Archive for May, 2011

Gold And Silver Rise This Week As Greece Seen Lacking Loan Commitments To Carry It Through The Next 12 Months

May 28, 2011

Currency Report for the week ending May 27, 2010   

1) … The U.S. dollar, $USD, declined 1.0% (down 5.4% y-t-d). while
The Swiss franc, FXF, increased 3.3%,
the New Zealand dollar, BNZ, 2.9%,
the Norwegian krone 2.3%,
the  Brazilian real, BZF, 1.8%,
the Swedish krona, FXS, 1.4%,
the Danish krone 1.2%,
the euro, FXE  1.1%,
the Japanese yen, FXY, 1.1%,
the Australian dollar, FXA,  0.4%,
the Mexican peso, FXM, 0.4%,
the Russian ruble, XRU, 0.3

Bloomberg reports South Korean builders may struggle to refinance $9.7 billion of short-term debt due through July even as the government backs a “bad bank” to buy up burned real-estate loans, according to Eugene Investment & Securities Co. “These short-term notes are a time bomb that have been moved from one basket to another,” said Kim In, a Seoul-based Eugene Securities banking analyst. “No one will be willing to roll over these debts, so builders’ liquidity will be squeezed even further, leaving more of them at risk of defaulting.”

Bloomberg reports Greece Aid Is Under Threat, Europe Finance Chief Says. A top euro-zone policy maker suggested the International Monetary Fund may withhold its next payment on Greece’s €110 billion ($155 billion) bailout, rattling financial markets with questions about whether a new Greek payments crisis is imminent. Luxembourg Premier Jean-Claude Juncker, who heads the conclave of euro-zone finance ministers, suggested Thursday that an important review of the bailout program might conclude that Greece doesn’t have enough loan commitments to carry it through the next 12 months

CNBC Reports China Drought Ignites Global Grain Supply Concerns. Analysts are closely watching the weather in China, warning any further supply shocks in the grain markets would fuel a further rally in U.S. corn and wheat futures, already stoked by harsh crop weather in the United States and Europe.

Zero Hedge reports Super Typhoon Songda Projected to Pass Over Fukushima Nuclear Power Plant. Super Typhoon Songda, which according to Weather Underground will form shortly as a Category 5 storm with 156+ mph winds, will take a northeasterly direction and 2 days later will pass right above Fukushima.

Forbes reports In India, Bad Loans Rising. State run banks in India, long seen as one of the key pillars in a healthy and regulated banking sector, are seeing a rash of bad loans on their books, the Times of India reported Friday. Chart of HDFC Bank, HDB.,

Mike Mish Shedlock relates Excess Reserves Are A Mirage And Banks Are Actually Captal Impaired and relates Greece Not Just Illiquid, It’s Insolvent and relates from Der Spiegel International Hidden Risk Of Saving The Euro.  Since the beginning of the financial crisis, banks in countries like Ireland, Portugal, Spain and Greece have unloaded risks amounting to several hundred billion euros with central banks. The central banks have distributed large sums to their countries’ financial institutions to prevent them from collapsing. They have accepted securities as collateral, many of which are — to put it mildly — not particularly valuable. These risks are now on the ECB’s books because the central banks of the euro countries are not autonomous but, rather, part of the ECB system. When banks in Ireland go bankrupt and their securities aren’t worth enough, the euro countries must collectively account for the loss. Germany’s central bank, the Bundesbank, provides 27 percent of the ECB’s capital, which means that it would have to pay for more than a quarter of all losses. Chart of the Euro, FXE.

For 2010 and the two ensuing years, the Bundesbank has already decided to establish reserves for a total of €4.9 billion ($7 billion) to cover possible risks. The failure of a country like Greece, which would almost inevitably lead to the bankruptcy of a few Greek banks, would increase the bill dramatically, because the ECB is believed to have purchased Greek government bonds for €47 billion. Besides, by the end of April, the ECB had spent about €90 billion on refinancing Greek banks.

But even greater risks lurk in the accounts of commercial banks. The ECB accepted so-called asset-backed securities, ABS, as collateral. At the beginning of the year, these securities amounted to €480 billion. It was precisely such asset-backed securities that once triggered the real estate crisis in the United States. Now they are weighing on the mood and the balance sheet at the ECB.

No expert can say how the ECB can jettison these securities without dealing a fatal blow to the European banking system. Chart of European Financials, EUFN.

The ECB is in a no-win situation now that it has become an enormous bad bank or, in other words, a dumping ground for bad loans, including ones from Ireland. According to AFME figures, the total value of all outstanding asset-backed securities in the euro zone and the United Kingdom is an almost unimaginable €1.8 trillion. Of course, not all asset-backed securities are toxic. German banks, for example, package together car or small-business loans to ease pressure on their balance sheets. But the securities that end up at the ECB from peripheral countries like Greece or Ireland are often of questionable value. The central bank is supporting lenders that are in fact no longer viable. And the bombs continue to tick.

The US Dollar, $USD, fell 0.9% today on the rise of precious metals, JPP, Gold, GLD, Silver, SLV, and base metals, DBB, and a flight to safety in the Swiss Franc, FXF, and a rise in the Yen, FXY.

SFGate reports Italy leads rise in sovereign debt risk after S&P rating threat.

Peterson Institute Chart of Bank Holdings of Greece Sovereign Debt courtesy of Joe Weisenthal of Business Insider shows Italy, EWI, as having by far the most exposure.

Tyler Durden of Zero Hedge reports European Industrial Orders Post Steep Decline In March

Irvine Renter reports in article Banks stockpile homes buyers don’t need to buy, and that the backlog of housing REOs and shadow inventory is worst in New York City, Chicago, Boston and Minneapolis.

Kate Randall of reports MassHealth, the state Medicaid program, will be cut $750 million. And $7.9 million in cuts will be made to direct benefits to the poor. WIC, the Women, Infants and Children program, faces a $2.7 million cut, some 17 percent. The program currently provides nutritional support for more than 130,000 pregnant women, mothers, infants and children up to age five. Thousands of children on welfare would see their yearly clothing allowance slashed from an already miserly $150 to $40 if the legislation passes.

Chart of gold, GLD, communicates a rising investment demand for gold on rising global chaos. video Hundreds of Michigan families seek assistance in Southfield. DTE Energy, one of the main energy companies in the Detroit-area, held a customer assistance event in the suburb of Southfield which attracted nearly a thousand people needing help with household energy payments. Every year, DTE shuts off the utilities of thousands of families for falling behind on their bills. Utilities, XLU, fell lower this week.

Patrick Martin of reports Republicans lose House seat in special election.

2) … Interesting charts of the week

Latin America,, LATM rose strongly this week.

The Swiss Franc, FXF, continues to be a safe haven investment.

The 30-10 US Sovereign Debt Leverage Curve Daily, $TYX:$TNX, communicates the exhaustion of both QE1 and QE 2

Basic Materials: Silver Miner: Aleco Resource Corp, AXU, illustrates the failure of the seigniorage of Neoliberalism as investors are unwilling and unable to leverage gold stocks, GDX, over the price of gold.

3) … The chart of the currency yield curve, RZV:RZG, confirms that competitive currency devaluation, that is competitive currency deflation commenced in May 2011, as major currencies, DBV, and commodity currencies, CCX, and emerging market currencies, CEW, all fell lower. These have joined the US Dollar, $USD, in a death spiral into the pit of financial abandon together.

4) … The chart of gold relative to the Australian Dollar establishes that wealth is best preserved by investing in gold.

Keywords: Fukushima, Investment Demand For Gold, Global Chaos, China Drought, Energy Assistance, Competitive Currency Deflation, Competitive Currency Devaluation

European Regional Economic Governance will emerge out of sovereign debt crisis before 2013

May 26, 2011

European Regional Economic Governance will emerge out of sovereign debt crisis before 2013.

Social unrest in Spain and voter disapproval for the current European political regimes, coupled with ongoing sovereign debt issues, is setting the stage for the establishment of ten regions of global governance as called for by the Club of Rome in 1974.

Bible prophecy of Revelation 13:5-10,  reveals that a Chancellor, that is the Sovereign, and Revelation 13:11-18 reveals that a Banker, that is the Seignior, will arise to provide a new seigniorage, that is a new moneyness, based not upon sovereign debt, but rather political coordination of their word, will and way.

Bible prophecy of Revelation 13:3, reveals that out of Götterdämmerung, that is an investment flameout and financial collapse, state leaders will announce regional framework agreements, which waive national sovereignty and establish regional economic and political governance as well as assign stakeholders to run industries for the regional good  These will oversee the factors of production such as labor and capital to establish state corporatism.

An Iron Chancellor, the Sovereign, perhaps Herman Van Rompuy, and an Adept Banker perhaps Mario Draghi, or Christine Lagarde, will provided a new seigniorage.which will be for the most part political and not economic. Such leadership will require and enforce great austerity and mass layoffs in socialist state regimes particularly the periphery nations, that is the PIIGS.

While sovereign debt has been the underlying seigniorage of the Age of Neoliberalism … The word, will and way of the Sovereign and the Seignior will be the seigniorage.the age of Authoritarianism.

European Federalism has been creeping in scope and power since World Ware II, with the aid of the Spinelli Group and others. A Euro Centric Continent, now precludes a return to an age of sovereign nation states.

Sovereign state currencies such Greek Drachma or the German Deutsche Mark are a pipe dream of the Mises Institute and Austrian economists. A much greater likelihood is the rise of a Euro German Empire, that is a revived Roman Empire, as suggested in Daniel Chapter 2, with a political leader and a banking leader whose power will rival and exceed those of Charlemagne.

Women Can Be Neocons Too

May 25, 2011

Many Jewish women have made, that is developed, their husbands into the world’s leading neocons.

For example, Meyrav Wurmser, co-founded the Middle East Media Research Institute, MEMRI. is the spouse and head of household thinking, of one of the co-founders of the Project for the New American Century.  

Another example is Anne Sinclair, the spouse and molder of Dominique Strauss-Kahn. Chris Cuomo and Jessica Hopper of ABC News in May 23, 20101 article Anne Sinclair Uses Family’s Fortune to Fight Dominique-Strauss Kahn’s Sex Assault Charges report that Anne Sinclair, the wife of former International Monetary Fund head Dominique Strauss-Kahn, is using her millions to help her husband fight sexual assault charges.

Sinclair, 62, was spotted leaving the luxury high rise in lower Manhattan where Strauss-Kahn is temporarily living during his house arrest. Sinclair is arranging for the couple to transfer to a new luxury apartment.

“My guess is that she will stay by his side all the way through. She will stay with him in New York. She will be there at every appearance in front of the court,” said Appolline de Malherbe, correspondent for French channel BFMTV.

Since Strauss-Kahn’s arrest on May 14 for allegedly sexually assaulting a maid at the Sofitel hotel, Sinclair has defended her husband.

Sinclair was a prominent television journalist in France when she married Strauss-Kahn in 1991. It was his third marriage and her second. Sinclair retreated from her career and became a driving force behind Strauss-Kahn’s political ambitions. She used her considerable family fortune to finance his political career.

Sinclair’s grandfather amassed a fortune representing artists like Pablo Picasso and Henri Matisse. Now Sinclair is using that same family fortune for her husband’s court battle and house arrest.

“He worked a lot, earned a lot of money, but she earned more than he did. Together as a couple, they’re worth about $70 million,” de Malherbe said.

The idea here is that many men are creations of the women they marry, they are birthed, formed, molded and made to Zionists of Zionists.

Many Apartments In Queens And Brooklyn Are Illegally Divided

May 25, 2011

Sam Roberts of the New York Times in article Survey Hints At A Census Undercount in New York City reports that Census data suggests that “immigrant burbs”, that is “country communities” have formed in New York where large immigrant families share apartments forming neighborhoods such as “Little Syria” and “Little Russia”.

These include East Elmherst and Jackson Heights in Queens and Sunset Park, Bay Ridge and Bensonhurst.  

East 2nd and O in Brooklyn is one such neighborhood.  

“Why would so many units be there and be illegally subdivided if there was no demand for housing?” said Joseph J. Salvo, director of the population division of the city’s Planning Department, adding that the city had done “extensive field research, work that is corroborated by local data sources on foreclosures, new construction and rents.

Jeff Silverbush, a real estate agent in East Elmhurst, said: “There are certain areas in Queens where half of the houses seem to be for sale. That’s not the case there. You don’t find a huge amount of empty houses around there.”

One woman who answered the door at a single-family home on 99th Street said she never returned her census questionnaire. “I don’t understand much English,” said the 30-year-old woman, who did not want to give her name. In Brooklyn, off Ocean Parkway, a block of mostly one- and two-family homes bounded by East Second and Third Streets and Avenues O and P recorded an increase of 65 vacancies, to 70 from 5, and a decline in population of 57, to 283 from 340.

Theresa Scavo, the chairwoman of Community Board 15, doubted that the block had lost more than 150 people since 2000 and suggested instead that many of the Russian immigrants who moved to the neighborhood in recent years had not filled out forms or answered the door when census takers visited.

“How do you get a decrease in population,” she said, “when 10 years ago the buildings were not as crowded?”

World Enters Kondratieff Winter As US Stocks Join Global Stock, Commodity, And Currency Sell-Off On European Debt Worries … While Demand For Gold Remains Strong

May 23, 2011

Financial Market Report For May 23, 2011

1) … US Stocks, VTI, such as IWM, PSCI, PSCT, FLM, PNQI, PSCE joined the world sell off of stocks, VT, and ACWI as well as VSS and EWX.
Kirsten Donovan and Giuseppe Fonte of Reuters report financial markets piled pressure on peripheral euro zone countries on Monday as investors worried about heightened risks in Spain and Greece and fresh concerns over Italy.

A weekend wipe-out of Spain’s ruling Socialists in regional and municipal elections raised fears of potential clashes over deficit curbs between central and local government as Madrid fights to avoid having to seek a bailout like Greece, Ireland and Portugal.

Italy, which has the euro zone’s biggest debt pile in absolute terms, was hit by credit ratings agency Standard & Poor’s decision on Saturday to cut its outlook to “negative” from “stable.”
Government sources said Rome would bring forward to next month planned decrees to slice 35 to 40 billion euros off the budget deficit in 2013 and 2014, in an effort to reassure markets.

“We’ve kept things in order and the bases are all there for us to continue to do so,” Economy Minister Giulio Tremonti said.

The premiums charged by investors to hold Italian and Spanish 10-year bonds rather than safe-haven German bunds rose to their highest levels since January, at 186 and 261 basis points respectively.

The euro, FXE,  briefly fell below a key support level at $1.40, hitting a two-month low against the dollar, before stabilizing.

“The key point is that the crisis seems to be taking hold even of peripheral countries regarded as solid,” said WestLB rate strategist Michael Leister. “Sentiment is that there appears to be no end to it now Italy is being scrutinized by the ratings agencies.”

Stratospheric Greek debt yields rose still further — with 10-year bonds yielding more than 17 percent — amid uncertainty over a crucial 12 billion euro aid disbursement next month which is vital to meet 13.4 billion euros in funding needs, including debt redemptions, in mid-June and avoid default.

The Greek yields do not reflect Athens’ real borrowing costs because the country is surviving on IMF/EU loans and trading in Greek bonds is thin, but it is a barometer of market anxiety about some form of debt restructuring.

The Greek cabinet met to discuss new emergency deficit cutting measures to try to persuade international lenders to keep aid funds flowing, and convince investors the country can cope without a restructuring.

“We are in the middle of an ongoing battle. We will not surrender. We will do whatever it takes to make sure Greece stands on its own feet,” Prime Minister George Papandreou told voters last week, preparing them for still harsher austerity.

Visiting inspectors from the European Commission, the European Central Bank and the International Monetary Fund are withholding judgment on Greece’s compliance with its rescue program until they see progress on spending cuts, revenue increases and stalled privatizations.
Among planned new belt-tightening measures were deeper cuts in public sector wages, more consumer tax increases and even the taboo issue of dismissing full-time civil servants.

The chairman of the 17-nation Eurogroup of finance ministers of countries sharing the single currency, Jean-Claude Juncker, said on Saturday that Greece has fallen behind targets and should set up a trustee institution for privatizations.

Economic Policy Journal reports The Jam Greece Is In  Greece’s prime minister, George Papandreou, has now admitted for the first time that his country might not be able to raise money in the financial markets for its borrowing needs next year.

Papandreou said in an interview with the daily Ethnos that “it does not appear at present that Greece will be able to cover its borrowing requirements in 2012 normally, from the markets.”

As part of its euro110 billion bailout deal with the European Union and the International Monetary Fund, Greece was expected to raise euro27 billion to help pay its bills in 2012. Not likely.

And this leads to an even more immediate problem that could lead to default.

Financial Times reports The Greek government has paid just 1% of debt owed by public hospitals in 2011 and only 30% of payments owed since the start of last year. “The situation has become dramatic,” the Hellenic Association of Pharmaceutical Companies said in a letter to the Greek Ministry of Health. (Hat Tip to Between The Hedges)
The Italian OIl Company, ENI, E, and the Spanish OIl Company, Repsol, REP,

2) … Oil, USO, commodities, DJP, and base metals, DBB, turn lower on a stronger US Dollar, $USD, as gold, GLD, silver, SLV,  and agricultural commodities, JJA, remain strong as seen in the chart of  USO, DBB, GLD, SLV, JJA

Natural resource companies fell strongly.
Copper Miners, COPX,
Aluminum Producers, ALUM,
Coal Producers, KOL
Hard Asset Producers, HAP,
Energy Service, OIH, and IEZ
Junior Gold Miners, GDXJ
Gold Miners, GDX,
Silver Miners, SIL,

3) … The Telegraph asks What happens when Greece defaults

4) … Competitive currency devaluation picked up speed today and Chris Martenson relates Get ready for accelerating devaluation of all fiat currencies

5) … Economic Policy Journal reports Shanghai Index Falls Nearly 3 Percent and Bloomberg reports Chinese Manufacturing Index Drops to Lowest Level in 10 Months.   Chart of CAF.

6) … Shipping SEA fell strongly.

7) … MarketWatch reports  QE2 Was A Flash In The Pan.
Economic Data is Worse Than Before. It‘s cost $600 billion of your money. And it was supposed to rescue the economy. But has Ben Bernanke’s huge financial stimulus package, known as “Quantitative Easing 2,” actually worked as planned? QE2 is being wound down in the next few weeks. Fed Chairman Ben Bernanke has said it has left the economy “moving in the right direction.” But an analysis of the real numbers tells a very different story. Turns out the program has created maybe 700,000 full-time jobs — at a cost of around $850,000 each. House prices are lower than before QE2 was launched. Economic growth is slower. Inflation is higher.

The six month fall lower in Southern Peru Copper, China, China Small Caps, and Vietnam, evidences the failure of China to sustain world growth as well as documents the failure of state sponsored inflation controls and managed economies to maintain investor interest. SCCO, YAO, HAO,VNM

Oil, USO, DBC, BNO, and Base Metals, DBB, and Timber CUT, fell heavily on world currency, DBV, and emerging currency, CEW failure.  

Country ETFs falling lower today on debt debtdeflation, that is currency deflation, included the following
EWY,  -3.7
SKOR -4.5
EWA -3.2 and KROO, -3.7 
RSX, -3.0 and RSXJ, -3.6
IDX -2.6
EWG -2.5 and GERJ -2.3
NORW -2.7
EZA -3.1 The down turn in the gold mining intensive South Africa Shares epitomizes the failure of Neoliberalism’s seigniorage.
EWU -2.6
INDY -2.0 and SCIN -2.1
LATM -2.1
VGK -2.4
VNM, -3.1

EWZ 2-2 and BRF -2.1… O Globo reports The Brazilian economy is close to “overheating” and an increase in interest rates and “budget consolidation” are desirable, the International Monetary Fund’s Olivier Blanchard said. Brazil needs to be prepared for negative shocks, such as a drop in raw material prices, Blanchard said in an interview. The economist also said it’s reasonable to adopt certain measures to limit the appreciation of the real, such as reserve accumulation and capital controls. (Hat Tip To Between The Hedges)

Chart of Sweden, EWD; Sweden has been a competitive currency deflation loss leader and its sharply lower currency the Swiss Krona, FXS, has driven country shares lower,

8) … Are price controls and capital controls coming to China, YAO?  
China Securities Journal China’s negative real interest rates are prompting people to withdraw money from banks to invest in higher-yielding wealth management products, citing analysts. The trend may push the central bank to focus on pricing tools in adjusting monetary policy. (Hat Tip To Between The Hedges)

The Chinese Coal Mining Company which has been at the center of proposed price controls fell strongly. Yanzouh Coal Mining, YZC, is now turning lower, taking China Materials, CHIM, lower.

Chinese Small Caps And Technology leader,  Focus Media Holding, FMCN, is falling strongly lower

9)  … Zero Hedge reports As Spain’s Socialists Lose Local Elections, The Bond Vigilantes Stir.
Total Bonds, BND, rose manifesting a lollipop hanging man candlestick suggesting that Peak Credit was  achieved today.
Junk Bonds, JNK, fell lower and Leveraged Buyouts, PSP, fell strongly lower

Emerging Market Bonds, EMB, World Government Bonds, BWX, and International Corporate Bonds, PICB, documenting that the seigniorage of the world central banks has failed and that debt deflation, that is currency deflation is underway in bonds as well as stocks.  

Chart of Bonds, BND,

10) … The world’s leading banks fell strongly on the exhaustion of Quantitative Easing and the commencement of global competitive currency devaluation.
Australian Bank: Westpac Banking, WBK, -4.3, Emerging Market Financial, EFN, -3.8, Brazil Financials, BRAF, -2.8, China Financials, CHIX, -2.1, European Financials, EUFN,  -2.6, Banco de Chile, BCH, -2.5, Regional Banks, KRE -1.6

11) … Utilities, XLU, fell lower on a falling EURO, FXE and a topping out of bonds, BND.

12) … The S&P 500, SPY, breaks back below its 50-day moving average as a whole host of sectors fell strongly including
Semiconductors, XSD,
Steel,  SLX,
Retail, XRT,
Build and Construction, FLM,
Automobiles, CARZ
Wood and Paper Producers, WOOD
Manufactured Housing, CVCO

13) … Competitive currency devaluation coming as a result of the loss of Neoliberalism’s Seigniorage is seen in the cumulative loss of value of currencies since April 29, 2011 as is seen in the Finviz Screener of FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, CYB, BZF, XRU, FXY, BNZ, DBV, CEW, CCX

FXS, -7.1
SZR, -6.6
XRU, -5.4
FXE, -5.2
BZF, -4.5
FXA, -4.3
FXB, -3.6
FXC, -3.3
FXF, -2.2
FXM, -2.2
BNZ, -2.1
ICN, -1.9

Tyler Durden reports Belarus Just Devalued Its Currency By 56%; Thank God, I don’t live there as  food, FUD, and cooking oil, FUE, would be out of my purchasing power.

The US Dollar, $USD, up at 76.16 today.

Gold Rises As Stocks Led By Financials Fall Lower As World Currencies Fall Lower

May 23, 2011

Financial Market report for Friday May 20, 2011

1) … Competitive currency devaluation plus ongoing concerns over price controls on Chinese coal, and concerns over European Sovereign Debt turned stocks lower today.
CHIM -3.9%
XRT -1.7
WOOD -1,.2
DOO -1.7
SLX -1.6
PSCD -1.3
THD -1.1
ALUM, -1.4
IYR -1.0
ACWI -1.0

EUFN -2.3
EFN -1.0
XLF -1.4
KRE -1.3

EWP -3.5
NORW -2.7
EWG -2.7
EWI -3.4
TUR -1.9
VGK -1.7
RSX -2.1
RSXJ -1.2
HAO -1.7
GERJ -1.6
EWD -1.0

2) … Major world currencies, DBV, and emerging world currencies, CEW, fell lower while the US Dollar USD, $USD, traded by UUP, rose 0.74% to close at 75.65.

The chart of the Euro Weekly, FXE Weekly, shows that

Competitive currency devaluation at the hands of the currency and bond traders has meant a rally for the $USD

3) … Stocks falling lower today included
ARUN, -17.1%
USAP, -9.8
ADSK, -4.6
PKOH, -4.3
Retailers, RL, -4.3, BBBY, -2.0, ANF -1.7%, ULTA -1.8%
AEL, 1.7
PLCM -2.8%
Banks,  STD -3.9, BNPQY -5.2%, ING -3.5, UBS -1.5, RBS -1.7, LYG -3,.5, DB -3.9, STI -2.2
USB, 2.4, FITB, -2.1,
SFLY -4.0%
EXR, -2.3
WBC -2.9%
DAN -2.1
TEN -3.8
MOD -2.1
JCI, -1.2
LBY -3.3
YZC -2.7
LCAPA -2.1
AWI -1.3
LOW -1.3
HD -0,9
CVCO -1.5
KAR -1.3
SAH -4.9
AA, -2.5%
ISCA, -1.8%
TIN, -1.8%
BEAV, -1.9%
TAL, -1.7
QLTY, -1.2
WHR, -1.5

4) … Gold, GLD, rose 1.2%

5) … News of the day
Motorola XOOM is the First Tablet Built on Android 3.0, Motorola XOOM Wi-Fi, and has been available through Sprint Direct Ship sales channels for $600.

Digital Journal relates Enjoy The Crisp Taste of Soda Stream(SODA) Fountain; this stock is a short sell

Business Insider reports Netanyahu Officially Tells Obama That a Return to 1967 Borders Isn’t Going to Happen.

Between the Hedges reports The Spain sovereign cds is surging +7.17% to 259.88 bps, the Italy sovereign cds is gaining +4.06% to 158.87 bps, the UK sovereign cds is rising +3.7% to 59.17 bps, the Belgium sovereign cds is rising +3.83% to 146.42 bps and the US sovereign cds is rising +7.04% to 50.50 bps.

Mike Mish Shedlock writes  S&P revises Italy’s credit outlook to negative

Het Nieuwsblad reports that European Council President Herman Van Rompuy announced on Friday that he will probably seek a second term in office. And Open Europe asks Is Christine Lagarde the answer?

Der Standard reports French Finance Minister Christine Lagarde said Greece risks a default if it doesn’t step up consolidation efforts. “Greece risks a sovereign default and finance ministers have expressed strong doubts about the sluggish progress,” Lagarde said. Both issues “should be enough for now to stimulate the government in Athens to start privatizations.” Lagarde said privatization efforts “too slow.” At the same time there won’t be a restructuring or a reprofiling of Greek debt.

OpenEurope reports France and Germany at odds over permanent eurozone bailout mechanism; Spanish local elections could reveal pile of ‘hidden debt’. The FT reports that France and Germany are at logger- heads over the role of private creditors in potential sovereign defaults under the regime establishing the European Stability Mechanism (ESM), the eurozone’s post-2013 permanent bailout fund.

Germany is insisting that the treaty establishing the ESM contains a legal requirement which states that the ESM must include some form of private sector involvement in any disbursement of financial aid, with France pushing for a political rather than legal agreement. Germany is reportedly supported by Austria, Finland and the Netherlands, while France has the backing of the rest of the eurozone countries.

The WSJ reports that EU leaders are not backing down in their row with the ECB over potential restructuring of Greek state debt, as they believe the ECB will not fulfil its threat to stop accepting Greek debt as collateral if there were any form of restructuring as such a move would bankrupt Greek banks and threaten financial stability.  

A new journal article from CQ Global Researcher, titled “Future of the Euro”, cites Open Europe’s briefing on a Portuguese bailout and quotes Open Europe’s Raoul Ruparel saying: “Greece and Ireland are already bailed out and look like they won’t be able to finance themselves next year,” meaning that a debt restructuring is the only real long term solution. Meanwhile, EUobserver reports that the local elections in Spain, expected to result in a heavy defeat for the governing Socialist party, will also expose a pile of ‘hidden debt’ held by regional and municipal authorities, adding billions of euros to Spain’s official debt figures.

FD reports that the Greek crisis has led to a clash in the Dutch Parliament between Dutch Prime Minister Mark Rutte and Geert Wilders, whose PVV party supports the minority government despite being in opposition, with Wilders calling for the Dutch government to stop sending money to Greece. The article suggests that the row ultimately risks bringing down the minority government.

Meanwhile, The Parliament reports that UKIP MEP Marta Andreasen has urged the Commission to explain where the money will taken from should a country fail to pay back loans given by the €60bn European Financial Stabilisation Mechanism, which is backed by the EU budget and therefore all member states.
FT FT 2 WSJ Telegraph WSJ 2 CityAM Economist Welt: Leader FAZ: Leader FT 4 FT 5 EurActiv Irish Independent Les Echos EUobserver 2 FD Powned TV Telegraph: Warner WSJ: Mattich WSJ: Fidler WSJ: Philippe EUobserver

EUobserver reports that thousands of protestors continue to take to the streets in Spain ahead of this weekend’s regional and municipal elections to express their disillusionment with the political establishment, and to protest against political corruption and extremely high rates of youth unemployment in particular.
El País El Mundo EUobserver IHT FT 3

Iron Ore ‘Bubble’ Looms, Will Lower Price. The iron ore market has risen to “bubble” levels that will burst as new mines create oversupply of the steelmaking raw material, according to Baosteel Group Corp., China’s second-biggest mill. “There is a bubble in this market, many are gambling,” making acquisitions and investment expensive, Chairman Xu Lejiang said in an interview in Shanghai, without saying when prices would drop.

“Everyone who has money is rushing in to invest in iron ore.” Vale SA (VALE3), Rio Tinto Group and BHP Billiton Ltd. (BHP), the three biggest suppliers, plan to spend $45 billion on mines. Macquarie Group Ltd. predicts prices will average about half current levels after 2014 as demand growth in China, the world’s biggest buyer, slows. “The reason the big three keep spending is that they probably think growth in India, Brazil, Russia and South Africa will be sustained, and also because they believe the return on their input would beat those blind investments” by smaller rivals, Xu said. The biggest losers from the new mines may be the speculative companies that haven’t yet started production and their investors, Xu said.

Basic Materials: Iron Ore: Cliffs Natural Resources, CLF, -2.5

6) … The world has entered into the Age of Deleveraging as Quantitative Easing has now coming to bonds as well as stocks and commodities.
6A) … FactorShares 2X Gold/ Short S&P, FSG, is in an Elliott Wave 3 Up indicating that the seigniorage of Neoliberalism has failed on inflation destruction, demand destruction, exhaustion of quantitative easing, and competitive currency devaluation.

6B) … Peak Credit was likely achieved the week ending May 20, 2011 as both bonds and credit providers have both appeared to have topped out. Junk bonds, JNK, bonds overall, BND, appear to be topped out as well. Credit provision firms such as ECPG, COF, AXP, DFS appear to have topped out.

6C) … Doug Noland writes “The backdrop really turns uncertain when one ponders a repeat of last year’s scenario where Greek debt problems turn systemic through a dislocation in the CDS market.  And if, once again, such a development leads to euro weakness, the resulting boost to the dollar could further catch players on the wrong side of various “carry trades” and other bets gone astray.  As I noted above, the end of QE2 doesn’t have to mean liquidity issues for the marketplace.  Then again, the end of quantitative easing becomes a major market liquidity event if the marketplace is in the midst of a serious bout of speculative de-risking and de-leveraging.  Much to contemplate and analyze over the coming days and weeks.”

6D) … The Optimized Carry ETF, ICI, entered an Elliott Wave 3 Down this week.

6E) … The failure of Neoliberalism’s seigniorage is seen in world stocks relative to world government bonds, VT:BWX, falling lower yet again.

6F) … John Mauldin writes All for One Euro and One Euro for All?

7) …European Regional Economic Governance will emerge out of sovereign debt crisis before 2013
Social unrest in Spain and voter disapporoval for the current European policital regimes, coupled with ongoing sovereign debt issues, is setting the stage for the establishment of ten regions of global governance as called for by the Club of Rome in 1974.

Bible prophecy of Revelation 13:5-10,  reveals that a Chancellor, that is the Sovereign, and Revelation 13:11-18 reveals that a Banker, that is the Seignior, will arise to provide a new seigniorage, that is a new moneyness, based not upon sovereign debt, but rather political coordination of their word, will and way.

Bible prophecy of Reevlation 13:3, reveals that out of Gotterdammerung, that is an investment flameout and financial collapse, state leaders will announce regional framework agreements, which waive national sovereignty and establish regional economic and political governance as well as assign stakeholders to run industries for the regional good  These will oversee the factors of production such as labor and capital to establish state corporatism.

An Iron Chancellor, the Sovereign, perhaps Herman Van Rompuy, and an Adept Banker perhaps Mario Draghi, or Christine Lagarde, will provided a new seigniorage.which will be for the most part be political and not economic; such leadership will require and enforce great austerity and mass layoffs in socialist state regimes particularly the periphery nations, that is the PIIGS.

While sovereign debt has been the underlying seigniorage of the Age of Neoliberalism … The word, will and way of the Sovereign and the Seignior will be the seigniorage.the age of Authoritarianism.

European Federalism has been creeping in scope and power since World Ware II, with the aid of the Spinelli Group and others. A Euro Centric Continent, now precludes a return to an age of sovereign nation states.

Sovereign state currencies such Greek Drachma or the German Deutsche Mark are a pipe dream of the Mises Institute and Austrian economists. A much greater likelihood is the rise of a Euro German Empire, that is a revived Roman Empire, as suggested in Daniel Chapter 2, with a polical leader and a banking leader whose power will rival and exceed those of Charlemagne.

Greece Promises To Double Austerity Measures To Keep On Track For Continued Seigniorage Aid

May 19, 2011

 Kathimerini reports Greece promised to double the size of austerity measures for this year, from €3bn to €6bn, after coming under increasing pressure to bring its budget program back on track. The government will announce in the next few days measures that will exceed €6bn measures with the aim of reducing spending and measures to increase revenue, said Georgios Papaconstantinou. This may include redundancy layoffs in the public sector, new recruitment will be freezed. Georgios Papapandreou already announced 150,000 job departures in the public sector.

Inflation Destruction Is A Distinguishing Characteristic Of Both The Failure Of Neoliberalism’s Seigniorage And The Age of Deleveraging

May 18, 2011

Inflation Destruction Is A Distinguishing Characteristic Of Both The Failure Of Neoliberalism’s Seigniorage And The Age of Deleveraging

Financial Market report on the toxic effect of quantitative easing as of May 18, 2011

Inflation Destruction is the fall in investment value that accompanies derisking and deleveraging out of investments that were formerly inflated by money flows to, and carry trade investing in, high interest paying financial institutions, profitable natural resource companies, and high growth companies.

Inflation destruction begets more of the same as former vigilant investors turn short sellers, and carry out their attack on their former investment, by going short the 200% ETFs, such as ProShares Ultra India, INDL, and Ultra BRICS, BRIL as is seen in the chart of EET, INDL, and BRIL  

Inflation Destruction may precede Debt Deflation which 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.”

The Age of Leverage was characterised by debt expansion, credit liquidity, stability, world wide currency expansion, economic growth and expansion and prosperity … yet with competitive currency devaluation and the rise of the US Dollar, the world has passing into The Age of Deleveraging characterised by inflation destruction, sovereign debt failure, debt deflation, credit ill-liquidity, instability, economic contraction and austerity.

Between The Hedges reports The Spain sovereign cds is rising +2.8% to 240.50 bps, the Greece sovereign cds is rising +3.07% to 1,313.15 bps and the US sovereign cds is jumping +11.1% to 45.75 bps. India’s Sensex continues to trade very poorly, falling another -.28% overnight, despite gains in the rest of Aisa, and is now down -11.81% for the year. As well, Brazil’s Bovespa is falling another -.84% today and is down -8.98% ytd. While today’s commodities, DJP, surge is a short-term positive for the broad market, it remains a longer-term negative as it intensifies emerging market inflation fears and raises the odds of hard-landings in those economies.

The Financial Express reports Worst Performer Among BRIC, Indian Bonds to Extend Drop on Spiraling Fuel Prices. Indian bonds, the worst performers among Bric nations, may extend declines as the biggest increase in gasoline prices in three years threatens to accelerate inflation, banks and primary dealers say. Yields on 10-year government debt will rise 10 basis points, or 0.10 percentage point, by June 30 to 8.40%, the highest level since October 2008, according to the median estimate of nine analysts in a survey.

The chart of HDFC Bank Ltd. HDB, compared to India, INDY, India Small Caps, SCIN,China Small Caps, HAO, Brazil Small Caps, BRF,and Russia Small Caps, RSXJ …. HDB, INDY, SCIN, HAO, BRF, RSXJ shows that inflation destruction is causing a failure of the seigniorage of both the US Central Bank as well as the seigniorage of the India Central Bank resulting first in a destruction of banking capital and then a destruction of investment capital especially in the BRIC small cap stocks.

Much can be said the same of Turkey, as seen in the chart of TUR and HDB

Debt Deflation, that is currency deflation is underway in the India Rupe, ICN,

An investment maxim is, in a bull market be a bull and buy on price dips; in a bear market be a bear and sell into rises. Today’s rally was a short selling opportunity in SIVR, IEZ, AMJ, XME, XLE, EEM, YAO, XLB, KOL, IYJ, IWO, RZG, EWY, IYM,  

Debt Deflation, Age of Deleveraging, Sovereign Debt Failure, Inflation Destruction, Failure of Neoliberalism, Quantitative Easing Exhaustion,  EEB, TUR, HDB, INDY, SCIN, HAO, BRF, RSXJ, EET, INDL, BRIL, ICN , SIVR, IEZ, AMJ, XME, XLE, EEM, YAO, XLB, KOL, IYJ, IWO, RZG, EWY, IYM,

Industrials, Semiconductors, Aluminium Manufacturers, Natural Gas Producers, Shipping And Basic Materials Fall Lower On The Continuing Failure Of Neoliberalism’s Seigniorage

May 17, 2011

Financial Market Report for May 17, 2011

1) …The Continuing Failure of Neoliberalism is seen in Bloomberg’s report Production Stalls on Autos, Housing Starts Fall. Industrial production in the U.S. unexpectedly stalled in April and housing starts dropped, posing hurdles to a rebound from the first quarter’s economic slowdown. Output at factories, mines and utilities was unchanged after a 0.7 percent gain in March, figures from the Federal Reserve showed today, led by a drop in auto production after parts supplies were disrupted by the earthquake and tsunami in Japan. Work began on 523,000 houses at an annual pace, down 11 percent, as tornadoes and floods in the South shut down construction sites.  

The ongoing failure of Neoliberalism’s Seigniorage and Quantitative Easing Exhaustion. is seen in
Aluminum Manufacturers, ALUM, -2.0% … Natural Gas Partnership, AMJ, -1.7%  
Shipping, SEA, -1.4% Bloomberg reports The Baltic Dry Index, $BDI, a measure of commodity shipping costs, had a sixth consecutive fall on fleet expansion and weaker demand to haul grain cargoes. The index fell 1.3% to 1,274 points today. That’s the lowest since April 28.The “grain season is starting to wane out of South America,” Peter Norfolk, an analyst at Freight Investor Serviced Ltd. in London, said. There’s a “relentless” supply of capesizes being delivered to owners and insufficient iron-ore cargoes to match it, he said.
Semiconductors, XSD, -1.2% … Industrial, IYJ, -1.2% … Materials, XLB, -1.2%

3) …. Utilities, XLU, rose to a new rally high on lower interest rates. And Bonds, BND, continued their rally as the Interest Rate of the 10 Year US Government Note, $TNX, fell lower. Of note Junk Bonds, JNK, failed to participate in the rally, with LQD, BLV, MUB, ZROZ, MBB, TLT, IEI, and EDV rising

4) … Stocks falling lower included:
Retail: Ulta Salon Cosmetics And Fragrances, ULTA,
Transportation: Railroad: Rail America, RA,
Technology: Turbines: Precision Cast Parts, PCP,
Technology: Active Power, ACPW,
Technology: Instruments: Mettler Toledo Intl, MTD,
Communications Equipment: Alcatel Lucent, ALU
Consumer Discretionary: Zip Car, ZIP,
The Morgan Stanley Cyclical Index Transportation Component: Goodyear Tire. GT.
The Morgan Stanley Cyclical Index: Basic Materials Component: Alcoa Aluminum, AA
The Morgan Stanley Cyclical Index: Industrial Component: Eaton. ETN.
The Morgan Stanley Cyclicals Index: Packaging: Temple Inland, TIN,
The Morgan Stanley Cyclical Index: Agriculture Industry Component: Deere, DE
Agriculture Industry: CNH Global, CHN,
Agriculture Retail Company: Titan Machinery, TITN,  
Basic Materials: Natural Gas Partnership: DCP Midstream Partners, DPM,
Basic Materials: Natural Gas: Chesapeake Energy, CHK
LED Manufacturer: CREE Inc, CREE,
Health Care: Long Term Health Care Facility: Sunrise Senior Living, SRZ,
Consumer Goods: Consumer Brands: Iconix Brand Group, ICON,
Consumer Goods: Automobile Parts: WABCO Holdings, WBC
Consumer Goods: Automobile Parts: Tenneco Automotive, TEN,
Consumer Goods: Automobile Parts: TRW Automotive Holdings,TRW,
Consumer Goods: Automobile Parts: Titan. TWI.
Industrial: Machine Tools: Timken, TKR,
Industrial: Hydraulic Equipment: Parker Hannifin, PH,
Industrial: Diversified Machinery: Actuant Corporation,  ATU
Industrial MRO Services: DXP Enterprises, DXPE,
Industrial: Diversified Equipment: Cummins. CMI,
Industrial: Construction Equipment: Caterpillar, CAT,
Industrial: Small Tools: Welding and cutting tools: Lincoln Electric, LECO,
Industrial: Machine Tools: Flow Intl, FLOW,
Construction Equipment: Terex,TEX,
Consumer Services: Restaurant: Middleby, MIDD
Consumer Goods: SCP Pool, POOL,
Industrial: Design And Build: Foster Wheeler, FWLT,
Industrial: Design And Build: KBR Inc, KBR,
Consumer Discretionary: Entertainment: Cedar Fair L.P., FUN,
Consumer Goods: Clean Technology: Batteries Exide Technologies, XIDE
Office Supplies: ACCO Brands,ABD,
Semiconductors, SanDisk, SNDK
Semiconductors, Micron, MU
Semiconductors, Texas Instruments, TXN
Financial Firm: Australian Bank: Westpac Banking, WBK

5) … Will an Iron Chancellor, such as Herman Van Rompuy, and an Adept Banker, such as Mario Draghi Establish Regional European Economic Governance to provide order and moneyness from a soon coming investment flameout caused by the fall of world currencies and the collapse of sovereign debt?

Economic Policy Journal reports  EuroZone Endorses Draghi to Become Next ECB President
The ministers from the 17 nations that use the euro endorsed former vice-chairman of Goldman Sachs International, Mario Draghi, 63, to take over as head of the European Central Bankin November, Luxembourg’s Jean- Claude Juncker, who leads the group, told reporters in Brussels late yesterday. ECB President Jean-Claude Trichet’s eight-year term ends on Oct. 31. Juncker continued: [Draghi] is a central banker who has proven throughout his career that he holds the principles of the euro dear. He is a man who brings together all the necessary qualities to be a worthy successor to Jean-Claude Trichet, who was an eminent president.  Following the vote by European Union finance ministers, the nomination will be forwarded to the European Parliament so that EU leaders can make a final decision in June.

Failure of Neoliberalism, Neoliberalism, Quantitative Easing Exhaustion, Seigniorage, The Seignior, The Sovereign, European Economic Governance, Mario Draghi

Austerity Measures Take Personal Toll In Greece As IMF Chief Is Arrested For Alleged Sexual Assault

May 16, 2011

Financial Market Report for May 16, 2011

1) … Bloomberg reports IMF’s Strauss-Kahn Ordered Held Without Bail. International Monetary Fund chief Dominique Strauss-Kahn, accused of attempting to rape a hotel maid, was ordered held without bail by a New York judge. Roubini gives a thumbs up to Stan Fischer as the replacement for  IMF Chief; formerly #2 at the IMF and now head of the Israeli central bank. Hat Tip to EconomicPolicy Journal

2) … Landon Thomas of the the New York Times reports Money Troubles Take Personal Toll in Greece. A year after Greece received a bailout from Europe and the I.M.F., people’s anxiety has grown into deep despair.

His face contorted with anguish, Anargyros D. recounted how he had lost everything in the aftermath of the Greek economic collapse — the food-processing factory founded by his father 30 years ago, his house, his car, his Rolex, his pride and now, he said, his will to live.
“Many times I have thought of taking my father’s car and driving it into a wall,” he said, declining to give his last name because he was reluctant to draw attention to himself under these circumstances.
Hunched over and shaking, he sat last week in the spartan office of Klimaka, a social services organization here that provides help to the swelling numbers of homeless and depressed Greek professionals who have lost their jobs and their dignity.
“We were the people in Greece who helped others,” he said. “Now we are asking for help.”

It has been one year since Greece avoided bankruptcy when Europe and the International Monetary Fund provided a 110 billion euro ($155 billion) bailout. While no one expected the country to reverse its sagging fortunes quickly, the despair of Greeks like Anargyros D. reflects a level of suffering deeper than anyone here had anticipated.
Economists are predicting a 4 percent contraction in gross domestic product this year, and the data support the pessimism. Cement production is down 60 percent since 2006. Steel production has fallen, in some cases more than 80 percent in the last two years. Analysts say that close to 250,000 private sector jobs will have been lost by the end of the year, pushing the unemployment rate above 15 percent.
With headlines shouting of credit rating downgrades, panicky Greeks are taking their money from banks. Greece lost 40 billion euros of deposits last year, and bankers say withdrawals have increased recently.
These struggles have again made Greece an urgent matter for the 17-nation euro zone, whose finance ministers are to meet on Monday to discuss Greece and the debt crisis that has defied Europe’s yearlong efforts to contain it. On the table will be whether Greece, which is now projected to miss its deficit target by as much as two percentage points of G.D.P. this year, will be granted another round of loans totaling as much as 60 billion euros, and what further budget cuts would be required in return.
But there is serious debate about whether this kind of prescription — subjecting Greece to more cuts and sacrifice in order to justify a second installment of funds from a reluctant Europe — is the right one.
This form of remedy violates two basic economic principles, according to Yanis Varoufakis, an economics professor and blogger at the University of Athens. “You do not lend money at high interest rates to the insolvent and you do not introduce austerity into a recession,” he said. “It’s pretty simple: the debt is going up and G.D.P. is going down. Have we not learned the lesson of 1929?”

The arrest on Saturday of Dominique Strauss-Kahn, the head of the I.M.F., on charges related to sexual assault could create new uncertainty about a push for more severe austerity. Mr. Strauss-Kahn generally favored a less onerous approach, and if he is forced to resign it is possible that tougher conditions preferred by Germany will be imposed.

But while the debate over how to fix the Greek economy has played out in public, the ways in which this slump is tearing at the country’s social fabric are less well known. The transformation has been jarring to a citizenry long accustomed to a generous welfare state.
Social workers and municipal officials in Athens report that there has been a 25 percent increase in homelessness. At the main food kitchen in Athens, 3,500 people a day come seeking food and clothing, up from about 100 people a day when it first opened 10 years ago.
The average age of those who show up is now 47, down from 60 two years ago, adding to evidence that those who are suffering now are former professionals. The unemployment rate for men 30 to 60 years old has spiked to 10 percent from 4 percent since the crisis began in 2008.
Aris Violatzis, Anargyros D.’s counselor, says that calls to the Klimaka charity’s suicide help line have risen to 30 a day, twice the number two years ago.
“We cannot imagine this,” Mr. Violatzis said. “We were once the 29th-richest country in the world. This is a nation in deep emotional shock.”

Evidence of the emotional and social shock was abundant in Athens last week. Even as I.M.F. and European banking officials worked with Greek officials to hash out the contours of a second bailout package, a nicely dressed middle-aged woman with silver buckles on her shoes sifted through the garbage cans outside the five-star hotels where many of these officials were staying.
At dusk, riot police fired tear gas at rock-throwing protesters as tourists and workers on their way home took cover.
Laid off construction workers have holed up in abandoned villas. A security guard fired by one of the many downsizing Greek companies said he had spent the last year sleeping in the back seat of his battered hatchback. And a chef trained in the premier cooking school in Athens spent 18 months sleeping on park benches after the restaurant where he worked eliminated his job. A homeless charity recently gave him shelter.
While aid workers refer to these people as a new generation of homeless, the Greek government does not officially recognize the homeless as a social category in need of assistance, says Anta Alamanu, who runs a privately financed shelter for Klimaka, the social services group.
As a result there are no government-supported homeless shelters as they exist in other parts of Europe or in the United States.
When Kostas DeLazaris, 47, lost his tourism job on the island of Corfu in 2007, he joined a construction firm in Athens, only to lose that job 10 months ago as the once-buoyant building industry ground to a halt. Now he sleeps on the floor in an abandoned house, sharing the space with two Greek women and a family of Bangladeshi immigrants.

He was a dedicated union man when he worked in tourism, serving as vice president of his local branch. But on the same day last week that his former peers marched on Parliament in protest, he said he would not be joining them.
“I feel betrayed,” he said, his voice rising in anger. “I paid my dues. I was part of the masses, and now I am on the streets.” He snorts at the possibility of a new deal with Europe.
“That is a dead end,” he said. “There will be an earthquake instead and blood will be spilt.”

Indeed, there are analysts who argue that a social flare-up is in the making, fueled by the divide between the hard-hit private sector and a public work force of about one million strong that so far has not experienced significant job losses.

“This is an explosive situation, and there could well be violence,” said Stefanos Manos, a former economy minister who has advocated more aggressive spending cuts. “Especially as those who lost their jobs were earning 50 percent less than those who kept them.”

There is mounting criticism that Prime Minister George A. Papandreou, after a burst of changes last year, as lost his nerve. A plan to raise 50 billion euros by 2015 by privatizing the publicly owned power and train companies has been a bitter disappointment. Those companies, home to powerful unions that protect what some view as thousands of excess workers, remain largely untouched by reforms.
Mr. Papandreou has achieved some success in opening up closed professions and reforming the country’s pension and retirement systems. And he still retains the support of many Greeks, who believe that there is no better alternative.
But his critics say he may be avoiding the difficult choices in the belief that, as the saying goes here, the god of Greece will save Greece by means of a fresh European bailout.
That is what Richard Parker, a political economist from Harvard who is serving as one of Mr. Papandreou’s top outside advisers, thinks should happen. Germany, he says, has to overcome its Calvinist instincts and write Greece one big check so that it can continue its economic overhaul process.
“Greece’s debt is just 3 percent of the euro zone G.D.P.,” said Mr. Parker, who has known Mr. Papandreou for more than 40 years. “And the price of tipping over Europe will be much larger. My attitude is, give them the money.”

Greece may well get the assistance, with strings attached, of course. But whether that will help lift Anargyros D. out of his despondency remains unclear. At age 41, he lives off his father’s monthly pension of 962 euros, which is down from 1,500 euros a year ago, and he must borrow money for the bus from his home in the Peloponnese region to his counseling sessions in Athens.
“Everything was coming up roses,” he said, mashing a cigarette into the ashtray before him. “And then the banks took it all away from us.”

Chart of the Euro, FXE,

2) … Non commodity stocks and sectors which led the Quantitative Easing and QE 2 rally fell strongly as exhaustion of Quantitative Easing Expands

Stocks falling significantly today include REDF

Technology: Tools Robot Corp, IRBT,

Processing Systems And Equipment: Polycom, PLCM,

Aerospace, BE Aerospace, BEAV

Networking ETF, IGN, Allot Communications, ALLT, Acme Packet, APKT, Network Appliance, NTAP, Networking: Aruba Networks, ARUN, Juniper Networks, JNPR,

Software ETF: IGV, Saba Software, SABA, National Information Consortium, EGOV, Autodesk, ADSK

Small Cap Technology, PSCT

United States Small Cap Growth Stocks, IWO,

The Nasdaq 100, QTEC,

Semiconductors, XSD,  CEVA Inc, CEVA;  NetLogic Microsystems, NETL,  

Internet Retail, HHH, Amazon, AMZN, Priceline, PCLN, Google, GOOG

Small Cap Pure Growth, RZG,

Consumer Goods: Tableware products: Libbey, LBY,

Consumer Discretionary: Entertainment: Cedar Fair L.P., FUN

Health Care: DUSA Pharmaceuticals, DUSA,  Jazz Pharmaceuticals, JAZZ

Restaurants: Chipotle Mexican Grill, CMG,

Consumer Discretionary: Consumer Services: Shutterfly, SFLY,

Leisure: Gaming ETF, BJK: Wynn Resorts, WYNN, Las Vegas Sands, LVS, MGM Resorts, MGM

Printed Circuit Boards: Diodes, DIOD

Real Estate: Asset Management: Blackstone Group, BX,

Internet Software: Internet Capital Group, ICGE,

Technology: Capstone Turbine: CPST

Technology: Lasers: IPG Photonics, IPGP

Real Estate: Industrial REIT: First Industrial Realty Trust, FR,

Railroad: Genesee and Wyoming Railroad, GWR,

Retail: Ulta Salon Cosmetics And Fragrances, ULTA,

Retail: Sonic Automotive, SAH,  Advanced Auto Parts, AAP

Communications Equipment: Alcatel Lucent, ALU,

Communications Equipment: Apple Ecosystem ETF: Smarthphone, FONE,

3) … India’s HDFC Bank, HDB, leads the emerging market financials, EFN,  and stocks, EEM, lower. 
Between The Hedges relates Bloomberg reports Credit-default swaps tied to Indian banks are rising the most this month among the so-called BRIC nations as banks increased provisions, saying their customers will feel the strain of higher interest rates. Contracts tied to government-owned State Bank of India, which some investors perceive as a proxy for the nation, increased 9 basis points to 173 basis points, according to CMA.

4) … Inflation Destruction is taking its toll as Bloomberg reports Manufacturing in New York Slows More Than Estimated on Raw-Material Costs.
Manufacturing in the New York region expanded at a slower pace than forecast in May, showing that surging raw-material costs are hurting confidence. The Federal Reserve Bank of New York’s general economic index fell to 11.9 from a one-year high of 21.7 in April, the central bank reported today.

5) … Bloomberg reports Oil Drops on Economy Risk; BofA’s Blanch Sees Demand Destruction.
Oil, USO, DBC, and BNO, dropped for the first day in three in New York after President Barack Obama said failure to raise the U.S. debt ceiling may unravel global finances and threaten growth in the world’s biggest crude consumer.  Futures slipped as much as 1.3 percent after Obama said the U.S. “could have a worse recession than we’ve already had,” according to a segment taped for CBS’s “Face the Nation” program. Prices also slid on concern Greece’s debt crisis may worsen, threatening Europe’s economic growth. Oil may drop in the second half of the year amid signs prices are causing demand to slow, said Francisco Blanch, head of Global Commodity Research, Bank of America Merrill Lynch. Crude for June delivery slid as much as $1.30 to $98.35 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.79 at 1:06 p.m. Sydney time.
Gasoline, UGA, crashed, falling 5.3%

6)… Marketwatch Lowe’s(LOW) Cuts Forecast as Sales Drop Unexpectedly; LOW, fell 3.6%

6) … Zero Hedge reports Treasury Confirms Debt Ceiling To Be Breached Today; Will Tap Pension Funds. I ask does it have the authority to do so?

7) … Zero Hedge reports 2 Chinese Bond Auctions Failed.this world government bonds, BWX, have turned parabolically lower  

8) … Might an Iron Chancellor, a Sovereign,  and an Adept Banker, a Seignior, rise to leadership in Europe as a type of revived Roman Empire?
… whose power might rival that of Charlemagne and be the driving force behind a feudal state corporatism that established regional European economic governance?  

Reuters reports Angela Merkel, IMF Talks Cancelled After Dominique Strauss-Kahn Arrest. Talks between German Chancellor Angela Merkel and arrested IMF chief Dominique Strauss-Kahn, set for Sunday, have been cancelled as the International Monetary Fund will not send a replacement to Berlin, a government source said … And ECO reports that Niall Ferguson, a professor of history at Harvard University in the U.S., said Lehman Brothers Holdings Inc. seems like a “well-run bank” compared with the debt on some German lenders’ balance sheets, citing an interview. A restructuring of Greek debt is “unavoidable,” Ferguson said. The future of the eurozone largely depends on Germany, he said.