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.