Archive for November, 2011

Stocks Rally Strongly As Wolfgang Schaeuble Says The Goal Of The EU States Is A Stability Union

November 29, 2011

Financial market report for Monday November 28, 2011

 1) … World Stocks led by the European Stocks rose today as Wolfgang Schaeuble called for the EU member states to create their own Stability Union.

World Stocks, ACWI, VSS, Material Stocks, XLB, IYM, Russell 2000, IWM, Financials, XLF, IXG, FGEM, EMFN, KCE, CHIX, and European Stocks, VGK, FEU, EWG, EWI, EWP, EWQ, EUFN, EWO, EWN, EWD, blasted higher today.

National Bank of Greece, NBG, Bank of Ireland, IRE, and Deutsche Bank, DB, led world banks seen in this Finviz Screener, and US Banks, RWW, KRE, IAT, KBE, higher. The FT reports that European Banks face a funding gap of 241 Billion this year. This means that the banks are insolvent and will all have to be and soon will be nationalized.

Energy producers, XOP, WCAT, PSCE, soared.

Chinese Materials, CHIM, Copper Miners, COPX, Steel, SXL, Silver Miners, SIL, Gold Miners, GDX, Uranium Miners, URA, Aluminum Miners, ALUM, Rare Earth Miners, REMX, and Coal Miners, KOL, rose strongly.

Turkey, TUR, led emerging markets, EEM, higher.

US Stocks, VTI, rose the most in a month on Euro hopes and strong retail sales.

Solar, TAN, Small Cap Value, RZV, Small Cap Growth, RZG, Energy Service, OIH, IEZ, XES, Homebuilders, XHB, ITB, rose strongly.

Miners, MXI, seen in this Finviz Screener, rose strongly.

Automobile Stocks, seen in this Finviz Screener rose strongly.

Industrial Equipment Manufacturers, seen in this Finviz Screener rose strongly.

The Networking shares seen in this Finviz Screener rose strongly.

The Construction, Environmental and Industrial companies seen in this Finviz Screener, rose strongly.

The Synthetics seen in this Finviz Screener, rose strongly.

Leveraged Buyouts, PSP, and Junk Bonds, JNK, rose strongly.

Utilities, XLU, were the sectors’ under performer, rising only 1.3%.

Airlines, FAA, and Shippers, SEA, seen in this Finviz Screener, rose strongly. Joanne Chiu of Market Watch reports Maersk Line, the world’s largest container shipper by volume, will announce plans to cut its shipping capacity on Asia-Europe routes next week due to the impact of the euro-zone debt crisis on international trade, a senior executive from the company said Friday.. While lingering concerns about the European debt crisis are weighing on demand for trade on European routes, Smith said the prospects for transpacific routes are better amid signs of a gradual recovery in the U.S. economy. Freight rates have plunged to unprofitable levels this year as a result of overcapacity in the market. Maersk Line said earlier it expected its container shipping business to post a loss for 2011 mainly due to weak rates on Asia-Europe routes.

Country stocks rose with Russia, RSX, South Africa, EZA, Australia, EWZ, India, INDY, Switzerland, EWL, Mexico, EWW, Canada, EWC, Brazil, EWZ, China, YAO, the UK, EWU, South Korea, EWY, leading the way. Japan, EWJ, and Japan Small Caps, JSC, and New Zealand, ENZL, eked out a tiny gain. Global sovereign insolvency has not been abated, it is only held in abeyance. We are entering into the age of sovereign insolvency which is accompanied by a crisis of over production as well, and where manufacturing is separated from the consumer by a long supply chain serviced by shipping firms that are loosing money. Out of the European debt crisis will come a sovereign insolvency regime with an emperor of insolvency, the Sovereign, and a government banker, the Seignior. Their combined word, will and way, will provide moneyness, that is seigniorage, for all those living in the Euro zone. Debt servitude will be required by all.

Neoliberalism’s ponzi lending has reached its extreme — credit has reached its full expansion. Sovereign insolvency means the end of ponzi financing  and the beginning of debt servitude. We are witnessing the last vestige of the minting of money as the Milton Friedman Free To Choose Regime is history. In this former regime, bankers, and government ministers waived magic wands of finance and created wealth. What we are seeing is only zombie financing. The Beast Regime of Neoauthoritarianism is rising out of the Mediterranean Sea profligates, Italy and Greece. In this regime, bankers and government ministers waive clubs and beat people into debt servitude. Irvine Renter relates FHA Loan Limits Go Back Up To $729,750 Congress has voted to increase the FHA loan limit to $729,750 through the end of 2013. The FHA has been perverted. It used to provide home ownership opportunities for low and middle income Americans. It was never intended for supporting overpriced markets dominated by high wage earners like here in Irvine. Markets with prices requiring loans over $417,000 are supposed to be supported by savings and equity from previous sales. Since most Americans have no savings, and since home equity has been largely wiped out in the crash, the markets for high wage earners are looking for the government to bail them out. This policy will undoubtedly cause more FHA losses because prices will continue to decline, and with the tiny down payments on FHA loans, borrowers will go underwater and many will strategically default. In short, this policy will shift losses from the private lenders and investors to the taxpayer — to you.

The rally in stocks caused world currencies, DBV, and emerging market currencies, CEW, seen in this Finviz Screener, to rise, while the yen, FXY, traded lower to the edge of a massive head and shoulders pattern at 126.34. The US Dollar, $USD, UUP, traded down slightly to close at 79.26. Action Forex provides the chart of the USD/JPY which I belive has bottomed out at 75.50 and is now headed higher.

Silver, SLV, Timber, CUT, Base Metals, DBB, led Commodities, DBC, een in this Finviz Screener, higher.

Michael Kitchen of MarketWatch reports German Finance Minister Wolfgang Schaeuble saying, “The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that.” Germany and France are looking at how to deepen fiscal integration. Analysts at Brown Brothers Harriman said, “Germany is pressing hard for tougher budget rules. It requires real sanctions, tighter than the ones Germany and France wiggled out of a decade ago. This is nothing less than a new dimension to the governance of the euro zone.”

Sober Look writes The Stability Union Concept Is Not Dampening Financial Stress Indicators. the chart of the US 2-year swap spread which is maybe a basis point off the high; and the 3-month EUR/USD currency basis swap spread continues to widen, marching toward -150

Paul Krugman writes that the Eurozone leaders have no narrative of how their policy of expansionary fiscal contraction is consistent with a Eurozone recovery.

Expansionary fiscal contraction is the combination of structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts and centralized fiscal supervision favored by German economic and expansionary fiscal contraction. political leaders, such as Wolfgang Schauble, Olli Rehn, and Guido Westerwelle, which eliminate labor privileges such as inflation inked wage rises, that eat away at intra Euro zone competitiveness. The economic theory of expansionary fiscal contraction is the concepts of Harvard’s Alberto Alesina, and Goldman Sachs’ Broadbent and Daly, writes George Irvin in the Social Europe Journal, stating, “it is very difficult to see how massive fiscal contraction can be expansionary in Britain today.” And Simon Johnson writes Under four conditions, fiscal contraction can be expansionary. But none of these conditions is likely to apply in the United States today. Wolfgang Muchau wrote in the FT, “I cannot see how somebody with a solid training in macroeconomics, and with a minimal sense of honesty, could come up with a fairy tale of an expansionary fiscal contraction. Or, that coordinated austerity programmes would not affect growth in the short run.”

Finland lawyer Grahnlaw wrote several days ago The CDU resolution Starkes Europa – Gute Zukunft für Deutschland underlines that solidarity requires massive reforms for stability and competitiveness in countries needing help. And the Euro Plus Pact is seen as an agreement among 17 eurozone leaders and six other EU members to strengthen the economic union in the EMU, by increasing competitiveness.

And today Granhlaw writes Merkel And Sarkozy Brewing Faustian Pact. A new week, and a new episode in the eurozone cliffhanger is about to begin. Only democratic and legitimate government with sufficient powers at European level can lay the robust and politically acceptable foundations needed. Euro bonds won’t work without a political authority that backs them up, says the European Economic Policy blog, but continues that we have seen over the last week that the EU has no intention of establishing such a government. In the Wall Street Journal, Irwin Stelzer states: One thing is certain: The euro cannot survive without a major change in the governance structure of the euro zone.

In a fairly detailed blog post Arend Jan Boekestijn wonders if it is five past twelve, instead of five to twelve for the eurozone (in Dutch). We are still not offered any useful and open information by the German and French governments, but we see more and more reports about a new disciplinarian code among eurozone governments in the making. The Wall Street Journal article adds important details to what it calls fiscal union.

The pact, it is hoped, could liberate the ECB to intervene massively in the bond markets, something many see as necessary to prevent the eurozone from collapsing. Have I understood correctly? If things go bad, and they already have, this intergovernmental agreement would put in place a state of emergency in individual countries, based on their prior consent. Formally democratic government would be preserved, but the policies dictated by the pact.

For all we know, these extraordinary powers could be assumed outside the political and institutional framework of the European Union (and the eurozone) with nothing in the way of transparency and public debate to influence execution. And we still have no convincing promises of democratic European level government where the national level has failed? A Faustian pact, if I may say, dear Angela Merkel and Nicolas Sarkozy.

A EU wide coup d etat is underway. Reuters reports EU Leaders To Brief Obama On Debt Crisis At Oval Office Summit. President Obama and Treasury Secretary Geithner will confer at the White House with European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso and EU foreign policy chief Catherine Ashton. “He understands that it is a European leadership issue,” said Heather Conley of the Center for Strategic and International Studies in Washington. Obama and the EU officials will release a statement after their summit ends, with Obama almost certain to restate his confidence that Europe’s leaders can handle the crisis if they show the political leadership to do so. He has previously said that calming markets would require “some tough decisions” in Europe.

Bloomberg reports IMF Readying Loan Of As Much As $794 Billion For Italy.

A New Stability Pact is forthcoming for a Stability Union. Reuters reports Germany, France Plan Quick New Stability Pact. France and Germany are planning a quick new pact on budget discipline that might persuade the European Central Bank to ramp up its government bond purchases, German National Newspaper Welt am Sonntag reported on Sunday. Echoing a Reuters report on Friday from Brussels, the Sunday newspaper said the French and German leaders were prepared to back a deal with other euro countries that might induce the ECB to intervene more forcefully to calm the euro debt crisis. The newspaper report quoted German government sources as saying that the crisis fighting plan could possibly be announced by German Chancellor Angela Merkel and French President Nicolas Sarkozy in the coming week. In an advance release before publication, Welt am Sonntag said that because it would take too long to change existing European Union treaties, Euro zone countries should just agree among themselves on a new Stability Pact to enforce budget discipline, possibly implemented at the start of 2012.

It could be similar to the Schengen Agreement which applies to EU countries that choose to take part and enables their citizens to enjoy uninhibited cross border travel. Among the countries in the Stability Pact, there would be a treaty spelling out strict deficit rules and control rights for national budgets. The European Central Bank should also emerge more as a crisis fighter in the euro zone, Welt am Sonntag wrote, saying that while governments cannot tell the independent ECB what to do, the expectations are clear. “Based upon these measures, there should be a majority within the ECB for a stronger intervention in capital markets,” Welt am Sonntag said. It quotes a central banker as saying: “If the politicians can agree to a comprehensive step, the ECB will jump in and help.”

The ECB, which cannot directly finance governments, has been buying Italian and Spanish bonds on the open market since August to try to keep down borrowing costs for the euro zone’s third and fourth largest economies. Yields on Italian and Spanish debt have nonetheless climbed in recent weeks, despite the ECB intervention and the appointment of a new technocrat government in Rome and the election of the conservative Popular Party in Madrid.

In Brussels on Friday, euro zone officials said a push by euro zone countries toward very close fiscal integration could give the ECB the necessary room for maneuver to scale up euro zone bond purchases and stabilize markets. France’s Journal du Dimanche newspaper said reforms to Europe’s economic governance would be the focus of a speech which Sarkozy will deliver in the Mediterranean port of Toulon on Thursday. “The European Commission could take on supra-national powers,” said one French presidency source, according to the newspaper, saying that Brussels would supervise the decisions of countries at risk of default, provided they request this. “National parliaments will retain the initiative over the (policy) efforts to be made,” one French negotiator told the paper.

The European Commission, the EU executive arm, put forward proposals on Wednesday to grant it intrusive powers of approval of euro zone budgets before they are submitted to national parliaments, which, if approved, would effectively mean ceding some national sovereignty over budgets. Berlin, meanwhile, is pushing to change the European Union treaty so that a country could be sued for breach of EU budget rules in the European Court of Justice. Le Figaro said there was resistance within Sarkozy’s government to allowing France’s budgets to be submitted for scrutiny by an “intergovernmental conference” in Brussels, but the president would seek to rally support for this. A closer fiscal union could eventually pave the way for joint debt issuance for the euro zone, where countries would be liable for each others’ debts.

Reuters reports World Stocks Rise From 7 Week Low On Europe Hope World stocks rose from last week’s 7-week low on Monday as hopes grew euro zone leaders would unveil fresh measures to resolve the two-year-old debt crisis, while caution ahead of next week’s key summit.

Reuters reports Moodys Warns Euro Area Crisis Threatens EU Sovereign Ratings Moody’s Investors Service warned on Monday the rapid escalation of the euro zone sovereign and banking crisis threatens the credit standing of all European.

Reuters reports Germany And France Examine Radical Push For Eurozone Integration.

Tyler Durden relates that European Banks Are Moving From A Liquidity Crisis To A Solvency Crisis. That all important metric of the 3 month EUR/USD basis swap not only did not improve but has continued to deteriorate, the worst since October 10, 2008. What is ironic is that while we know banks have a USD funding problem, they also seem to be having a EUR sourcing issue, despite being able to pull as much cash from the ECB as they want. That is of course assuming they have sufficient collateral for the repo market. Which then begs the question: is the European liquidity crisis shifting to one of evaporating repoable assets? And if the repo market is drying up, that means that the ECB will soon be forced to accept staplers are worthwhile collateral before it all falls apart.

Ambrose Evans Pritchard writes Europe’s Shrinking Money Supply Flashes Slump Warning All key measures of the money supply in the eurozone contracted in October with drastic falls across parts of southern Europe, raising the risk of severe recession over coming months.

Between The Hedges reports The 2-Year Swap spread is very near the highest since May 2010. The FRA/OIS Spread is near the highest since May 2010. The 2yr Euro Swap Spread is near the highest since Nov. 2008. The 3M Euro/Dollar Cross Currency Basis Swap is down -1.75% to -148.50 bps, which is the worst since October 2008 on a closing basis. The Libor-OIS spread is the widest since June 2009, which is also noteworthy considering the equity bounce off the recent lows.

The chart of M2 Money Stock (M2) shows a parabolic rise. I believe that this is due to a flight to safety in US Treasury Bonds, ZROZ, EDV, TLT, IEF, SHY on the flattening of the yield curve as is seen in the rise of the Flattner EFT, FLAT.

Robert A. Weigand writes an upward sloping curve implies economic expansion, and a flattening or inverting of the curve implies slowdown or contraction. Two key points here. First, the graph shows that the curve has been flattening throughout 2011, accurately foretelling the slowing economy in which we find ourselves. Second, as pointed out in a thoughtful article by Chris Turner via Advisor Perspectives, domestic and global Central Bank intervention has made it impossible to know (or even guess) what market determined interest rates would or should be anymore. Thus far we’ve accounted for 70% of the magical, mystical LEI index, and on this more granular level, it’s difficult to see the unequivocally positive information that is so apparent to bulls like Ken Fisher. Still not convinced? Okay, let’s take a look at indicator number four, Manufacturer’s New Orders for Consumer Goods, weighted almost 8% in the LEI index. If we consider the change in the nominal series, the signal appears positive. Non-Defense Durable Goods Orders are almost back up to their 2002 post-recessionary lows. With a little luck, we might soon be back where we were 10 years ago. Having accounted for almost 80% of the LEI, I rest my case. Ken Fisher’s exhortations notwithstanding, the LEI appears to be flashing positive signals because, like most averages, it obscures those always devilish details. The economy has slowed and continues to slow. Unless businesses lay off even more workers to further boost profits, or stock valuations simply continue to ignore fundamental information, stocks may face considerable headwinds in 2012.

Bloomberg reports OECD Reduces Global Growth Forecasts, Blames Euro Doubts: Economy. The Organization for Economic Cooperation and Development said growing doubts about the survival of Europe’s monetary union has caused global growth to stall and represents the main risk to the world economy. The 34 OECD nations will grow 1.9 percent this year and 1.6 percent next, down from 2.3 percent and 2.8 percent predicted in May, the Paris-based organization said in its twice-annual global economic outlook released today. In a separate report, Morgan Stanley cut its forecast for 2012 global growth. “Skepticism has grown that euro-area policy makers can deal effectively with the key challenges they face,” OECD Chief Economist Pier Carlo Padoan wrote in the report. Serious downside risks remain, linked to “loss of confidence in sovereign-debt markets and the monetary union itself.” The remarks are the first from a major government body to highlight the possibility of a euro breakup and reflect the shift in the two-year-old crisis from the region’s periphery to its so-called core. Government bond yields for both Germany and France, Europe’s two largest economies, climbed last week as a German bond auction failed to get bids for 35 percent of the 10 year debt.

Bloomberg reports Mounting Euro Breakup Risk Seen by Banks as Debt Crisis Festers. Banks around the world are sounding their loudest warnings yet that the euro area risks unraveling unless its guardians quickly intensify efforts to beat the two year sovereign debt crisis. As European finance chiefs prepare to meet this week, and Italy seeks to raise as much as 8.8 billion euros ($11.7 billion) in bond sales, economists from Morgan Stanley, UBS AG, Nomura International Plc and other banks say governments and the European Central Bank must step up their crisis response. Failure to do so threatens to break the 17-nation currency bloc, they told clients in reports published over the past week. “Markets continue to move faster than politicians,” Mansoor Mohi-uddin, Singapore-based head of foreign exchange strategy at UBS, said in a Nov. 26 note. Investors are starting to “price in the endgame” for the euro, he said. What Deutsche Bank AG calls “a new stage of the crisis” and Nomura labels a “far more dangerous phase” is dawning as signs mount that investors are even concerned about Germany, the euro’s linchpin economy. It failed to draw bids for 35 percent of 10-year bunds sold last week and the yield on its 30-year securities had the biggest weekly gain in 14 months.

Reuters reports BOJ Shirakawa Warns Japan Economic Outlook Severe

Reuters reports China 2011 Inflation To Be About 5.5 Percent Minister Relates

IBD reports Kansas City Southern Firing On All Cylinders, yet the stock value of KSU fell 7.6% last week. US Railroads are the final market sector to turn lower as fears of sovereign insolvency and failure of global growth arise, as is communicated by the chart of Kansas City Southern relative to US Basic Materials, KSU:IYM. The railroads seen in this Finviz Screener rose strongly today.

Oakland Tribune reports California Ports Slump Ahead of Holiday Shopping Season. The Port of Oakland and other California ports have suffered a slump in volume in recent months — an unsettling sign that could portend sluggish sales ahead of the crucial holiday shopping season. The slowdown for imports suggests merchants curbed orders for overseas products due to fears of lackluster consumer demand.

At the ports of Oakland, Los Angeles and Long Beach, the year started out great. Month after month, volumes were up compared with the same month a year ago. Signs pointed to an improved economy. By midsummer, though, things began to go awry for the California ports as the volume of cargo began to sink. The slump arrived in August and continued through September and October. “Those months are our peak season, the run-up before the holiday season,” said Lawrence Dunnigan, manager of business development with the Port of Oakland. “All of the imports are very soft this year.” From August to October of this year, the ports of Oakland, Los Angeles and Long Beach all endured a decline in total volume compared with the same period the year before. The statistics are based on a combined total of imports and exports at the trio of commerce hubs. (Hat Tip to Between The Hedges)

2) … EU leaders are calling for a Stability Union; it necessitates a fiscal union with the pooling of sovereignty, led by a credible sovereign who possesses sovereign authority.

A stability union can only be achieved through a sovereignty union, that is a Eurozone where leaders meet in summits and announce regional framework agreements, which waive national sovereignty for the security and stability of the EU as a whole. A stability union will require both a fiscal union and a credible sovereign who possesses sovereign authority.

Neoliberalism provided prosperity, but Neoauthoritarianism provides security. The world has passed from inflationism and into destructionism, yet there will be no death of the Euro currency union. Economic sovereignty of the EU leaders, in particular the EU ECB and IMF Troika, will manifest through announcement of regional framework agreements, as implied in the 1974 Call of the Club of Rome for regional economic government, as a means of coping with the deleveraging and disinvesting out of the Milton Friedman Free to Choose floating currency, that has come with the implosion of sovereign debt and which has produced a European banking crisis, as well as a exhaustion of credit induced growth in Chinese industrial production.

MacroBusiness provides A Picture Of Deleveraging and writes that overnight, the New York Fed released its quarterly report into US credit trends. To cut a long story short, US consumers continue to deleverage. The research has some killer charts, including the one above, which shows that after all of the fear and loathing of the past three years, aggregate credit has slid back only to 2007 levels.

The Milton Friedman Free To Choose Regime featured the moneyness of freedom, where Wall Street securitized lending of all types, which provided credit liquidity for economic growth. But the Beast Regime of Neoauthoritarianism features the seigniorage of diktat, that is the moneyness of diktat, where leaders announce mandates of global governance, which provide for regional economic stability.

Rosemary Righter, an associate editor at the Times of London, relates on page 9 of the Septemeber 26, 2011 issue of Newsweek that José Manuel Barroso, the European Commission president, asserts that the “fight for the economic and political future of Europe” requires “a new federal moment.”

An inquiring mind asks, do you believe that a new federal moment is at hand?

3) … Milton Friedman was the “great liberator of women” as well as the “great liberator of investors”; but, the Beast Regime of Neoauthoritarianism is going to claw back many of the advances of the former regime of Neoliberalism.

And Lauren Streib in the same September 26, 2011, issue of Newsweek Magazine, in article entitled, Where Women Are Winning, documents that women living in the Nordic Countries of Iceland, Sweden, Denmark, Finland, Norway and Netherlands, are in the top ten best places to be a woman.

It was Milton Friedman, who provided the Free To Choose script of floating currencies that has underwritten the northern european socialist regimes’ capability to provide better justice, health, education, government, and political gains than anywhere else in the world. But now the Beast Regime of Neoauthoritarianism is rising out of the Mediterranean Sea profligates, The Beast System has seven heads, symbolic of occupation in mankind’s seven institutions, and ten horns, symbolic of governance in all of the world’s ten regions; and it will claw back many of the advances of the former regime of Neoliberalism, as it uproots democracies throughout the world. And it will enforce a totalitarian collective in each of the world’s ten regions. Totalitarian Collectivism is the the EU’s future. Liberty and Free Enterprise are mirages on the Neoauthoritarian Desert of the Real. Choice is the epitaph on the tombstone of Neoliberalism. Diktat is the order of the future, and serves as the sovereign authority of the Ten Toed Kingdom of regional economic government.

Greek Crisis.Net relates the Suzanne Daley NYT report Greeks Balk At Paying Steep new Property Tax, where Mr. Ioannis Chatzis now has a responsibility to pay a new real estate tax bill. This is an example of the economic policy of expansionary fiscal contraction and the Euracracy’s seigniorage of diktat.

Today’s stock market rise is simply noise, it is Neoliberalism’s death rattle.

MarketWatch’s report of German Finance Minister Wolfgang Schaeuble statement, “The goal is for the member states of the common currency to create their own Stability Union and to concentrate on that”, is the bedrock for global regional economic governance that characterizes Neoauthoritarianism.

The 1974 Call of the Club or Rome for regional economic government is clarion, that is, trumpeting for the New Europe, where the word, way and way of sovereign leaders underwrites regional economic stability.

Angela Merkel will speak December 2, 2011. Tony Czuczka of Bloomberg reports Germany spurned investor calls to maximise financial firepower to calm markets, saying its fast track proposals for European Union treaty change are key to solving the euro-area debt crisis. The Chancellor will deliver a speech on the crisis to the lower house of parliament in Berlin on Dec. 2, previewing a Dec. 9 summit of European leaders that is due to discuss proposals for treaty change, Merkel’s chief spokesman, Steffen Seibert, told reporters today. Germany is working with “an ambitious timeline because we believe that Europe can’t wait for this forever, but that it should also be possible to put such limited change into effect in what for some is a surprisingly short time,” Seibert said in Berlin.

As the largest contributor to euro-area bailouts, Germany is stepping up its demands for treaty change to lock in tighter budget controls for the 17 euro member states as the chief means of tackling the debt crisis and restoring market confidence. Michael Meister, parliamentary finance spokesman for Merkel’s party, has said that fiscal integration is a precondition for any German rethink of its opposition to “joint liability.”

In the age of sovereign insolvency, the only forms of sovereign wealth are gold and diktat.

 4) … Will the Fed buy mortgage backed securities?

Bloomberg reports Dealers See Fed Buying $545B Mortgage Bonds; this to me seems to be rumor and a vestige of Neoliberalism.

5) … A Global Eurasia War is coming.

Associated Press reports Unprecedented Move For Arab League. Union approves economic sanctions against Syria’s Assad regime amid a bloody eight-month uprising. And BBC News reports France Says Days Of Syrian Government Are Numbered French Foreign Minister Alain Juppe has said time is running out for the Syrian leader after the Arab League agreed sanctions against Damascus over its crackdown on pro democracy protests.

6) … Either there will be monetary freedom, or there will be monetary diktat.

Either there will be the monetary freedom, or there will be monetary diktat: that is, either there will be currency backed by gold, or there will be the seigniorage of diktat providing fiat currencies, eventually resulting in a one world government, and a one word bank, which provides global seigniorage and a global currency; such is the end result of globalism.

Tyler Durden relates Ron Paul on the International Monetary Fund and International Money, communicating that the world is marching ever onward on the road to serfdom. “We know what to do, we did it once after the Civil War period, we went from a paper standard back to the gold standard, and the event wasn’t that dramatic. But today the big problem is that both the conservatives and liberals have an big apetite for big government for different reasons, therefore they need the Fed to tie them over and monetize the debt. So if you don’t get rid of that appetite it’s going to be more difficult, but the transition isn’t that difficult. You have to get your house in order; you have to balance the budget, you have to not run up debt, and you have to promise not to print any more money. I would like to have a transition period and just legalize gold money, gold and silver as legal tender, and work our way back. We want to legalize the use of gold and silver as the constitution dictates, rather than punishing the people who try to do that. I am quite convinced that the system we have will not be maintained, that’s what these last 4 years was all about, and that’s what the turmoil in Europe is all about. The question is are they going to move toward a constitutional form of money. or are we going to go another step further into international money, instead of having an international gold standard based on the market, are we going to go toward a UN, IMF standard where they are going to control with the use of force another fiat standard. I consider that a very, very dangerous move.”

A Revived Roman Empire Is Forming In The EU ….. Deflation Accelerates In Japan

November 27, 2011

Introduction

The Euro continues to trade lower. Germany is rising out of the European sovereign debt crisis to be Europe’s taskmaster. Japan is leading the world down in a deflationary asset and investment collapse.

 1) … The Euro traded lower today

The US Dollar, $USD, UUP, rose, as the Euro, FXE, traded strongly lower today. Tyler Durden writes European Sovereigns Implode European sovereign credit curves are bear flattening (inverting wider) in almost all cases as short-dated yields breaks to new records in several names. At the same time, European credit is breaking to new lows in Corporates and financials with Subordinated financials underperforming.

Between The Hedges writes of sovereign insolvency and the failure of the seigniorage of freedom relating France and Belgium sovereign cds are making new all-time highs again and the Spain, Hungary, Italy sovereign cds are very close to their recent record highs. The Germany sovereign cds is testing its Oct. 4th multi-year high and the UK sovereign cds is making a new multi-year high. The TED spread continues to trend higher and is at the highest since June 2010. The 2-Year Swap spread is at the highest since May 2010. The FRA/OIS Spread is at the highest since May 2010. The 2yr Euro Swap Spread is near the highest since Nov. 2008. The 3M Euro Basis Swap is down -4.02% to -148.87 bps, which is the worst since October 2008. The Libor-OIS spread is near the widest since July 2009, which is also noteworthy considering the equity bounce off the lows. China Iron Ore Spot has plunged -26.83% since February 16th and -22.43% since Sept. 7th

In a world of failed sovereigns, regional global governance will rise to be sovereign authority. A revived Roman Empire which will emerge as one of ten regions of global governance.

This week many fled  the Euro, as they became aware that a sovereignty union is forming in the EU out of failed sovereign nation states. In true bear market fashion, world stocks, ACWI, and VSS, slid slightly lower into the final hour on rising Eurozone debt angst, fears of failure of global growth, rising energy prices and technical selling. Risk trade commodities Silver, SLV, and Aluminum, JJC, traded lower, continuing to turn Commodities, DBC, lower.

2) … A revived Roman Empire is building in the EU, its foundation is global governance.

Conservative blogger Archbishop Cranmer, writes, “The European Union is essentially the recreation of the old Empire of Charlemagne: from the moment the Treaty of Paris was signed in 1951, the European Coal and Steel Community, ECSC, bound together the economic and political destinies of France and Germany.”

The New Europe, an Angela Merkel word,  is emerging as the first authoritarian kingdom of the Ten Toed Kingdom of Regional Economic Government; its sovereignty comes from the 1974 Clarion Call of the Club of Rome for regional economic government, and is communicated in bible prophecy of Daniel 2:31-43, where Daniel presents a statue foretelling the progression of kingdoms in an interpretation of King Nebuchadnezzar dream.

Great kingdoms and leaders have been appointed to rise to power 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, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority.  President Obama, now rules with Critical Authorities, which equal or exceed those of the former President, as he has said he will veto S 1867, the National Defense Authorization Act, according to White House statement, any bill that challenges or constrains the president’s  critical authorities to collect intelligence, incapacitate dangerous terrorists and protect the nation would prompt the president’s senior advisers to recommend a veto,”  Soon ten kings will come to rule establishing his own regional power base, Rev.17:12-14 .

The statue of the progression of kingdoms communicates that God has ordained two iron kingdoms, the United Kingdom and the US; and that out of their rule, the Ten Toed Kingdom of Regional Economic Government will rise to rule mankind, Daniel 2:33. This regime is described as the Beast, a system of Statism and Neoauthoritarianism in Revelation 13:1-4. This monster is rising out of the fiscal debauchery of the Mediterranean profligates. It has seven heads, symbolic of its occupation in mankind’s seven institutions and ten horns, symbolic of its rule in the world’s ten regions.

The coming President of the EU will be one knowledgeable with the scheme of regional framework agreements. He must be a fierce leader as he will have a whole spectrum of angry people o deal with. 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’

Regional pooling of sovereignty will establish regional economic government, both in the EU, as well as globally, to provide for resource capability, financial security and economic stability. Having experienced sovereign insolvency, all of the periphery nations, Portugal, Italy, Ireland, Greece and Spain, the PIGS, well the PIIGS, are no longer sovereign nation states. These countries will have to look to EU ECB and IMF leadership, that is EU ECB and IMF Troika and its diktat, and their sovereign authority for seigniorage, that is moneyness.

Although one or more of the EU periphery countries may depart the common currency, there will be no breakup of the common currency zone. Economic libertarians, who foresee sovereign nation states such as Germany emerging out of the current crisis to establish their own currencies are going to be very disappointed. Their thinking is based upon the logic of Austrian School of Economics leaders, Hayek, Mises and Rothbard, and championed by Ron Paul and Lew Rockwel and John Redwood.

The political dynasties of European Socialism in the periphery countries of Portugal, Italy, Greece, and Spain, that provided pork via patronage, are history. A new paradigm, that being, regional economic government is emerging in the EU. Stephen Foley in the Independent What Price The New Democracy? Goldman Sachs Conquers Europe communicates that the Euro currency union, is the Goldman Sachs investment bankers project, and that it is continually striving for consensus that the creditors be paid in full. This is the basis of the mandate for expansionary fiscal contraction being demanded by the Euracracy.

God is acting sovereignly, Ephesians 3:1-11, Revelation 2:26-27, to effect a coup, Revelation 6:1-2, to bring a Sovereign and a Seignior to power in the EU. These will provide Euro zone wide seigniorage, that is moneyness, for the New Europe.

The former Eurozone had its political capital from the people across Europe. The political capital of the New Europe will come from federalist leaders in Brussels, Berlin, France, Goldman Sachs, and the technocratic governors of the periphery countries.

Roy Schwarcz writes that bible prophecy of Daniel 2 and Revelation 13 communicates that Germany and a powerful leader will rise to empower a European Super State in a type of Roman Empire. “The Roman Empire fell apart from within, no enemy destroyed it. Rome is living in the great nations of Europe today: Italy, France, Great Britain, Germany, and Spain are all part of the old Roman Empire. The laws of Rome live on, as well as the language. Latin today is the base of French, Spanish, and other languages. Her warlike spirit lives on also as Europe has been at war ever since the empire broke up into these kingdoms. What is happening in Europe today? There is a diminishing of the nations and a unifying of the people with a common currency, common markets and common government. The foundation is being laid for the man who is coming someday to put the Roman Empire back together again.” This man will be the Sovereign of Revelation 13:5-10.

This New Charlemagne, will be accompanied by the Seignior, Revelation 13:11-18, the top dog banker who takes a cut. Together they will provide the seigniorage of diktat, as the seigniorage of freedom, that existed under the Milton Friedman Free To Choose floating currency regime, is history. The word, will and way of these two will provide moneyness, and the people will be amazed and follow after it, placing their trust in it, giving it their full allegiance, Revelation 13:3-4.

The faith based Milton Friedman Free To Choose Neoliberalism is ending. The faith based Beast Regime of Neoauthoritarianism is  rising out of the Mediterranean Sea profligates, Revelation 13:1-4. The Beast System has seven heads, symbolic of occupation in mankind’s seven institutions, and ten horns, symbolic of governance in all of the world’s ten regions.

Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.

In 1974, 300 of world’s elite met and made a call for strong regional economic governments in all of the world’s ten regions. This ten toed kingdom, Daniel 2:33, was purposed as a means of coping with the deleveraging, disinvesting, and derisking out of the Milton Friedman Free To Choose floating regime. The 1974 Call of the Club of Rome is clarion, that is clear, distinctive and ringing, and it comes with the authoritarian imperative. The 1974 Club of Rome’s Call for regional economic government is the basis for the sovereign authority of the EU ECB IMF Troika’s New Europe.

The Clarion Call is underlying the vision for regional economic government and expansionary fiscal contraction, which is the combination of structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts, reforming social welfare benefits, and centralized fiscal supervision to achieve intra Euro zone competitiveness.

The Clarion Call has been heard and heeded by Neoauthoritarian economic thought leaders, and is being published by Project Syndicate and reported by Reuters, include Olli Rehn, Wolfgang Schauble,Guido Westerwelle, Jeffrey Frankel, Michael Boskin, and Jean Claude Trichet, who suggested the creation of the position of a joint finance minister for the euro zone. These supremacists are building on the work of Neocon thought leaders such as WaPo columnist Charles Krauthammer.

In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. In as much as the EU is characterized by failed nation states, moneyness will come by diktat. The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian collectivism will be the way of life for all in the Euro zone.

The road to serfdom is seen in a number of news reports. The editors of Bloomberg, for example, write ECB And Germany Should Define the Rules of Their Game The crucial question, then, is what, if anything, governments can do to gain the ECB’s backing. For all its talk of non-interventionism, the ECB has become a political actor, most notably by withholding support for the Italian bond market in the crucial week before Silvio Berlusconi’s ouster as prime minister. ECB President Mario Draghi never specified why. Nor did Draghi or German Chancellor Angela Merkel ever say what would qualify as behavior worthy of support, other than to pledge allegiance to the euro while insisting that the central bank won’t act as a lender of last resort. The lack of a clear signal may be intentional. a way to maintain the ECB’s power and freedom. It’s also dangerous. At any moment, investors can assume the worst and refuse to lend at any price to European sovereigns, banks and companies. In one ominous sign, Germany had trouble placing 10-year bonds at a Nov. 23 auction, selling only 3.6 billion euros of a 6 billion euro issue.

We believe the right approach would be to allow insolvent governments to go through an orderly default and for the ECB to put up enough money, at least 3 trillion euro, to ensure the recapitalization of Europe’s banks and to guarantee solvent governments’ access to financing at reasonable interest rates. In the absence of such a bazooka, the ECB could at least provide some rules of the game. This would involve going beyond a narrow focus on inflation and explicitly stating that it will support the financial stability of solvent governments. It might also include some definition of what the word solvent means. Are austerity and labor market reforms enough? Or must governments give up some sovereignty to a pan-European fiscal authority, with the power to step in and take over if budget balancing measures fail? If the requirement is such a fiscal union, we wish Europe’s leaders the best in achieving it before markets lose faith. If that doesn’t work, we hope the ECB stands ready to do whatever it takes to hold the euro together.

The Milton Friedman Free To Choose floating currency regime facilitated inflationism.  In July 2011, investors became aware that a debt union had formed in the EU, and sold out of their investments, causing a global investment, political, and economic regime shift out of Neoliberalism and into Neoauthoritarianism.  Destructionism is well underway, bring chaos, stemming from disinvestment, derisking, and deleveraging out of the investments made in the former regime.

BBC reports Angela Merkel communicated that global governance is the way forward, and that it is build upon a common understanding for each other, BBC reports, “If we are to have a global order and global governance we need to have an understanding for each other,”

What exactly is global governance? Thomas G. Weiss and Leon Gordenker in NGOs, The U.N and Global Governance, Lynner Publisher Boulder, 1996, wrote in PDF, “We define global governance as efforts to bring more orderly and reliable responses to social and political issues that go beyond capacities of states to address individually.”

Sovereignty.Net relates the most official definition is the one issued by the Commission on Global Governance in 1995, which Oxford Bibliographies states is “Governance is the sum of many ways individuals and institutions, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accommodated and co-operative action taken. It includes formal institutions and regimes empowered to enforce compliance, as well as informal arrangements that people and institutions either have agreed to or perceive to be in their interest”.

Note the words Angela Merkel, “If we are to have a global order and global governance we need to have an understanding for each other”. She did not say “of each other” but rather “for each other”, and in so doing communicated a common experience, a unifying vision, which underscores the Nicholas Sarkozy and Angela Merkel August 2011 Joint Comminique for a “true European economic government”.

Neoliberalism featured credit liquidity of all types, subprime lending, mortgage equity withdrawals, GSE home loans, junk bonds, municipal bonds, and Treasury debt. Neoauthoritarianism features just the opposite. Greeks cannot be Germans. The former being of the olive state are club med; while the latter, being of the industrious state are hardworking. Yet all will be one living in debt servitude.

In the former age, Milton Friedman provided the Free To Choose script, where one profited from one’s insight and skill as one exercised freedom to invest in currencies and assets according to one’s risk appetite.

But in the current age, one is not free, as The Club of Rome, Nicholas Sarkozy, Angela Merkel,  Herman Van Rompuy, Wolfgang Schaeuble, Jean Claude Trichet, provide global governance for one’s obedience. Libertarians who are hoping that Germany will pull away from the EU and  reinstitute its Deutsche Mark, are going to be sorely disappointed, as Germany is going to rise to the top of the pack and take the lead in the seigniorage of diktat.

3)  … Japan dominated trade and carry trade investing. Now it is rapidly deflating.

Japan operated a ZIRP regime and financed carry trade investing globally with the result that the Japanese Yen, FXY, rose from 81 in June 2007 to 128 in August 2011, at which time the value of its stocks traded by the ETF, EWJ, turned down severely, and now in November 2011, have turned down severely again. Reuters reports Japan Deflation Persists.  FX Street reports Japan: Deflation worsens in November.  WSJ reports IMF Warns Japan Debt Could Quickly Become Unsustainable. Reuters reports Japan Benchmark 10-Year Yield Completes Biggest Weekly Gain Since January.  WSJ reports Japanese Government Bonds Tumble

Nature economist Elaine Meinel Supkis writes “Inflation is higher than that so of course, bond buyers want to buy bonds of countries giving higher, not lower, interest rates of return! Japan can’t sell its bonds to anyone except the Chinese and they are buying only because they want to control Japan, not to make money. The Chinese and Japanese purchase of super cheap US loans was for the same purpose: to control trade, not to make a profit via holding debt.”

News reports reflect that Japan is exporting less on the beginning of world trader recession and on its high currency value relative to all other currencies. Japan’s high level of debt, and its high currency value is rapidly deflating the value of the larger shares relative to the smaller shares, as is seen in EWJ:JSC. Large exporters such as Sony SNE, Panasonic, PC, Hitachi, HIT, Advantest, ATE, Kubota, KUB, Toyota, TMC, and Nidec, NJ, are for the most part being successfully sold short by speculators. Japan’s banks are among the fastest deflating banks in world; these include MTU, NMR, MFG, SMFG.

Elaine Meinel Supkis continues, “This action of holding a foreign nation’s debt not to make profits from the debts but to make profits in trade has totally warped bond sales, world wide. This is all part of the noxious free trade/floating fiat currency system. It hasn’t stopped, it is now so lopsided, and thanks to ZIRP borrowing, out of whack with any reality, it is now exploding in everyone’s faces. No surprise. It is all connected with individual trade deficits and sovereign wealth funds of trade profits.” And Ms Supkis adds, “Not only is sovereign debt of the top ‘wealthy’ nations in serious collapse, many of the floating fiat currencies are in trouble, too. This is no surprise to me since the entire system depends on the US dollar, not gold, to determine how one resolves future value of trade goods and international exchanges.

Mercer Hall in Express UK writes In a chilling threat to UK sovereignty, German finance minister Wolfgang Schauble predicted that all Europe would one day use the single currency. “It will happen perhaps faster than some in the British Isles currently believe,” he said. His sinister warning followed the emergence of a secret German plan to build a powerful new economic government for the eurozone and block an EU referendum in Britain. HAHAHA, absolutely everyone in the EU is demanding that sovereign wealth nation, Germany, bail them all out. At the same time, they don’t want to do what the Germans order, either. They want to tell the Germans, what to do. This is similar to the US relationship with China: we still want to order the Chinese creditors around while whining about our finances. The Germans have no need to save the entire EU system if this means they give up not just their own sovereignty but their sovereign wealth and get in return, nothing. Someone has to pay something. When any third world nation is in trouble, the IMF imposes great seizures of national wealth and savings! So, if the Germans have to be the IMF for Europe then Europe has to let Germany be the IMF. Odd to say, isn’t it?

The US believes that we can owe China huge sums and at the same time, pay virtually no interest forever! And at the same time, menace China with our military and talk openly about going into default just so we can harm China! The EU has to understand that creditors get to set many of the rules if one wishes for more loans. And the creditor nations have to understand that ZIRP lending is bad for them just as it is very bad for the US and Japan. We have had global inflation in key, vital sectors: food and fuel—for the last decade. And this inflation floats on top of a drop in value of various vital assets: property and factory values. This sort of disconnect has happened once before. During the ‘stagflation’ years in the US, we saw the exact same thing. Japan has had no inflation due to a collapse in property values but has had quite significant food and fuel inflation which has made the population there significantly poorer even as the government borrowed at ZIRP rates.

Japan’s future is far from bright, indeed, it is black as octopus ink as Bloomberg reports Japan Risks Rating Downgrade as S&P Says Public Finances Are Deteriorating. “Japan’s finances are getting worse and worse every day, every second,” Takahira Ogawa, director of sovereign ratings at S&P in Singapore, said in an interview. Asked if that means he’s closer to cutting Japan, he said it “may be right in saying that we’re closer to a downgrade. But the deterioration has been gradual so far, and it’s not like we’re going to move today.” Japan’s lower house of parliament today approved legislation that would add an additional 2.1 percent levy to an individual’s annual payment. Lawmakers revised the government’s proposal to extend the period of the measure to 25 years, from 10 years, to help pay for earthquake rebuilding. The measure takes effect in 2013. Japan’s policy makers have signaled they will double the nation’s sales tax from 5 percent by around 2015 Japan’s debt is not downgraded only because Japan has, until this year, run trade surpluses.

This year, thanks to the tsunami, earthquakes and Fukushima, the trade statistics are terrible. But not anywhere near US trade statistics. No country on earth has run bigger trade deficits than the US has run for the last decade! Not even close. If a 10% sales tax is imposed, this is a very ‘regressive’ tax in that it hammers the poor very hard. Since most of what they buy is things for barest survival, this will be a 10% tithe on food and fuel. If the proposed tax is supposed to last for more than 20 years, this means it is pretty much permanent. Another way to look at this is inflation: Japan will have this 10% inflation in prices for the foreseeable future. This is inflation but will not be revealed in statistics which leave out sales taxes when calculating inflation.

As for the hideous nuclear mess which has pretty much totally destroyed the entire economy in eastern Japan, as well as driving down the value of real estate there to zero: Fukushima worker confesses “There is nothing left that we could do”, Fukushima Diary reports. In short, he says Tepco started reducing the number of workers because they can not do anything for the reactors anymore. Even though they stock lots of workers, there is no clue to do something most important. … The interiors of the buildings are extremely radioactive and nobody can officially go into reactor 3 … They can never go into the basement floor of the reactors either. The only thing they can do is to analyze the gas from inside of the container vessels. Thus nothing can be done by humans anymore. They can only clean debris, take away broken operation floor, maintain the water purifying system, setting new tanks etc. As I said the very first week, this is Chernobyl and this is unfixable. So far, the workers have whispered the truth but TEPCO and the government refuse to understand, they think they can dig up all the dirt, plant sunflowers or dump nuclear waste directly in the Pacific Ocean and it will cease to be a problem. This is a ‘China Syndrome’ affair, perhaps much worse than Chernobyl since it was all of the reactors going at the same time, not one. And unlike Chernobyl, the reactor containment vessels are all broken by the earthquake, thus, ceased containing their nuclear rods a long time ago. This is truly a full throttle meltdown and has very significant reactive actions.

Bloomberg reports Asian Stocks Drop As Dollar, Bond Risk Climb on Europe Debt Crisis Concern Japan’s benchmark bond yields completed the biggest weekly gain since January on concern the government will fail to rein in the world’s largest debt burden. Ten-year yields added 3.5 basis points to 1.03 percent at the 6:05 p.m. close at Japan Bond Trading Co., the nation’s largest inter dealer debt broker. The last time the rate rose above 1 percent was Nov. 1. Yields have climbed 8.5 basis points this week, the most since the period ended Jan. 7.

4) … The Milton Friedman Free To Choose floating currency regime has failed … The global regional economic government regime, known as the ten toed kingdom of regional economic government, is rising to rule mankind. 

The chart of the USD/JPY shows the US Dollar has been rising against the Yen in November, 2011. On November 4, 2011, David Song of Daily FX writes Risk Appetite Diminishes As global policy makers conclude the G20 Summit in Cannes, France, the developments seen so far holds little scope of shoring up market sentiment, and market sentiment may weaken further over the near term as world leaders resist calls to broaden the lending capacity of the International Monetary Fund. As optimism surrounding the meeting quickly taper off, we may see the greenback end the week on a higher note, and the shift away from risk-taking behavior may carry into the following week as the outlook for the world economy turns increasingly bleak ….. And on November 11, Ilya Spivak of Daily FX writes USDJPY Intervention Spike Being Unwound ….. And on November 14, Michael Butros writes USD Rebounds as Stocks Fall on EU Woes, Index to Hold Upward Trend ….. And on November 17, John Kichlighter of Daily FX writes Dollar’s Appeal Rising as Threat of Another Financial Crisis Builds. ….. And on November 23, Jamie Saettele of Daily FX writes Japanese Yen Year and a Half Trendline Defines Major Trend I do believe that the late October USDJPY intervention should be believed since it occurs AFTER a completed 5 wave Elliott wave pattern. The 7630/50 support held and the push through short term resistance (trendline) does warrant a short term bullish stance towards 7750 and 7825. From a longer term perspective, a push through the trendline that has defined the trend since the May 2010 high is required in order to signal a major reversal. There are signs however that a major reversal is underway, such as the mentioned Elliott wave interpretation and RSI divergence on the weekly.

Emerging markets, growth, steel, financial, mining, shipping, and airline stocks fell sharply this week. The Morgan Stanley Cyclicals, $CYC, fell 7%, 15%, YTD. Consumer Durables Manufacturing Component of the Cyclicals Index, Whirlpool, WHR, 15%, 48%, European Financials, EUFN, 15%, 35%, Emerging Market Financials, EMFN, 9%, 29%, World Financials, IXG, 9%, 28%,, Chinese Financials, CHIX, 12%, 28%, Aluminum Miners, ALUM 7%, 42%, Copper Miners, COPX, 13%, 38%, Chinese Minerals, CHIM, 10%, 40%, Coal, KOL, 11%, 32%, Steel, SLX, 12%, 37%, Airlines FAA 4%, 38%, Shipping SEA 10%, 52%, Iron Ore Miner, VALE, 11%, 36%, Emerging Markets, EEM, 9%, 24%,

The US Dollar, $USD, rose 2%. World currencies, DBV, fell 3.8%, and Emerging Market currencies, CEW, 3.6%. Individual currencies fell as follows, the Japanese yen, FXY, 1.1%, the Swiss franc, FXF, 1.4%, the Canadian dollar, FXC, 1.8%, the Euro, FXE, 2.1%, the New Zealand dollar, BNZ, 2.1%, the British pound, FXB, 2.3%, the Indian rupe, ICN, 2.6%, the Australian dollar, FXA, 3.0%, the Russian ruble, FXRU, 3.0%, the Swedish krona, FXS,  3.2%, the Mexican peso, FXM, 3.5%, the South African rand, SZR, 4.0%, the Brazilian real, BZF, 5.6%.

The ongoing Google Finance chart of the emerging market currencies, CEW, the emerging market financials, EMFN, and the emerging market mining titans,  CEW, EMFN, EMT, communicates that the Milton Friedman Free To Choose floating currency regime suffered a mortal blow in July 2011, when investors fled stocks, as they became aware that a debt union has formed in the Eurozone. The former regime was laid to rest, that is it was buried in November 2011, when investors fled once again, as they became aware that a sovereignty union has formed in the EU.

The ongoing Yahoo Finance chart of currencies SZR, FXA, FXE, FXM, FXC, ICN, FXB, FXS, FXF, BZF, FXRU, communicates that competitive currency devaluation, that is competitive currency deflation is well underway. Currencies are no longer floating, they are sinking. Debt deflation, that is currency deflation, is aggressively destroying wealth and investing in India. Investors are cutting their holdings of Indian debt as Indian rupe weakens.

Bloomberg reports India’s companies cut borrowings in the global syndicated loan market by 87% this month, as the rupee’s drop to a record low increases the cost of servicing overseas debt. Debt deflation, that is currency deflation is intensifying in Brazil, as a credit collapse is commencing.

Francisco Marcelino and Gabrielle Coppola of Bloomberg report The highest Brazilian vehicle loan default rate in more than two years is fueling concern Banco do Brasil SA and Itau Unibanco Holding SA, ITUB, the nation’s largest banks by assets, may boost provisions for bad loans. Default rates on cars, motorcycles and trucks in October rose to 4.7%.

Risk appetite has turned to risk avoidance as inflationism has turned to destructionism. Financial institutions and mining companies, once global growth leaders are now global recession leaders. Both ITUB and VALE are leading Brazil, EWZ, lower, as is seen in this Google Finance chart. And both WBK and BHP are leading Australia, EWA, lower, as is seen in this Google Finance chart. And both BAP and SCCO are leading Peru, EPU, lower, as is seen in this Google Finance Chart.

The seigniorage, that is the moneyness of freedom, has failed; the seigniorage of diktat is commencing. Out of the failure of currencies, financial institutions, mining investment, and consumer durable manufacturing, the global regional economic government regime, known as the ten toed kingdom of regional economic government, is commencing, beginning with the coup d etat of the EU ECB and IMF Troika that mandates banks represented by the IIF write down their Greek debt by fifty percent, that technocratic government be installed in the profligate countries, and that expansionary fiscal contraction commence.

The case of failed sovereigns is not limited to the Eurozone PIIIGS, Takashi Nakamichi of the WSJ reports The International Monetary Fund warned in a new report that market concerns over fiscal sustainability could trigger a sudden spike in Japanese government bond yields that could quickly render the nation’s debt unsustainable as well as shake the global economy. Andy Sharp of Bloomberg reports Japan risks falling into a similar sovereign debt crisis as Europe if it doesn’t get the world’s worst public debt situation in order, a former finance minister said. What’s happening in Europe could take place someday in Japan, Hirohisa Fujii, chairman of the ruling Democratic Party of Japan’s tax commission, said. Politicians must understand Japan has the world’s worst debt situation.’ Japan’s public debt is projected to reach 228% of gross domestic product in 2013, around double the average forecast for Group of 20 nations.

Tyler Durden reports that the US Federal Reserve is for now the lender of only resort for dollar financing. Foreign banks scrambled to procure a record amount of US Dollars while repoing Treasurys and who knows what else with the Fed, an indication that other conventional liquidity conduits had frozen in the days following the Halloween MF massacre. Since then the Fed’s Reverse Repo balance has moderated to more normal levels as Treasurys have gone out of repo with the Fed. Yet something more troubling has just been spotted. In today’s one-day delayed issue of the Fed’s H.4.1, literally the very last number on the very last subpage in the weekly update reveals something quite disturbing. Namely the Fed’s “other” non-reserve based factors absorbing liquidity. And specifically, the actual number, which rose by an unprecedented $88 billion in one week to an all time high of $115 billion for the week ended November 23! We wonder: in this day and age of trillions in fungible excess reserves, and discount window stigmata, just what was it that caused US banks to demand a record amount of effectively under the table cash from the Fed?

Angela Merkel’s New Europe will require the sacrifice of sovereignty and the pooling of sovereignty. Tom DeWeese writes on Globalism, Global Governance, And Sovereignty There are many faces of globalism, and it comes with many names. In all cases, however, the goal of globalism is to erase national borders, eliminate national sovereignty, reduce national identities, and move toward global governance through the United Nations.  The European Union is the prime example of the results of globalism, where once proud nations have surrendered famous currencies like the deutsche mark, the franc, and the lira. It’s where ancient cultures like Greece and Rome have erased their borders and buried their cultures in order to be led by a Union of Socialists with loyalty to nothing but the drive for more and more power.  Yet it’s done in the name of equity, economic prosperity, and ecological integrity. Globalism is sold to the unsuspecting public with words and phrases like “free trade,” “open borders,” and “environmental protection,” but it’s really about redistribution of wealth, redistribution of your wealth.  Globalism is about erasing national borders and national sovereignty. And it’s about top-down control, not necessarily by elected officials, but by special interests called non governmental organizations (NGOs), which are only sanctioned by the United Nations.  Globalism calls for a wrenching transformation of our society, away from representative government and independent nations to the establishment of a global village with global citizens.  The entire plan is outlined in detail in the UN’s Agenda 21, a treaty signed by then-President George H. W. Bush at the UN’s Earth Summit in 1992.

Daniel Hannan in Telegraph article Herman Van Rompuy: Today the EU, Tomorrow the World relates that Globalism took a more authoritarian juncture when EU President Herman von Rompuy declared, “2009 is the first year of global governance [and] the global management of our planet.”  Catholic News Asia reports Catholic Van Rompuy Is The First Permanent Euro President.  He is known for bringing peace and stability, as Time Magazine’s 2-Min. Bio of Herman Van Rompuy  referring to Liesbeth Van Impe, writer for the Belgian newspaper Het Nieuwsblad, London Independent, November 14, 2009, relates, “He’s no big hitter, but don’t underestimate Herman Van Rompuy. This country was in a terrible state and he’s managed to bring peace and stability. But now, everyone is worrying about what will happen when he’s gone.”  On May 21, 2011, A EU Task Force Meets Under New EU President van Rompuy To Work On A Framework Agreement For European Economic, Monetary And Seigniorage Governance  The first meeting of the Task Force established by the March 2010 European Council on sovereign debt and related banking crisis resolution and better budgetary discipline, will be held in Brussels on today, Friday 21 May 2010. The Task Force is chaired by the new, that is incoming, President of the European Council Herman Van Rompuy. The objective of the workgroup will be to present a report to the October European Council on the measures and mechanisms needed to reach the objectives of an improved crisis resolution framework and better budgetary discipline, says the press release from the President of the European Council.

Consillium provides a video of Herman Van Rompuy, President of the European Council, during a debate on European economic government at the European Parliament. And Reuters reports Van Rompuy urges euro zone to pool sovereignty. And G7 Finance reports Mr Van Rompuy saying in a speech to a conference held by a Brussels think tank. “The euro zone has to move towards real economic union commensurate with monetary union.” … “We need to give both our citizens and the markets a clear message about the irreversibility of the euro,” … “This will imply in some of these areas a pooling of sovereignty in exchange for a stronger, more stable monetary union,” Van Rompuy stated “(Deepening economic union) will require a combination of two things, a significant strengthening of our rules and mechanism for fiscal responsibility and a large step in terms of integration in economic policies.” … “We have to fight for our economic and monetary union and Europe’s place in the world,” … “In Italy, it is an hour of truth.”

Tyler Durden reports ECB executive board member José Manuel González Páramo calls for the sacrifice of sovereignty. “We cannot completely delegate governance to financial markets. The euro area is the world’s second largest monetary area. It cannot depend solely on the opinions of ratings agencies and markets. It needs economic governance arrangements that are preventive and linear. This underscores my central point that a much more comprehensive approach to economic governance is now the priority for the euro area. And this means more economic and financial integration for the euro area, with a significant transfer of sovereignty to the EMU level over fiscal, structural and financial policies.”

Out of sovereign armageddon, that is a credit bust and world investment breakdown, a new global  economic and political regime will arise. At the appointed time, fate, not any human action, will open the curtains, and onto the world stage will step the most credible sovereign, Europe’s New Charlemagne, and his banking partner, who will provide the seigniorage of diktat, as the seigniorage of freedom, that existed under the Milton Friedman Free To Choose floating currency regime, is history. The word, will and way of these two will provide moneyness, and the people will be amazed and follow after it, placing their trust in it, giving it their full allegiance.

David R Reagan writes that sovereignty will be sacrificed when the Revived Roman Empire rises out of chaos. “German Foreign Minister Joschka Fischer repeated his call for a European government in July, 2000, and said the European single currency, the Euro, was “the first step to a federation.” He added that he wanted a “powerful president.”1  Fischer said his aim was “nothing less than a European parliament and a European government, which really do exercise legal and executive power,” to operate under his powerful president. More sinisterly, he welcomed the progress made in removing the “sovereign rights” of nations which he defined as control of currency and control of internal and external security. In summary, Fischer said, “Political union is the challenge for this generation.”2  … (1 and 2 Ibid, “German Foreign Minister floats idea of elected EU president,” The Financial Times, July 7, 2000. This article was a report on a speech by Joschka Fischer to the European Parliament’s constitutional affairs committee.)

Eventually the ten toed kingdom of regional economic government, being comprised partly of the iron of diktat, and the clay of democracy, will crumble, and the Sovereign and the Seignior will gain the upper hand, and install a one world government, a one world bank and rule globally providing a global seigniorage, Revelation 13:18.

God Provides A Resolution For The Sovereign Debt Crisis …It’s Called A New Europe And Global Regional Economic Government

November 25, 2011

Financial market report for Wednesday November 23, 2011

1) … Stocks fell lower as the Euro zone debt crisis weighs on growth globally.
Bloomberg reports Euro Weakens Amid Signs Debt Crisis Is Weighing on Growth. The euro declined for the sixth time in eight days against the dollar before data that may add to signs that Europe’s debt crisis is damping economic growth. The 17-nation euro dropped versus the yen ahead of reports forecast to show that manufacturing in Germany and France, Europe’s two biggest economies, fell this month. The euro fell to its lowest level in seven weeks against the dollar and traded at $1.3333 in late trading in Europe.

Bespoke Investment Group China PMI Shrinks Most In 32 months. Their chart shows that an Elliott Wave 3 of 3 Down has commenced in the Chinese manufacturing sector.

Weak growth prospects weighed heavily on Shipping Stocks, Copper Miners, Aluminum Miners, and Chinese Small Caps, as is seen in this Google Finance chart of SEA, COPX, ALUM, and HAO, which led World Stocks, ACWI, ACWX, and World Small Caps, VSS, lower today.

Shipping stocks SEA, NMM, TEU, GLF, HOS, BALT, ISH, ALEX, DSX, SSW, DHT, ULTR, DRYS, NM, SB, TOO, as seen in this Finviz Screener, have tumbled in the last five days of trading.

Telecom, IYZ, Industrial Office REITS, FNIO, Automobile Industry VROM, Fishing Industry, FISN, Airlines, FAA, have been strong fallers in the last week. Foreign Utilities, EOC, EBR, SBS, CIG, CPL, TEF, fell strongly today.

Commodity Stocks, such as Rare Earth Miners, REMX, Gold Miners, GDX, GDXJ, Silver Miners, SIL, Copper Miners, COPX, Coal Miners, KOL, Uranium Miners, URA, Aluminum Producers, ALUM, Wildcatters, WCAT, Small Cap Energy, PSCE, Energy Production, XLE, XOP, Energy Service, OIH, IEZ, XES, Steel, SLX, Metal Manufacturing, XME, Wood Producers, WOOD, led Materials, MXI, XLB, IYM, lower.

Semiconductors, XSD, SMH, Smartphone, FONE, and Cloud Computing, SKYY, Networking, IGN, Nanotechnology, PXN, led Technology Stocks, MTK, lower.

Lender Austria, EWO, European Financials, EUFN, Financials, XLF, Global Financials, IXG, Investment Banks, KCE, Stockbrokers, IAI, Banks, KBE, IAT, KRE, QABA, the Too Big To Fail Banks, RWW, Emerging Market Financials, FGEM, EMFN, traded lower.

India banks, HDB, IBN, UK area banks LYG, RBS, BCS, IRE, HBC, Brazil Financials, BRAF, BSBR, BBD, ITUB, South Korea Banks, KB, SHG, WF, Argentina Banks, BBVA, BMA, BFR, Chile Banks, BCH, BCA, SAN, Australia Bank, WBK, led world banks lower,seen in this Finviz Screener. Banks falling to a new 52 week low include Spain’s STD, Japan’s MTU, NMR, MFG, SMFG, India’s IBN, HDB, Great Britain’s HBC, LYG, Ireland’s IRE, Scotland’s, RBS, and Chile, SAN,

Italy, EWI, and Spain, EWP, led Europe, VGK, and FEU, lower. Germany, EWG, and France, EWQ, Ireland, EIRL, traded lower. Borrower and natural gas intensive Poland, EPOL, traded strongly lower.

Australia, EWA, Norway, EWN, Sweden, EWD, Israel, EIS, South Korea, EWY, South Africa, EZA, Taiwan, EWT, Singapore, EWS, Chile, ECH, were major country fallers.

The BRICS, EEB, BIK, BKF, traded lower as Russia, RSX, RSXJ, India, INDY, INP, SCIN, China, YAO, HAO, TAO, FXI, CHIM, CHIE, CHII, Brazil, EWZ, BRF, fell lower on fears of the failure of growth.

Columbia, GXG, Turkey, TUR, and Indonesia, IDX, led the emerging markets, EEM, lower.

Taiwan, TWON, led the Small Cap Stocks, VSS, lower. Latin America Small Caps, LATM, led the Emerging Market Small Caps, EWX, lower.

Egypt, EGPT, has plummeted in the last five days of trading. Japan, EWJ, was pummeled to a new 52 week low today. Reuters reports Nokia Siemens Networks To Cut 17,000 Jobs; NOK -1.6% today.

Boeing, BA, a company with a lot of debt, and a global growth leader, traded lower. BE Aerospace, airline rehabilitation company traded lower.

Industrial electrical equipment manufacturers, ETN, ROK, AME, TNB, BDC, ENS, FELE, and metal manufacturing companies, CMC, NUE, STLD, and networking shares FFIV, NTGR, XXIA, ELX, VSAT, CMTL, CSCO, QCOM, RVBD, CTXS, AKAM, and computer peripherals PANL, AUO, RDCM, and automotive parts manufacturers, JCI, DAN, TEN, LAD, CLC, F, TTM, SMP, MTOR, WBC, WPRT, PCAR, GM, CVGI, ALV, fell strongly on prospects of diminished growth.

Defense companies, ORB, HON, HEI, GD, LLL, TDG, traded lower.

Manufactured Housing Firm, CVCO, traded strongly lower.

Morgan Stanley Cyclicals Index, $CYC, fell strongly. And its consumer durables component, Whirlpool, WHR, fell to a new 52 week low.

PLCM and FIO were pure small cap growth, RZG, loss leaders. Mid Cap Growth, JKH, and Russell, 2000, IWM, both fell lower.

Homebuilders, XHB, and ITB, fell lower, as did Real Estate, IYR, and Retail, XRT,

Leveraged Buyouts, PSP, and Junk Bonds, JNK, traded lower.

Silver, SLV, Timber, CUT, Copper, JJC, and Aluminum, JJA, led base metals, DBB, and Commodities, DBC, Oil, USO, and Grains, JJG, GRU, lower.

The US Dollar, $USD, UUP, rose strongly as competitive currency devaluation drove World Major Currencies, DBV, Emerging Market Currencies, CEW, and the individual currencies, FXA, FXE, FXM, FXC, FXB, FXS, SZR, FXF, BZF, FXRU, ICN, lower.

A flight to safety in US Government Debt continued as ZROZ, EDV, TLT, rose parabolically in value, with the Zeroes, +1.9%, the 30 Year Bonds, +1.6%, and the 10 Year Notes, +1.0%. A similar strong demand for the longer out corporate bonds over the shorter duration ones, is seen in the chart of BLV:LQD, as BLV rose 0.5% and LQD fell 0.5%. Build America Bonds, BAB, rose to an all time high. World Government Bonds, BWX, and Emerging Market Bonds, EMB, International Corporate Bonds, PICB, traded lower.

Tony at MacroStory writes Regardless of how horrible the US fiscal house is USTs are deemed “risk free assets” and thus the flight to the USD and the UST. At some point the US will have to defend their own bond market but for now the risk off trade is long US Treasuries. Think of what I just said. Global bond markets are selling off yet the US is setting bullish records. If people are buying treasuries don’t they also need to buy US dollars? If the USD is strong doesn’t that mean equities are weak?

MacroAnalyst writes the yield curve flattening continues unabated. This is seen in the Flattner ETF, FLAT, rising in value, and the 10:30 US Government Bond Yield, $TNX:$TYX, falling in value.

Greek Crisis relates the WSJ reports A German government debt auction drew some of the weakest demand since the introduction of the euro, signaling diminishing investor appetite for even the safest euro-zone assets amid Europe’s worsening debt crisis. The auction sent waves through markets as investors, battered by a spate bad news out of Europe over the last few months, initially interpreted it as a sign of the crisis reaching the core of the euro zone.

2) … In today’s news
MarketWatch reports Belgian And French Yields Jump On Dexia Bailout Worries And ZeroHedge reports Dexia Bailout On Verge Of Collapse, Threatens To Take France AAA Rating Down With It
And Reuters reports Dexia Using Emergency Liquidity Facilities.

Bloomberg reports Hungary May Have to Bow to IMF Conditions to Access Financial Assistance. Hungary’s government may have to reverse its position on ruling out International Monetary Fund conditions in exchange for financial aid, according to Barclays Plc, Goldman Sachs Group Inc. and Capital Economics. Prime Minister Viktor Orban last week abandoned his policy of shunning the Washington-based lender, seeking help after a Standard & Poor’s threat to downgrade Hungary’s debt to junk sent the forint to a record low. He may have to do another reversal and scrap emergency taxes on some industries and ease the burden of a mortgage-repayment plan on banks, said Neil Shearing, an emerging-markets analyst at Capital Economics Ltd. The government has scrapped two debt sales and reduced the size of another eight auctions in the last three months as the euro region’s debt crisis deepened. The threat of market turmoil may force Orban to back down from insisting on an IMF agreement that won’t infringe on the country’s “economic sovereignty,” Barclays Capital economist Christian Keller said.

Zero Hedge reports HSBC Reports China PMI Contracts, Tumbles To 32 Month Low Of 48, From 51 Previously.

Bloomberg reports China Shunning Ships Shows $2.3 Billion Vale Mistake. The Vale Brazil, the biggest commodity ship ever built, was designed to carry iron ore to China from South America. After six months in operation, it hasn’t done that once. China’s refusal to accept the Brasil has derailed Vale SA’s push to control shipments to its biggest customer by building up a fleet of 35 ships, each almost as large as the Bank of America Tower in New York. Rio de Janeiro-based Vale, the world’s biggest iron ore miner, ships about 45 percent of sales to China, the largest consumer of the steel making ingredient. Vale’s plan, which includes buying 19 vessels for $2.3 billion, has spurred opposition from Chinese shipowners who say it will worsen overcapacity, slumping cargo rates and industry wide losses.

Bloomberg reports India’s Rupee Slide Spurs Fastest BRIC Inflation. The Indian rupee’s slump to its weakest level since the era of floating exchange rates began four decades ago risks boosting the fastest inflation among BRIC nations and adds pressure to raise interest rates. The rupee slid to close at 52.32 per dollar in Mumbai yesterday, bringing its decline in the past four months to 15 percent, the biggest drop among 10 Asian currencies tracked by Bloomberg. The decline will have an “immediate impact” on inflation, Reserve Bank of India Deputy Governor Subir Gokarn said in Mumbai yesterday. A weaker exchange rate raises the cost of imported energy and other commodities, adding to price pressures in a nation already beset by transportation bottlenecks and power shortages. A sustained slide in the rupee may buck the RBI’s plan to keep borrowing costs unchanged in coming months, limiting its scope to respond to growth threats posed by Europe’s debt crisis. “The more the rupee drops, the more difficult it would be for the central bank to stay pat on rates,” said Arun Singh, Mumbai-based senior economist at Dun & Bradstreet Information Services India Pvt. “There will be pressure on the RBI to abandon its stance and do another hike.” India’s benchmark wholesale-price inflation was 9.73 percent in October. By comparison, consumer prices rose 7 percent in Brazil, 5.5 percent in China and 7.2 percent in Russia in the same month.

Bloomberg reports EU’s Rehn Says Stressed Nations Must Step Up Austerity Measures.

Bloomberg reports Spain Pays More to Borrow Than Greece as Rajoy Appeals to Europe. While Rajoy won’t take office until the second half of next month and hasn’t announced his Cabinet, Europe’s other new leaders are rushing to bring order to their nation’s finances and obtain political support in Europe. Greek Prime Minister Lucas Papademos today meets with Jean-Claude Juncker, who chairs meetings of euro-area finance ministers. Italian Prime Minister Mario Monti meets with EU President Herman Van Rompuy in Brussels. Fitch Ratings said today that Spain’s new government will need to take “additional measures” beyond those announced by the Socialists to meet its deficit targets, and the People’s Party’s election victory provides a “window of opportunity.” Rajoy inherits a stalled economy with a 23 percent jobless rate, a banking system that’s facing a funding squeeze and a deficit of more than twice EU’s limit of 3 percent of gross domestic product. Spain has pledged to reduce the shortfall to 4.4 percent next year from more than 6 percent this year. Spaniards have “voted for austerity,” Rajoy told senior party members yesterday. It is the country’s “national duty to strengthen the euro,” he said. The Spanish Treasury today also sold six-month bills at 5.227 percent, up from 3.302 percent last month. The last time Spain sold bonds on Nov. 17 it paid almost 7 percent for securities maturing in January 2022, the most since it joined the euro in 1999.

Reuters report Spanish Yields Spike As Crisis Exits Blocked. Credit ratings agency Fitch said Spain’s new government would need to enact additional savings measures to meet its existing fiscal targets and had a window of opportunity to do so with a fresh mandate. “If it is to improve market expectations of its capacity to grow and reduce debt within the confines of the eurozone, it must positively surprise investors with an ambitious and radical fiscal and structural reform programme,” a Fitch statement said. The ECB has been sporadically buying Spanish and Italian government bonds to prevent prices spiking to unaffordable levels, but the limited, stop-go purchases have failed to provide durable relief. “The yields are a reflection of where their paper trades in the secondary market but if it wasn’t for the European Central Bank, there wouldn’t be a Spanish or Italian bond market,” said Gary Jenkins, head of fixed income at Evolution Securities.

The Guardian reports Spain’s Debt Crisis Worsens As Country Begins Month Of Post Election Limbo. A landslide victory by Mariano Rajoy’s People’s party (PP) in Sunday’s general election did nothing to stop Spain’s debt problems worsening on Monday as the prime minister elect remained powerless to calm the markets. Spaniards were proud of having avoided an Italian-style government of unelected technocrats after they gave conservative Rajoy the go-ahead to introduce reform and impose further austerity. Rajoy is hampered by the country’s system for handing over power, which takes a month, and the impatience of markets that sent the cost of Spanish debt higher on Monday morning. He must also obey the dictates of an EU, dominated by German chancellor Angela Merkel, which has imposed severe austerity programmes on member countries with debt problems. “A large part of his most immediate programme is already set out in the fiscal consolidation plan demanded by Europe,” Ceberio said. Rajoy will, for example, be unable to choose Spain’s deficit levels over the next three years, as strict targets have already been set by the EU. The PP leader has warned that he does not carry a magic wand and will not be able to perform instant miracles, even though yields on Spanish bonds are floating dangerously towards the 7% level that economists consider unsustainable. Rajoy’s main message to investors is that Spain will be “compliant”, meaning it will meet the deficit target of 4.4% set by the EU for next year. In a country where growth is zero and austerity already threatens a double-dip recession, that is likely to require further massive spending cuts or tax hikes, or a mixture of both. On Sunday night he pledged to make Spain respected in, among other places, Frankfurt. That was recognition that the country now depends heavily on the Frankfurt-based European Central Bank, which has been buying Spanish bonds to keep yields down. Rajoy is, however, in tune with Merkel, with whom he spoke by phone on Monday. Merkel’s spokesman, Steffen Seibert, said they discussed “Spain’s great problems”. Reforms that bring no cost to Spain’s cash-strapped treasury, such as to the labour market, may come first. Jaime García, an economist at a PP thinktank, said he expected Rajoy to announce “shock measures” soon. PP leaders have urged the outgoing socialist government of prime minister José Luis Rodríguez Zapatero to speed up the transfer of powers, even though the law requires parliament to meet on 13 December before Rajoy can take over. “There are extraordinary problems which demand that a holiday period between governments should not exist,” said PP spokeswoman Soraya Sáenz de Santamaría. Economist Nicholas Spiro, of Spiro Sovereign Strategy, said: “The fact that investors have to wait another month for Mr Rajoy’s cabinet to take the reins only adds to the uncertainty.” The outgoing socialists have set into motion the process of calling a party conference to transfer power to a new leadership. The conference is likely to take place in February.

Phillip Lane of Irish Economy will speak before the Royal Irish Academy, on The Dynamics of Ireland’s Net External Position. Ireland’s net external liability position expanded in dramatic fashion during 2008- 2010, despite relatively small net financial flow during this period. Understanding the the source and persistence of this negative shock is critically important in as- sessing the future path for the Irish economy but data analysis is made difficult by the confounding impact of Ireland’s major role as an international financial centre, such that the “core” international balance sheet remains obscure. However, there is considerable indirect evidence to believe that a substantial component of this decline is genuine and relates to the internationally-leveraged structure of the financial port- folios of domestic Irish residents.

Ambrose Evans Pritchard writes Ireland Demands Debt Relief, Warns On EU Treaties Europe’s plans for treaty changes to enforce fiscal discipline in the eurozone may fall foul of popular anger in Ireland unless the EU creditor states agree to share more of the pain.The Irish government has suddenly complicated the picture by requesting debt relief from as a reward for upholding the integrity of the EU financial system after the Lehman crisis, though there is no explicit linkage between the two issues.

“We carried an undue burden for protecting the European banking system from contagion,” said finance minister Michael Noonan. “We are looking at ways to reduce the debt. We would like to see our European colleagues address this in a positive manner. Mr Noonan said the country will stay the course with unbending austerity, even though nominal gross national product (GNP) has already contracted by 22pc. Public wages have fallen 12pc on average under Ireland’s “internal devaluation” policy to regain competitiveness within EMU. There are likely to be further wage cuts in the December budget.”We have to face reality. There is no painless way, no soft option: we’re going to cut spending drastically, but with social cohesion. We don’t want situation we see in Greece with people on streets and the foundations of state under threat. We’re not going that route.”

Antid Oto, of WSWS relates European Debt Crisis Threatens Balkan Economies. The deepening European financial crisis and the ever-growing possibility of bankruptcy for countries like Greece and Italy pose huge dangers for the economies of the Balkan countries. The report continues by noting that the non-EU Balkan countries are “susceptible to the effects of a further global slowdown and a deepening euro area crisis through several channels: trade, FDI, foreign banks, and remittances. The EU countries … are the largest trade partners of all the SEE6: trade with the EU is equivalent to between 30 percent and almost half of the SEE6 GDPs.” Serbia, for example, would be most directly affected by the deepening crisis in Italy, because Italian companies, most notably the automobile company Fiat and the clothing manufacturer Benetton, are among the biggest investors in Serbia. Italy is the top export partner for Serbian products, with proceeds amounting to just over $1 billion in 2011, according to Goran Nikolic, economist from the New Policy Centre, reported by Balkan Insight. The EU is also the largest FDI provider to the region, with net FDI inflows worth over 2 percent of the SEE6 GDP, and a significant source of remittances in the region.

Another major financial danger is the domination of foreign-owned banks in the region. (I relate that these provided significant amounts of carry trade investing). The International Monetary Fund (IMF) has also noted the danger of a contagion effect of the EZ debt crises on Albania. Its October report candidly explains that the country “has large trade, labour-market, and banking-system links with Greece and Italy, which could result in substantial spillovers with banking-system contagion potentially the most severe near-term risk, while sharply lower remittances could result in a significant GDP shock”. The capital flight from the region is already evident in currency exchanges. Last week’s Financial Times article “Eastern Europe’s currencies take a Eurozone beating” states that “[f]ar from benefiting from being outside the Eurozone, eastern European countries are feeling the strain of exclusion from the club” with “the value of their currencies plummeting. (I relate that this evidences, a massive unwinding of hot money carry trade loans). A renewed credit crunch in the Balkan region would be much more severe than in 2008-2009. The extent of social cuts and privatisation of state assets already carried out means that this time round there would be no room for softening the blow with further public spending cuts.

Bruce Krasting writes in Zero Hedge on how wealthy shipping magnates have transferred their wealth out of Euros and into Swiss Francs. Capital Flight and Forced Repatriation. Put yourself in the mind of a Greek who had some savings in a local bank. What would you do? You would do whatever you could to get your money to high ground. It would be perfectly reasonable for you to do that. And that is exactly what the Greeks have done. They’ve moved billions of Euros to Swiss banks in an effort to preserve their wealth. In the process they have crippled the Greek banks and have added to the downward spiral in Greece and the rest of the EU. There was (IMHO) a very significant development on this front last week. A move is being made in Brussels to “force” the Swiss government/banks to transfer all of the assets of Greek citizens back to the Greek banks. For a Greek this means that your money is hostage. It has been functionally expropriated. It will be transferred into a banking system that is fraught with risk. Some portion of the money that goes back to Greece will certainly be lost.
I have talked with some who I know in Athens. They are out of their minds with this development.
BRUSSELS — The European Commission is helping Greece negotiate an agreement with Switzerland to repatriate as much as $81 billion believed to be hidden in Swiss bank accounts, a high level European Union executive body official said Nov. 17. $81 billion? That’s massive. This is not the shopkeeper or pensioner. This is big bucks and that means the Greek shippers. It is a fact that the Greek government doesn’t tax the foreign earnings of the shippers. Call that a mistake, but that is the law. As a result, the shippers have held huge bucks in Switzerland. It’s not dirty money. Right or wrong, there was no legal tax on this. The European Commission is working with Switzerland and Greece stop what it believes is an ongoing exodus of money from Greek bank accounts into Swiss and other offshore banking centers, the EU official said. The only way to stop capital flight is to address the underlying causes of the flight. That can’t happen in Greece for years. The alternative is to trap the money, force it to go where it is at most risk. The owner of the money will have no choice. Any rights they might have to preserve their assets will be abrogated. I’m amazed at this development. The Swiss government/banks are obligated to cooperate with EU tax authorities when there is evidence of tax fraud. But that is not what this is about. The people in Brussels and Bern know that. The fact is that the Greek tax system is so screwed up that there simply are no taxes levied on certain types of income capital (the shippers). No doubt, some of the Greek cash that is in Switzerland is there because of tax avoidance. But the vast majority is simply safe haven money. The word “Repatriation” sounds nice enough but really it means “Theft and expropriation”. There will be nothing voluntary about this. There will be little (if any) due process.

3) … A New Europe and global regional economic government, is rising out of the European sovereign debt and banking crisis, as well as out of a global recession.
Sovereign insolvency, falling currency values, and a failure of growth are the issues of the day.

Insolvent sovereigns and illiquid banks cannot sustain economic stability. And capital depleted industrial electrical equipment manufacturers, networking companies, computer peripheral manufacturers, automotive parts manufacturers, companies such as those in the Morgan Stanley Cyclicals Index, and the Chinese industrials, cannot sustain growth.

News reports communicate that Portugal and Spain have now joined Greece and Italy in the insolvent nation club. Bloomberg reports Portugal’s Credit Rating Cut To Junk By Fitch. Tyler Durden reports Spanish Yield Curve Inverts Most Since 1994. Mike Mish Shedlock reports Two Year Italian Bond Yield Hits 7.27%. CNBC reports Bond Market Closing To Sovereign Countries. Ashoka Mody and Damiano Sandri of Economic Policy Org summarize their research in VOXEU article Sovereign Risk and Banking Fragility. Reuters reports Disastrous Bond Sale Shakes Confidence In Germany. And Mike Mish Shedlock in German Failed Bond Auction writes It’s actually about solvency, not liquidity, not confidence. Solvency issues in Greece, Spain, and Portugal have now affected the core.

Banks that have fallen precipitously and are now illiquid include the European Financials, EUFN, Investment Banks, KCE, Regional Banks, KBE, IAT, KRE, Nasdaq Banks, QABA, Too Big To Fail Banks, RWW, Emerging Market Financials, FGEM, EMFN, India banks, HDB, IBN, UK area banks LYG, RBS, BCS, IRE, HBC, Brazil Financials, BSBR, BBD, ITUB, South Korea Banks, KB, SHG, WF, Argentina Banks, GGAL, BBVA, BMA, BFR, Chile Banks, BCH, BCA, SAN, Australia Bank, WBK, Japan’s MTU, NMR, MFG, as seen in this Finviz Screener.

Regional pooling of sovereignty will establish regional economic government, both in the EU, as well as globally, to provide for resource capability, financial security and economic stability.

Having experienced sovereign insolvency, all of the periphery nations, Portugal, Italy, Ireland, Greece and Spain, the PIGS, well the PIIGS, are no longer sovereign nation states. These countries will have to look to EU ECB and IMF leadership, that is EU ECB and IMF Troika and its diktat, and their sovereign authority for seigniorage, that is moneyness. Although one or more of the EU periphery countries may depart the common currency, there will be no breakup of the common currency zone. Economic libertarians, who foresee sovereign nation states such as Germany emerging out of the current crisis are going to be very disappointed. Their thinking is based upon the logic of Austrian School of Economics leaders, Hayek, Mises and Rothbard, and championed by Ron Paul.

The political dynasties of European Socialism in the periphery countries of Portugal, Italy, Greece, and Spain, that provided pork via patronage, are history. A new paradigm, that being, regional economic government is emerging in the EU.

An entirely new economic, political, and investment landscape is at hand. Its as EUobserver reports that, at a business congress in Istanbul on Friday, Turkey’s former Ambassador to the EU Volkan Bozkir said, “The EU dream has come to an end for the world. There is a paradigm shift. The EU is no longer the same Union that provided comfort, prosperity and wealth to its citizens as in the past.” Financial Post writes Europe Can Say Goodbye To La Dolce Vita. Christoph Dreier in WSWS writes The Threat Of Dictatorship In Greece.

Stephen Foley in the Independent What Price The New Democracy? Goldman Sachs Conquers Europe communicates that the Euro currency union, is the Goldman Sachs investment bankers project, and that it is continually striving for consensus that the creditors be paid in full. This is the basis of the mandate for expansionary fiscal contraction being demanded by the Euracracy.

God is acting sovereignly, Ephesians 3:1-11, Revelation 2:26-27, to effect a coup, Revelation 6:1-2, to bring a Sovereign and a Seignior to power in the EU. These will provide Euro zone wide seigniorage, that is moneyness, for a New Europe. The former Eurozone had its political capital from the people across Europe. The political capital of the New Europe will come from federalist leaders in Brussels, Berlin, France, Goldman Sachs, and the technocratic governors of the periphery countries.

Roy Schwarcz writes that bible prophecy of Daniel 2 and Revelation 13 communicates that Germany and a powerful leader will rise to empower a European Super State in a type of Roman Empire. “The Roman Empire fell apart from within, no enemy destroyed it. Rome is living in the great nations of Europe today: Italy, France, Great Britain, Germany, and Spain are all part of the old Roman Empire. The laws of Rome live on, as well as the language. Latin today is the base of French, Spanish, and other languages. Her warlike spirit lives on also as Europe has been at war ever since the empire broke up into these kingdoms. What is happening in Europe today? There is a diminishing of the nations and a unifying of the people with a common currency, common markets and common government. The foundation is being laid for the man who is coming someday to put the Roman Empire back together again.” This man will be the Sovereign of Revelation 13:5-10.

This New Charlemagne, will be accompanied by the Seignior, Revelation 13:11-18, the top dog banker who takes a cut. Together they will provide the seigniorage of diktat, as the seigniorage of freedom, that existed under the Milton Friedman Free To Choose floating currency regime, is history. The word, will and way of these two will provide moneyness, and the people will be amazed and follow after it, giving it their full allegiance, Revelation 13:3-4. The faith based Milton Friedman Free To Choose Neoliberalism is ending. The faith based Beast Regime of Neoauthoritarianism is commencing, yes rising out of the Mediterranean Sea profligates, Revelation 13:1-4. The Beast System has seven heads, symbolic of occupation in mankind’s seven institutions, and ten horns, symbolic of government in all of the world’s ten regions.

A leading candidate for the Sovereign of Revelation 13:5-10 is Herman van Rompuy, President of the European Council. Consillium provides a video of Mr. Van Rompuy, during a debate on European economic government at the European Parliament. Reuters reports Van Rompuy urges euro zone to pool sovereignty. And G7 Finance reports Mr Van Rompuy saying in a speech to a conference held by a Brussels think tank, “The euro zone has to move towards real economic union commensurate with monetary union.” … “We need to give both our citizens and the markets a clear message about the irreversibility of the euro,” … “This will imply in some of these areas a pooling of sovereignty in exchange for a stronger, more stable monetary union,” Van Rompuy stated “(Deepening economic union) will require a combination of two things, a significant strengthening of our rules and mechanism for fiscal responsibility and a large step in terms of integration in economic policies.” … “We have to fight for our economic and monetary union and Europe’s place in the world,” … “In Italy, it is an hour of truth.”

A leading candidate for the Seignior of Revelation 13:5-11, is Mario Draghi, a Goldman Sachs banker who is now heading up the ECB.

Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.

In 1974, 300 of world’s elite met and made a call for strong regional economic governments in all of the world’s ten regions. This ten toed kingdom, Daniel 2:33, was purposed as a means of coping with the deleveraging, disinvesting, and derisking out of the Milton Friedman Free To Choose floating regime. The 1974 Call of the Club of Rome is clarion, that is clear, distinctive and ringing, and it comes with the authoritarian imperative. The 1974 Club of Rome’s Call for regional economic government is the basis for the sovereign authority of the EU ECB IMF Troika’s New Europe.

The Clarion Call is underlying the vision for regional economic government and expansionary fiscal contraction, which is the combination of structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts and centralized fiscal supervision favored by German economic and expansionary fiscal contraction. political leaders, such as Wolfgang Schauble, Olli Rehn, and Guido Westerwelle, which eliminate labor privileges such as inflation inked wage rises, that eat away at intra Euro zone competitiveness.

In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. In as much as the EU is characterized by failed nation states, moneyness will come by diktat. The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian collectivism will be the way of life for all in the Euro zone. The road to serfdom is seen in a number of news reports; I provide three samples below.

Gillian Grannum of Shift Frequency provides the Bob Alderman New American report Germany’s Merkel Yields More Sovereignty to the EU. At a joint briefing on Wednesday with Irish Prime Minister Enda Kenny, German Chancellor Angela Merkel announced the next step towards the creation of the supra-national European state: “Germany sees the need…to show the markets and the world public that the euro will remain together, that the euro must be defended, but also that we are prepared to give up a little bit of national sovereignty…” It must be done, she said, so that the euro is “strong and inspires confidence on international markets.”

Tyler Durden reports ECB executive board member José Manuel González-Páramo calls for a significant transfer of sovereignty to the EMU level,: “We cannot completely delegate governance to financial markets. The euro area is the world’s second largest monetary area. It cannot depend solely on the opinions of ratings agencies and markets. It needs economic governance arrangements that are preventive and linear. This underscores my central point that a much more comprehensive approach to economic governance is now the priority for the euro area. And this means more economic and financial integration for the euro area, with a significant transfer of sovereignty to the EMU level over fiscal, structural and financial policies.”

Roddy Thomson AFP report EU demands Right To Dictate National Budgets. The European Union called Wednesday for sweeping new powers to override national budgets and decide when governments should be placed under the wardenship of Brussels technocrats. “Without stronger governance, it will be difficult if not impossible to sustain the common currency,” Jose Manuel Barroso, head of the executive EU Commission, said of plans presented as a pre-condition for pooled eurozone government borrowings, seen as a way of helping resolve the debt crisis. The Netherlands meanwhile warned that plans for fiscal convergence also face an “uphill struggle,” Finance Minister Jan Kees De Jager adding without naming the objectors: “There are those who resist further discipline.”

The proposals, which concern the eurozone, now journey through the EU’s 27 member states and the European Parliament. Barroso argued that to complement democracy at the level of national parliaments, for instance in the setting of annual budgets, a “democracy of the EU” also had to be given its say. Otherwise, he said, Europe would “hand sovereignty to markets.”

The EU has rules on annual deficits and cumulative debts but these have been trampled over for years by its governments. This time, the Commission wants the power to send inspectors in to finance ministries around Europe, and demand changes it believes better meet the needs of the common good before funds are legally allocated. Barroso echoed the Dutch when he cited past “coalitions” of states determined not to respect pacts on deficits and growth. Now the Commission wants states to set up independent councils using external forecasting to agree on spending, taxation and other budget shaping reforms.

Euro Commissioner Olli Rehn said the right to intervene in a eurozone state’s public finances would be awarded when the Commission and the European Central Bank, ECB, determine that financial stability is at risk. Pressed to detail the criteria envisaged for making that judgment, he insisted that the EU can’t predict “ex ante all the situations where we might need” such surveillance. Berlin actually wants to go further on surveillance, indeed Germany wants the European Court of Justice to be empowered to pursue the worst offenders. “Madame Merkel and I will soon make proposals for treaty modifications in order to prevent states from diverging in budgetary, economic or fiscal policy,” said French President Nicolas Sarkozy late on Tuesday.

4) … The world has passed from Neoliberalism into Neoauthoritarianism
In July 2011, investors became aware that a debt union had formed in the EU, and sold out of their investments, causing a global investment, political, and economic regime shift out of Neoliberalism and into Neoauthoritarianism.

The Milton Friedman Free To Choose script provided for personal gain … The Club of Rome vision provides for regional stability and security.

Sovereign nations issued debt giving rise to inflationism … Insolvent sovereigns are unable to issue debt giving rise to destructionism.

Mike Mish Shedlock writes “Steen is correct regarding the only true role of central banks. It is precisely why they they should be eliminated. Far from being “inflation fighters” they are the very source of inflation. More correctly: Fractional Reserve Lending and Central Bank Printing do not “cause” inflation, they “are” inflation. Deflation is the destruction of credit and debt from the preceding boom. And he also writes The cause of the great depression was the runup in credit that preceded it. Central banks, governments, fiat currencies, and fractional reserve lending are responsible for every major economic bust in history and fools come back begging for more. Enough! Eurobonds are not going to happen (nor should they happen).

Currencies floated … Currencies sink in competitive currency devaluation.

Human action guided Neoliberalism… Fate, that is Destiny guides Neoauthoritarianism.

Social institutions were the result of human action, but not of human design. Many of the most important institutions and practices were not the result of direct design but were the by-product of actions taken to achieve other goals … Mankind’s seven institutions are occupied by the Beast Regime with the goal to subject mankind to debt servitude.

The seigniorage of freedom provided credit liquidity and supported economic growth … The seigniorage of diktat enforces expansionary fiscal contraction producing ongoing economic recession.

Sovereign bankers engaged in wildcat finance, a Doug Noland term, and waved wands of wealth stirring up ponzi finance, mortgage equity withdrawal, and mark to fantasy valuations … Sovereign leaders are involved in wildcat governance, tearing and riping one another, and yield authoritarian clubs beating people into submission.

An example of wildcat finance was carry trade investing in countries such as Chile and Latvia. Now Reuters reports Russian Financier Said Detained On Lithuania Bank Crash Lithuania To Make Fifth-Largest Bank Bankrupt. The Russian businessman whose banks in Lithuania and Latvia were seized by regulators was detained in London on Thursday under a European arrest warrant, Lithuania’s interior minister was quoted as saying. Finance Minister Ingrida Simonyte said the state would have to lend to the country’s deposit insurance fund to pay back Snoras clients who had deposits up to 100,000 euros.But she said the country would not need outside assistance from the International Monetary Fund, as Latvia did during its 2008 bank crisis, as the government would use the proceeds from a recent $750 million debt issue. However, that leaves Lithuania needing to raise $1 billion next year to refinance a bond due for maturity in 2012. Latvia, which has been running Krajbanka since Monday, had hinted that it wanted Lithuania to bail out Snoras, as Latvia did for its second-largest bank, Parex, in 2008. However, that intervention forced Latvia to take a bailout from the International Monetary Fund and European Union. Lithuania wants to avoid that fate

Leaders met in national legislatures and the rule of law was observed and maintained in democratic republics to encourage capitalism in Australia, Canada, America, Mexico and promoted socialism in a whole host of European nations. Leaders meet in summits and waive national sovereignty, and announce regional framework agreements, work groups, and stakeholder bodies to promote state corporatism on a regional basis.

The UK and the US dominated the world operating empires in India, Iraq and Afghanistan … Out of sovereign crisis, ten regional governments form, and ten kings eventually rise to rule in each region.

5) …A Global Eurasia War is coming.
CBS News reports The U.S. Embassy in Damascus urged its citizens in Syria to depart immediately, and Turkey’s foreign ministry urged Turkish pilgrims to opt for flights to return home from Saudi Arabia to avoid traveling through Syria.Tyler Durden reports Russia Retaliates Against US: Puts Radar Station On Combat Alert, Prepares To Take Out European Missile Defense Systems. And Scott relates that the hook in the Jaw of Russia is natural resources in Syria and the Middle East.

6) … What rights does one have in the age of new sovereigns?
An inquiring mind asks, in the age of new sovereigns, what rights does one have? If one is a Christian, then one has the right to manifest as a child of God. Reformed Christianity is a religion based upon the concept that God has two Wills and two Vessels; and that the Vessel either belongs to God or to Sin And Death.

One is owned either by God, or is mortgaged to Sin and Death. Human beings do not own themselves. For those in Christ, The Apostle Paul said in 1 Corinthians 6:19-20, “Ye are not your own: for ye are bought with a price: therefore glorify God in your body, and in your spirit, which are God’s.” Paul simply states a fact: one does not own one’s self, one was redeemed by Christ’s blood. And he states a consequence, one is to glorify God in body and spirit; and he emphasises the ownership of God, stating that the believer’s physical body and spirit belong to God. Every limb of one’s frame belongs to God; it is his property; He has bought it “with a price.”

One has a choice of four sources to determine what right(s) exist: religion, law, philosophy, or the state.

Reformed Christianity holds there is only one right: But as many as received him, to them gave he power to become the sons of God, even to them that believe on his name. 1 John 1:12.

Right or Rights can only exist where there is power. Where the power is, there the right is.

1 John 1:12 means that one, after having received Christ, has the power to manifest as, or to develop as, the son of God. In other words, one having received Christ, can exercise his right and actuate as the progeny of God

Either one will manifest genuine concerning the faith of the Son of God or one will manifest reprobate concerning the Son of God. Manifesting faithful to the Word of God is the only Right there is.

The Apostle John wrote 1 John 1:12 under inspiration of the Holy Spirit to confront the “Law of The Jews? and the “Wisdom of Greeks ? Wisdom of the Ancients”. The Jews held forth the Prophets, The Nation of Israel and The Law for one’s identity and experience. The Greeks held forth the Wisdom of the Ancients, such as Plato, and philosophy for identity and experience.

Please consider more thoughts from Four Sources To Determine One’s Rights ….

Stocks Fall Lower As Fears Of Sovereign Insolvency And Failure Of Global Growth … Will The EU Become A Totalitarian Collective?

November 22, 2011

Financial market report for Monday, November 21, 2011

1) … Stocks fell sharply lower as fears of sovereign insolvency and failure of global growth increased. Moody’s warns of Change In French Rating Outlook and Reuters reports Global Economic Outlook Grim, China To Spend 1.7 Trillion On Strategic Sectors

Solar, TAN, Energy Service, OIH, IEZ, XES, Commodity Stocks, such as Silver Miners, SIL, Copper Mining, COPX, Coal, KOL, Uranium, URA, Wildcatters, WCAT, Small Cap Energy, PSCE, Energy Production, XOP, Steel, SLX, Metal Manufacturing, XME, Rare Earth Miners, REMX, Gold Miners, GDX, led Materials, MXI, lower.

Risk trade leaders Internet Retailers, HHH, and Small Cap Gold Miners, GDXJ, plummeted.

Semiconductors, XSD, SMH, Smartphone, FONE, and Cloud Computing, SKYY, Networking, IGN, Nanotechnology, PXN, led Technology Stocks, MTK, lower.

Austria, EWO, Australia Dividends, AUSE, India Earnings, EPI, European Financials, EUFN, Financials, XLF, Global Financials, IXG, Emerging Market Financials, EMFN, FGEM, Investment Banks, KCE, Stockbrokers, IAI, Banks, KBE, IAT, KRE, QABA, the Too Big To Fail Banks, RWW, were strong fallers, taking the World Stocks, ACWI, and ACWX, lower.
Wall Street Journal reports Credit Suisse warns of “last days” with the euro and EconomicPolicy Journal writes Europe’s banking system could end up shut for days.

National Bank of Greece, NBG, and India’s HDFC Bank, HDB, and ICICI Bank, IBN, led world banks lower,seen in this Finviz Screener, on fears of currency deflation, specifically a failure of the Euro, FXE, and the India Rupe, ICN.

All the global banks traded lower today: BSBR, ITUB, BBD, BBVA, IBN, HDB, UBS, RBS, STD, DB, LYG, KB, WF, SHG, CHIX, GGAL, BFR, BMA, SMFG, BCH, BCA, EPI, CS, WBK, BLX, BCS, ING, MTU. Lloyds Banking Group, LYG, Royal Bank of Scotland, RBS, HSBC Holdings, HBC, were strong fallers, as was Bank of America, BAC, and Citigroup, C, and Deutsch Bank, DB. Lloyds Banking Group, LYG, has lost 15% in the last five trading days.

Italy, EWI, led Europe, VGK, and FEU, strongly lower. Germany, EWG, Spain, EWP, and France, EWQ, all lower.
Industrial Office REITS, FIO, led Real Estate, IYR, lower.

Tata Motors, TTM, led automobile stocks, VROM, lower.

Egypt, EGPT, fell strongly as its military battled civilians. Business Insider repaorts Egypt’s Cabinet Has Submitted Its Resignation To The Military Council, As Huge Protests Break Out In Cairo. And Sweden, EWD, Israel, EIS, South Korea, EWY, and Taiwan, EWT, were major country fallers.

The BRICS, EEB, BIK, BKF, fell strongly as Russia, RSX, RSXJ, India, INDY, INP, SCIN, China, YAO, HAO, TAO, FXI, CHIM, CHIE, CHII, Brazil, EWZ, BRF, fell lower on fears of the failure of growth.

Turkey, TUR, Indonesia, IDX, led the emerging markets, EEM, lower.

Taiwan Small Caps, TWON, South Korea Small Caps, SKOR, India Small Caps, SCIF, Canada Small Caps, and Australia Small Caps, KROO, led the Small Cap Stocks, VSS, and Emerging Market Small Caps, EWX, lower.

Shippers, SEA, plummeted.

Agricultural shares, PAGG, and MOO, fell strongly; these included AGCO ,LNN, DE,

Boeing, BA, a company with a lot of debt, and a global growth leader fell strongly.

Industrial companies, IBM, CAT, ROK, turned parabolically lower.

Defense companies, ORB, ST, HON, HEI, GD, LLL, TDG, all turned parabolically lower.

Manufactured Housing Firm, CVCO, a rally leader, fell parabolically lower.

Railroad, KSU, was a strong transportation faller.

Mid Cap Growth, JKH, and Russell, 2000, IWM, both fell 2.5%. The S&P, SPY, broke below its 50 day moving average, Bespoke Investment Blog reports .

Focus Media Holdings, FMCN, once a consistently strong China technology stock fell 40%.

Gilead Sciences, GILD, fell 9% as the HIV drug maker will spend about $11 billion to buy Pharmasset Inc. in what one analyst termed an “amazing risk,” a high stakes gamble, AP reports.

Leveraged Buyouts, PSP, and Junk Bonds, JNK, fell strongly, as did World Government Bonds, BWX, and Emerging Market Bonds, EMB. Business Insider reports Sovereign Risk is Spreading Like Wildfire.

Commodities, DBC, traded sharply lower on fears of global economic contraction with Base Metals, DBB, Precious Metals, JPP, Gold, GLD, Silver, SLV, Timber, CUT, Copper, JJC, Cotton, BAL, Corn, CORN, Grains, GRU, Agricultural Commodities, JJA, lower.

The US Dollar, $USD, UUP, rose to a six week high, to close at 78.30, as competitive currency devaluation continued at a fast clip, driving world currencies, DBV, and emerging market currencies, CEW, lower. Currencies trading lower as seen in this Finviz Screener, included FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, BZF, FXRU,

International Business Times reports US Money-Market Funds Seen at Risk Due to Europe’s Debt Storm.

2) … Fears of bank and sovereign insolvency, together with fears of economic contraction, were the force driving stocks, commodities, and currencies lower today. Reuters reports Absence Of An Effective Firewall To Halt A Meltdown In Sovereign Bonds The risk premiums on Spanish, Italian and French government bonds rose as investors fled to safe-haven German Bunds, while European shares fell more than 2 percent after Moody’s warned that France’s credit rating faces new dangers. “This crisis is hitting the core of the euro zone. We should have no illusions about this,” European Economic and Monetary Affairs Commissioner Olli Rehn said. He defended the European Union executive’s advocacy of austerity policies blamed for choking off growth and jobs. “One simply cannot build a growth strategy on accumulating more debt, when the capacity to service the current debt is questioned by the markets,” Rehn told a Brussels seminar. “One cannot force foreign creditors to lend more money, if they don’t have the confidence to do it.” Two newspapers said the ECB’s governing council had imposed a weekly limit of 20 billion euros on purchases of euro zone government bonds.

Greek Prime Minister Lucas Papademos will meet EU Commission President Jose Manuel Barroso and Eurogroup head Jean-Claude Juncker on Monday after EU, IMF and European Central Bank representatives held tough talks in Athens. Fearful of alienating voters, Antonis Samaris, head of the conservative New Democracy party, refused to give a written commitment to the terms of a second bailout program, no matter who wins an election expected on February 19. The leader of the far-right LAOS party said international lenders would not release the 8 billion dollars Greece needs to avoid default in mid-December without the guarantee.

Bloomberg reports Rajoy Party Wins Spanish Elections After Debt Crisis Overwhelms Socialists. Mariano Rajoy won the biggest parliamentary majority in a Spanish election in almost 30 years, and told Spaniards to brace for difficult times as the nation fights to avoid being overwhelmed by the debt crisis. Rajoy’s People’s Party swept the ruling Socialists from power after eight years, winning 186 of the 350 seats in Parliament, compared with 110 for the ruling party’s candidate Alfredo Perez Rubalcaba. That’s the worst result for the Socialists in more than three decades. Opinion polls in the month before the vote showed the PP winning 184 to 198 seats. “Hard times lie ahead,” Rajoy told supporters outside the PP’s headquarters in Madrid, giving no new details of his plans. “We are going to govern in the most delicate situation Spain has faced in 30 years.” Rajoy, 56, who said on Nov. 18 he hoped Spain wouldn’t need a bailout before he can be sworn in as prime minister in a month’s time, has pledged to slash the budget deficit and regain the nation’s AAA credit rating, without saying how he will do it. He inherits a stagnant economy with a 23 percent unemployment rate and borrowing costs back at the levels Spain was paying before it joined the euro.

The WSJ reports European Commission to Propose Shared Euro-Zone Representation at IMF. Europe’s upcoming proposals to fight its debt crisis will include new economic rules for the continent and shared representation for euro-zone nations at the International Monetary Fund, a senior European Commission official said in an interview Saturday. Viviane Reding, a European Commission vice president, said the new steps to be unveiled Wednesday will show Europe building stronger ties to relieve mounting international doubts about the future of the 17-nation currency bloc.

The WSJ reports Brussels Seeks More Control Over Euro-Zone Member Budgets. The European Commission will set out proposals Wednesday that would significantly tighten Brussels’ control over the budget policies of euro-zone member states, according to draft documents. The proposals would see struggling governments forced to submit to frequent reviews of their policies and accounts, and could see euro-zone governments effectively forced to seek financial assistance by a vote of their peers.

Ambrose Evans Pritchard relates Spain Becomes Fifth Victim To Fall In Europe’s Arc Of Depression. “Spain has been the biggest victim of cheap capital from German, Dutch, and French banks. The eurozone crisis is as much a tale of excess bank leverage and poor risk management in the core as of excess consumption and wasteful investment in the periphery”, relate Philip Whyte and Simon Tilford, in a paper for the Centre for European Reform. Too much Austrian economic virtue is “collective vice” argue the researchers.

Mr Pritchard continues “Given that the structure of EMU itself caused the North South imbalances that lie behind the crisis, the EU authorities and the creditor states surely have a duty of care to the countries now trapped in slump. Instead, we heard last week from Brussels that the Spain must “help itself”, and from Germany the usual mantra of reform.”

Expansionary fiscal contraction is the combination of structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts and centralized fiscal supervision favored by German economic and political leaders, such as Wolfgang Schauble, Olli Rehn, and Guido Westerwelle, which eliminate labor privileges such as inflation inked wage rises, that eat away at intra Euro zone competitiveness.

The economic theory of expansionary fiscal contraction is the concepts of Harvard’s Alberto Alesina, and Goldman Sachs’ Broadbent and Daly, writes George Irvin in the Social Europe Journal, stating, “it is very difficult to see how massive fiscal contraction can be expansionary in Britain today.” And Simon Johnson writes Under four conditions, fiscal contraction can be expansionary. But none of these conditions is likely to apply in the United States today. Wolfgang Muchau wrote in the FT, “I cannot see how somebody with a solid training in macroeconomics, and with a minimal sense of honesty, could come up with a fairy tale of an expansionary fiscal contraction. Or, that coordinated austerity programmes would not affect growth in the short run.”

I relate that the Eurocracy is determined that Greece’s fiscal spending will not continue at its current level. It’s economy is in a Fisher Depression, which Brian Griffin covers in Seeking Alpha article Irving Fisher on Debt, Deflation, and Depression.

Bloomberg reported on June 30, 2011, that Goldman Sachs,strengthened its managemnt team with hire from the UK Central Bank Goldman Sachs Group, GS, hired Andrew Benito from the Bank of England as a senior European economist, reinforcing a link between the fifth-biggest U.S. bank by assets and monetary policy makers. Benito joined the New York-based bank on June 27 in London after 11 years as an economist at the U.K. central bank, according to an internal Goldman Sachs memo sent to employees today and obtained by Bloomberg News. Spokeswoman Fiona Laffan confirmed its details. The hiring comes the same month as Ben Broadbent joined Sushil Wadhwani and David Walton as Goldman Sachs alumni who have become Bank of England policy makers and weeks after the bank named former central bankers as its chief economists for Europe and Japan. Benito’s arrival marks a further reshaping of the bank’s economics division, which includes the appointment of Huw Pill, the ECB’s deputy director general of research, as chief European economist. He will join in August to replace Erik Nielsen, who is transferring to UniCredit SpA as its global chief economist. Naohiko Baba joined in January as chief economist in Japan after leading financial systems analysis at the Bank of Japan. Educated at the universities of Warwick and Cardiff, Benito was most recently a senior economist in the Bank of England’s structural economic analysis division and has also spent time at the Bank of Spain and International Monetary Fund, according to the Goldman Sachs memo.

3) … An inquiring mind asks, Will the EU become a totalitarian collective?

Greece lost its debt sovereignty in May 2010, as it began accepting EU ECB IMF Troika aid, and Italy lost its debt sovereignty when its interest rate surpassed seven percent. Having experienced sovereign insolvency, Greece and Italy are no longer sovereign nation states. Now Italy too will have to look to EU ECB and IMF leadership, that is EU ECB and IMF diktat, and their sovereign authority for seigniorage, that is moneyness, as well as a resource for their fiscal spending.

Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.

In 1974, 300 of the world’s elite met and made a call for strong regional economic governments in all of the world’s ten regions, as a means of coping with the deleveraging, disinvesting, and derisking out of the Milton Friedman Free To Choose floating regime. The 1974 Call of the Club of Rome is clarion, that is clear, distinctive and ringing, and it comes with the authoritarian imperative.

Insolvent sovereigns cannot govern. Greece and Italy having lost their debt sovereignty, now lack seigniorage, the ability to create money. And today Spain has lost its debt sovereignty and lacks debt seigniorage as the interest rate on its 10 year bond has risen to 6.6. The periphery nations cannot spend what they do not have. They are without fiscal spending resources, and have to depend on the sovereign authority of a Euracracy, that is the EU ECB Troika. The seigniorage of freedom is history, and the seigniorage of diktat has commenced. And it is mandating expansionary fiscal contraction.

While some might say that expansionary fiscal contraction is hyperbole, or doublespeak, Frances D’Emilio and Colleen Barry of the AP, in article Italy Hit By Protests As PM Unveils Economic Plan report on Mario Monti’s expansionary fiscal contraction plans in Italy.

They relate, Monti revealed plans to fight Italy’s pervasive tax evasion, lower costs for companies so they can hire more and possibly lower taxes rates for women to encourage their increased participation in the work place. Hee warned Italians they must brace for more “sacrifices,” including the probable return of a property tax on primary residences.

“We must convince the markets we have started going down the road of a lasting reduction in the ratio of public debt to GDP. And to reach this objective we have three fundamentals: budgetary rigor, growth and fairness,” Monti said. He said he would quickly work to lower Italy’s staggering public debt, which now stands euro1.9 trillion ($2.6 trillion) — 120 percent of its GDP. “But we won’t be credible if we don’t start to grow,” Monti added.

Stefano Folli, a political analyst at the il Sole-24 Ore paper, viewed Monti’s overture to the nation as more political than economic, aimed at convincing both Italians and the international community of his mission. “The anti-crisis discussion was aimed at Italians to seek a season of sacrifices and rigor, and abroad to say Italy wants to gain credibility.” Folli said.
Monti said his government would consider reforms to lower Italy’s “elevated” tax rates. Employers say high payroll taxes discourage them from hiring. In the workplace, Monti called for structural reforms but added “we must avoid the anguish that accompanies it.”

The question of how long Monti’s government will last has sparked intense debate among Italy’s political parties. Monti has said he intends to govern until the legislative period expires in the spring 2013. But Berlusconi’s longtime ally the Northern League wants elections earlier. Sen. Roberto Calderoli, a Northern League leader, gave a “thumbs-down” signal at the end of Monti’s speech.

Some in Berlusconi’s conservative People of Freedom Party have called for early elections, but top party officials have said they will support Monti in parliament to achieve anti-crisis measures. Monti indicated he was looking for wide support among Italians.

Paul Mitchell writes in WSWS article Social Democrats Pave Way For Return Of Right Wing Popular Party In Spain relates Spain remains a social powder keg. Much of the world’s press crowed that the vote represented a swing to the right. In fact, the PP only increased its vote from 10.2 million to 10.8 million votes. Nearly 10 million voters, over 28 percent, abstained. The swing to the PP was for the most part due to the collapse of the PSOE vote from 11.1 million in 2008 to 6.9 million. This shift also benefited the pseudo-left parties such as the United Left, which saw its number of seats increase from two in 2008 to 11. The new Basque coalition Amaiur went from zero to seven seats in Congress and now outnumbers the region’s traditional Basque Nationalist Party, which only won five seats.

For the new government to meet the public deficit target of 4.4 percent of gross domestic product by the end of 2012, the PSOE failed to meet the 6 percent for this year, will have to slash spending by 30 billion euros ($41 billion), twice as much as the PSOE, at a time when the economy is sinking deeper into recession.

Fearful that Spain faces a crisis of revolutionary proportions, new PP Prime Minister Mariano Rajoy called for Spaniards of all political persuasions to work together. “It is no secret to anyone that we are going to rule in the most delicate circumstances Spain has faced in 30 years,” he said. “We stand before one of those crossroads that will determine the future of our country, not just in the next few years but for decades.”

He combined this with an appeal for the financial markets to realise “that there are elections and that the winners must be given a little room for manoeuvre that should last more than half an hour.” There were, he added, “no miraculous cures to solve Spain’s economic troubles.” He must act, while seeking to avoid creating “artificial division.”

But the global financial oligarchy interpreted Rajoy’s appeals, even though they come from the major party of the ruling elite—the political heirs of the dictator General Francisco Franco—as a sign of weakness. The PP’s domestic political calculations do not count for much to the global banks, which have been behind the installation of unelected technocratic governments in Greece and Italy. The common demand of the “financial markets” is for the new government to grit its teeth and immediately impose greater austerity measures, further slashing living standards, “reforming” employment protection laws and destroying what remains of the welfare state.

To underline their diktat, on Monday interest rates on the country’s 10-year bond rose by 12 basis points to 6.56 percent. These are far above Germany’s rates of 1.88 percent and close to the 7 percent levels that prompted Greece, Ireland and Portugal to request huge bailouts from the European Union and the International Monetary Fund earlier this year. Madrid’s Ibex stock exchange dropped nearly two percent in early trading. Spain is now considered to be less creditworthy than Italy, where former European Union commissioner Mario Monti has been installed as prime minister. Charles Grant, the director of the Centre for European Reform, declared contemptuously, “Little is known about him [Rajoy] outside Spain… He reminds me of Zapatero. If it is going to be that way, Spain will continue to lose influence.”

A Madrid-based bond trader told Reuters, “They [the PP] still haven’t done anything so it makes sense there’s no support from the market. It’s good they’ve won a majority, but the global economy remains in a bad way, and this won’t change one day to another… The problem remains. There are no clients. There is no interest. Maybe the ECB [European Central Bank] is buying bonds, but it’s the only one that is.”

Another said, “Rajoy says he can rebuild market confidence in Spain but his arrival isn’t enough and he hasn’t said anything ‘magical’ tonight. The crisis is moving too fast; in this environment bond markets might not extend him credit while we wait.”
The vice chairman of Spain’s largest employers’ organisation the Spanish Confederation of Business Organizations Arturo Fernández said the bond rates were not “sustainable” and the country was on the “edge of an abyss.”

Whatever their concerns regarding the political and social stability of Spain, Rajoy’s government will do as it is told.
In juxtaposition, The Sunday Telegraph reports EU Officials Threaten Strike Action Over Pay And Conditions. reported that 40,000 EU officials are embroiled in a dispute over plans to increase their working week from 37.5 hours to 40 hours, raise their retirement age, and award a pay rise of 1.8%. Protests are planned in Brussels tomorrow and EU civil service unions have threatened strike action. Open Europe’s Pieter Cleppe was quoted arguing that the move is unjustified “at a moment when all European governments are cutting their budgets, also at the instigation of the EU.” Pieter was also quoted in the Irish Independent.

In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. Structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts, as well as bank nationalizations, and debt servitude will be de rigueur.

In as much as the EU is characterized by failed nation states, moneyness will come by diktat.

The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian collectivism will be the way of life for all in the Euro zone, this being seen as Reuters reports Spain Starts Fresh, Saying Adios To The Socialists. Mariano Rajoy and his People’s Party won the biggest majority in a Spanish election in almost 30 years on Sunday, sweeping the ruling Socialists from power after eight years and winning an absolute majority in Parliament, with 186 of 350 seats.

The political dynasties of European Socialism in the periphery countries of Portugal, Italy, Greece, and Spain, that provided pork via patronage, are history.

A new paradigm, that being, regional economic government, and a policy of expansionary fiscal contraction, will give birth to the New Europe.

An entirely new economic, political, and investment landscape is at hand. Its as EUobserver reports that, at a business congress in Istanbul on Friday, Turkey’s former Ambassador to the EU Volkan Bozkir said, “The EU dream has come to an end for the world. There is a paradigm shift. The EU is no longer the same Union that provided comfort, prosperity and wealth to its citizens as in the past.”

Financial Post writes Europe Can Say Goodbye To La Dolce Vita.

Christoph Dreier in WSWS writes The Threat Of Dictatorship In Greece. The manner in which the new Greek government was imposed and the forces upon which it relies underscore the mounting threat to the democratic rights of working people in Greece and throughout Europe.

Stephen Foley in the Independent What Price The New Democracy? Goldman Sachs Conquers Europe communicates that the Euro currency union, is the Goldman Sachs investment bankers project, and that it is continually striving for consensus that the creditors be paid in full. This is the basis of the mandate for expansionary fiscal contraction.

Mr. Foley relates While ordinary people fret about austerity and jobs, the eurozone’s corridors of power have been undergoing a remarkable transformation.

The ascension of Mario Monti to the Italian prime ministership is remarkable for more reasons than it is possible to count. By replacing the scandal-surfing Silvio Berlusconi, Italy has dislodged the undislodgeable. By imposing rule by unelected technocrats, it has suspended the normal rules of democracy, and maybe democracy itself. And by putting a senior adviser at Goldman Sachs in charge of a Western nation, it has taken to new heights the political power of an investment bank that you might have thought was prohibitively politically toxic.

This is the most remarkable thing of all: a giant leap forward for, or perhaps even the successful culmination of, the Goldman Sachs Project.

The political decisions taken in the coming weeks will determine if the eurozone can and will pay its debts – and Goldman’s interests are intricately tied up with the answer to that question.

Simon Johnson, the former International Monetary Fund economist, in his book 13 Bankers, argued that Goldman Sachs and the other large banks had become so close to government in the run-up to the financial crisis that the US was effectively an oligarchy. At least European politicians aren’t “bought and paid for” by corporations, as in the US, he says. “Instead what you have in Europe is a shared world-view among the policy elite and the bankers, a shared set of goals and mutual reinforcement of illusions.”

This is The Goldman Sachs Project. Put simply, it is to hug governments close. Every business wants to advance its interests with the regulators that can stymie them and the politicians who can give them a tax break, but this is no mere lobbying effort.
Goldman is there to provide advice for governments and to provide financing, to send its people into public service and to dangle lucrative jobs in front of people coming out of government. The Project is to create such a deep exchange of people and ideas and money that it is impossible to tell the difference between the public interest and the Goldman Sachs interest.

Mr Monti is one of Italy’s most eminent economists, and he spent most of his career in academia and thinktankery, but it was when Mr Berlusconi appointed him to the European Commission in 1995 that Goldman Sachs started to get interested in him.
First as commissioner for the internal market, and then especially as commissioner for competition, he has made decisions that could make or break the takeover and merger deals that Goldman’s bankers were working on or providing the funding for. Mr Monti also later chaired the Italian Treasury’s committee on the banking and financial system, which set the country’s financial policies.

With these connections, it was natural for Goldman to invite him to join its board of international advisers. The bank’s two dozen-strong international advisers act as informal lobbyists for its interests with the politicians that regulate its work. Other advisers include Otmar Issing who, as a board member of the German Bundesbank and then the European Central Bank, was one of the architects of the euro.

Perhaps the most prominent ex-politician inside the bank is Peter Sutherland, Attorney General of Ireland in the 1980s and another former EU Competition Commissioner. He is now non-executive chairman of Goldman’s UK-based broker-dealer arm, Goldman Sachs International, and until its collapse and nationalisation he was also a non-executive director of Royal Bank of Scotland.

He has been a prominent voice within Ireland on its bailout by the EU, arguing that the terms of emergency loans should be eased, so as not to exacerbate the country’s financial woes. The EU agreed to cut Ireland’s interest rate this summer.

Picking up well-connected policymakers on their way out of government is only one half of the Project, sending Goldman alumni into government is the other half. Like Mr Monti, Mario Draghi, who took over as President of the ECB on 1 November, has been in and out of government and in and out of Goldman. He was a member of the World Bank and managing director of the Italian Treasury before spending three years as managing director of Goldman Sachs International between 2002 and 2005 – only to return to government as president of the Italian central bank.

Mr Draghi has been dogged by controversy over the accounting tricks conducted by Italy and other nations on the eurozone periphery as they tried to squeeze into the single currency a decade ago. By using complex derivatives, Italy and Greece were able to slim down the apparent size of their government debt, which euro rules mandated shouldn’t be above 60 per cent of the size of the economy. And the brains behind several of those derivatives were the men and women of Goldman Sachs.

The bank’s traders created a number of financial deals that allowed Greece to raise money to cut its budget deficit immediately, in return for repayments over time. In one deal, Goldman channelled $1bn of funding to the Greek government in 2002 in a transaction called a cross-currency swap.

On the other side of the deal, working in the National Bank of Greece, was Petros Christodoulou, who had begun his career at Goldman, and who has been promoted now to head the office managing government Greek debt. Lucas Papademos, now installed as Prime Minister in Greece’s unity government, was a technocrat running the Central Bank of Greece at the time.
Goldman says that the debt reduction achieved by the swaps was negligible in relation to euro rules, but it expressed some regrets over the deals. Gerald Corrigan, a Goldman partner who came to the bank after running the New York branch of the US Federal Reserve, told a UK parliamentary hearing last year: “It is clear with hindsight that the standards of transparency could have been and probably should have been higher.”

When the issue was raised at confirmation hearings in the European Parliament for his job at the ECB, Mr Draghi says he wasn’t involved in the swaps deals either at the Treasury or at Goldman.

It has proved impossible to hold the line on Greece, which under the latest EU proposals is effectively going to default on its debt by asking creditors to take a “voluntary” haircut of 50 per cent on its bonds, but the current consensus in the eurozone is that the creditors of bigger nations like Italy and Spain must be paid in full. These creditors, of course, are the continent’s big banks, and it is their health that is the primary concern of policymakers.

The combination of austerity measures imposed by the new technocratic governments in Athens and Rome and the leaders of other eurozone countries, such as Ireland, and rescue funds from the IMF and the largely German-backed European Financial Stability Facility, can all be traced to this consensus.

“My former colleagues at the IMF are running around trying to justify bailouts of €1.5trn-€4trn, but what does that mean?” says Simon Johnson. “It means bailing out the creditors 100 per cent. It is another bank bailout, like in 2008: The mechanism is different, in that this is happening at the sovereign level not the bank level, but the rationale is the same.”

So certain is the financial elite that the banks will be bailed out, that some are placing bet the company wagers on just such an outcome. Jon Corzine, a former chief executive of Goldman Sachs, returned to Wall Street last year after almost a decade in politics and took control of a historic firm called MF Global. He placed a $6bn bet with the firm’s money that Italian government bonds will not default.

When the bet was revealed last month, clients and trading partners decided it was too risky to do business with MF Global and the firm collapsed within days. It was one of the ten biggest bankruptcies in US history.

The grave danger is that, if Italy stops paying its debts, creditor banks could be made insolvent. Goldman Sachs, which has written over $2trn of insurance, including an undisclosed amount on eurozone countries’ debt, would not escape unharmed, especially if some of the $2trn of insurance it has purchased on that insurance turns out to be with a bank that has gone under.
No bank – and especially not the Vampire Squid – can easily untangle its tentacles from the tentacles of its peers. This is the rationale for the bailouts and the austerity, the reason we are getting more Goldman, not less. The alternative is a second financial crisis, a second economic collapse.

Shared illusions, perhaps? Who would dare test it?

4) … A Sovereign and a Seignior will provide Euro zone wide seigniorage, that is moneyness, for a New Europe.

The former Eurozone had its political capital from the people across Europe. The political capital of the New Europe will come from federalist leaders in Brussels, Berlin, France, Goldman Sachs, and the technocratic governors of the periphery countries who are working for expansionary fiscal contraction.

Roy Schwarcz writes that bible prophecy of Daniel 2 and Revelation 13 communicate that Germany and a powerful leader will rise to empower a European Super State in a type of Roman Empire. “The Roman Empire fell apart from within, no enemy destroyed it. Rome is living in the great nations of Europe today: Italy, France, Great Britain, Germany, and Spain are all part of the old Roman Empire. The laws of Rome live on, as well as the language. Latin today is the base of French, Spanish, and other languages. Her warlike spirit lives on also as Europe has been at war ever since the empire broke up into these kingdoms. What is happening in Europe today? There is a diminishing of the nations and a unifying of the people with a common currency, common markets and common government. The foundation is being laid for the man who is coming someday to put the Roman Empire back together again.” This man will be the Sovereign of Revelation 13:5-10.

He will be accompanied by the Seignior, Revelation 13:11-18, the top dog banker who takes a cut. Together they will provide the seigniorage of diktat, as the seigniorage of freedom, that existed under the Milton Friedman Free To Choose floating currency regime, is history. The word, will and way of these two will provide moneyness, and the people will be amazed and follow after it, giving it their full allegiance, Revelation 13:3-4.

A leading candidate for the Sovereign of Revelation 13:5-10 is Herman van Rompuy, President of the European Council. Consillium provides a video of Mr. Van Rompuy, during a debate on European economic government at the European Parliament. Reuters reports Van Rompuy urges euro zone to pool sovereignty. And G7 Finance reports Mr Van Rompuy saying in a speech to a conference held by a Brussels think tank, “The euro zone has to move towards real economic union commensurate with monetary union.” … “We need to give both our citizens and the markets a clear message about the irreversibility of the euro,” … “This will imply in some of these areas a pooling of sovereignty in exchange for a stronger, more stable monetary union,” Van Rompuy stated “(Deepening economic union) will require a combination of two things, a significant strengthening of our rules and mechanism for fiscal responsibility and a large step in terms of integration in economic policies.” … “We have to fight for our economic and monetary union and Europe’s place in the world,” … “In Italy, it is an hour of truth.”

A leading candidate for the Seignior of Revelation 13:5-11, is Mario Draghi, a Goldman Sachs banker who is now heading up the ECB.

Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.

In 1974, 300 of the world’s elite met and made a call for strong regional economic governments in all of the world’s ten regions, as a means of coping with the deleveraging, disinvesting, and derisking out of the Milton Friedman Free To Choose floating regime. The 1974 Call of the Club of Rome is clarion, that is clear, distinctive and ringing, and it comes with the authoritarian imperative.

The Clarion Call is underlying the vision for regional economic government and expansionary fiscal contraction which is the combination of structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts and centralized fiscal supervision favored by German economic and expansionary fiscal contraction. political leaders, such as Wolfgang Schauble, Olli Rehn, and Guido Westerwelle, which eliminate labor privileges such as inflation inked wage rises, that eat away at intra Euro zone competitiveness.

In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. Structural reforms, such as austerity measures, pension overhauls, reworked national wage contracts, as well as bank nationalizations, and debt servitude will be de rigueur. In as much as the EU is characterized by failed nation states, moneyness will come by diktat. The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian collectivism will be the way of life for all in the Euro zone.

5) … In today’s news

Simon Johnson in Bloomberg writes Deutsche Bank Could Transfer Contagion. You’ve probably never heard of Taunus Corp, but according to the Federal Reserve, it’s the U.S.’s eighth-largest bank holding company. Taunus, it turns out, is the North American subsidiary of Germany’s Deutsche Bank, CB, with assets of just over $380 billion. Deutsche Bank holds a large amount of European government and bank debt; it also has considerable exposure to lingering real estate problems in the U.S. The bank, therefore, could become a conduit for risk between the two economies. But which way is Deutsche Bank more likely to transmit danger to or from the U.S.?

Bloomberg reports Dollar Preeminence Grows as Foreign Banks Double Deposits at Fed. Foreign bank deposits at the Federal Reserve have more than doubled to $715 billion from $350 billion since the end of 2010 amid Europe’s debt turmoil, buttressing the dollar’s status as the world’s reserve currency. Forty-seven non-U.S. banks held balances of more than $1 billion at the New York Fed as of Sept. 30, up from 22 at the end of 2010, according to a survey of 80 financial institutions by ICAP Plc, the world’s largest inter-dealer broker. The dollar has appreciated 6.6 percent since Standard & Poor’s cut the nation’s AAA credit rating Aug. 5, the best performance among developed-nation peers, according to Bloomberg Correlation Weighted Currency Indexes. A budget deficit of more than $1 trillion, a deadlock among Congressional supercommittee members on spending cuts and 9 percent unemployment haven’t deterred investors from seeking safety in the world’s biggest economy.

The euro has been undermined by the region’s sovereign debt crisis, while the Swiss franc and yen have fallen as their governments buy billions of dollars to weaken them. “There’s not anything close to a substitute and part of it is the deepness of the market, the liquidity,” Jack McIntyre, a fund manager, who oversees $23 billion in debt.

An inquiring mind asks, is the rise in M2, nothing more than a flight to safety in US Treasuries held at the Federal Reserve? Is the rise in M2 inflationary? or is the rise in M2, simply a rise in the notational value of US Government debt, trade by ETFs, such as ZROZ, EDV, TLT, IEF, and SHY?

Bloomberg reports Japan Exports Fall on Yen Gains, Europe Crisis. Japan’s exports fell for the first time in three months, indicating that the yen’s appreciation and financial turmoil in Europe are slowing the nation’s recovery from the March disaster. Shipments dropped 3.7 percent in October from a year earlier, the Ministry of Finance said today in Tokyo, worse than all 29 estimates of economists surveyed by Bloomberg News. Exports to China, Japan’s biggest market, slid 7.7 percent, the largest drop since May, today’s report showed. “A sharp slowdown in demand from eurozone countries should be weakening exports from Asia, in turn leading to weakness in exports from Japan,” said Masayuki Kichikawa, chief economist at Bank of America Merrill Lynch in Tokyo. “Exports should be weakening toward the end of this year, or possibly until January or February.”
Tyler Durden reports Italy’s domestic financial institutions, mainly banks, have been increasing their holdings of Italian Treasury Debt, increasing their accumulation by €23bn to €267bn.

Tyler Durden reports European Black Swan Sighted In European Investment Bank Bonds. While everyone’s attention was focused intently on peripheral European bond spreads last week and the incessant call for ECB intervention, a dramatic, (and contagiously panic-worthy) move occurred in the European Investment Bank, EIB, bonds.

NYT reports Europe Fears a Credit Squeeze as Investors Sell Bond Holdings. Nervous investors around the globe are accelerating their exit from the debt of European governments and banks, increasing the risk of a credit squeeze that could set off a downward spiral. Financial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many have decided not to renew short-term loans to European banks, which are needed to finance day-to-day operations. If this trend continues, it risks creating a vicious cycle of rising borrowing costs, deeper spending cuts and slowing growth, which is hard to get out of, especially as some European banks are having trouble meeting their financing needs.

The flight from European sovereign debt and banks has spanned the globe. European institutions like the Royal Bank of Scotland and pension funds in the Netherlands have been heavy sellers in recent days. And earlier this month, Kokusai Asset Management in Japan unloaded nearly $1 billion in Italian debt. At the same time, American institutions are pulling back on loans to even the sturdiest banks in Europe. When a $300 million certificate of deposit held by Vanguard’s $114 billion Prime Money Market Fund from Rabobank in the Netherlands came due on Nov. 9, Vanguard decided to let the loan expire and move the money out of Europe. Rabobank enjoys a AAA-credit rating and is considered one of the strongest banks in the world. “There’s a real sensitivity to being in Europe,” said David Glocke, head of money market funds at Vanguard. “When the noise gets loud it’s better to watch from the sidelines rather than stay in the game. Even highly rated banks, such as Rabobank, I’m letting mature.” The latest evidence that governments, too, are facing a buyers’ strike came Thursday, when a disappointing response to Spain’s latest 10-year bond offering allowed rates to climb to nearly 7 percent, a new record.

A Global Eurasia War is coming. AP reports U.S. and allies to unveil new Iran sanctions The measures come amid growing concern that Tehran is pursuing a nuclear weapon. And Reuters reports Romney urges Obama to stop looming military cuts. Nature Economist Elaine Meinel Supkis writes Congress works only for AIPAC, not US voters. Libertarian Robert Wenzel reports The neo-con American Enterprise Institute, in partnership with CNN and The Heritage Foundation, is sponsoring a Republican presidential debate on national security and foreign policy that will take place on Tuesday, November 22, at 8 p.m. ET.

Bible Prophecy Provides Insight To A Resolution To The European Sovereign Debt Crisis

November 20, 2011

Roy Schwarcz writes that bible prophecy of Daniel 2 and Revelations 13 foretells that Germany and a powerful leader will rise to empower a European Super State in a type of Roman Empire. “The Roman Empire fell apart from within, no enemy destroyed it. Rome is living in the great nations of Europe today: Italy, France, Great Britain, Germany, and Spain are all part of the old Roman Empire. The laws of Rome live on, as well as the language. Latin today is the base of French, Spanish, and other languages. Her warlike spirit lives on also as Europe has been at war ever since the empire broke up into these kingdoms. What is happening in Europe today? There is a diminishing of the nations and a unifying of the people with a common currency, common markets and common government. The foundation is being laid for the man who is coming someday to put the Roman Empire back together again.”

Sovereignty is of appointment. You Tube Video presents Nigel Farage, in well tailored fashion, asking What gives you the right to dictate to the Italian people? I have neither suit nor tie, but I do know that sovereignty comes by appointment. Leadership has more to do with fate than it does with meritocracy. This was true of the former age, where destiny provided Milton Friedman, Alan Greenspan, and Ben Bernanke. It is true of this age as well, as leaders, such as Nicolas Sarkozy, Angela Merkel and Herman van Rompuy, have risen to power through destiny. There is no human action; rather all things are of God, Ephesians 1:11 and Romans 9:16. A Trilateral Commission and Bilderberg Euracracy is effecting a bloodless coup in Europe, Revelation 6:1-2. Nicolas Sarkozy and Angela Merkel are the forerunners and ambassadors of the Ten Toed Kingdom of regional economic government called for by the 300 elite of the Club of Rome in 1974. Their Clarion Call comes with authoritarian imperative, that is both compelling and irresistible. It is the effecting working of bible prophecy of Daniel 2:32-42

Sovereign leaders of this age are from the EU’s core, not its periphery. Continuing from the NYT article Central Bank Chief Tells Troubled Nations They Are On Their Own, Jens Weidmann, president of the Bundesbank, the German central bank, was more blunt than Mr. Draghi in rejecting use of the European Central Bank to bail out troubled governments, reflecting the hard line that German policy makers have taken. “The economic costs of any form of monetary financing of public debts and deficits outweigh its benefits so clearly that it will not help to stabilize the current situation in any sustainable way,” Mr. Weidmann said at the same event, the Frankfurt European Banking Congress. He put the onus on governments to address deficiencies in their national economies. “These deficiencies include a lack of competitiveness, rigid labor markets and the failure to seize opportunities for growth,” he said.

In as much as Italy has lost its debt sovereignty when its interest rate surpassed seven percent, Italy lost its national sovereignty. Italy will have to look to EU ECB and IMF leadership, that is EU ECB and IMF diktat, and their sovereign authority for seigniorage, that is moneyness, as well as a resource for their fiscal spending. Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.

In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. Austerity measures, structural reforms, pension overhauls, bank nationalizations, and debt servitude will be de rigueur. In as much as the EU is characterized by failed nation states, moneyness will come by diktat. The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian Collectivism will be the way of life for all in the Euro zone.

An inquiring mind, concludes with four questions. What is a leader, what does a leader carry, what agenda does the leader carry, and what is that leader’s reward? Urban dictionary provides a number of definitions for leader. I am not a libertarian, but do relate that many Libertarians hold forth Ron Paul as their leader. Do you know what Ron Paul carries, and what his agenda is? He is very much an anachronism in this age of diktat. I believe He and his followers are likely to feel marginalized very soon, as they pursue Freedom and Free Enterprise; these are simply mirages on the Neoauthoritarian Desert of the Real. Freedom and choice are epitaphs on tombstones of the bygone era of Neoliberalism.

Angela Merkel, Nicolas Sarkozy and Herman van Rompuy are leaders of this age. They are those who are first to serve. They carry the beacon of more Europe and more reform. Their agenda is a European Federal Union, where sovereignty is ceded to Brussels, Berlin and Paris. Their reward is sovereignty and the seigniorage of diktat.

Political power is coalescing in Germany. Johannes Stern writes in WSWS Germany’s Christian Democrats Head Toward A Grand Coalition. And Bloomberg reports Angela Merkel saying The EU must move toward closer union. And, the NYT quotes her saying, It is now the task of our generation to complete the economic and currency union in Europe and create, step by step, a political union.

The New Europe that Angela Merkel envisions will be one of ten regional powers, as called for by the Club of Rome. Thus, the New Europe, will be one of the ten toes, of the ten toed kingdom of regional economic government held forth in Daniel 2:32-42. This global regime will be a monster of state corporatism manifesting as the Beast regime of Neoauthoritarianism, seen in Revelation 13:1-4.

Sovereign insolvency will be the catalyst for Financial Nuclear Winter, and the pooling of sovereignty as called for by Herman van Rompuy. Consillium provides a video of Herman Van Rompuy, President of the European Council, during a debate on European economic government at the European Parliament. And Reuters reports Van Rompuy urges euro zone to pool sovereignty. And G7 Finance reports Mr Van Rompuy saying in a speech to a conference held by a Brussels think tank. “The euro zone has to move towards real economic union commensurate with monetary union.” … “We need to give both our citizens and the markets a clear message about the irreversibility of the euro,” … “This will imply in some of these areas a pooling of sovereignty in exchange for a stronger, more stable monetary union,” Van Rompuy stated “(Deepening economic union) will require a combination of two things, a significant strengthening of our rules and mechanism for fiscal responsibility and a large step in terms of integration in economic policies.” … “We have to fight for our economic and monetary union and Europe’s place in the world,” … “In Italy, it is an hour of truth.”

Soon out of Financial Nuclear Winter, that is a credit bust and global financial collapse, a New Charlemagne, will rise to power in Europe and establish Germany at the center of a powerful and authoritarian revived Roman Empire. The Sovereign, Revelation 13:5-10, will be accompanied by a Seignior, Revelation 13:11-18, meaning top dog banker who takes a cut. These two will have both sovereign authority and fiscal sovereignty, and will provide dole to those living in the Eurozone. The people will be amazed by this, and place their trust in it, Revelation 13:3-4.

Freedom and human action characterized the Milton Friedman floating currency free to choose regime, where wildcat finance, a Doug Noland term, and the seigniorage of freedom, provided prosperity. But now, constraint and fate characterise the Beast sinking currency diktat regime, where wildcat governance, and the seigniorage of diktat, will overhaul pension system, and enforce austerity measure, structural reforms, as well as mandate debt servitude.

The overall view is that God is involved in Operation Free Mankind, seen in Revelation 2:26-28, where He is destroying all forms of economic life, such as Greek Socialism, European Socialism, and Free Enterprise, so that one can be free from all sin, that is doubt, that His Son Jesus is sovereign over all the earth.

A Soon Coming Global Eurasia War Will Be Centered In Iran And In Syria

November 20, 2011

Haluk Demirbag of TurkishNews, wrote on September 17, 2011, in review of  Gary H. Kah’s book En Route to Global Occupation, This writer believes that Syria might play a significant role in ushering in the New World Order, if not as an instigator of war, then as a middle man for negotiating peace. It is too critical a nation to remain on the sidelines for very long and, contrary to popular belief, Syria not Iraq is the most powerful Islamic military state in the Middle East. It therefore merits close watching.

There is an Old Testament prophesy concerning Damascus, the capital of Syria, which has yet to be fulfilled. Isaiah proclaimed: “See, Damascus will no longer be a city but will become a heap of ruins.” (Is. 17:1). As it is, Damascus is the oldest standing city in the world, never having experienced mass destruction.

This prophesy must be fulfilled some time before the return of Christ.

If the Soviet Union came to the rescue of Syria, it would suddenly find itself on opposite sides with the United States.

What could happen next is unthinkable. Mankind will have been brought to the brink of destruction.

Wicked men high places have been contemplating such a crisis for years. In a letter to the Italian revolutionary leader Giuseppe Mazzini dated 15 August 1871 Albert Pike, the leader of the Illuminati’s activities in the United States and the head of the Scottish Rite Freemasonry at the time, described a distant final war, which he felt would be necessary to usher in the New World Order. (5)

According to Pike, this conflict between two future superpowers would be sparked by first igniting crisis between Islam and Judaism.

He went on to write: We shall unleash the nihilists and the atheists and we shall provoke a great social cataclysm which, in all its horror, will show clearly to all nations the effect of absolute atheism, the origin of savagery and of most bloody turmoil. Then, everywhere, the people,  forced to defend themselves against the world minority of revolutionaries, will exterminate those destroyers of civilization; and multitudes, disillusioned with Christianity whose deistic spirits will be from that moment on without direction and leadership, anxious for an ideal but without knowledge where to send its adoration, will receive the true light through the uiversal manifestation of the pure doctrine of Lucifer, brought finally out into public view; a manifestation which will result from a general reactionary movement which will follow the destruction of Christianity and Atheism, both conquered and exterminated at the same time. (6) (*)

Should such a crisis be permitted to occur, the amount of destruction would be staggering. Humanity would tremble with fear believing that man is about to destroy himself. For even if Soviet Union or the United States were eliminated as military powers, over 30 countries would still have nuclear capacity. It would be a time of despair and mass confusion. Add to this the resulting chaos of global financial markets, which are already on the brink of disaster; the economic turmoil would only contribute to the world’s state of panic.

(1) US Department of Defense, Soviet Military Power, 1986 (Washington, DC: US Government Printing Office, 1986), 133

(2) Post Diplomatic Correspondent, “Jerusalem incomprehension at Syriannervousness,” The Jerusalem Post, (12 April 1984): 1, col. 1-2.

(3) Ibid.

(4) “Israel’s Nuclear Prowess – A Leak by Design?” US News and World Report(10 November 1986): 8.

(5) Salem Kirban, Satan’s Angels Exposed (Roseville, GA: Grapevine Books, 1980), 158-161

(6) Myron Fagan, The Illuminati-CFR, Emissary Publications, TP-107, 1968. This letter between Pike and Mazzini is now catalogued in the British Museum in London (According to Salem Kirban, Satan’s Angels Exposed, 164). Parts of this letter are also quoted in “Descent Into Slavery” by Des Griffin

Source: “En Route to Global Occupation” by Gary H. Kah, 1991, [Huntington House Publishers, Lafayette, Louisiana]

Central Bank Chief Tells Troubled Nations They Are On Their Own …. EU Leaders Call For Structural Reforms And Centralized Fiscal Supervision …. The Seigniorage Of Diktat Has Commenced

November 20, 2011

Financial market report for the week ending November 18, 2011

Jack Ewing and Niki Kitsantonis of the NYT report Central Bank Chief Tells Troubled Nations They Are On Their Own. In his first speech as president of the European Central Bank, Mario Draghi complained on Friday that Europe’s political leaders had been too slow to carry out their own plans to address the debt crisis. And despite ever louder calls for central bank intervention, Mr. Draghi offered no hope he would come to any country’s rescue by pumping money into the financial markets. Mr. Draghi, who took office at the beginning of the month, implicitly rejected calls for the central bank to use its enormous resources to stop the upward creep of borrowing costs for Spain and Italy, which threatens their solvency and by extension the European and global economies. Mr. Draghi said the bank would not deviate from its focus on price stability and suggested that other measures could undercut the bank’s credibility. “Gaining credibility is a long and laborious process,” Mr. Draghi said at a gathering of bankers here in Frankfurt. “But losing credibility can happen quickly, and history shows that regaining it has huge economic and social costs.” He criticized leaders for taking too long to act on decisions they had made at numerous summit meetings. “Where is the implementation of these longstanding decisions?” he asked. “We should not be waiting any longer.”

EU leaders call for structural reforms and centralized fiscal supervision. EU observer reports Finland’s Alexander Stubb, said his country favours the Dutch proposal to create a budget ‘tsar’ within the European Commission. Stubb also suggested that he would “combine the functions of the Presidents of the Commission, the European Council and the Euro Area Summits into one high post.” … And Bruno Waterfield of The Daily Telegraph leaks Germany’s foreign ministry’s secret plans for political union A six-page German foreign ministry document sets out a pathway to European Super State. This includes plans for a European Monetary Fund, with the right to usurp sovereignty from member states experiencing financial difficulty. The fund will have the power to take ailing countries into receivership and run their economies. The document, entitled The Future Of The EU, will require integration policy improvements for the creation of a Stability Union. … And Guido Westerwelle, Angela Merkel’s foreign minster, writes in the FT seeks to solve the European Sovereign Debt Crisis through structural reforms and and tougher central budgetary supervision. … And La Stampa reports that Monti will travel to Brussels on Tuesday to meet European Council President Herman Van Rompuy and Commission President José Manuel Barroso. On Wednesday, Monti is due to meet French President Nicolas Sarkozy and German Chancellor Angela Merkel in Strasbourg.

Ambrose Evans Pritchard writes that Germany is slipping into the morass of the European Sovereign Debt Crisis. Traders say Asians are taking profits on Bunds and pulling out, with signs that even China’s central bank is shaving holdings. Mid-east wealth funds have remained firm. Germany’s exposure to the crisis is already huge, and the strains can only get worse as the eurozone tips back into recession. The Bundesbank is so far liable for €465bn in “Target2” payments to the central banks of Club Med and Ireland for bank support. Hans Werner Sinn from the IFO Institute said this is a form of back-door eurobonds that leaves German taxpayers on the hook. “The current system is dangerous. It is prone to a gigantic build-up of external debts,” he said. The Bundesbank is final guarantor behind €180bn in bond purchases by the European Central Bank, a figure still rising fast as the ECB buys Italian and Spanish debt.

Nature economist Elaine Meinel Supkis provides the insight that credit evaporation is underway. Sir Mervyn King: Britain on the brink of second credit crunch, Bank of England Governor warns, The Telegraph “There is weakness over the next few quarters. No one can know what precisely the outcome will be,” he said. “In the last three years, we have seen extraordinary events. Who knows what’s going to happen tomorrow, let alone next month?” . Ms Supkis states The banks can only issue loans to companies and home owners if they can find sufficient funding on the markets. According to the Bank of England’s inflation report, banks’ funding in the three months to September fell to levels not seen since Lehman Brothers, the US investment bank, crashed in September 2008…banks must raise a further £200 billion-£300 billion next year just to maintain their current lending levels. Translation: we ain’t got no capital. Banks are lending, still. But on a very slender base. Much of their ‘asset’ base has been melting away, that is, loans they handed out are not being paid back so the loans have moved from the ‘asset’ side of the equation to the ‘deficit’ side. Ergo: lending collapses, profits vanish.

And Ms Supkis adds, Here we see how money from Wall Street continues to warp our Congress and destroy our connections with the government: Wall Street Rallies for a Senate Ally – The NYT. Mr. Brown, a freshman who harnessed populist Tea Party anger to win the seat once held by Edward M. Kennedy, has taken more money from the financial industry than almost any other senator: all told, more than $1 million during the last two years, according to data from the Center for Responsive Politics. Of the 20 companies that accounted for the most campaign donations to Mr. Brown, about half were prominent investment or securities firms like Morgan Stanley, Fidelity Investments and Bain Capital. His donors include such blue-chip names as Gary Cohn, the president of Goldman Sachs, and the hedge fund kings John Paulson and Kenneth Griffin. She comments When he won a popular vote, he voted for the citizens. But now, under fire from the left, he is being bankrolled by the bankers who are scared to death of Occupy Wall Street rage. To this, the Big Picture adds, The US is now a corporate monarchy.

The major story of this week was that Italy has become an insolvent sovereign, as Jeremy Grant of Reuters reports All eyes on Europe’s 7 percent yields. Investors became aware that the EU has progressed from being a debt union to a sovereignty union, where there is a pooling of sovereignty, and as Financial Post reports Run from debt to cash sparks sell off. It was a text book case of debt deflation, that is currency deflation at work in the financial markets, as Doug Noland relates With a crisis of confidence impairing the markets for both sovereign and banking finance, it was seemingly yet another “inflection point” week in the marketplace. Increasingly, the markets are viewing the situation as unsustainable. With Italian debt in a downward spiral, the soundness of the entire European banking system is in serious jeopardy. Troublingly, there was heightened focus on counterparty and derivative issues, including U.S. bank exposure to European debt, the sovereign Credit default swap marketplace and other counterparty exposures. Fear that EU governments will be forced to recapitalize their faltering banking systems has weighed heavily on already depleted confidence in the creditworthiness of sovereign Credit.

Mr Noland continues, I, for one, don’t believe ECB President Jens Weidmann (or other German statesmen) is bluffing or posturing. I thought it might be useful to highlight from an insightful exchange from a November 13, 2011 Financial Times (Ralph Atkins and Martin Sandbu) interview. Mr. Weidmann’s comments are relevant to the unfolding European debt crisis as well as to central banking more generally.

Financial Times: “Can you explain why the ECB cannot be lender of last resort?” Bundesbank President Jens Weidmann: “The eurosystem is a lender of last resort – for solvent but illiquid banks. It must not be a lender of last resort for sovereigns because this would violate Article 123 of the EU treaty [prohibiting monetary financing – or central bank funding of governments]. I cannot see how you can ensure the stability of a monetary union by violating its legal provisions. I think the prohibition of monetary financing is very important in ensuring the credibility and independence of the central bank, which allow us to deliver on our primary objective of price stability. This is a very fundamental issue. If we now overstep that mandate, we call into question our own independence.”

Financial Times: “The impression is that the Bundesbank will stick by principles until the whole house burns down…” Weidmann: “Right now we’re talking about the EU treaty and I don’t see how you can build trust in a system that violates laws.”
Financial Times: “Are you a pragmatist?” Weidmann: “I am president of an institution which is bound by a legal framework. We should respect the division of labour in a democracy. This has nothing to do with pragmatism or dogmatism.”

Financial Times: “What if there is a conflict between Article 123 and the risk of a refinancing crisis for Italian debt? Weidmann: “That assumes that you can address the issues in Italy with liquidity and that’s not the case. This whole debate completely blurs responsibilities. Furthermore, monetary financing will set the wrong incentives, neglect the root causes of the problem, violate the legal foundations on which we work, and destroy the cedibility and trust in institutions. You won’t solve the crisis by reducing incentives for the Italian government to act. It’s really an absurd debate in which we are telling institutions: don’t care about the law.”

And today from a speech given by Mr. Weidmann in Frankfurt: “The lack of success in containing the crisis does not justify overstretching the mandate of the central bank and making it responsible for solving the crisis. The economic costs of any form of monetary financing of public debts and deficits outweigh its benefits so clearly that it will not help to stabilize the current situation in any sustainable way.”

It would not appear that the Bundesbank is about to succumb to intense political and market pressures – and promote the ECB into the role as open-ended “buyer of last resort.” For the Germans, it is a fundamental issue of core principles. The costs of “monetary financing”, or monetization, outweigh the benefits “so clearly.” And especially here in the U.S., there is a complete lack of appreciation for the myriad costs involved in central bank market interventions.

Part of my thesis has been that the more the Germans saw of the European and, increasingly, global financial crisis the more determined they would be to safeguard their institutions, economy and credibility. The markets, of course, want the ECB to be more like the Fed, while I suspect the Bundesbank stares across the Atlantic and sees disaster in the making.

It’s not that sovereign yields are unreasonably high, only that they’ve surged to not unreasonable levels so abruptly. A long-distorted market pricing structure has unraveled rather dramatically, leaving dangerously leveraged financial institutions and over-indebted governments (along with a bloated Credit structure) in a dire predicament. It’s not so much that recent policies have caused the crisis as much as it is a case where an incredibly challenging political and policy backdrop created an opening for The Day of Reckoning to burst right on through.

It is increasingly apparent that resources are insufficient to sustain everyone. I’ll presume the sophisticated “money” is maneuvering for the exits. There were times this week when I had a really bad feeling about how things were unfolding.

Lew Spellman of the Spellman Report writes in Zero Hedge how monetization happens, being at the helm when the ship goes down. The consequences of excess debt are now facing the leaders of Europe head on, and a monumental decision must be made whether explicitly or implicitly. Excess debt leads to a long chain of D words: Deleveraging in an attempt to retire debt results in a depressed economy and declining asset prices. The depressed economy breeds private debt defaults that in turn produce distressed banks. The chain then runs through depositor flight from the banks, producing a financial crisis and in turn a devaluation of the currency as capital flees. When foreign goods become more expensive there is a declining standard of living as import prices rise faster than wages. Then in an effort to stop the government debt trap, there is a default on promised entitlements under an austerity program leading to the swift defeat of the political leaders. But ultimately there is a sovereign restructuring or a default of the government debt. Most, if not all, the D words are visiting Europe at the moment and its leaders are falling by the wayside. There is not a precise science that tells us when the debt trap begins the downward spiral that takes the ship down, but there are some rough guidelines. Reinhart and Rogoff (This Time is Different) have found to the extent one can generalize when a country’s debt-to-income ratio reaches the 90 percent level the ship of state begins to list and currently the OECD aggregate of 30-country gross debt-to-income ratio is 105 percent.

The seigniorage of diktat has commenced, as destructionism is replacing inflationism. The former seigniorage of freedom, was characterized by such things as US Federal Reserve credit liquidity, ZIRP, Quantitative Easing I, and II, and carry trade lending. But now credit is exhausting, and competitive currency deflation, that is competitive currency deflation is underway, as is evidenced by the ongoing fall of currencies. Currencies falling this week included FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FXRU, CEW.

Currencies rising this week included the US Dollar, $USD, UUP, and the Yen, FXY.

Unwinding yen carry trade investing is causing disinvesting out of Austria, EWO, Argentina, ARGT, Netherlands, EWN, Sweden, EWD, Korea, EWY, Taiwan, EWT, Singapore, EWS, South Africa, EZA, Turkey, TUR, Indonesia, IDX, India, INDY, INP, SCIN, SCIF, Australia, EWA, KROO, New Zealand, ENZL, Canada, EWC, Mexico, EWW, The UK, EWU, Brazil, EWZ, BRF and Russia, RSX, RSXJ. Hot money is flowing out of China, YAO, HAO, TAO, HKK, CHIM, CHIX, CHII, CHIM, CAF. Sovereign failure is causing money to flow out of Egypt, EGPT, and Vietnam, VNM. Disinvestment is coming out of former stars of Neoliberalism, Poland, EPOL, Peru, EPU, and Chile, ECH. Emerging Markets, EEM, fell 5.5%, the World Stocks, ACWI, 4.2%, and the World Small Caps, VSS, 4.3%.

Destructionism is marked by recession not growth. The fall of Whirlpool, WHR, to is an ominous omen for growth. Growth cannot be sustained in a world of failed sovereigns, that is a world characterized by sovereign insolvency. The Global Government Finance Bubble has finally burst and Whirlpool, a Morgan Stanley Cyclicals Index component, is leading the way down in a world characterized by disinvestment due to collapsing growth. The Morgan Stanley Cyclicals Index, ^CYC, peaked the week ending April 25, 2011 at 1131, and closed this week at 874 as seen in this Wiki Invest Chart. The Morgan Stanley Cyclicals Index, $CYC, fell 4.5% this week, an is down 16.1% this week. Not only is growth ending because of the failure of government, it is is ending as the consumer is exhausted and manufacturers cannot compete when US wage structure is applied to finished goods. On October 28, 2011 CNNMoney reported Whirlpool cutting jobs and closing a plant, and FT reported Whirlpool warns consumer being squeezed. America is witness Destructionism as CNN Money also reported on October 28, 2011 Arkansas city loses two factories in one day. And on October 31, 2011, Suzi Parker and Scott Malone of Reuters reported U.S. manufacturing jobs at risk as demand slows. When Whirlpool Corp closes its refrigerator factory in Fort Smith, Arkansas next year, the plant’s 974 workers will lose their jobs. They will not be the only ones who will feel the pain.

An inquiring mind asks what role will Asset Management companies have in the Age of Destructionism? An inquiring mind asks what role will Asset Management companies such as Blackrock Inc have in a world of disinvestment, deleveraging and derisking out of the Inflationism that characterized the former Milton Friedman Free To Choose floating currency regime of Neoliberalism. The world is now transitioning into a new regime, the Beast Regime of Neoauthoritarianism, which august leaders such as Angela Merkel, Nicolas Sarkozy and Herman Van Rompuy provide Diktat to cope with falling currency values. The ongoing Yahoo Finance Chart of Asset Managers, BLK, AMP, BX, KKR, GBL, EV, LZ, PFG, shows the stock market performance of these companies roughly approximates the S&P for the last ninety days. Just what service can these Asset Management Companies provide in a world that is rapidly moving away from financial services?

North American oil pipeline companies and North American oil companies will play a pivotal role to the Continents’ security in the Age of Destructionism. Daniel Gross of Daily Ticker writes Oil Hits $100 Per Barrel. It’s All About the Pipelines. Oil has hit $100 a barrel again. A host of factors play into the price of a West Texas Intermediate crude demand, global market conditions, the activity of speculators. Evan Smith, co-manager of the Global Resources Fund at U.S. Global Investors believes the recent run-up can be ascribed in part to activity (or the lack of activity) surrounding pipelines.

It’s hard to get excited about the tubes that facilitate the movement of crude oil around the country. But pipelines have been in the news in recent weeks. First, the U.S. government decided November 10 to postpone a decision about the proposed Keystone line, which would allow the movement of a large quantity of oil from Canada to the southern U.S. On Wednesday, Canadian company Enbridge said it would buy a 50% interest in a pipeline that runs from the huge oil terminal in Cushing, Oklahoma, to the Gulf Coast. As Smith tells me and The Daily Ticker’s Aaron Task in the accompanying video, both moves have helped push the price of WTI up.

Here’s why. Oil is priced on global markets. But the price can vary depending on where you’re buying. WTI, the benchmark commonly used in the U.S., refers to the price of oil at the landlocked Cushing, Oklahoma terminal. Brent crude, the benchmark for oil traded in the U.K., is a much more (excuse the pun) liquid market, and is a better indicator of the global market price. Historically, WTI has traded at a small premium to Brent, in part because Americans guzzled gas as domestic production fell. But for much of the past year, WTI has traded at a huge discount to Brent, of up to $30 per barrel. As Smith explains, that’s because demand for oil in the rest of the world is growing far more rapidly in the U.S., while production in the middle of the U.S. has soared, thanks to a boom in oil production in North Dakota. On Wednesday, Enbridge said it would buy a stake in a pipeline that runs from Cushing, Oklahoma to the Texas Gulf Coast. The significance is that the company is going to reverse the flow, and start sending oil from the terminal to refiners operating on the coast. In theory, increasing the supply of crude to refiners on the Gulf Coast should bring down the price of oil. “Right now, there’s too much oil production in the mid-continent, and not enough capacity to get it to the Gulf Coast,” said Smith. But oil used by refiners on the coast can come from anywhere, and is therefore priced closer to global prices than to regional ones. “Now that there is a prospect that some of the oil will get down to the coast, it raises the price closer to global benchmarks,” said Smith. In other words, opening up more of the supply languishing in Cushing to refiners who operate on the coasts has the effect of pushing up prices. That’s bad news for consumers, on the one hand. But it also means that refiners will buy less foreign oil going forward. That’s a short-term impact. The decision on the Keystone pipeline will have a longer-term impact, and may serve to keep the price of domestic oil and gas high. On Monday, the State Department, responding to environmental concerns raised in Nebraska and elsewhere along the route, said it would defer until 2013 a decision on whether to permit the construction of the pipeline from Canada to the southern U.S. “That’s a 700,000-barrel-a-day pipeline that would bring crude down to the Gulf Coast and keep the U.S. well supplied,” said Smith. The decision means it is likely that the supply of crude to U.S. refiners won’t be as large as previously thought, and that Canadians might look for other routes to export oil production, to Asia, for example. All things considered, the prospect of less supply over the long-term will push prices higher. Smith argues that bringing more crude from Canada is vital to the U.S. market. For even though production is booming in North Dakota and Texas.  I remark that the charts of Enbridge, ENB, and BlackRock Long Term Municipal Closed End Debt Fund, BTA, both show a shooting star candlestick pattern, suggesting that the seigniorage of oil, and the seigniorage of municipal debt investing is ending.

Networking shares CSCO, FFIV, NTGR, XXIA, ELX, VSAT, CMTL, QCOM, RVBD, CTXS, AKAM, seen in this ongoing Yahoo Finance Chart, and in this Finviz Screener, have had a strong rally in the last 90 days. An inquiring mind asks how well will these stocks continue to perform? What factors support their recent gains? Can their relative market gains be sustained? How much longer will the seigniorage of networking continue?

Sprint, S, and MetroPCS Communications, PCS, have been wireless communication loss leaders of late as is seen in this on going Yahoo Finance Chart of USM, AMT,TU, AMX, RCI, DCM, VIP, SKM, TSU, S, PCS and as is seen in this Finviz Screener. What factors support the ongoing gains of the better performing wireless communication companies?

Morningstar Mid Cap Growth, JKH, fell 4.0% this week.

Financials traded lower strongly lower this week. Financials, XLF, -5.6, the Broker/Dealers, IAI, -6.0, Investment Bankers, KCE, -5.3, European Financials, EUFN, -7.9, the Global Financials, IXG, -6.1, the Emerging Market, FGEM, -7.4. One can follow the leading banks by using a Finviz Screener such as this one.

Steel, Metal Manufacturing, and Materials traded strongly lower this week, with silver and junior gold miners leading the way down: SLX, -6.4%, XME, -6.9%,, EMT, -6.7% COPX, -8.7%, MXI, REMX, KOL, ALUM, IYM, XLB, URA, PSCM, all significantly lower. The strong down turn in silver miners, SIL, -8.9%, gold miners, GDX, -8.4%, the junior gold miners, GDXJ, -9.6%, and the Morgan Stanly Cyclicals material component, Freeport McMoran, FCX, -7.3%, reflects, that the risk trade in basic materials stocks is now over. Investors are avoiding risking their capital and are unable to get risk capital at banks. The moneyness of growth, that is, the seigniorage of growth, is over. The seigniorage of freedom, that came with the growth potential of the former Milton Friedman Free To Choose floating currency regime is exhausted. The seigniorage of diktat is unfolding.

Other notable fallers of the week included, Solar, TAN, Alternative Energy, GEX, Energy Service, OIH, IEZ, Oil Production, XOP, Agribusiness, PAGG, Automobiles, VROM, CARZ, Internet Retailers, HHH, Airlines, FAA,

Commodities falling lower this week included, DBC, USCI, CUT, RJA, BAL, SGG, CORN, GRU, UNG, UGA, SLV, GLD, JJP, JJA, CUT.

In news of India, V. Ramakrishnan and Jeanette Rodrigues of Bloomberg report, “India’s central bank will buy government bonds this month for the first time since January to boost cash in the banking system. The move comes after four of the last five debt sales this quarter failed to attract adequate investor demand.” And Anurag Joshi of Bloomberg reports: “Indian companies’ international bond sales have dried up this quarter, after the European debt crisis pushed borrowing costs to the most in more than two years. Sales dropped to their lowest since the second quarter of 2009”. And I report that the India Rupe, ICN, suffered a terrific drop this week, falling 3.4%.

Argentina is another country that is experiencing rapid destructionism. Drew Benson and Camila Russo of Bloomberg report: “Argentine reserves are falling at the fastest pace since 2008 this month after President Cristina Fernandez de Kirchner’s moves to stem capital flight prompted savers to withdraw dollars from their bank accounts. As inflation estimated by some economists at 24% helped fuel capital flight of $3 billion per month, Fernandez last month ordered energy and mining companies to repatriate export revenue and tightened oversight of the foreign exchange market.”

Bull Market Thinking relates we are witnessing a Complete paper asset collapse. A case in point in the silver ETF, SLV, and the silver mining stocks SIL, HL, PAAS, CDE, SSRI, MVG, seen in this Finviz Screener. Whole websites have been devoted to the silver bulls who claimed that silver was more valuable than gold; and that it was the upcoming global currency. Silver has proven to be nothing more than a glorified base metal, loved by speculators who are employed by the mining industry or who have had access to 1% carry trade loans from the Bank of Japan. Silver Standard Resources Inc, SSRI, has been the most carry traded company of all time; it got leveraged to fantastic levels via yen carry trade investors.

Kathleen Madigan of The WSJ reports The Index of Leading Economic Indicators rose 0.9% last month. I comment that I believe that this is simply a one month jump due to a rise in the US Dollar beginning in September, and do not expect any ongoing economic activity as the world has passed from Inflationism into Destructionism.

Sovereignty is of appointment. You Tube Video presents Nigel Farage, in well tailored fashion, asking What gives you the right to dictate to the Italian people?  I have neither suit nor tie, but I do know that sovereignty comes by appointment. Leadership has more to do with fate than it does with meritocracy. This was true of the former age, where destiny provided Milton Friedman, Alan Greenspan, and Ben Bernanke. It is true of this age as well, as leaders, such as Nicolas Sarkozy, Angela Merkel and Herman van Rompuy, have risen to power through destiny. There is no human action; rather all things are of God, Ephesians 1:11 and Romans 9:16. A Trilateral Commission and Bilderberg Euracracy is effecting a bloodless coup in Europe, Revelation 6:1-2.  Nicolas Sarkozy and Angela Merkel are the forerunners and ambassadors of the Ten Toed Kingdom of regional economic government called for by the 300 elite of the Club of Rome in 1974. Their Clarion Call comes with authoritarian imperative, that is both compelling and irresistible. It is the effecting working of bible prophecy of Daniel 2:32-42.

Sovereign leaders of this age are from the EU’s core, not its periphery. Continuing from the NYT article Central Bank Chief Tells Troubled Nations They Are On Their Own, Jens Weidmann, president of the Bundesbank, the German central bank, was more blunt than Mr. Draghi in rejecting use of the European Central Bank to bail out troubled governments, reflecting the hard line that German policy makers have taken. “The economic costs of any form of monetary financing of public debts and deficits outweigh its benefits so clearly that it will not help to stabilize the current situation in any sustainable way,” Mr. Weidmann said at the same event, the Frankfurt European Banking Congress. He put the onus on governments to address deficiencies in their national economies. “These deficiencies include a lack of competitiveness, rigid labor markets and the failure to seize opportunities for growth,” he said.

In as much as Italy has lost its debt sovereignty when its interest rate surpassed seven percent, Italy lost its national sovereignty. Italy will have to look to EU ECB and IMF leadership, that is EU ECB and IMF diktat, and their sovereign authority for seigniorage, that is moneyness, as well as a resource for their fiscal spending. Soon EU leaders will meet in summit, waive all national sovereignty by announcing regional framework agreements, establish a fiscal union, a common treasury, and empower the ECB as a bank, not so much for the needs of the people, but rather for the security of the region.

In a world of credit evaporation, credit will come via regional stakeholder bodies, that lend to companies deemed essential to the well being of the region. Austerity measures, structural reforms, pension overhauls, bank nationalizations, and debt servitude will be de rigueur. In as much as the EU is characterized by failed nation states, moneyness will come by diktat. The seigniorage of diktat may provide dole for the fiscal spending of former nation states, as all will be vassal states existing in a totalitarian collective. Totalitarian collectivism is the EU’s future.

An inquiring mind, concludes with four questions. What is a leader, what does a leader carry, what agenda does the leader carry, and what is that leader’s reward? Urban dictionary provides a number of definitions for leader. I am not a libertarian, but do relate that many Libertarians hold forth Ron Paul as their leader. Do you know what Ron Paul carries, and what his agenda is? He is very much an anachronism in this age of diktat. I believe He and his followers are likely to feel marginalized very soon, as they pursue Freedom and Free Enterprise; these are simply mirages on the Neoauthoritarian Desert of the Real. Freedom and choice are epitaphs on tombstones of the bygone era of Neoliberalism.

Angela Merkel, Nicolas Sarkozy and Herman van Rompuy are leaders of this age. They are those who are first to serve. They carry the beacon of more Europe and more reform. Their agenda is a European Federal Union, where sovereignty is ceded to Brussels, Berlin and Paris. Their reward is sovereignty and the seigniorage of diktat.

Political power is coalescing in Germany. Johannes Stern writes in WSWS Germany’s Christian Democrats Head Toward A Grand Coalition. And Bloomberg reports Angela Merkel saying The EU must move toward closer union. And, the NYT quotes her saying, It is now the task of our generation to complete the economic and currency union in Europe and create, step by step, a political union.

The New Europe that Angela Merkel envisions will be one of ten regional powers, as called for by the Club of Rome. Thus, the New Europe, will be one of the ten toes, of the ten toed kingdom of regional economic government held forth in Daniel 2:32-42. This global regime will be a monster of state corporatism manifesting as the Beast regime of Neoauthoritarianism, seen in Revelation 13:1-4.

Soon out of Sovereign Armageddon, that is a credit bust and global financial collapse, a New Charlemagne, that is a Sovereign, will rise to power in Europe and establish Germany at the center of a powerful and authoritarian revived Roman Empire. The Sovereign, Revelation 13:5-10, will be accompanied by a Seignior, Revelation 13:11-18, meaning top dog banker who takes a cut, who will have both sovereign authority and fiscal sovereignty, and will provide seigniorage dole to those living in the Eurozone, and the people will be amazed by this, and place their trust in it.

Freedom and human action characterized the Milton Friedman floating currency free to choose regime, where wildcat finance, a Doug Noland term, and the seigniorage of freedom, provided prosperity. But now, constraint and fate characterize the Beast sinking currency diktat regime, where wildcat governance, and the seigniorage of diktat, will overhaul pension system, and enforce austerity measure, structural reforms, as well as mandate debt servitude.

The overall view is that God is involved in Operation Free Mankind, seen in Revelation 2:26-28, where He is destroying all forms of economic life, such as Greek Socialism, European Socialism, and Free Enterprise so that one can be free from all sin, that is doubt that His Son Jesus is sovereign over all the earth.

I have consistently recommended that one buy and take possession of gold bullion, as it being sovereign wealth, will be the only “money good.” The Wall Street Journal reports Purgatory for MF Global Customers. About 33,000 Account-Holders Can’t Get to Their Cash: ‘My Entire Business Has Come to a Halt. The Examiner reports Investment Advisor Gerald Calente Loses Gold Futures Account In MF Global Debacle

Sovereign Insolvency … It’s The Catalyst For Financial Nuclear Winter

November 18, 2011

Financial market report for Thursday November 17, 2011

1) … Stocks, currencies, and world government bonds, fell lower yesterday as Fitch warned of US Banks’ European exposure and the European government bond market froze.
On November 16, 2011, World Stocks, ACWI, and VT, fell lower, led by Health Care Provider, IHF, Financials, XLF, Materials, XLB. The sell off included Transports, IYT, and Industrials, IYJ, and included shares across the globe, EWZ, RSX, INDY, YAO, EWA, EZA, ENZL, EWC, EWU, EWY, EWT, EWC, EWM, EWW, and VGK, as Bloomberg reports Fitch’s Warns About US Banks’ European Exposure.

Mike Mish Shedlock reports JPMorgan, Goldman Keep Investors In Dark On European Debt Risk ; Net Position Disclosure Hides True Risk.

And Mike Mish Shedlock reports on sovereign insolvency European Government Bond Market “Frozen” Says Bank Of Italy Managing Director; ECB Steps In But Rally Fails To Hold Spreads between bid and ask government bond prices indicate markets are “frozen,” said Franco Passacantando, Bank of Italy’s Managing Director for Central Banking, Markets and Payment System in Milan today. The European Central Bank is “almost exclusively buying Spanish and Italian bonds,” he added.

2) … Today, stocks fell lower as oil, gold, silver and copper turned lower on sovereign insolvency fears.
The volatile commodities, Oil, USO, Gold, GLD, Silver, SLV, and Copper, JJC, being risk trade driven and performing like currencies, turned lower. These commodities, are like currencies, and have market place seigniorage, that is market place moneyness, which comes from a high risk and high reward profile.  And today traders took risk trade profits, as an auction of 10-year bonds in Spain left the country paying interest rates of nearly 7 percent. That is the highest rate since 1997 and a level that economists see as unsustainable. It is likely that proxy buyers underwritten by ECB, that is buyers who are indemnified by the ECB, bought Spain’s bonds. A rate of 7% communicates that Spain is insolvent. Now Spain is an insolvent sovereign along with Italy. Thus all of the PIIGS are insolvent sovereigns.

World stocks, ACWI, VT, World Small Caps, VSS, EWX, and Emerging Markets, EEM, all fell lower on failing sovereign authority. Fears of sovereign insolvency drove markets lower today.     

Energy stocks falling lower included WCAT, OIH, IEZ, XLE, XOP, PSCE,

Silver Miners, SIL, Gold Miners, GDX, fell lower. And the Junior gold miners GDXJ, turned sharply lower. The age of profiting from investing in searching for new gold mining properties is over.

The Too Big To Fail Banks, RWW, European Financials, EUFN, Investment Bankers, KCE, and Stockbrokers, IAI, continued lower today. Blackstone Group, BX, fell strongly. The Emerging Market Financials, FGEM, and EMFN, traded strongly lower.  Brazil Financials, BRAF, and Australia Dividend, AUSE, fell strongly. The world’s leading banks seen in this Finviz Screener, turned lower.    

Technology stocks falling lower included, QTEC, MTK, SKYY, SMH, PSCT, PNQI, SWH, HHH, FDN, XSD, PXN, IGV, SOXX,

Real Estate, IYR, REZ, FNIO, and RWR, turned lower.

The BRICS, BIK, fell lower, being led so by China, YAO, FXI, HAO, CHIM, CHIE, CHIX, CHII, CAF, EWH, HKK, with India, INP, and Russia, RSX, RSXJ, and Brazil, EWZ, BRF, tagging along.

Ending of the risk trade in Tata Motors, TTM, and India Earnings, EPI, pushed India, INDY,  SCIN, and SCIF, lower. Business Week reports India Stocks May See ‘Sharp’ Fall, Franklin Templeton Says. Indian stocks, the second worst performers among Asia’s biggest markets this year, may decline further as investors shun riskier assets amid the global economic turmoil, according to Franklin Templeton Investments.

Ireland, EIRL, and Austria, EWO,, were among Europe’s strongest fallers. Other country fallers included Turkey, TUR, South Africa, EZA, Indonesia, IDX, Australia, EWA, and KROO.

Argentina, ARGT, fell strongly as its banks, BMA, GGAL, BRF, BMA, all fell strongly.  Given its market deterioration today, it too will join the ranks of failed sovereigns.

Agriculture, PAGG, and MOO, fell heavily, on falling grain, GRU, cotton, BAL, and agricultural commodities, JJA.  Stocks AGCO, LNN, DE, fell hard.

Steel, SLX, Metal Manufacturing, XME, Coal Producers, KOL, Copper Miners, COPX, fell strongly on falling commodities, and on the failure of Neoliberalism’s Free To Choose regime, where the baton of sovereignty is now passing from sovereign nations to sovereign leaders, giving rise to the regime known as Neoauthoritarianism.

Basic Materials, XLB, IYM, MXI, fell lower. With AA, and FCX, leading the Morgan Stanley Cyclicals Index, $CYC, lower. Leading mining stocks seen in this Finviz Screener, fell strongly.

S&P Telecom, XTL, plummeted.

Shippers, SEA, seen in this Finviz Screener, fell strongly.

Medical products Intuitive Surgical, ISRG, logistics company, EXPD, fell strongly, as did consumer discretionary, STMP, GAME, SFLY, WTW, MAT,

Applied Materials, AMAT, fell 8%, as Reuters reports Applied Materials Warns of “Challenging Economy”. Chip gear maker Applied Materials Inc gave a cautious quarterly revenue outlook and warned it expects to be affected by a tough economy. Economic uncertainty in the United States and Europe has hurt demand for consumer electronics in recent months, leading many chip manufacturers to put expansion plans on hold.

High income dividend shares, ABCS, traded strongly lower.

At market turns, airlines, FAA, is a fast faller; this market down turn is no exception.

The end of credit has commenced as these credit providers, PHH, AXP, NNI, COF, SLM, ECPG, NICK, MA, V, AMT, ADS, CATM, AINV, ARCC, AINV, seen in this Finviz Screener, fell strongly.

The rally of the defensive sector Utilities, XLU, is definitely over, as these have turned parabolically lower. DTE Energy, DTE, was a utility loss leader. The strong fall in foreign utilities, EDN, and EBR, suggests that the rewards of the Free To Choose Age is over. The Age of Diktat is beginning.

Commodities, DBC, plummeted. Oil, USO, fell vertically, giving rise to yesterday as an evening star candlestick.  Base metals, DBB, fell, strongly led by copper, JJC, and aluminum, JJU. Grains, GRU,  fell strongly, which is not surprising there are a glut of them.  

Gasoline, UGA, fell strong; so one does not have to worry about the pump being responsible for headline price inflation or consumer price inflation.

US Treasuries, ZROZ, EDV, TLT, were a safe haven investment today. Fears of Eurzone sovereign default gave seigniorage, that is moneyness, to US Government bonds.  Junk Bonds, JNK, and Leveraged Debt, PSP, continued lower on risk avoidance.

Of note the longer out corporate debt, BLV, rose; but the shorter duration corporation bonds, LQD, turned lower.

  
3) … To save the Euro, Germany must cede sovereignty, Angela Merkel communicates.
Mike Mish Shedlock writes in Business Insider German Chancellor Angela Merkel came flat out and said, “To save the Euro we must Destroy Germany”. Well not exactly, but she may as well have because that is the implication. This is what she did say: Germany Is Ready to Cede Some Sovereignty to Save the Euro.

Chancellor Angela Merkel said that Germany is ready to cede some sovereignty to strengthen the euro area and restore confidence in the common currency.  European Union treaty changes to strengthen EU institutions and patrol tighter budget rules are needed “to make the euro zone more crisis-proof,” Merkel told reporters in Berlin today at a joint briefing with Irish Prime Minister Enda Kenny.

“Germany sees the need in this context to show the markets and the world public that the euro will remain together, that the euro must be defended, but also that we are prepared to give up a little bit of national sovereignty,” Merkel said. Germany wants a strong EU and a euro “of 17 member states that is just as strong and inspires confidence on international markets.”

It’s Not Merkel’s Decision.  For starters Merkel is saying what she wants. It is debatable if that is what Germany wants at all. I rather doubt it. Moreover, even if it is what Germany wants, it is not Merkel’s decision. Such decisions, as the German supreme court has ruled are up to voters of Germany, not politicians with an axe to grind about what they want. If German voters want to cede power and form a European nanny state, then so be it. But it will be the end of Germany and the end of Europe as well should they do so.

Its A Desperate Attempt to Save Something Not Worth Saving.  As the crisis lingers the cries for more intervention get louder and louder, even though the massive intervention to date has only made matters worse.  Ambrose Evans Pritchard highlights the cries for intervention in Latin showdown with Germany over ECB.  The EU’s €440bn EFSF bail-out fund was supposed to take over on the rescue task, relieving the central bank. It has been a disastrous flop, unable to raise money itself at a viable cost after toying with leverage plans that greatly concentrate risk for creditor states. The net effect has been to accelerate contagion to the core. Germany’s constitutional court has ruled that “open-ended” and “automatic” liablities violate the country’s Basic Law. So only the Germans can save monetary union, yet the Germans cannot legally do so. Europe’s crisis has reached an impasse, the result of the original design flaws of EMU. Even so, a growing chorus of economists within Germany itself is calling for a strategic change. Wurzburg professor Peter Bofinger wants the ECB to cap Italian and Spanish yields. “We are in an emergency situation; this isn’t plastic surgery. If worse comes to worst, the ECB has to act before the financial system falls. And if it acts, it should act properly and set an upper limit for sovereign yields. It’s naive to believe that Italy can solve its problems on its own. Structural reforms can’t be implemented overnight. “Dennis Snower, head of the Kiel Institute, said the ECB must act to stem the crisis, even if this means straying into fiscal policy. Thomas Mayer from Deutsche Bank said Italy’s new government will fail unless the ECB buys time by holding down yields, perhaps as low as 5pc.

The Euro Experiment Is Over.  Pritchard concludes with a couple of paragraphs that I whole heatedly endorse. David Heathcoat Amory, Britain’s former Europe minister, said Berlin will do whatever it takes to try to save EMU. “The Germans will pay up, accept eurobonds, and mobilise enormous firepower. But this won’t save monetary union in the end because it is not a debt crisis. It is a currency crisis. The weaker states are uncompetitive and you cannot force them to deflate their way back to competitiveness by cutting wages 30pc. The EU elites won’t admit it, but the euro experiment is over,” he said. Merkel is willing to destroy Germany (and Europe) to save something that is doomed anyway.

Top Orwellian Comments Of All Times.  An American major after the destruction of the Vietnamese Village Ben Tre: “It became necessary to destroy the village in order to save it.” President George W. Bush: “I’ve abandoned free-market principles to save the free-market system.” We can safely add “To Save the Euro We Must Cede Sovereignty” to that list.

4) … The Euro is not over, sovereign insolvency will be the catalyst for Financial Nuclear Winter and the sacrifice of sovereignty and the pooling of sovereignty, where regional economic government will come to rule in the world’s ten regions.
A Financial Nuclear Winter is imminent. The downturn in world financials that began November 16, 2011, with Fitch’s Warning About US Banks’ European Exposure, will propel highly volatile stocks quickly lower. These fast fallers will include, CHIX, XME, COPX, EWX, HAO, CHIM, ETN and JCI, as seen in this ongoing Yahoo Finance Chart of World Financials, IXG, Chinese Financials, Metal Manufacturing, Copper Mining, World Small Cap Leaders, China Small Caps, China Materials, and industrial electrical equipment company Eaton, and automobile parts manufacturer, Johnson Controls, both of which are Morgan Stanley Cyclicals Index components

Recent economic is just a one time event. These metal manufacturing stocks, CMC, NUE, STLD, XME, these industrial electrical equipment manufacturers, and these automobile manufacturers, such as F, GM, MTOR, TWI, DAN, WPRT, TRW, SORL, SMP, VC, AXL, WBC, PCAR, CLC, have been among the stocks leading the S&P higher in the most recent rally, as Bespoke Investment Group reports, these have been the Industrial Production Subcomponents showing faster growth than the headline number (3.9%). Also these industrial, construction and environmental rehabilitation companies MTW, TEX, SHS, TRN, RBN, JOYG, AIMC, have been recent rally winners.

The strong Industrial Production Subcomponents report is a look in the” rear view mirror report”, where Industrial production likely came from the delayed results of QE I and QE2, coupled with firms buying replacement equipment and assets such as vehicles, computers and industrial electrical equipment, and is nothing sustainable.

Reuters reports on sales intransigence, that is the inability to make forward growth in sales. Salesforce.com, CRM, Shares Drop On Tepid Outlook. Web based software maker Salesforce.com Inc forecast current-quarter earnings broadly in line with Wall Street estimates and posted a quarterly net loss as its marketing and sales costs increased sharply. The tepid outlook from one of the leaders in Internet-based cloud computing suggests it will not avoid the effects of broad cutbacks in corporate spending which have ravaged other technology firms. Salesforce shares fell 6 percent after hours.

Bloomberg reports that a credit evaporation is underway. Tighter Credit Sending Warning Signals. The US market has been buoyed by a string of better-than-expected economic reports that have helped encourage the belief that the US is a relatively safe haven, insulated from the problems of Europe. But these data are coincident, or lagging, data at best, warns Mike Darda of MKM Partners. Leading indicators are found in the credit markets and are pointing to tighter financial condition, and lower stock prices, in the future.

The WSJ reports European Firms Face Lending Woes. Companies Struggle as Banks Lend Less, at Higher Rates, Forcing Businesses Into Public Markets With Selective Investors. Euro-zone countries aren’t the only borrowers whose financing costs are rising: European companies are facing higher capital costs as the debt crisis curtails bank lending and keeps wary investors on the sidelines. The amount of European corporate debt in need of refinancing is set to jump in 2012. But banks are lending less and at higher rates, forcing companies into public markets, where investors are becoming increasingly selective. Less corporate borrowing leads to less corporate investment—another drag on already sickly economies

Bloomberg reports  Zoomlion Sees Drastically Slower Demand for Cranes, Excavators in China. Zoomlion Heavy Industry Science & Technology Co. said a slowdown in China’s demand for cranes and excavators will carry on next year because of waning economic growth and cutbacks in railway building. “Demand for construction machinery has shrunk drastically and growth will no doubt continue to slow next year,” Chairman and Chief Executive Officer Zhan Chunxin said in a Nov. 15 interview in Hong Kong.  “The overall economy will also cool because of weaker export demand.”
(Hat Tip To Between The Hedges)

John Nyaradi, writing in Market Watch, used the term Financial Nuclear Winter relating, “As a beautiful autumn slowly moves towards the dark days of winter, global investors will likely find themselves facing a nuclear winter of extreme danger and volatility. Nuclear winter is the term used to describe the ice age-like temperature drops, severely cold weather, reduced sunlight and catastrophic agricultural failures that are theorized to be the after effects of nuclear war. In the financial world, nuclear winter will be a long period of years, even decades, of sub par growth, high unemployment, global recession/depression and a long-term secular bear market brought about by the financial equivalent of multiple nuclear blasts. Greece is the immediate trigger point for this series of fiscal nuclear explosions.”

Sovereign insolvency will be the catalyst for Financial Nuclear Winter, and the pooling of sovereignty as called for by Herman van Rompuy. Consillium provides a video of Herman Van Rompuy, President of the European Council, during a debate on European economic government at the European Parliament. And Reuters reports Van Rompuy urges euro zone to pool sovereignty. And G7 Finance reports Mr Van Rompuy saying in a speech to a conference held by a Brussels think tank. “The euro zone has to move towards real economic union commensurate with monetary union.” … “We need to give both our citizens and the markets a clear message about the irreversibility of the euro,” … “This will imply in some of these areas a pooling of sovereignty in exchange for a stronger, more stable monetary union,” Van Rompuy stated “(Deepening economic union) will require a combination of two things, a significant strengthening of our rules and mechanism for fiscal responsibility and a large step in terms of integration in economic policies.” … “We have to fight for our economic and monetary union and Europe’s place in the world,” … “In Italy, it is an hour of truth.”

You Tube Video provides Nigel Farage stating “By any objective measure the Euro is a failure”, and asking What gives you the right to dictate to the Italian people?

God is sovereign, Isaiah 4:9-14. In the age of sovereign insolvency, with nation states unable to issue Treasury Debt, God’s Sovereign Will, Ephesians 1:11, is providing sovereign authority in the 1974 Clarion Call of the Club of Rome for regional economic government. Regional leaders will meet in summits, and announce regional framework agreements and mandates for regional security and stability. Sovereign leaders and sovereign bodies, such as the EU ECB and IMF Troika, will pool national sovereignty, and govern through diktat, establishing the New Europe as envisioned by Angela Merkel.  Fate is operating sovereignly to provide a coup d etat. With the appointment of Mario Draghi, Goldman Sachs is taking over Europe.  The Eurozone will be one of ten regions of economic called for by God, Daniel 2:31-35.

The economic, political and tectonic plates shifted in July 2011 as the world major currencies and the emerging market currencies, sunk, and as investors fled the stock markets when they realized that a debt union had formed in the EU. And today, November 17, 2011,  others have fled the market as they realize that a sovereignty union and that they realize that Italy’s ten-year government bond yields soared well above 7%, the level beyond which Greece, Ireland and Portugal were all pushed into EU/IMF bailout programmes. Having been frozen out of the markets, Italy now faces a buyer’s strike.

Neoliberalism featured sovereign individuals and human action; now Neoauthoritarianism features sovereign leaders and diktat.

In 1971, the world went off the gold standard, as Milton Friedman provided the “Free To Choose” script. Now, in 2011, Angela Merkel is providing the “more Europe” script, and Herman van Rompuy is providing the   “We need reforms, not elections” script.

Bloomberg reports European Banks Face $270 Billion Goodwill Hangover for Past Acquisitions. European banks may have to write down some of the $270 billion of goodwill from their purchases in the run up to the financial crisis before they can sell assets, or new stock, to bolster capital. UniCredit SpA (UCG), Italy’s biggest lender, this week opted to take an 8.7 billion-euro ($10 billion) impairment charge following a series of acquisitions at home and in eastern Europe. Other European banks are yet to follow, analysts said. Credit Agricole SA (ACA), Banco Santander SA (SAN) and Intesa Sanpaolo SA are among European banks with the most goodwill remaining on their balance sheets, according to data compiled by Bloomberg. “Banks that paid a premium for businesses when the outlook was better will need to reassess the goodwill on their balance sheets,” said Andrew Spooner, an accounting partner at Deloitte LLP in London. “Previous acquisitions which are exposed to peripheral Europe are most vulnerable to impairments.” European bank stocks are trading at an average 58 percent of their book value, according to Bloomberg data. While writing down goodwill won’t deplete banks’ capital for regulatory purposes, it’s a sign that executives overpaid for purchases

Bloomberg reports GM Sees Europe Crisis ‘More Serious’ Than 2008 Credit Bubble. Europe’s debt crisis is a “more serious” situation than the housing bubble three years ago that preceded a global recession, General Motors Co. Chief Executive Officer Dan Akerson said today. “The ’08 recession, which was a credit bubble that manifested itself through primarily the real estate market, that was a serious stress,” Akerson told the Detroit Economic Club today. “The government took some insightful actions. This is much more serious.” GM, which hasn’t turned an annual profit in Europe in more than a decade, has declined in New York trading since rescinding its target for break-even results in the region. European operations lost $292 million before interest and taxes in the quarter ending Sept. 30, GM said last week as it reported a 2.5 percent drop in third-quarter net income. Analysts have slashed their estimates for GM’s adjusted earnings in the fourth quarter by 49 percent after the company said last week that results for the period would be similar to a year earlier, citing weakness in Europe as a factor. All 14 analysts surveyed by Bloomberg cut their estimates in the last two weeks, reducing the average to 44 cents a share, from 86 cents. “We’re dealt a hand and we have to play it as best we can,” Akerson, 63, said today of Europe. “It may get a little ugly at times, a little bumpy.” Asked if some countries such as Greece may eventually leave the euro zone and lead to a breakdown of the currency, Akerson said “I wouldn’t doubt it.” GM slid 3.8 percent to $21.79 at the close in New York. Detroit-based GM plunged 34 percent since its initial public offering a year ago.

Bank exposure to the European Sovereign Debt Crisis will mean the Money Market Funds will break the buck, that is fail to maintain their constant one dollar value. Money Market Fund, MMFs, and banks world wide will be integrated into governments and be known as the government banks or gov banks for short.     

Business Week reports Money-Market Spreads Surge to Two-year High on Europe Crisis. Investor demand for the relative safety of Treasuries during the European debt crisis has sent the difference between U.S. short-term yields and credit-market rates surging to levels not seen in more than two years. The gap between the London interbank offered rate and the overnight index swap, or what traders expect Federal Reserve’s benchmark to be over the term of the contract, widened to 38 basis points as of 9:58 a.m. in Tokyo. It was the highest level since June 2009. U.S. five-year swap spreads climbed to 45 basis points, the most since August 2009. “It’s a flight to safety,” said Akira Takei, head of the international fixed-income department at Mizuho Asset Management Co. in Tokyo, which has the equivalent of $42.7 billion in assets. “I have quite a bullish view on U.S. Treasuries. The market is quite risk-averse.” The TED spread, the difference between what lenders and the U.S. government pay to borrow for three months, widened to 47 basis points, or 0.47 percentage point. It was the most since June 2010. Two-year swap spreads increased to 52 basis points today, the most since May 2010. (Hat Tip To Between The Hedges)

5) … Moneyness will come by fiscal integration and diktat in a European Super State.  Life will be experienced in a totalitarian collective.
Moneyness, that is seigniorage, will come by diktat.
Before the sovereign crisis, the seigniorage of freedom, ruled as sovereign nation states ran with the Milton Friedman Free To Choose script of floating currencies, and banks and investment bankers underwrote debt of all types, such as GSE Mortgage Backed Bonds, MBB, US Treasuries, ZROZ, EDV, TLT, Long Duration Corporate Bonds, BLV, Corporate Debt, LQD, Junk Bonds, JNK, World Government Bonds, BWX, Emerging Market Bonds, EMB, and Municipal Bonds, MUB. Inflationism came via US Federal Reserve credit liquidity, ZIRP, Quantitative Easing I, and II, as well as carry trade lending from Austria and the Bank of Japan, driving World Stocks, ACWI, and Bonds, BND, higher. Hedge Funds speculated in commodities, DBC, of all types, driving base metals, DBB, such as copper, JJC, coffee, JO, and cotton, BAL, wildly higher.

Currencies, being based upon failed sovereignty, are no longer floating; they are sinking as sovereign insolvency is becoming apparent. The Yen, FXY, rose, as carry trades unwound, causing debt deflation, that is currency deflation, in the world’s major currencies, DBV, emerging market currencies, CEW, and commodity currencies, CCX. The Australian Dollar, FXA, led these currencies, seen in this Finviz Screener, lower today: FXE, FXM, FXC, ICN, FXS, SZR, FXF,  BZF, CEW, and FXRU. The US Dollar, $USD, UUP, closed higher at 78.82. The chart of optimized carry trade ETN, ICI, shows a parabolic turn lower.
 
The seigniorage of diktat which commenced during the last summit, as the EU leaders mandated a fifty percent reduction in the value of Greek debt, and as they sent a fiscal inspection team to Greece. The EU ECB and IMF Troika, and the technocratic government that they installed in Greece and Italy, are now the EU’s sovereign authority, as the baton of sovereignty has passed from sovereign nations to sovereign bodies and sovereign leaders.

In August 2011, Nicolas Sarkozy and Angela Merkel issued their Joint Comminique, calling for “true European economic government”. Such reflects the 1974 Clarion Call of the Club of Rome for regional economic government. These two are forerunners, heralds, and ambassadors of the soon coming Ten Toed Kingdom of regional economic government, where regional authority rises over former sovereign nation states, to establish rule in the world’s ten regions, Daniel 2:31-35.

The Beast Regime, that is Neoauthoritarianism, Revelation 13:1-4, is replacing Neoliberalism. Its called the Beast Regime, because it is a monster of state corporatism, that is statism, ruling in all of mankind’s seven institutions and in all of the world’s ten regions. Wildcat governance replaces wildcat finance, a Doug Noland term. Leaders bite, rip and tear one another. Only the most fierce and adept at working in the scheme of framework agreements will rise to the top.

Out of sovereign armageddon, that is an credit bust and financial system collapse, the New Europe will arise as a type of revived Roman Empire. It will have a New Charlemagne, the Sovereign, and a European Banker, the Seignior, who provide order out of chaos. Perhaps Herman van Rompuy will be Europe’s New King. And perhaps Olli Rehn, or Mario Draghi, will be the Seignior, which literally means top dog banker who takes a cut.  Roy Schwarcz writes that bible prophecy of Daniel 2 and Revelations 13 foretells of a soon coming European Federal Government, which will be led by a strong ruler. The Roman Empire fell apart from within, no enemy destroyed it. Rome is living in the great nations of Europe today: Italy, France, Great Britain, Germany, and Spain are all part of the old Roman Empire. The laws of Rome live on, as well as the language. Latin today is the base of French, Spanish, and other languages. Her warlike spirit lives on also as Europe has been at war ever since the empire broke up into these kingdoms. What is happening in Europe today? There is a diminishing of the nations and a unifying of the people with a common currency, common markets and common government. The foundation is being laid for the man who is coming someday to put the Roman Empire back together again.

The new script, replacing Milton’s Friedman’s Free To Choose scrip, is diktat. The moneyness of freedom is being replaced with the moneyness of diktat.

The seigniorage of diktat, the New Europe seigniorage, will mandate that the accumulated debt of the Eurozone be applied to every man woman and child therein. Greeks cannot be Germans, the former are of the olive state, and the latter are of the industrious state. One is club med, and the other industrious; yet both will be one, living in a New Europe, featuring a Federal Government, a Fiscal Union, a Common Treasury, the nationalization of banks, and the ECB empowered as a bank.

Destructionism mandates fiscal integration and diktat; these will enforce austerity measures, structural reforms, pension overhauls, and debt servitude; all these will be de rigueur. A fiscal czar  may issue   some dole coming forth from a common EU Treasury. The word, will and way of sovereign EU leaders will constitute a new money, and the people will marvel and follow after it, placing their trust and faith in it. The seigniorage of diktat will have the people’s allegiance.

Sovereign administrators, sovereign regulatory bodies, and sovereign stakeholder groups, will manage order and security. These will issue sovereign credit in a world otherwise devoid of credit, so that economic activity of the region will flow smoothly. Andrew Eisinger of ProPublica writing in NYT article Reform Adds More Twists to a Convoluted Derivatives World, highlights Gary Genzler of the CFTC.  Mr. Genzler is the type of sovereign who will rule the EU..  

The John M Broder, NYT article, Behind The Shift On Smog, A Re-Election Calculus, provides insight into Cass R. Sunstein, Obama’s Regulatory Czar, who oversaw a shift away from EPA enforcement of pollution controls. His bureaucratic action style will exemplify and predominate Neoauthoritarianism and Euracracy.   

The Libertarian vision of the Mises Institute, and the Ron Paul agenda, of freedom and free enterprise, are mirages on the authoritarian desert of the real. Libertarianism is an anachronism. Fate is working through the Clarion Call of the Club of Rome, is over whelming any and all freedom and human action. A totalitarian collective is coming to rule the Euro zone; totalitarian collectivism is the EU’s future.  Neoliberalism is falling to Neoauthoritarianism. The choice of sovereign individuals is being replaced by the diktat of sovereign leaders.

The Free To Choose economic policies of Neoliberalism produced Inflationism. Now Destructionism, characterized by disinvesting, deleveraging, and derisking is underway, bringing forth an entirely new economic, political and social order. All current economic life, whether it be Greek Socialism, or American Capitalism, or European Socialism, is passing away, as the Global Government Finance Bubble has burst. The political dynasties of both Italy and Greece, that produced patronage and pork are history. Freedom and choice are epitaphs on tombstones of a bygone era. Totalitarian collectivism is the Euro zone’s future.

SFGate reports Finance Job Losses Near 200,000 as BNP, Citigroup Cut Staff. Job losses in the global financial services industry this year are close to surpassing 200,000 as Citigroup Inc., France’s BNP Paribas SA and Bank of America Corp. eliminate jobs to reduce costs. Citigroup, the U.S. bank that shook up senior management earlier this month, may cut as many as 3,000 jobs as Chief Executive Officer Vikram Pandit squeezes out costs, said a person familiar with the company’s plans. BNP Paribas, France’s biggest bank, said today it will trim about 1,400 jobs at its investment-banking unit, with most coming from the lender’s capital markets and structured-finance teams. Bank of America also cut part of its equities unit in Europe yesterday. The reductions add to the 195,000 banks, insurers and asset managers announced this year, and surpass the 174,000 losses in 2009, data compiled by Bloomberg show.  (Hat Tip To Between The Hedges)

Neoliberalism featured the Spirit of The Cat In The Hat, as is seen in the repeal of the Glass Steagall Act, and the introduction of derivatives of all types.

Neoauthoritarianism features The Spirit Of Wilding. Karen Matthews of AP reports New York City police in riot gear lock down park amid violence as protesters take to streets nationwide in “Day of Action.” And Zero Hedge reports The Technocratic Revulsion Begins: Photos and Video as Thousands of Italians Protest Monti’s “Banker” Government.  Both of the two news reports relates that the leaders of this age are sorely unappreciated.

In Neoliberalism, leaders practicing wildcat finance, waived magic wands, and created wealth. In Neoauthoritarianism, leaders yielding clubs, practice wildcat governance, to deter protest.  

6) … Conclusion
I definitely observe pooled sovereignty. Do you want to take a dip into the pool of sovereignty?

Today, the world was immersed, that is baptised into the pooled sovereignty; soon it will experience the baptism of fire, as fiat wealth flows into the Pit of Financial Abandon.

God is carrying out Operation Free Mankind, for the purpose of setting mankind free from sin, that is doubt, by destroying all forms of economic life, such as Greek Socialism as well as sovereign nation states, such as Great Britain, and Greece, Revelation 2:27.

There is no Free-Land. Freedom is found only in Christ. The believer exercises the only right there is, the right to manifest as a child of God,1 John 1:12.

Out of sovereign default, will come an entirely new order, The Ten Toed Kingdom of regional economic government, Daniel 2:31-33.  In July 2011, many investors fled the stock market when they became aware that a debt union had formed in the Eurozone. Today, others have fled as they became aware that a sovereignty union is forming in the EU out of failed sovereign nation states.

Under Neoauthoritarianism, the only “money good” will be diktat and gold bullion. Yes, the only form of sovereign wealth will be regional economic government or physical gold.

Landon Thomas of the NY Times reports The Rise of a Euro Doomsayer, The euro zone was unraveling, just as he had long predicted, yet Bernard Connolly, Europe’s most persistent prophet of doom, still faced a skeptical audience.

“The current policy of lending plus austerity will lead to social unrest,” Mr. Connolly told investors and policy makers at a conference held this spring in Los Angeles by the Milken Institute, arguing the case that Greece, Italy, Portugal and Spain could not simply cut their way to recovery.

“And one should not forget that of the four countries we are talking about, all have had civil wars, fascist dictatorships and revolutions. That is history,” he concluded, his voice rising above the chortles and gasps coming from the audience and the Europeans on his panel. “And that is the future if this malignant lunacy of monetary union is pursued and crushes these countries into the ground.”

Mr. Connolly has been warning for years that Europe was heading for disaster. As an E.U. economist in the early 1990s, he helped design the common currency’s framework, but he was later dismissed after he expressed turncoat views. In 1998, just months before the euro’s introduction, he predicted that at least one of Europe’s weakest countries would face a rising budget deficit, a shrinking economy and a “downward spiral from which there is no escape unaided. When that happens, the country concerned will be faced with a risk of sovereign default.”

In 2008, Mark Carney, the governor of the Canadian central bank, cited the British-born Mr. Connolly, along with the far more prominent Nouriel Roubini of New York University and the Harvard economist Kenneth S. Rogoff, as having been among the few who foresaw the global financial crisis. Mervyn A. King, the governor of the Bank of England, who has become increasingly vocal about the euro zone’s problems, is also a longtime follower.

Nicolas Carn, an independent research analyst and money manager who worked previously as chief investment strategist for the London-based hedge fund Odey Asset Management, is one of his biggest fans. “Bernard has influenced me a great deal,” Mr. Carn said. “He has shaped my views on Europe and contributed significantly to my investment performance.”

To be sure, Mr. Connolly was not the only analyst who raised early warning flags about the euro project. Economists like Martin Feldstein of Harvard and Paul Krugman, a Princeton economist who writes an op-ed column for The New York Times, have been longtime critics, as were many experts in euro-skeptic Britain. But few have gone on to devote more or less their entire professional career to exposing Europe’s monetary fault lines.

Unlike many critics of the euro, Mr. Connolly, 61, plies his trade mostly in private, eschewing cable television programs, opinion pages and policy journals. He represents a new breed of independent analyst who has come increasingly to the fore since the financial crisis broke in 2008.

As investment banks have cut down on staff and remain constrained by their banking and government relationships, independent analysts like Mr. Connolly, who are mostly pessimistic in outlook, have become highly popular for hedge fund investors who wager large sums of money betting against the currencies, bonds and banks of countries heading for trouble.

Mr. Connolly, who used to work for AIG Financial Products, the banking arm of the giant insurance company American International Group, until it went into government receivership, now operates out of a nondescript office in New York, where he is said to pound out as much as 20,000 words of analysis a week.

Like those of other such analysts scattered around the globe, his insights do not come cheap. While the price Mr. Connolly charges is not public, analysts of his stature command, in some cases, as much as $100,000 for a full array of services, including regular meetings and phone calls along with written reports.

And like most of them, Mr. Connolly — the Oxford-educated son of a bus driver from Manchester — guards his privacy zealously. He declined numerous requests to comment for this article. People who know him say that his public reticence is also fed by a lingering anxiety that officials in Brussels will exact some form of revenge.

The origins of that fear as well as the anger and passion that drive him date to 1995, when he took a leave from his job to write “The Rotten Heart of Europe,” an excoriating history of the failure of the euro’s predecessor, the European Exchange Rate Mechanism.

In Britain, where suspicions of common European economic policy ran very high, the book was a hit for its attacks on the architects of the European common currency, including Jacques Delors, the former head of the European Commission, and Jean-Claude Trichet, the French finance official who would go on to run the European Central Bank for eight years.

The book was greeted less enthusiastically in Brussels; Mr. Connolly was told not to return from leave to reclaim his position. Moreover, he was the subject of an investigation by the European Commission into whether he had disclosed any proprietary information in his book. Investigators found that he had not.

In 2005, while working at A.I.G. and at a time when Greek, Portuguese and Irish bonds were trading at rates barely higher than Germany’s, Mr. Connolly persuaded a small group of hedge funds and independent investors to bet on a euro zone crack-up.

They did so by buying the credit-default swaps of what he saw as the most vulnerable European countries. When fears that those countries would default took off in 2008 and 2009, sending the values of those swaps skyward, they were able to sell out — reaping large profits.

“It took a while, but we finally were able to monetize Bernard’s views on Europe,” said James Aitken, who worked with him at A.I.G. and described his job then as translating Mr. Connolly’s arcane musings into actual investment strategies.

While other investors have also profited from following Mr. Connolly’s advice, Mr. Aitken says that Mr. Connolly’s true passion is to try to prevent the social and political train wreck he fears is just around the corner.

“He is anguished,” said Mr. Aitken, who runs his own research service for investors, called Notes from a Small Island, from his home in London. “He sees where this is going and is warning against the human tragedy.”

Yra Harris, a trader on the Chicago Mercantile Exchange, is another of Mr. Connolly’s supporters in the investment world. “Bernard is like no one I have ever met,” he said, citing his work as inspiration for some recent profits he made selling Italian bond futures.

Currencies, World Government Bonds, And Stocks Led By Health Care Providers, Financials and Materials Slip On Sovereign Insolvency Concerns And Fitch Warning About US Bank’s European Exposure

November 16, 2011

Financial Market report for November 16, 2011

1) … Stocks, currencies, and world government bonds, fall lower.

World stocks, ACWI, and VT, fell lower, led by Health Care Provider, IHF, Financials, XLF, Materials, XLB. The sell off included Transports, IYT, and Industrials, IYJ, and included shares across the globe, EWA, EZA, ENZL, EWC, EWU, EWY, EWT, as Bloomberg reports Fitch’s Warns About US Banks’ European Exposure.

Mike Mish Shedlock reports JPMorgan, Goldman Keep Investors In Dark On European Debt Risk ; Net Position Disclosure Hides True Risk.

And Mike Mish Shedlock reports on sovereign insolvency European Government Bond Market “Frozen” Says Bank Of Italy Managing Director; ECB Steps In But Rally Fails To Hold Spreads between bid and ask government bond prices indicate markets are “frozen,” said Franco Passacantando, Bank of Italy’s Managing Director for Central Banking, Markets and Payment System in Milan today. The European Central Bank is “almost exclusively buying Spanish and Italian bonds,” he added.

The Emerging Markets, EEM, EWX, and the BRICS, YAO, FXI, HAO, CHIM, CHIE, CHIX, CHII, CAF, EWH, INDY, RSX, EWZ, traded lower.

Europe shares included EWD, EWN, EWO, EWI, EWP, EWO, EWG, EWQ, VGK, FEU,

Small Cap Shares included VSS, SKOR, SCIF, SCIN, KROO, TWON, BRF, RSXJ, GERJ, HAO, HKK, RSXJ, GERJ, IWM,

Financials included EUFN, FGEM, IXG, EPI, BRAF, CHIX, RWW, RWJ, IAI, KCE, JPM, MS, GS, BAC, C,

Materials included, MXI, REMX, URA, COPX, KOL, SIL, GDX, GDXJ, ALUM, EMT,

World leading shares included SLX, XME, FAA, SEA, TAN, AMX, ABB, BEAV, BA, DIS,

The credit providers, PHH, AXP, NNI, COF, SLM, ECPG, NICK, MA, V, AMT, ADS, CATM, AINV, ARCC, AINV, seen in this Finviz Screener, turned lower. And Health Care Providers, IHF, in this Finviz Screener, traded lower: UNH, WLP, ESRX, HUM, CVH, HNT, WCG, AGP, CI, CNC, MOH, turned lower.

The risk trade in Junk Bonds, JNK, and Leveraged Buyouts, PSP, is over.

The world government bonds, BWX, fell lower on sinking world currencies, DBV FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FXRU. The Yen, FXY, and the US Dollar, $USD, UUP, rose.

Oil, USO, popped 2.3% higher in what may be an evening star, while silver, SLV, fell 2.6%.

2) … News of the day.

Tyler Durden reports German Chancellor Angel Merkel said that she believes treaty changes are needed to win back market confidence, and Germany therefore, is willing to give up some national sovereignty

Tyler Durden reports Goldman Introduces Italy’s New Technocratic Government. Goldman’s Francesco Garzarelli relates Italian PM designate Mario Monti has unveiled the composition of his Cabinet. Key Ministries are taken by high profile and widely respected figures, mostly from academia and the civil service. In a departure from the ‘technocrat’ government of Ciampi in 1993, the Monti government has no elected representatives. PM Monti will lay out his government’s program tomorrow in the Senate, ahead of a vote of confidence. Broad bipartisan support for the new government is expected, at least initially. PM Monti is likely to hold office until general elections are held in the Spring of 2013.
Prime Minister: Prof. Mario Monti – former EU Commissioner (1994-2004) and President of Bocconi University. His deputy will be Prof. Antonio Catricalà, currently head of the antitrust regulator.
Finance Minister: Mario Monti. Junior ministers will be appointed in the coming days and, according to the press, could include well-known economics professors.
Labor and Welfare Minister: Prof. Elsa Fornero, a highly respected expert in social security. Prof Fornero heads the Centre for Research on Pension and Welfare policies – an Italian research institute at the University of Turin.
Economic Development Minister/Infrastructure/Transport: Corrado Passera, currently CEO of Intesa Sanpaolo – the largest Italian domestic bank.
Foreign Minister: Giulio Terzi di Sant’Agata, the current Italian Ambassador to the United States. Justice Minister: Prof. Paola Severino, who lectures in law at LUISS University in Rome.
Interior Minister: Anna Maria Cancellieri, who has been prefect (a senior law enforcer appointed by the central government) in several Italian provinces (the layer of local government between municipalities and regions, which the previous government planned to scrap).

Consillium provides video of Herman Van Rompuy, President of the European Council, during a debate on European economic government at the European Parliament.

Reuters reports Van Rompuy urges euro zone to pool sovereignty. And G7 Finance reports Mr Van Rompuy saying in a speech to a conference held by a Brussels think tank. “The euro zone has to move towards real economic union commensurate with monetary union.” … “We need to give both our citizens and the markets a clear message about the irreversibility of the euro,” … “This will imply in some of these areas a pooling of sovereignty in exchange for a stronger, more stable monetary union,” Van Rompuy stated “(Deepening economic union) will require a combination of two things, a significant strengthening of our rules and mechanism for fiscal responsibility and a large step in terms of integration in economic policies.” … “We have to fight for our economic and monetary union and Europe’s place in the world,” … “In Italy, it is an hour of truth.”

Business Insider reports To save Europe they had to kill democracy.

Reuters reports UniCredit Seeks Wider ECB Funding for Italian Banks. The CEO of Italy’s UniCredit will ask the European Central Bank at a meeting on Wednesday to extend access to ECB funding for Italian banks by widening the range of collateral that can be offered to get funds, a source close to UniCredit said. Italian banks have increased their reliance on the ECB for cheaper funding since the summer as Italy was sucked ever deeper into the euro zone debt crisis and its lenders faced sharply higher funding costs.

Open Europe reports City AM and Conservative Home: Browne relate that the panel of top European economists who will judge the Wolfson Prize was unveiled this morning; they will award £250,000 to the economist who offers the most feasible plan that a country could follow if it wanted to leave the eurozone. The judging panel will be chaired by Open Europe’s Vice-Chairman Derek Scot.

Open Europe asks Euro, Neuro, Guilder or…Dukaat? The big Dutch currency debate]

Open Europe reports Kathimerini reports that the Greek economy shrank by 5.2% during the third quarter. This means that the 5.5% target is now virtually impossible to attain. (We assume these data are either annualised or relative to the previous year. They cannot be quarterly rates.) It is clear that such figures are inconsistent with the target of a 5.5% contraction for the year, given that the fourth quarter pressure on the real economy is likely to be even stronger.

Wall Street Journal reports Greek Deficit Could Exceed 9%. Greece’s budget deficit could exceed 9% of gross domestic product this year compared with an 8.9% to 9% estimate as the economy is expected to sink deeper into recession, a senior government official said Wednesday. “It will likely be above 9% as the recession this year will be around 6%. First estimates call for a budget deficit of around 9.2%,” the official with direct knowledge of the country’s finances and planning said. “Tax collection remains the main problem,” he said. (Hat Tip to Between The Hedges)

Dr Housing Bubble reminds Mark to fantasy model of real estate accounting.

Bloomberg reports on US Dollar Hegemony. U.S. Marines to Be Deployed in Australia. President Barack Obama said the U.S. is sending a “clear message” of its intent to lead in the Asia-Pacific region with an agreement he and Australian Prime Minister Julia Gillard announced to deploy American Marines on Australian bases next year. Moving to counter China’s regional influence, the defense accord will anchor an American presence in the western Pacific that can help safeguard sea lanes that carry more than $5 trillion of commerce, about $1.2 trillion of it U.S. trade. “The United States is stepping up its commitment to the entire Asia Pacific,” Obama said at a news conference yesterday with Gillard in the Australian capital of Canberra. “This is a region of huge strategic importance to us.”

3) … Sovereign insolvency will be the catalyst for Financial Nuclear Winter and the pooling of sovereignty as called for by Herman van Rompuy. 

A Financial Nuclear Winter is imminent. The downturn in world financials that began November 16, 2011, Fitch’s Warning About US Banks’ European Exposure, will propel highly volatile stocks quick lower, these include, CHIX, XME, COPX, EWX, HAO, CHIM, ETN as seen in this ongoing Yahoo Finance Chart of World Financials, IXG, Chinese Financials, Metal Manufacturing, Copper Mining, World Small Cap Leaders, China Small Caps, China Materials, and industrial electrical equipment company Eaton, which is a Morgan Stanley Cyclicals Index component.

The metal manufacturing stocks and the industrial electrical equipment companies have been among the stocks leading the S&P higher in the most recent rally, as these have been the Industrial Production Subcomponents showing faster growth than the headline number (3.9%), Bespoke Investment Group reports.

John Nyaradi, writing in Market Watch, used the term Financial Nuclear Winter relating, “As a beautiful autumn slowly moves towards the dark days of winter, global investors will likely find themselves facing a nuclear winter of extreme danger and volatility. Nuclear winter is the term used to describe the ice age-like temperature drops, severely cold weather, reduced sunlight and catastrophic agricultural failures that are theorized to be the aftereffects of nuclear war. In the financial world, nuclear winter will be a long period of years, even decades, of sub par growth, high unemployment, global recession/depression and a long-term secular bear market brought about by the financial equivalent of multiple nuclear blasts. Greece is the immediate trigger point for this series of fiscal nuclear explosions.”

Sovereign insolvency will be the catalyst for Financial Nuclear Winter, and the pooling of sovereignty as called for by Herman van Rompuy.

In the age of sovereign insolvency, with nation states unable to issue Treasury Debt, sovereign authority  comes from the 1974 Clarion Call of the Club of Rome for regional economic government.  Regional leaders will meet in summits, and announce regional framework agreements and mandates for regional security and stability. Sovereign leaders and sovereign bodies, such as the EU ECB and IMF Troika, will  pool national sovereignty, and govern through diktat, establishing the New Europe as envisioned by Angela Merkel.

Bank exposure to the European Sovereign Debt Crisis will mean the Money Market Funds will break the buck, that is fail to maintain their constant one dollar value. Money Market Fund, MMFs, and banks world wide will be integrated into governments and be known as the government banks or gov banks for short.

World Government Bonds And World Currencies Lower As Euro Zone Sovereign Spreads Balloon Out … Are The EU Nations Closed Out Of Sovereign Debt Financing … Can The EU Remain A Union?

November 16, 2011

Financial Market report for November 15, 2011

1) … Inverted interest rates and spreads rose in the EU causing the European Financials and currencies to fall globally.  Are the EU nations closed out of sovereign debt financing?  Can The EU remain a union?
The question of sovereign insolvency rises today.  Inverted spreads, and rising spreads at today’s level define national insolvency. Italy is insolvent at 7%, and other European nations, with the exception of Germany, are now insolvent nation states due to the spread between their rates and that of Germany. SF Gate relates Italy Investors Give Junk Rating To Monti’s Debt.  An inquiring mind asks, are the EU nations closed out of sovereign debt financing? Are the EU nations insolvent? Can the EU remain a union?

World Government Bonds, BWX, and emerging market government bonds, EMB, turned lower on falling currencies. The Euro, FXE, world currencies, DBV, and the emerging market currencies, CEW, traded down today as is seen in this Finviz Screener. FXA, FXE, FXM, FXC, ICN, FXB, FXS, SZR, FXF, BZF, FXRU, FXY, all fell lower. Competitive currency devaluation, that is competitive currency devaluation, is underway again.

The European Stocks, FEU, and VGK, did not fall with the Euro, and are hugely overpriced from their relationship with today’s sovereign spreads.

The Epoch Times reports Chinese TV Host Says Regime Nearly Bankrupt. I comment that the global financial system, IXG, consisting of the banks seen in this Finviz Screener are insolvent.

Today’s news reports herald the development of the prophesied revived Roman empire.

If you read enough about the EU and recent developments it becomes obvious that big changes are on the way, changes that are completely consistent with bible prophecy of a revived Roman empire.

Truly astonishing developments in the EU are taking place: central bankers are taking over Greece and Italy, but they have never been elected; they are appointed in coup d etat fashion to govern as Before the News relates Dictators by Nature…EU Enters Death Agony  and Hal Lindsey relates Empires Rise And Fall.

A revived Roman Empire consisting of a unified Europe is very much part of biblical end time prophecy. And the developments we are seeing in the EU is exactly what one would expect to see: more central control and power, as Bloomberg reports Angela Merkel spoke saying The EU must move toward closer union.  The NYT quotes her saying, It is now the task of our generation to complete the economic and currency union in Europe and create, step by step, a political union.

The New Europe that Angela Merkel calls for will be one of ten regional powers; it is one of the ten toes on King Nebuchadnezzar’s statue, Daniel 2:31-42, which is referred to as the Ten Toed Kingdom. This global regime is the same one described as a Beast rising from the sea of humanity, Revelation 13:1-4. And according to Revelation 17:12-14, ten kings will rule in each of the ten toes. These sovereigns were called as sovereign authority by the 300 elite of the Club of Rome in 1974, as a means of dealing with the destructionism coming from disinvesting, derisking, and deleveraging out of the inflationism of the Milton Friedman Free To Choose floating currency regime.

Two former sovereign nations are now insolvent. First, Greece has lost their sovereign debt authority, and now relies on seigniorage aid from the EU ECB and IMF Troika; this body is the rising sovereign authority in the EU. Second, Italy is now an insolvent nation as its interest rate has soared above 7%, all real buyers will not purchase its debt, perhaps only the ECB acting through a  proxy buyer might purchase the debt.

Soon out of Sovereign Armageddon, that is a credit bust and global financial collapse , a New Charlemagne, that is a Sovereign, Revelation 13:5-10, and a Seignior, meaning top dog banker who takes a cut, Revelation 13:-11-18, will have both sovereign authority and fiscal sovereignty, and will provide seigniorage dole to those living in the Eurozone, and the people will be amazed by this, and place their trust in it, yes they will give their allegiance to it, Revelation 13:3-4.

Freedom and human action characterized the Milton Friedman floating currency free to choose regime, where wildcat finance, a Doug Noland term, and the seigniorage of freedom, provided prosperity.

But now, constraint and fate characterize the Beast sinking currency diktat regime, where wildcat governance, and the seigniorage of diktat, will overhaul pension system, and enforce austerity measure, structural reforms, as well as mandate debt servitude.

I have consistently recommended that one buy and take possession of gold bullion, as it being sovereign wealth, will be the only “money good.”  The Wall Street Journal reports Purgatory for MF Global Customers. About 33,000 Account-Holders Can’t Get to Their Cash: ‘My Entire Business Has Come to a Halt. The Examiner reports Investment Advisor Gerald Calente Loses Gold Futures Account In MF Global Debacle

2) … News  Of The Day
Euro Intelligence in its for fee newsletter, provides the following, of which I share just a portion. There is a responsibility on the part of those seeking the best of news reporting to pay the required subscription fees.   Sovereign debt spreads balloon out.  Spanish spreads are now back over 4.3%, and perhaps, most seriously, French spreads are now at 1.65%, a level that is no longer consistent with the country’s AAA-rating. The number for Italy are inconsistent with Italy’s membership of the eurozone, no matter what Mario Monti can achieve. There exists no attainable growth rate at which could remain a member of the eurozone under those interest rates. It is clear by now that the ECB’s security markets programme does not achieve a stabilisation of bond prices. After Jens Weidmann’s public statement that the ECB must not act as a lender of last resort, Yves Mersch yesterday reiterated that position. He said the SMP was limited in volume and in time, and the ECB had no duty to act as a lender of last resort to states. (We believe that a lender of last resort states is probably necessary, but we find it hard to believe that the ECB would be in a position to do so without a stronger political commitment to a fiscal union.)

Greek conservatives reject further austerity measures. Reuters reports Greece’s Greece’s Right LAOS Party Rejects More Austerity. Eurozone leaders and the European Commission are waiting for the conservative New Democracy and its two coalition partners, the Socialists and the right-wing LAOS party, to sign pledges that they will do what is necessary to make a new €130bn rescue loan package work. New Democracy leader Antonis Samaras said he would not sign any pledge for new belt-tightening. His support for the three-day old government has been lukewarm. The LAOS party has also objected to any new wage or pension cuts. Opening a parliamentary debate that will culminate in a confidence vote on Wednesday, incoming premier Lucas Papademos urged the parties to commit to implementing the bailout’s terms as agreed last month. Papademos said Greece had no choice but to remain inside the eurozone, telling lawmakers reforms were the only way to mitigate painful austerity measures.

Bild’s Ralf Schuler says Merkel now has as much authority as Kohl. Commenting on her Leipzig speech, Ralf Schuler claims that after six years of chancellorship Angela Merkel has reached a level of undisputed authority in her party that only Helmut Kohl enjoyed in recent times. “Minimum wage, more money for Europe, six minutes of applause after a rather boring speech – Angela Merkel can ask of her party whatever she wants”, Schuler writes. “Next to her there is nobody any more in the CDU who could compete with her. No Länder prime ministers, no party wings, no ambitious would be successors”. And the columnist concludes: “Since Helmut Kohl the party has never been as dependent as now on its Number One.”

Roland Berger thinks that Germany is the loser of the euro. Roland Berger, founder of the economic consultancy and one of Germany most trusted economic experts, see Germany as a looser of the euro. “The truth is that Germany was among the losers fo the euro in the first decade”, he told Süddeutsche Zeitung. “Since its introduction and until after the world financial crisis we were among the last in terms of economic growth in Europe – together with Italy. In terms of GDP per capita Germany has dropped from the 4th to the 10th place in the EU. The real income has shrunk by 7.4% in Germany since 2000 – so Germans are able to afford less for their work. The export quota into the euro area has gone back from 46% to 41%.” Also Berger thinks the euro is not the reason for the strong position of German companies. The reason for their competitiveness is that their product mix is tailor-made to the needs of emerging countries and that in real terms the German euro has devalued by 21% towards non euro countries and by 18% in relationship with the euro area. “German products and services have become better and nevertheless cheaper”, Berger argues.

Mike Mish Shedlock reports Sovereign Debt Yields and Spreads Soar Everywhere: Belgium, France, Italy, Spain, Ireland; Major Problem List is Every Country but Germany; Belgium Spread Inverts Significantly.  Commenting on the Reuters report “We will not vote for any new measures,” Samaras told a meeting of his own MPs, Mr. Shedlock says Good luck with that. And good luck with Spanish unemployment at 22% with new austerity measures coming. In Italy, there are more people on retirement than there are workers. Good luck with a program to make it easier to fire people. It will be impossible to fire workers and maintain pension benefits. And what happens to spending and GDP when benefits are reduced and people are fired? What happens to the bond market if that does not happen? These are the questions and scenarios analysts should be asking and discussing instead of making wooden forecasts of slight recessions.

Christoph Dreier of WSWS writes Newly Installed Greek Government Pledges Continued  Cuts
Samaras also said ND would not vote for any new austerity plans required by international lenders in exchange for further loans to Athens. He said, “Some say that to unblock the [€8 billion] installment, we need to sign a joint statement with all the parties that support this new transitional government. But I will not sign such statements.” ND apparently hopes that PASOK will continue to take full responsibility for imposing social cuts on the working class, thus shielding ND from popular discontent with right-wing, anti-worker policies. ND has taken over the ministries of defense and foreign affairs, which are less directly targeted for budget cuts.

Hat Tip to Between The Hedges for the following news items

Bloomberg reports Italian Yields Reach 7%, French Debt Slides. Italian bonds led a slump in euro- area government debt as investors abandoned all but the safest assets amid rising borrowing costs at auctions and concern the region’s financial woes are deepening. “It’s a confidence crisis,” said Elwin de Groot, a senior market economist at Rabobank Nederland in Utrecht, Netherlands. “Investors have no confidence that the euro zone can solve its problems. They will look for the most safe place they can store their money, which is Germany. Everything else is suffering.” German two-year rates dropped below 0.3 percent for the first time, while the extra yield investors demand to hold 10- year bonds from France, Belgium, Spain and Austria instead of bunds all climbed to euro-era records. Italy’s 10-year yield rose above 7 percent as prime minister-in-waiting Mario Monti wrapped up talks on forming a new government. Spain and Belgium sold less than the maximum target of bills at auctions today as financing costs increased. Italy’s 10-year yield climbed 37 basis points, or 0.37 percentage point, to 7.07 percent at 5 p.m. in London. It rose to a euro-era record 7.48 percent on Nov. 9. The 4.75 percent bond due September 2021 slid 2.285, or 22.85 euros per 1,000- euro face amount ($1,351), to 84.57. The spread investors demand to hold 10-year French debt instead of German bunds widened 26 basis points, the most since the euro started in 1999, based on closing-market rates, to 190 basis points. It touched 191 basis points, also the most since the common currency was introduced. The yield on the 10-year bund fell one basis point to 1.77 percent, less than half France’s 3.67 percent rate.

Bloomberg reports Euro Declines to Lowest in Five Weeks Before Spanish, French Debt Auctions. The euro declined to a five-week low against the dollar and the yen as Spain and France prepare to sell securities tomorrow after Italy led a slump in euro-area debt, signaling Europe’s debt crisis is spreading. The 17-nation currency weakened for a third day after the extra yield investors demand to hold bonds from France, Belgium, Spain and Austria instead of German bunds climbed to euro-era records. The dollar rose against 15 of its 16 most-traded peers as investors sought safer assets. China’s yuan declined after the People’s Bank of China set its daily reference rate weaker for a second day, suggesting the nation won’t bow to a U.S. call for faster currency appreciation. “France, Spain, they’re all seeing yields move out, so you get the impression that we’re at some sort of juncture where banks, investors and corporations are starting to prepare for the worst-case outcome,” said Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney. “The euro will remain under pressure.” The euro fell 0.6 percent to $1.3456 as of 1:21 p.m. Tokyo time from the close in New York yesterday, after touching $1.3437, the weakest level since Oct. 10. The shared currency declined 0.6 percent to 103.69 yen after dropping to as low as 103.59 yen, also the least since Oct. 10. Japan’s currency was little changed from yesterday at 77.06 versus the dollar. Spain is scheduled to sell as much as 4 billion euros ($5.4 billion) of bonds due 2022, while France will auction notes maturing from 2013 to 2016 tomorrow. Spain and Belgium sold less than the maximum target of bills at auctions yesterday as financing costs increased. Ten-year Spanish yields jumped 23 basis points to 6.34 percent. The extra yield over similar-tenor bunds surged to 455 basis points. The spread investors demand to hold 10-year French debt instead of bunds was 190 basis points. The euro extended declines on speculation so-called stop- loss orders around the $1.35 level were activated, according to Satoshi Okagawa, a senior global markets analyst in Singapore at Sumitomo Mitsui Banking Corp., a unit of Japan’s second largest banking group by market value. “There seems to be risk-off sentiment, given worries over France, Italy and Spain,” said Okagawa. “Selling of the euro looks strong, and stop-losses in euro-dollar were probably triggered.”

Bloomberg reports No Stopping Technocrats Rule as Debt Crisis Brings Down Europe Governments. The European debt crisis has toppled four elected governments with the last two, in Greece and Italy, falling last week without a shove from voters. The appointment of prime ministers in Athens and Rome to push through unpopular austerity measures echoes efforts in the past five decades by European leaders to control policy-making when democratic means fall short. “The euro zone would never have been created if voters had been given a say,” Fredrik Erixon, head of the European Centre for International Political Economy in Brussels, said in a telephone interview. “It’s an elite project but that doesn’t mean it’s a bad project.” Greek Prime Minister Lucas Papademos, a former central banker, and Italian Prime Minister-designate Mario Monti, an academic and former European commissioner, were chosen by each nation’s president after their elected predecessors were abandoned by political allies, making them unable to pass legislation demanded by the other members of the euro region. “They’re there not just because they’re technocrats, but because it was easier to ask independent personalities to construct political consensus,” European Commission President Jose Barroso said Nov. 14 in Paris. “The level of hostility between different political forces is enormous.” Progress toward building — and now saving — the 27-nation union has rested largely with the ruling elites. Decisions are taken at meetings of ministers from national governments, and the commission, its executive arm, is appointed by those governments.

Bloomberg reports Feldstein Poised to Secure Victory Over Euro as Trichet Departs a Crisis. Harvard University Professor Martin Feldstein, who predicted in 1998 that the euro would prove an “economic liability,” said the single currency will survive for now, even as he bets Greece quits within a year. “With the exception of Greece leaving, I don’t think the whole thing is going to fall apart anytime soon,” Feldstein said in a Nov. 14 telephone interview. “The Greek situation is impossible.” Feldstein’s views on Europe carry increased weight as the region’s two-year debt crisis validates his warnings in the 1990s that uniting so many disparate nations under the same exchange and interest rates could backfire. While he said he doesn’t like to “use the word vindicate,” Feldstein, who turns 72 next week, said he recently reviewed his euro-skeptic articles and “thought they were pretty much on target, even though they were written 20 years ago.” His conclusions often left him at odds with now-former European Central Bank President Jean-Claude Trichet, who consistently rejected as “absurd” any speculation the euro area would shrink and warned that a member shouldn’t be allowed to default.

Bloomberg reports Hong Kong Credit Growth Risks Bad Loans Amid EU Crisis, IMF Says. Hong Kong’s “rapid” credit growth has increased the risk that bank made bad loans as the city faces a potential recession if the European crisis deepens, the IMF said. “Credit has been growing at an extraordinary pace, particularly for loans in foreign currency,” the IMF said in a report. Such growth may “lead to a worsening of average credit quality” and create “strains on bank funding,” it said.

FT reports Financial Times Sovereign CDS Soar For Bid Eurozone Countries. The cost to insure eurozone debt against default soared to record highs for most of the leading economies amid growing fears over the single currency. The jump in credit default swap prices on Tuesday came as the extra cost to swap euros for dollars jumped to highs last seen in December 2008 when many markets had seized up in the wake of the collapse of Lehman Brothers. The cost to insure the debt of Italy, Spain, France, Belgium, Austria and the Netherlands hit all-time highs since the sovereign CDS markets saw their first trades around 2002, according to Bloomberg.

The Telegraph reports Paul Krugman is Rewriting History on Eurzone Decline. There is only one path Europe can take if it is to avoid economic meltdown: dramatic cuts in public spending, the dismantling of its welfare states, the removal of crippling taxes and business regulations, the downsizing of the public sector, and a return to self determination for EU member states. It is Europe’s lack of fiscal responsibility, economic freedom, and national sovereignty, that are at the heart of the current economic crisis, and the United States must do all it can to avoid European-style decline.

The Telegraph reports Italian Unity Fails to Stem Market Fears Over Eurozone. Economists at Schroders warned that Rome’s borrowing costs were “unsustainable” even with the help of the European Central Bank (ECB). “With no solution to Italy’s problems in sight… we are heading for an almighty crash,” they said in a note.

Economist Shaun Richards writes Greece Has Regressed Six Years Or More … Can The EU Remain A Union? We are left with a Greek recession that has been revised deeper again and let me give it a proper title as it is clearly no longer a recession it is a depression. It was back on August 22nd that I first pointed out that Greece had moved into an economic depression. Back on August 12th I pointed out this. At constant prices so in real terms Greece’s economic output has gone back to the levels of the spring of 2006. In essence she has gone back five years. Sadly she has now gone back six years or more.

A Consequence of this: missed fiscal deficit targets. I took a look at the Greek medium term financial strategy from the summer and spotted that it was forecasting economic growth of -3.5% in 2011 and a fiscal deficit of 7.5% of GDP. So it was no surprise when I read that the Greek Prime Minister Lucas Papademos said that it would now be 9% last night and regular readers will be aware that I have said that this was likely for some time. And as the Greek economy continues to contract rapidly we have to question the forecasts for 2012 (6.5%) and 2013 (4.8%) too.

The current Greek government bond yields have exploded higher. The story here is one that shows economic collapse. Greece’s one year government bond yield has gone above 260% today and her two year yield has risen to 114%. The benchmark ten-year is now at 28.8% which is another high in this crisis. Apart from the effect of all this on Greece I have two main thoughts for you.
1. How can you possibly have a currency union when one has a benchmark bond yield of 28.8% and another has one of 1.83% making a gap or spread of 27%! Hands up those who think that this is sustainable?
2. We see here that the template for European Central Bank intervention has failed utterly in its objectives. Rather than raising bond prices and reducing bond yields the effect after a year and a half has been the reverse. And a reverse on the scale of General Custer at Little Big Horn in my opinion.

If we look at the Greek bond market the amount of official intervention has been enormous. It is often forgotten that Greek (and other) banks were encouraged to pile into the market by the terms available for getting liquidity from the European Central Bank so that there has been indirect as well as direct purchases. Also some of the market will be in what you might call core holdings at insurance and pension funds where they are matched against liabilities such as annuities. So if you are left with the impression that there may not be a lot more left to buy there is a little exaggeration but the principle holds, but the market has still collapsed.

Now project this onto Italy with her 1.9 trillion Euros of government debt and I hope that you get why I do not feel that ECB intervention in this market can ever be the panacea that I see many are claiming. You might buy a trillion Euros worth and if the Greek experience is any guide you would still fail to achieve your objectives and you would be losing hundreds of billions of Euros. Or rather you would be losing hundreds of billions of Euro zone taxpayers money. Oh and you may have to pay for the reconstruction of the German Bundesbank which I suspect might enact in reality what Charles Dickens suggested in fiction, spontaneous combustion! If we look at the Greek experience we see the following, indirect purchases of government debt by banks (check) and direct purchases by a central bank (check).

Agence France-Presse reports Peugeot Citroen To Cut 4,000 French Jobs

Wall Street Journal reports Citi May Slash 3.000 Jobs. Citigroup Inc. is preparing to eliminate 900 jobs in its securities and banking division, or about 5% of the unit’s world-wide staff, as turmoil in the equity and debt markets erodes revenue, people familiar with the situation said.