Report on the Euro for August 14, 2011
1) … News reports document that the twin pillars of the regime of Neoliberalism consisting of sovereign debt and carry trade investing are crumbling and that the new regime of Neoauthoritarianism is coalescing.
We are witnessing the beginning of the end of traditional credit … Credit, particularly commercial paper, is evaporating, as Bloomberg reports Dollar Libor may rise to .5 percent by December, Barclays says. The rate banks say they pay each other for three-month dollar loans may rise to a one-year high if European policy makers fail to stymie investors’ concern the region’s debt crisis is worsening, according to Barclays Plc. The three-month dollar London interbank offered rate, or Libor, will reach 0.5 percent by the end of the year, Barclays strategist Joseph Abate wrote in a note to clients Sept. 12. Libor was fixed yesterday at 0.347 percent, according to the London-based British Bankers’ Association. The rate has risen this year from as low as 0.245 percent on June 15. European efforts to contain the region’s debt crisis have failed to quell speculation that Greece may default on its debt and that the crisis may spread. The yield on the Greek two-year note reached a record 77 percent yesterday. Investors question the ability of Greece to implement austerity moves fast enough to get a sixth payment from last year’s 110 billion-euro ($151 billion) bailout. “Unless there is some sort of clarity out of Europe and some type of resolution to the sovereign-debt crisis there is really nothing to prevent Libor from going higher,” said New York-based Abate in a telephone interview yesterday. “There is stress in the financial system. We’ve already seen the volume of commercial paper issuance falling, with the amount of daily issuance down by about half, and the term of the paper being issued has shortened up. ”
We are witnessing the beginning of the end of traditional moneyness as the ECB now provides seigniorage, that is moneyness, as Bloomberg reports Deposit flight from European Banks means risk piling up at ECB. European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for safe havens, a trend that could worsen economic and financial conditions. Retail and institutional deposits at Greek banks fell 19 percent in the past year and almost 40 percent at Irish lenders in 18 months. Meanwhile, European Union financial firms are lending less to one another and U.S. money-market funds have reduced their investments in German, French and Spanish banks. While the European Central Bank has picked up some of the slack, providing about 500 billion euros ($685 billion) of temporary financing, banks are cutting lending, which could slow growth in their home countries. They’re also paying more to keep and attract deposits, or, in the case of Italy, selling bonds to retail customers for five times the interest they offer on savings accounts — which will erode profitability. “All of this is symptomatic of a lot of fear in the European financial sector,” said Kash Mansori, senior economist at Experis Finance in Charlotte, North Carolina, which advises U.S. and European companies. “It shows that even European banks don’t trust each other anymore, so they’re taking their money out of the EU system. It’s similar to the distrust that happened worldwide in 2008.” Deposits by financial institutions in Greek banks, which make up 21 percent of the total, have fallen by one-third since the beginning of 2010, while those by non-financial firms and residents dropped 9 percent, according to Bank of Greece data. In Germany, deposits by financial institutions, which account for one-third the total, declined 12 percent over the same period and 24 percent since the September 2008 collapse of Lehman Brothers Holdings Inc., ECB figures show. In France, where the erosion started last year, the same type of deposits, which make up half the total, are down 6 percent since June 2010. They have fallen 14 percent since May 2010 at Spanish banks, where they account for one-fifth of the total. To make up the deficit, firms are leaning on the ECB for short-term funding. Borrowing by Italian lenders from the central bank more than doubled to 85 billion euros between June and August. Greek and Irish banks each took about 100 billion euros from the ECB in August. Irish lenders also got 56 billion euros from their domestic central bank. Portuguese banks borrowed about 46 billion euros from the ECB, while Spanish banks took 52 billion euros in July. By accepting those countries’ bonds as collateral in exchange for funds, the ECB is piling up risk, said Desmond Lachman, a fellow at the American Enterprise Institute in Washington. In the event of a default, the ECB’s losses would be borne by the EU’s member states. Lending to the region’s banks by the ECB and other central banks is about seven times the capital of the Eurosystem, the consolidated balance sheet of all euro zone central banks. “If there are sovereign defaults, the ECB will be left with garbage that has been accepted as collateral,” said Lachman. “It’s putting EU taxpayers’ money at risk in a very non-transparent way. But there’s no alternative. The ECB is the only game in town.”
We are witnessing the beginning of the end of carry trade lending as MarketWatch reports Nomura reportedly to cut 5% of jobs in Europe.
We are witnessing the beginning of the end of Greek state worker jobs, as well as the end of Greek Socialism as Financial Times reports Richard Sulik, chairman of Freedom and Solidarity, one of Slovakia’s four ruling parties, said his party is opposed to the proposal to expand the European Financial Stability Facility because the EFSF “is not the right solution for the debt crisis,” citing a telephone interview. “The eurozone is just trying to solve the debt crisis with more debt,” Sulik said. The best solution for Greece would be for it to declare bankruptcy, Sulik said
We are witnessing the beginning of the end of student lending as My Budget 360 reports The $1 trillion student loan market begins to implode
We are witnessing the beginning of the end of sovereign nation states as Between The Hedges reports the Western European Sovereign CDS Index is making another all-time high ….. And as Financial Times Deutschland reports, Jens Weidmann, The Bundesbank president urged the government to quickly decide on whether it wanted to continue on the basis of the existing arrangements or whether it intended to go down the road of a “big leap” towards a fiscal union. “From my point of view a decision has to be taken within a short time”.
We are witnessing the beginning of the end of democracy in Europe, as Steven Erlanger of the NYT reports “They have to speak with one tongue, not 17, or so”, says Kurt Hubner of European Studies at the University of British Columbia Vancouver.
2) … While Greece and others may be ejected from the EU, Bible prophecy of Revelation 2:27 communicates that God is destroying nations and national sovereignty, so as to reveal the sovereignty of his Son by proviing a Super European Government, as part of a Ten Toed Kingdom of regional economic government as foretold in bible prophecy of Daniel 2:42.
Out of a sovereign debt and banking collapse seen in Revelation 13:3, One Leader, the Sovereign Revelation 13:5-10, and His Seignior, Revelation 13:11-18, will arise to speak for and to the Eurozone, and together with his partner, the Seignior, seen in they will provide seigniorage, that is moneyness, based upon diktat of austerity and debt servitude.
Some make the case for breakup of the Eurozone. Edward Harrison wrote in early September in Credit Writedowns breakup of the euro zone is likely And Mike Mish Shedlock in June, wrote “the policy decisions that governments and the EU are making cannot be maintained politically in the periphery or in the core”. And Nouriel Roubini wrote the Eurozone could break up over a five-year horizon. And today, Mr. Shedlock writes: “We both stated that the key to maintaining the euro zone at all was the potential for closer integration of the member states. But the German Constitutional Court decision makes this nearly impossible.” And Ambrose Evans Pritchard relates German court curbs future bail-outs, bans EU fiscal union.
I give Austrian Economists credit for communicating that Eurobonds are dead on arrival. They and Ron Paul, have a philosophy fathered are Rothbard and Hayek, who envision a world with sovereign individuals and sovereign nations each with its own currency. But the world is evolving into greater state corporatism, that is statism which will manifest in all of mankind’s seven institutions and ten world regions as ordained in Revelation 13:1.4,
Sovereign leaders will be replacing sovereign individuals. Freedom and choice are illusions on the Neoauthoritarian desert of the Real. Angela Merkel and Nicolas Sarkozy are ambassadors of regional economic government, as Kathimerini reports Merkel, Sarkozy and Papandreou will hold talks today with Papandreou expected to outline plans for privatisation and further spending cuts. They are laying down the rule of diktat in the EU.
The Beast Regime of Neoauthoritarianism, foretold in Revelation 13:1.4, is built upon many; it is fathered by the 300 luminaries of the Club of Rome, whose 1974 Call is clarion, compelling, and comes with authoritarian imperative for regional economic government, as an answer to the chaos coming from unwinding carry trades and deleveraging stocks, as well as the failure of sovereign debt.
While Greece and others may be ejected from the EU, fate is operating to destroy nation states, and to provide a Super European Government. Between The Hedges relates Sueddeutsche Zeitung reports Italy is prepared to give up “all sovereignties necessary” to allow the creation of a European central government,” citing Foreign Minister Franco Frattini. The European Union’s existing contracts should be extended or changed if necessary to incorporate a “stabilizing finance mechanism,” according to the report. The ECB should gain a “political role,” while remaining an independent institution, Frattini said.
Because of the severity of a soon coming sovereign debt and banking collapse, Eurozone Leaders will waive national sovereignty, and announce regional framework agreements. One Leader, the Sovereign, will arise to speak for and to the Eurozone; and together with his partner, the Seignior, they will provide seigniorage, that is moneyness, based upon their combined word, will and way.
The European Super Government will be a type of revived roman empire, and will feature a Fiscal Union, whose Iron Chancellor, will rule with diktat, enforcing debt servitude and austerity. The people will be amazed by the new seigniorage, that is the new moneyness, and follow after the Beast Regime of Neoauthoritarianism, giving it their allegiance as held forth in Revelation 13:3-4.
The prophet Daniel in Daniel2: 31-43 foretold that great leaders would emerge as history unfolds. These have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority. Soon ten kings will come to rule, each in his own regional power base. The coming President of the EU will be one knowledgeable with the scheme of framework agreements. A leading individual for this position is Herman Van Rompuy, as he orchestrated the original Greek bailout, and as who the Daily Mail reports as saying, the age of the nation state is over and the idea that countries can stand alone is an ‘illusion’ and a ‘lie’
For now, liquidity is being supplied to the European Banks as Bloomberg reports the ECB lends Dollars to European Banks. The European Central Bank said it will lend dollars to two euro-area banks tomorrow, a sign they are finding it difficult to borrow the U.S. currency in markets. The ECB allotted $575 million in a regular seven-day liquidity-providing operation at a fixed rate of 1.1 percent. It’s the first time since Aug. 17 that a lender requested dollars from the ECB. The spot rate was $1.36.
Chart of The Euro, FXE, show a close at 136.99