The Collapse Of The Dollar And A Global Currency War Was Prophesied In November 2009

USA ActionNews relates that it was back on Friday, November 6, 2009, that a financial analyst prophesied that we would reach the point of today’s developing global currency war: The dollar will get “utterly destroyed” and become “virtually worthless”, said Damon Vickers, chief investment officer of Nine Points Capital Partners … Due to the huge wage disparities between the United States and emerging markets like China, Vickers said that may resolve itself in some type of a global currency crisis. …“If the global currency crisis unfolds, then inevitably you get an alignment of a global world government. A new global currency and a new world order, so we may be moving towards that,” he said.

Today, November 11, 2010, a bear stock and bond market got fully underway as the currency traders fully declared a currency war on the world governments.

I … Stephen Bernard, of the Associated Press wrote on Thursday November 11, 2010, from New York:   Before the markets open that stock futures slipped as the world leaders attempted to come up with plans to strengthen a weak global economy and signs of rising inflation in China.

The Group of 20, which encompasses leaders from major rich and developing nations, are meeting in South Korea and trying to hammer out plans to help support a global recovery that has accelerated in some countries like China while more developed countries like the U.S. have struggled to rebound.

Currency manipulation, trade gaps and protectionism are the major topics the group is expected to discuss.

Some countries criticized the U.S. last week after the Federal Reserve announced a bond-buying program that effectively cut the value of the dollar. The U.S. and others have criticized China for holding its currency artificially low.

A weak currency helps a country’s exports because they become cheaper to sell overseas. That can lead to big trade imbalances and protectionist reactions from government’s trying to keep their own countries’ goods from being priced out of the world market.

Leaders are trying to sort through those issues to avoid a string of currency devaluations that could stunt a global recovery

The dollar, $USD, gained ground against the Euro, FXE, today, and was little changed again Japan’s yen, FXY. The Japanese government has flooded currency markets multiple times in recent months with yen to cut the value of the currency as it hovers near a 15-year low against the dollar.

The Euro, FXE, has struggled in recent days because of fresh concerns about government debt problems, particularly in Ireland, EIRL.

A steadily declining dollar over the past two months has helped funnel money into stocks and commodities as investors seek better returns

The Euro, FXE, has struggled in recent days because of fresh concerns about government debt problems, particularly in Ireland, EIRL.

A steadily declining dollar over the past two months has helped funnel money into stocks and commodities as investors seek better returns.

II … Today, stocks fell sharply, effectively started a new downturn — debt deflation got strongly underway in stocks, ending a rally that began with the announcement of the EFSF Monetary Authority in early June 2010, and which for many insightful investors carried insight that the US would come out with QE 2 in its November FOMC meeting.

Peak stock wealth has been achieved as stocks fell as follows:

S&P, SPY, -0.4%,
Russell 2000, IWM, -0.4%,
World Shares, ACWI, -0.5%.

A global bear stock market actually commenced on November 5, 2010, when World Shares, ACWI, fell from the November 4, 2010 rally high of 46.60 to the November 5, 2010 value of 46.51. Today’s fall to 48.85 simply put the nail in the coffin as European shares fell hard on Ireland’s and Portugal’s debt issues:

Europe, VGK, -1.3%
European Financials, EUFN, -1.5%
Europe Small Cap Dividends, DFE, -2.0%
Ireland, EIRL, -2.5%
Italy, EWI, -2.0%
Spain, EWP, -2.0%
Sweden, EWD, -1.9%
Austria, EWO, -3.1%

Currency traders sold the world’s currencies against the US Dollar again today November 11, 2010, on news of Eurozone sovereign debt issues: a new and greater Eurozone Debt crisis has emerged with Ireland and Portugal at its epicenter.

The currency traders actually commenced a global currency war on November 5, 2010 when the world currencies, DBV, peaked at a high of 24.10 and sold off on November 8, 2010. 

The European Financials, EUFN, in addition to the Interest Rate on the US 30 Year Interest Rate, $TYX, are the current focal points of the global currency war, which started November 5, 2010, as the currency traders have undertaken a plan to establish global corporatism and themselves as sovereign over humanity.

Global competitive currency deflation, that is global competitive devaluation, has come at the hands of the currency traders, as concerns have arisen over the sovereign debt of Ireland and Portugal, and that the US Federal Reserve’s QE 2 purchases of US Government debt, constitutes monetization of debt. 

III … In the global currency war, the most indebted currencies are likely to be sold first and hardest by the currency traders: this means that Portugal, Italy, Ireland, Greece, Spain, The US and Japan are going to be ground zero for austerity and hardship. 

EuroIntelligence reports in article Ireland Going Down Irish 10 year yields hit 8.7%, and the spread with German bonds is now 6.5%; LCH Clearnet imposes larger margin requirements for Irish trades; the Greek adjustment programme is collapsing, as the projected 2010 deficit is now put at 9.3%, as opposed to a projected 7.8%; Papademos insists on no restructuring; an increasing number of market participants now believe that Greece and Ireland will eventually default, as they are beginning to digest the implications of the German crisis resolution proposals; Portuguese yields also rise/

ECRM – its  a new acronym. After the EFSF and ESRB, comes the ECRM, or will it be the EMF? After the proposal by Daniel Gros and Thomas Mayer for an EMF, comes the counter-proposal from the Bruegel team by Francois Gianviti, Anne Krueger, Jean Pisany-Ferry, Andre Sapir and Jurgen von Hagen, for a European Sovereign Debt Crisis Resolution Mechanism, or ECRM. Here is the link to the paper. In the introduction the authors characterise their main points thus: A procedure to initiate and conduct negotiations between a sovereign debtor with unsustainable debt and its creditors leading … in order to re-establish the sustainability of its public finances. This would require a special court to deal with such cases. … Rules for the provision of financial assistance to euro-area countries as an element in resolving the crisis. Should a euro-area country be found insolvent, the provision of financial aid should be conditional on the achievement of an agreement between the debtor and the creditors reestablishing solvency.

Mervyn King’s warning of trade imbalances and current account imbalances are becoming increasingly apocalyptic. This was contained in an article on Alan Greenspan in the FT. It is not very interesting what Greenspan has to say, but the comment from Mervyn King is of a different order. “If we end up 12 months from now with countries taking protectionist measures, everyone will suffer. I think the absolute imperative for this weekend [at the G20] is a clear demonstration that every member of the G20 recognises that the imbalances are a problem . . . If we don’t do that then I fear the next 12 months will be an even more difficult and dangerous period than the one we have been through.”

John Glover and Michael Shanahan of Bloomberg report Irish Bank Default Swaps Surge to Distress on Cost of Bailout. The cost of insuring the bonds of Irish banks soared to distressed levels amid concern that the government won’t be able to afford the cost of bailing out the nation’s banks.

IV … The US Dollar, $USD, traded up 0.7% by the end of the day to close at 78.17. While Total Bond, BND, traded even on the day, the World Government Bonds, BWX, and the International Corporate Bons, PICB, traded lower so as to constituted severely damaged investments

The 1 to 3 Year Government Bonds, IEI,  traded 0.2% lower; these are the very ones targeted for purchase under QE2 for stabilization. Quantitative Easing is a total waste of money: why attempt to stabilize something is inherently unstable, unless one have a secret motive.

World government bonds, that is sovereign debt of the nations, BWX, traded 0.5%  lower, falling from a head and shoulders pattern. Investing in sovereign debt is no longer a profitable investment opportunity. 

Emerging market bonds, EMB, traded 0.2% lower; and the chart pattern being similar to world government bonds, suggesting that it is unwise to invest in sovereign debt in the emerging markets as well as the developed world.

Likewise international corporate bonds, PICB, traded 0.7% lower and has fallen from support as well. Bryan Keogh of Bloomberg reports: Company bonds in Europe are the riskiest compared with U.S. securities since May as concern rises that the euro-region’s most indebted governments will need a bailout, further damaging the economy.

V … The currency traders have established themselves as sovereign over the governments of the world and over the world’s financial markets today November 11, 1010.  The bond vigilantes and the currency traders have seized sovereign debt seigniorage authority from the world banks and world governments; and established themselves as the sovereign governing power in the world today.

VI … A new global currency system will be implemented by a world leader and a world banker and they will oversee global governance in regions of global government, as called for by the Club of Rome in 1974. 

I believe that out of intensifying bond deflation by bond vigilantes calling sovereign debt, BWX, lower and bank debt interest rates higher, and greater competitive currency deflation at the hands of currency traders, the seigniorage of the European periphery countries will fail, and that they will default on their sovereign debt.

Eventually I believe a Global Seignior and Global Sovereign will arise and institute unified regulation of banking globally, this as referred to, in the James Politi and Gillian Tett Financial Times article, NY Fed Chief In Push For Global Bank Framework, and that the Seignior will oversee all matters of debt and credit, and implement a universal currency system, that is a global currency system, that will likely first be used by Portugal, Italy, Ireland, Greece and Spain, as they will have lost their sovereign debt seigniorage and the ECB will have stopped buying their debt.

Perhaps Robert Rubin, Co-Chairman of the Council On Foreign Relation, the CFR, or European Council President Herman Van Rompuy will rise to be the world’s Sovereign and institute global governance as he said November 9, 2010:  ”We have together to fight the danger of a new euro-scepticism. … This is no longer the monopoly of a few countries. In every member state, there are people who believe their country can survive alone in the globalised world … It is more than an illusion: it is a lie!”, reports OpenEurope in November 10, 2010 Daily Briefing.

One can read the full EU Press release of his speech here. And Mark Alexander provides the reference to the Daily Telegraph report: Euroscepticism leads to war and a rising tide of nationalism is the European Union’s “biggest enemy”, Herman Van Rompuy, the president of Europe has told a Berlin audience

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