry trade disinestment cause an unwinding of its financial success?

James Traub writes at Foreign Policy:  Turkey is not content with being the brightest star in its benighted neighborhood; it wants to play on the world stage. And that ambition may force Turkey to find a new balance among its competing identities. (Hat Tip GlobeEurope Daily Email Briefing which also recommends an article by Saban Kardas at the Eurasia Daily Monitor about delevoping Turkish-Chinese relations.)

Bible prophecy foretells of a world war between Israel, Iran, Syria, Turkey and other Arab nations that draws in Russia, Germany, Bulgaria, Romania, as well as Turkey. One can read of this in Jack Kelley’s article The Battle Of Ezekiel 38 on the Grace Through Faith Website. Syria is involved in war with Israel in Isaiah 17:1. And Syria, Lebanon, Hezbollah, and Hamas confederate against Israel in Psalm 83.

ProphecyNewsAlerts reports Growing ties between Turkey, China, Iran worry Israel and US:  The United States and Israel are watching with concern the growing military cooperation among Turkey, China and Iran, especially following a joint Turkish-Chinese air-force exercise last week.  Until two years ago Israel was Turkey’s main partner for air combat training.  In 2001 the Turkish air force inaugurated a tactical air warfare center in Konya with Israel and the United States. Until 2008 the Israel Air Force was a frequent guest in Turkey’s sky and a regular participant in the country’s big annual exercise, Anatolian Eagle. In the wake of Operation Cast Lead and the subsequent deterioration of bilateral relations Turkey last year revoked Israel’s participation in the maneuvers. The United States decided not to take part in the exercise this year because of that decision. A number of other NATO members followed suit. Turkey replaced the Israel Air Force with its Chinese counterpart. China sent Sukhoi SU-27 fighter aircraft and pilots to train with Turkey’s F-16 fighters. In the past these exercises were held in relatively openness, but last week they were held covertly, with only a brief report appearing in the Turkish media after the exercise.

Bible prophecy of Daniel 9:27 predicts that a third Jewish Temple will be constructed before the Lord’s return, and that the world’s Sovereign, that is the world’s Leader, will one day, after the war of Ezekiel 38, establish a peace covenant between Israel and Arab nations; and in so doing, it is very likely that he will insist that an international peacekeeping force be present within both Israel and within Jerusalem as well at Israel’s borders.  

Yet the Sovereign will not fully honor that covenant, as he will break it after 36 months. “He shall confirm the covenant with many for one week”; here each day represents one year. This important phrase indicates that the event that starts the 70th week, the seven-year tribulation, is the signing of a seven-year covenant between the Sovereign and Israel.  The signing of the covenant begins the period called the Tribulation. At the halfway point of the Tribulation, which is three and a half years, the Sovereign will break this covenant with Israel with an event called “The Abomination of Desolation.” It is at this time that God provides a physical place of safety, that is a refuge, for a select group of saints. This also signals there is only three and a half more years remaining, before Christ returns to earth to set up His Earthly Kingdom, which will last for a 1,000 years.

It is a given that the covenant between the Sovereign and Israel will permit the Jews to rebuild their temple, where they will once again practice their sacrifices. Presently a red heifer to be used in ritual sacrifice is being sought, instruments are being implemented, priests are being prepared, and blueprints are being drafted toward this end.

Bible prophecy also reveals that the Beast System of Revelation 13:1-4, will arise to rule manking. The Beast is Global Corporatism; and is currenly coming forth from waves of carry trade investment and stock market turmoil. Debt deflation is the contraction and crisis that follows credit expansion.  One of the most famous quotations of Austrian economist Ludwig von Mises is from page 572 of Human Action: “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 involved.”

Nick Godt reports Fed and oil, fuel talk of demand destruction: “The US Dollar Index which pits the U.S. unit against major currencies; it has slumped 16%. The slide intensified in September, with the dollar losing 9% in the month as it became clearer that the Fed would soon provide further stimulus. As a result, crude oil earlier this month returned convincingly above $80 a barrel and continues to head higher. Energy analysts say the move is not driven by fundamentals. “There’s definitely concerns about the recovery and demand destruction while crude is being [lifted] by the dollar,” says Tariq Zahir, managing member at Tyche Capital Advisors. “Fundamentally, there’s enough [crude] out there and we should head lower.” Gluskin Sheff chief economist Dave Rosenberg notes that $84 a barrel means higher gasoline prices ahead, while at the same time food prices, FUD, are also rising.”

The dollar is now at 15-year lows against the yen as is communicated by the chart of USD/JPY currently trading at 81.27.

Barry Gray of WSWS.org  writes: The Institute of International Finance, which lobbies for major banks, estimates that $825 billion will flow into developing countries this year, 42 percent more than in 2009.  (Chart of emerging markets EEM, compared with the Russell 2000, IWM, …  EEM and IWM

Last month, the Brazilian finance minister warned of the outbreak of a global currency war and earlier this month his government announced the doubling of a tax on foreign purchases of Brazilian bonds in an attempt to stem the inrush of capital and the relative rise of the nation’s currency, the Real.  (Chart of the Brazilian Real, BRF)

This past week, Thailand took similar steps, announcing a 15 percent withholding tax on the interest payments and capital gains earned by foreign investors in Thai bonds, in an attempt to arrest the appreciation of the baht, which has already risen by 10 percent against the dollar this year. (Chart of Thailand, THD)

The eruption of currency and trade war is being driven by the general slowdown in economic growth to anemic levels that make impossible any genuine recovery from the deepest slump since the 1930s. Faced either with slumping domestic demand or stagnant foreign markets, or (as in the case of the US) a combination of the two, the major economies are all intent on increasing their sales abroad. As the prospects dim for a revival of economic growth to pre-recession levels, the system of multilateral currency and trade relations dating back to the agreements made at the end of World War II is collapsing. So too are the chances of genuine multilateral coordination.”

As I look at the world stocks, ACWI, in early morning trading, I ask: Will today be the day that the beast system grows greater in power as world wealth falls lower? And the answer comes back possibly so, as the chart of Euro Yen carry trade, that is the EUR/JPY, FXE:FXY, is trading lower, as is the Indian Rupe Yen carry trade, ICN:FXY,  the Mexico Peso carry trade, FXM:FXY, the Swedish Krona Yen carry trade, FXS:FXY, the Canadian Dollar Yen carry trade, FXC:FXY, the British Pound Yen carry trade, FXB:FXY, the Brazilian Real Yen carry trade, BZF:FXY,  and the Australian Dollar Yen carry trade, FXA:FXY.

The developed currencies carry trade, DBV:FXY, and the emerging markets carry trades, CEW:FXY, have fallen lower; this as someone or someones have taken the Yen, FXY, higher to, ouch, 121.78. A higher Yen is not conducive to investing long the stock markets.

Some other reasons why today might be the day when stocks finally turn lower, are that, the Euro, FXE, has turned slightly down, and the Semiconductors, SMH, and the emerging markets, EEM, including Peru, EPU, are trading lower. 

But then again, stocks may not turn lower as Tyler Durden reports: “Another day, another chance for Brian Sack to give $3-5 billion in free, free linen to the Primary Dealers to buy themselves some Apple. Today’s POMO has started, and the bonds to be monetized include a variety of 2016-2020 vintages. Once again, these are the bonds which will likely be purchased the most in the upcoming $1-$1.5 trillion QE2, so PDs may hold off selling them back to Brian until they get much better prices. Although who the hell knows or cares anymore. After all, if things get ugly the UK will simply come in and buy a quadrillion worth of Bonds using some more of that Fed free, free linen.”

The US 30:10 Yield curve, $TYX:$TNX, steepened again today, as the Fed’s embarking on a reflationary policy, will make holding 30-year bonds less attractive, since future inflation would drive interest rates higher and erode their value. 

The rise in longer-dated yields, $TYX, compared to the closer-in yields, $TNX, has steepened the curve. A steepend yield curve over the years has rewarded investors to go into the longer out maturities, found in the longer out corporate bonds, BLV, and US Government Bonds, TLT and the Zeroes, ZROZ, but the Federal Reserve’s new dynamic of QE II, amounts to monetization of sovereign debt, which results in the falling bond value, which caused TLT to begin to fall from its October 6, 2010 value of 105.56, and caused ZROZ to begin to fall from its October 6, value of 86.19. The rise in both of these US Government Bonds, as well as the Direxion 300% ETF, TMF, and the Proshares 200% ETF, UBT, today, represents short selling opportunities, as in a bull market one buys dips, and in a bear market one sells into strength.    

The rise in the longer out US corporate bonds, BLV, to resistance at 84 is particularly foreboding. The fall lower from  86.18 on October 6, 2010 shows that corporate bonds have failed to be a reliable investment; this at the hands of the Federal Reserve Chief Ben Bernanke, who is coming out with QE II, where he is going to simply print money, and buy the short duration US Government Bonds, SHY, and IEF.  

The Fed’s actions benefit those who are invested in Pimco’s, MINT, but disadvantages those invested in longer out US Government debt, as well as longer out corporte bonds.  As corporate bonds, LQD, and BLV, fall in value, interest rates go up on business borrowing.  Small businesses, especially the Russell 2000, IWM, will simply throw in the towel, and Bob the Plumber, and Mary the Baker, and Bill the restaurant supply corporation President, will end up in the unemployment lines. All this as a consequence of the US Central Bank attempting to prevent a deflationary collapse by extending and pretending that US Government debt has value.  

Mortgage backed bonds, MBB, have remained strong, on the QE 2 cool aid.  I strongly encourage one to be invested in gold bullion, $GOLD, even though its price may go down, should the US Dollar, $USD, traded by UUP, rise in value for a while. Emerging market bonds, EMB, emerging market small cap dividend shares, DGS, the frontier markets, FRN, are trading lower today on lower developing market currencies, CEW. The chart of bonds, BND, shows that Peak Credit occurred on October 7, 2010 when bonds topped out at 82.93. The End Of Credit has commence.

The Apostle John’s vision, in addition foretelling of a beast system, heralds the Sovereign, rising to rule mankind, Revelation 13:5-10.  The world leader will be complemented by the Seignior, Revelation 13:11-18, meaning top dog banker who takes a cut. He is a also a Spiritual Leader with a unifying Global Vision. Eventually he will direct the 666 credit system,  Revelation 13:17-18, where one will be given the charagma, or mark, necessary to conduct commercial activity. Those interested can read more: Beast System, Sovereign, and Seignior to rule mankind.

II … In today’s news

Bill Wilson, writes in the BibleProphecyToday article, End Times Prophecy — Watching Israel, Iran, Syria, Turkey, Lebanon:  “News events of late point to an acceleration toward end time prophecies. For example, there have been many, many stories about major nations seeking a global currency. There have been steps taken by the largest nations to coordinate their economies during this recent economic collapse. The United Nations has continued to advocate global governance and even documents presented by the United States government are calling for more and more global governance. As we see technology advance and more economic calamity, there is an acceleration toward that Revelation 13:17,  “That no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.” And continues: “Iran is currently making a large play in the Middle East in unifying Turkey (once thought to be an ally of Israel), Syria, and Lebanon against Israel. The prophesy clock is moving forward.”

ZeroHedge reports: BHP Billiton and Rio Tinto cancel plans for a $120B joint venture in Australia. 

And ZeroHedge also reports: US structured-note sales surge to $38.4B to break record of 2008.

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