Archive for December, 2011

It’s No Mistake … A United States Of Europe Is Inevitable

December 30, 2011

In Spiegel interview, German Constitutional Court Judge Udo Di Fabio says It’s a Mistake To Pursue a United States of Europe. “I think it is a mistake to pursue a United States of Europe model. There is no ideal solution on earth, nor is there one that dates back to the 19th century. The supposed universal remedy of a United States of Europe could cause even greater conflicts than the current union with its many weights and counterweights that allow for a balance.”

In all respect to the German Constitutional Court official, an inquiring mind asks, can something that has been ordained by God, be called a mistake?

John, God’s apostle, meaning sent one, recorded a dream that was given by angels for one’s consideration. The Revelation of Jesus Christ presents those things which must shortly come to pass, Revelation 1:1, meaning that once they start to occur, they fall rapidly in place, like dominoes falling one on top of another

God is sending the First Horseman of the Apocalypse, Revelation 6:1-2, to replace all current economic, banking and political rule with authoritarian rule, as evidenced by the appointment of emergency financial managers in Michigan by Public Act 4, and by the appointment of technocratic governors in the EU’s periphery.  The Sovereign Lord, Psalms 2:4-5, is passing the baton of sovereign authority from nation states to the EU ECB and IMF Troika.

Bible prophecy of Revelation 13:1-4, the Beast Regime of Neoauthoritarianism is seen rising up out of the profligate Mediterranean Sea countries of Greece and Italy.  This monster of statism 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.  It is being called forth by the 1974 Clarion Call of the Club of Rome for regional global governance, as a means of providing security and stability, in a world of chaos, that is coming from derisking and deleveraging out the Banker Regime of Neoliberalism.

Throughout history, God has provided a series of kings and a progression of kingdoms to rule mankind, Daniel 2:31-45.  Freedom and Free Enterprise, the Libertarian dream, has come only recently and existed for a brief period, that is from the end of the Revolution War to the beginning of the Civil War.  Fate appointed kings have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority.  And fate is pushing political and economic power of the UK and the US, the two iron legs of global hegemony, into the hands of ten kings, who will eventually come to rule, each in his own regional power base.  With this distribution of power to regions, we see the rising of the Ten Toed Kingdom of regional global governance, where rule in the ten toes will be mired in the clay of democracy and the iron of diktat.  The coming President of the EU will be one knowledgeable with the scheme of framework agreements.

As credit instruments break down, not by any human action, but rather by fate, the curtains will open, and a most credible leader, The Sovereign, Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will step onto the world’s stage.  In a credit exhausted and currency devalued world, the people will come to place their faith in the word, will, and way of these two; they will give their full allegiance to their diktat Revelation 13:3-4.  Eventually Europe’s Lord, will lord it over all other lords, whether they be in the UK or in the US, as he rises to rule the world in a one world government, and as his partner establishes a one world currency, and Global Seigniorage, Revelation 13:17-18.

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Should Lords Who Live In Glass Parliaments Throw Stones?

December 29, 2011

I respectfully take issue with a number of points presented by John Redwood, Member of Parliament for Wokingham since 1987, who writes The Euro Accelerates The West’s Decline.

“The rising strength of China and Brazil, of India and the Civets, is based on hard work and free enterprise.” … Not true, the rising strength of China is based on a low currency value, and the use of state run corporations paying low wages to export to the US and countries globally, and by a willingness to buy GSE Debt and US Treasury Debt. The success of Brazil has been achieved through issuing consumer credit, and by participation in hot money flows in its banks farming and mining industries. Brazil successes, if they be called that, are the result of carry trade investing. In both cases, the City of London’s black hole investing machine, has assisted oligarchs from around the world to secretly invest in every ponzi credit scheme that has existed. And the City of London has assisted in hiding away profits in Caribbean pirate cove islands.

I raise a question, should lords who live in glass parliaments throw stones? The Honorable John Redwood continues. “The top down Euro scheme, little wanted by the German and French people, let alone the British, is doing untold damage to economic prospects. It is proving to be the ultimate ill judged intervention by the political classes, the final expression of governing power that is damaging families, businesses and job prospects.”

Can something that has been ordained by God be called ill judged intervention.  God is sending the First Horseman of the Apocalypse, Revelation 6:1-2, to replace all current political and banking rule with the rule of authoritarians, as evidenced by the appointment of emergency financial managers in Michigan by Public Act 4, and by the appointment of technocratic governors in the EU’s periphery. The Sovereign Lord, Psalms 2:4-5, is passing the baton of sovereign authority from nation states to the EU ECB and IMF Troika.

God’s apostle, meaning sent one, recorded a dream for one’s consideration, The Revelation of Jesus Christ” and presented “those things which must shortly come to pass”, meaning that once they start to occur, they fall rapidly in place, like dominoes falling one on top of another.  In Revelation 13:1-4, the Beast Regime of Neoauthoritarianism is seen rising up out of the profligate Mediterranean Sea countries of Greece and Italy. This monster of statism 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.  It is being called forth by the 1974 Clarion Call of the Club of Rome for regional global governance, as a means of providing security and stability, in a world of chaos, that is coming from derisking and deleveraging out the Banker Regime of Neoliberalism.

Throughout history, God has provided a series of kings and a progression of kingdoms to rule mankind, Daniel 2:31-45, Freedom and Free Enterprise, the Libertarian dream, has come only recently and existed for a brief period, that is from the end of the Revolution War to the beginning of the Civil War. Fate appointed kings have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority. And fate is pushing political and economic power of the UK and the US, the two iron legs of global hegemony, into the hands of ten kings, who will eventually come to rule, each in his own regional power base. With this distribution of power to regions, we see the rising of the Ten Toed Kingdom of regional global governance, where rule in the ten toes will be mired in the clay of democracy and the iron of diktat. The coming President of the EU will be one knowledgeable with the scheme of framework agreements.

As credit instruments break down, not by any human action, but rather by fate, the curtains will open, and a most credible leader, The Sovereign, Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will step onto the world’s stage. In a credit exhausted and currency devalued world, the people will come to place their faith in the word, will, and way of these two; they will give their full allegiance to their diktat Revelation 13:3-4. Eventually Europe’s Lord, will lord it over all other lords, whether they be in the UK or in the US, as he rises to rule the world in a one world government and as his partner establishes a one world currency and Global Seigniorage, Revelation 13:17-18.

Asia Emerges As A Region Of Global Governance …. Oil Trades Lower Turning Currencies, Commodities, And Stocks Lower .… S&P Enters An Elliott Wave 3 of 3 Down .… Euro Falls Below 130 …. The CHF Becomes A Reserve Currency

December 29, 2011

Report on currencies and regional global governance as of December 28, 2011

1) …. Introduction
Asia emerged today December 28, 2011, as a region of global governance as Japan entered into a yuan based bilateral trade agreement with China, complimenting the existing Shanghai ASEAN free trade agreement. Of note, Japan took the lead in global factory production decline. Oil traded lower which turned currencies, commodities, and stocks lower. The S&P entered into an Elliott Wave 3 of 3 decline.

2) … Oil traded lower turning currencies, commodities, and stocks lower.
Oil, USO, is a risk trade, and today it turned strongly lower, turning the world major currencies, DBV, and emerging market currencies, CEW, lower.  Oil like gold is both a commodity and a currency. Gold has turned down, with the other currencies. Today it was oil’s turn to participate in currency deflation.

The British Pound Sterling, The South African Rand, The Euro, The Swiss Franc, The Brazilian Real and the Australian Dollar, were the currency loss leaders of the day, which stimulated the US Dollar, $USD, UUP higher. The Euro, FXE, fell to 128.9.  Falling currencies stimulated debt deflation in world government bonds, BWX. Today’s falling currencies, delevered oil, which in turn sent investors derisking out of chemical manufacturers seen in this Finviz Screener, DD, ALB, ASH, WLK, HUN, CYT, NEU, RPM.

The currency demand curve, the ratio of small cap pure value shares, RZV, relative to small cap pure growth shares, RZG, … RZV:RZG … traded lower, evidencing that competitive currency devaluation is underway again.  A.Trader.Mind relates The Euro Is Pulling Down All Rrisk Currencies

Copper miners, COPX, silver miners, SIL, and Aluminum producers, ALUM, plummeted. Small cap gold mining shares, GDXJ, fell more than their larger peers, GDX. A commodity premium, and a currency premium washed out off copper shares. Stockpiled copper in China and in New Orleans has been part of a ponzi lending system in China; and today a failing of the seigniorage of credit, that is the moneyness of credit, turned copper mining stocks, such as Southern Peru Copper, SCCO, strongly lower.  Risk trade and carry trade leverage washed out rare earth, REMX, miner Molycorp, MCP.  Iron ore producer, Cliffs Natural Resources, CLF, traded strongly lower today.  Coal Miners, KOL, and Uranium Miners, URA, traded lower as investors pursued risk avoidance.

Silver is continuing to prove to be a risk trade and not a safe have trade, as it was the commodity, DBC, USCI, loss leader.  Gold, GLD, traded strongly lower. Copper, JJC, Lead, LD,  Nickle, JJN, led base metals, DBB, lower. Timber, CUT, was a strong commodity faller. The Ron Paul portfolio of silver mining companies, seen in this Finviz Screener, SIL, HL, PAAS, CDE, SSRI, MVG, got derisked, as Silver was deleveraged by falling risk currencies today.   

M3 Financial Analysis presents a chart of commodities, and the Euro. An inquiring mind asks will a continuing falling Euro, FXE, pull commodities, DBC, lower?  And an inquiring mind asks will continuing falling Commodity Currencies, CCX, pull Commodities, DBC, lower? The chart of Commodities relative to Commodity Currencies, …  DBC:CCX …  shows an Elliott Wave 2 up, and ready to enter an Elliott Wave 3 Down.

The leverage of stocks relative to commodities has reached another falling point. The chart of US Stocks, VTI, relative to US Commodities, USCI, … VTI:USCI … turned down today. And the chart of World Stocks, VT, relative to Commodities, DBC, … VT:DBC, also turned down today. The death of fiat money is deleveraging not only commodities but stocks as well. Global derisking and deleveraging is underway once again. And an inquiring mind asks, will political devolution get underway as well?  Will deleveraging mean that investment capital will be replaced by political capital? What will be the nature and way of that political capital?

An inquiring mind ask has the maximum safe haven value of utilities, XLU, seen in this Finviz Screener been achieved? And an inquiring mind asks likewise of health care providers, IHF, seen in this Finviz Screener, the Health Care REITS seen in this Finviz Screener, the energy partnerships, AMJ, seen in this Finviz Screener, the synthetics producers seen in this Finviz Screener, the automobile dealers seen in this Finviz Screener, the tobacco companies seen in this Finviz Screener, the business service companies seen in this Finviz Screener, the education companies seen in this Finviz Screener, and the apparel retailers seen in this Finviz Screener?  All fiat safe haven investments have run their course, as the death of fiat money, that is, the death of fiat currencies is underway.  

World stocks, ACWI, VSS, EWX, EBB, EEM, EMT, DIA, QTEC, QQQQ, IYM, IYT, IYJ, IWO, JKH, and even the safe have dividend stocks, DVY, DTN, traded lower on debt deflation, that is currency deflation.  The Russell 2000, IWM, safe haven trade is starting to wain as is seen in the chart of the Russell 20000 relative to Banks, KRE, … IWM:KRE   

The strong fall lower in Turkey, TUR, Russia, RSX, and Argentina, ARGT, reflects significant carry trade unwinding.  Other countries turning lower included RSX, EWZ, EWA, EWG, EWI EWP, INP
YAO, CAF, EWN, EWD, EWO, VGK, EZA, VGK, EWJ, EWT, EPOL, VTI.

Sectors falling lower included, TAN, WCAT, OIH, IEZ, XLE, PSCE, IYC, XSD, SMH, SOXX, XLV, XRT, IBB, WOOD, PAGG, XLU, IYZ, XTL, IHF, PXN XLV, XLP, IHE, AMJ, SEA, FAA.

Industrials traded lower. China Industrials, CHII, Steel, SLX, and Metal Manufacturing shares, XME, NUE, STLD, RS, AKS, SMS traded strongly lower. Small tools, LECO, SNA, SSD, SWK, traded lower. Industrials, XLI, and small cap industrials, PSCI, WTS, HEES, PH, NR, EMR, ROLL, AIT, BRC, CLC, DCI, LL, PSCI, FAST, traded lower. Industrial equipment manufacturers ETN, ROK, AME, ENS, FELE, TNB, turned lower. Ford, F, General Motors, GM, and Caterpillar, CAT, traded lower.

Technology shares, MTK, SKYY, IGN, FONE, IGV, XSD, PSCT, traded lower.

The small cap scientific instrument leader ZIGO, networking, FIO, and the small cap industrial electrical equipment manufacturer, AMRC, were strong fallers of the day.

Real estate, IYR, Small Cap Real Estate, ROOF, and Residential REITS, REZ, turned lower.

The relative strong fall in home builder, XHB, ITB, suggests that the risk trade, that is the dollar rally, in US Homebuilders is over. Christian Science Monitor reports New home sales near all-time low. NPR reports 2011 shaping up as worst year ever for home sales

Avoidance of the risk trade, turned Junk Bonds, JNK, lower. The Morgan Stanley Cyclical Index, ^CYC, trade lower. Debased currencies are unable to support risk and growth.

Bespoke Investment Group reports S&P 500 10-Day A/D Line Pauses Just Below Overbought Levels. This is as good as it is going to get. The S&P, SPY, is now turning lower as S&P Materials, MXI, and S&P Global Financials, IXG, and as the equal weight ETFs, RSP, RYF, RYE, RCD, RHS, RYH, RGI, RYT, RYU, RYM, show downturn. It’s hasta la vista baby to profitable investing in the S&P. Global currency deflation means unprofitable stock investing. The chart of the S&P, $SPX, shows that it is now in an Elliott Wave 3 of 3 Decline from its July 2011 high. The Elliott Wave 3 of 3 downs are the most destructive economic waves known to mankind, they for all practical purposes wipe out all wealth that was formerly built up on the 5 o5 wave up. This 3 of 3 wave down is best seen in the chart of the equally weighted RSP, which may go down in the text books as one of the most important investment charts of all time. Corey Rosenbloom in chart article shows today’s failure to rise higher with close below resistance of $1,260 which is the just under the middle of a broadening top pattern. Street Authority relates that when you see the broadening top, the market will eventually drop.      

Eddy Elfenbein presents the The S&P and Sector P/E Ratios. I comment that Telecom, XTL, and Utilities, XLU, have been prized safe haven investments because of their dividend payouts. Staples, XLP, Discretionary, IYC, and Health Care, XLV, prized for stability and outlook. Energy, XLE, has been shunned because of its poor dividend payouts and Materials, XLB, and Financials, XLF, shunned because of risk.  Telecom dividend payers T, VZ, Pharmaceutical dividend payers, PFE, MRK, Utility, dividend payers, DTE, NEE, all turned lower today.     

Banks in Germany, DB, South Korea, WF, SHG, India, IBN, United Kingdom, RBS, IRE Australia, WBK, Argentina, BBVA, BMA, Brazil, BSBR, BBVA, BBD,  Europe, EUFN, Japan, NMR, and the Too Big To Fail Banks, RWW, BAC, C, RF, STI, were the World Financial, IXG, loss leaders of the day. Bank shares KBE, KRE, IAT, XLF, QABA, turned lower.  Investment Bankers, KCE, turned strongly lower. Revenue small caps, RWJ, such as Rent A Center, RCII, and Nicholas Financial, NICK, traded lower. Credit firms traded lower, AXP, NNI, COF, MA, V, AMT, ADS, CATM, GPN, AEA.

Gonzola Lira questions A run on the global banking system? When is there ever a panic? When is there ever a run on a financial system? Answer: When enough participants no longer trust the system. It is the classic definition of a tipping point. It’s not that all of the participants lose faith in the system or institution. It’s not even when most of the participants lose faith: Rather, it’s when a mere some of the participants decide they no longer trust the system that a run is triggered.  And though this is completely subjective on my part, backed by no statistics except scattered anecdotal evidence, but it seems to me that MF Global has shoved us a lot closer to this theoretical run on the system.

“The MF Global scandal has made it clear that the integrity of the system has disappeared,” said a good friend of mine, Tuur Demeester, who runs Macrotrends, a Dutch-language newsletter out of Brugge. “The banks are insolvent, the governments are insolvent, and all that’s left is for the people to realize what’s going on, and that will start a panic.” there will be such a run on the system: It’s only a matter of time. In fact, the handling of the MF Global affair has sped up the time frame for this run on the system, because the forward edge players, such as Demeester, myself, and my other acquaintances who understand the implications of the bankruptcy, realize that the regulators will side with the banksters, and not the ordinary investors: So we are preparing accordingly. …  I’ve consistently recommended that one buy and take possession of gold bullion. I recommend dollar cost averaging of gold at this level. A buy and hold strategy in gold is the only investment strategy that will preserve wealth.  

Coordinated Central Bank provision of Dollar FX Swaps and Mario Draghi’s provision of the LTRO facility have prevented the world’s financial markets from seizing up, but they have now commenced the loss of America’s debt sovereignty and today started a delveraging out of stocks.  

Last week, Leveraged Buyouts, PSP, Junk Bonds, JNK, Municipal Bonds, MUB, California Municipal Bonds, CMF, Michigan Municipal Bonds MIW, rose. The Flattner ETF, FLAT, turned lower and the Steepner ETF, STPP, made what is a likely plummeting bottom, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, 2%, signaling the beginning of the end of US debt sovereignty and US Hegemony, that has accompanied the Inflationism, that came with the Banker Regime of Neoliberalism. The last remnant of the Milton Friedman Free To Choose Age floating currency regime of leverage, is now history, as the maximum safehaven value of US Treasuries appears to have been achieved. With the fall lower in US Government Bonds, the failure of US Debt Sovereignty has commenced.

A sell signal developed in US Treasuries and in corporate bonds: the longer out debt LTPZ, TMF, ZROZ, EDV, TLT, BLV, all turned lower more than their shorter duration counterparts. Mortgage Backed Bonds, MBB, turned down this week. The 300% bear of the 30 Year US Treasuries, TMV, has turned up. And the Zeroes, ZROZ, has turned down. The Finviz chart of Bonds, BND, LAG, AGG, all showed topping out characteristics this week, signaling that Peak Credit has been achieved. Deflationism has come to bonds. There are no more safe have investments other than gold, GLD, which closed lower at 151 today and cash price of $1,558. Risk and competitive currency deflation, has turned the spigot of investment liquidity completely off, resulting in even the go-go restaurants McDonalds, MCD, and Starbucks, SBUX, trading lower.  

3) … Regional cooperation and diktat are rising to replace credit and financial deregulation as the dynamos of economic and political organization.
Bloomberg reports Deflation’s Grip Returns in Japan as Factory Production Decline Japan’s rebound from the March earthquake and tsunami sputtered in November as production and retail sales tumbled, deepening the nation’s return to the deflation that first took hold a decade ago. Industrial output slumped 2.6 percent from October, more than all the forecasts in a Bloomberg News survey of 29 economists, a government report showed today in Tokyo. Retail sales slid 2.1 percent. Consumer prices excluding fresh food fell 0.2 percent from a year earlier after a 0.1 percent decline the previous month. The weakening economy, hurt by Europe’s debt crisis and plans by companies from Panasonic Corp. to Nissan Motor Co. to shift production abroad, may undermine Prime Minister Yoshihiko Noda’s plan to raise taxes and cut the world’s largest debt burden. Noda’s party today is scheduled to propose boosting the sales levy, which polls show a majority of the public oppose. “Fundamentally, Japan’s economy is on a downward slope,” said Yoshimasa Maruyama, chief economist at Itochu Corp. “Exports are falling and negatively impacting Japan’s economy due to the global slowdown.”

The Washington Post reports Japan And China Announce Yuan Based Regional Trade Agreement  …   and in the process becomes a reserve currency.  During a visit to Beijing by Japanese Prime Minister Yoshihiko Noda, the two governments said in a surprise announcement Sunday they will encourage use of their own currencies in bilateral trade, which now is conducted mostly in U.S. dollars. They also agreed to support the sale of bonds denominated in China’s yuan by Japanese companies in Tokyo and foreign markets and by the state-owned Japan Bank of International Cooperation in mainland China’s markets, which are closed to most foreign investors.

Nature economist and historian Elaine Meinel Supkis relates China And Japan Form Trade And Currency Union As I explained a year ago, China now is Japan’s #1 trade partner. The US has been dethroned. This leads, INEVITABLY, to many severe shifts in trade directions, the relative power of empires and other things that will see the US become a #2 power in the world, not the Ruler of the Seven Seas. As I have explained over and over again, when we destroyed our own sovereign merchant marine, we doomed ourselves to future failure.

We imagined if we spent trillions on having an immense military navy, the loss of the merchant marine wouldn’t matter. This was utterly childish and anyone reading history could see the end results, yet all of our ‘historians’ like the fraud, Gingrich, hired by our government to advise them proved to be a madras of maniacs, not historians looking coldly at that bloody bitch, History.

The present fall in world trade is due entirely to China raising the bank rate reserve ratios and limiting foreign investment in China. This squeezed Japan mercilessly and this was deliberate since Japan was two timing China, talking trade when in Beijing and then talking war when in DC. The Japanese always joined US attacks on China’s huge FOREX holdings while holding nearly just enough to keep the dollar strong against the yen so they could ravage our domestic markets. There is no turning back this particular wheel of history: it will grind forwards no matter what. The US had its chance to dominate Asia and blew it with the Vietnam War. Since then, we have been treading water. We let Japan’s shipping industry destroy our own industry so that NO American ships EVER went to Japanese harbors while a huge flotilla of Japanese merchant ships came pouring into all our ports, for example. China can buy whatever it wants since it has money! Lots of money in all currencies. Its FOREX holdings are immense and not in dollars but in many currencies and this was deliberate, too. China can buy whatever it wants since it has money! Lots of money in all currencies. Its FOREX holdings are immense and not in dollars but in many currencies and this was deliberate, too.

Tyler Durden writes in Currency Wars Update The currency war is won by the government that can debase its currency at the fastest rate while still boosting employment creation and manufacturing capacity in its domestic economy. This is why China’s currency policy is scorned by the West, they have managed to maintain a weak currency while becoming an economic powerhouse. Other countries feel China has achieved this at the expense of their own economies. While all governments are simultaneously in the process of debasing currencies against one another by increasing respective money supplies, they cannot debase the value of real assets as they do not and cannot control and manipulate its supply. As a result, the global economy is bound to see continued increases of commodity prices across the board in nearly each and every currency denomination. It is set to result in a global price inflationary environment if the currency wars continue, which we expect will. Monetary metals such as gold and silver stand to benefit tremendously as the currency wars continue.

I relate that China raised the bank rate reserve ratios at exactly the same time that the stock market expansion of QE1 was ending and needed a second monetary expansion with QE2. The combination of the exhaustion of QE1, and the raising of the bank rate reserve ratios, turned China Industrials, CHII, lower, in October and November of 2010, as is seen in this Yahoo Finance Chart of CHII, KOL, ACWI, SLX. Then Coal, KOL, Steel, SLX, led world stocks, ACWI, and China Industrials, CHII,  further lower when investors became aware that a debt union had formed in the EU, and as investors became aware that a ponzi financing scheme was being used in China based upon stockpiles of copper as collateral, which propelled China Minerals, CHIM, China Financials, CHIX, and China Industrials, even more strongly lower.

Murry Rothbard reported that the fiat monetary system began on August 15, 1971, when the US government suspended the convertibility of the US dollar to gold. The death of fiat money, that is, the death of fiat currencies, began in August 2011, as the US Dollar, $USD, began to rise from 73.50. This was immediately after investors sold out of stocks, ACWI, in July 2011, when they became aware that a debt union had formed in the Euro zone. Then in August, they sold heavily again, when Angela Merkel and Nicolas Sarkozy called for a true European economic government, and when Herman van Rompuy called for a sovereignty union.

Failed currencies reflect sovereign insolvency and banking insolvency. Failed sovereigns and credit depleted financial institutions are unable to support growth and do not provide security and stability.
A paradigm shift is occuring in globalism. The former focus of globalism was for banking and corporate profit; but as nations loose their debt sovereignty and banks are nationalized, the focus of globalism will increasingly be on coordinated governance for regional stability and security.  

It was Milton Friedman who provided the Free To Choose script of floating currencies in 1974. But now his Banker Regime of Neoliberalism is crumbling. The economic, political, and financial tectonic plates have shifted an an authoritarian tsunami is on the way.

The word dynamo comes from Greek dynamis, means power, and carries the connotation of an electrical generator.

Credit and financial deregulation were the dynamos of the Milton Friedman Free To Choose floating currency and Banker Regime. Now diktat is the dynamo of the Beast Regime of Neoauthoritarianism.

The seigniorage of diktat is rising to replace the seigniorage of fiat money, as the political capital of diktat is rising out of the ashes of the Milton Friedman Free To Choose floating currency known as Neoliberalism.

The economic capital that underwrote democracy is history. Choice is now a epitaph on the tombstone of a prosperous bygone era. The cherished Libertarian concepts of Freedom and Free Enterprise are mirages on the Neoauthoritarian Desert of the Real.  

God is sending the First Horseman of the Apocalypse, Revelation 6:1-2, to replace all current political and banking rule with the rule of authoritarians, as evidenced by the appointment of emergency financial managers in Michigan by Public Act 4, and by the appointment of technocratic governors in the EU’s periphery. The Sovereign Lord, Psalms 2:4-5, is passing the baton of sovereign authority from nation states to the EU ECB and IMF Troika. WSWS reports that Detroit Politicians Are Attempting To Outdo One Another In Eliminating Jobs in order to salvage the city of Detroit. Millionaire Detroit Mayor Bing proposed that Governor Snyder appoint him as an emergency manager to run the city. Bing has called for a 10 percent pay cut for city workers, 1,000 layoffs, and a “voluntary” reduction in benefits on the part of the city’s 22,000 retirees. The city council is calling for even more drastic attacks, including the layoff of 2,300 city workers. An inquiring mind asks, will martial law be declared to deal with a collapse of government in Detroit?

Yahoo Finance chart shows that the most toxic of debt, Michigan Municipal Bonds, MIW, has had a terrific run up since QE1, rising from 6.84 on Dec 8, 2008 to a high last week of 14.87, far exceeding the gain in Junk Bonds, JNK, and the toxic debt taken in by the US Treasury under QE1, which is approximated in the value of the mutual fund FAGIX.  US Central Bank monetary policies and a “flight to safety” out of the Euro, FXE, have boosted the most bad credit to a spectacular level. The debt debauchery practiced central bankers, has run up bad credit to grotesque levels. The monetization of debt by the world central banks is causing the death of fiat currencies, and a most painful deleveraging and derisking out stocks. A strong rise in municipal debt in the 1920s was a leading cause of the 1929 to 1932 depression. This time the depression is going to be so terrific, that a change of governance will be required.       

The Beast Regime of Neoauthoritarianism is rising up out of the Mediterranean Sea. This monster of statism 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, Revelation 13:1-4.

It is being called forth by the 1974 Clarion Call of the Club of Rome for regional global governance, as a means of providing security and stability, in a world of chaos, that is coming from derisking and deleveraging out the Banker Regime of Neoliberalism.

While Neoliberalism featured wildcat finance, a Doug Noland term, Neoauthoritarianism features wildcat governance, where leaders bite, rip and tear one another, and only the most fierce top dog comes out on top.  Markus Salzmann of WSWS reports Hungarian Government Passes Authoritarian New Laws

Throughout history, God has provided a series of kings and a progression of kingdoms to rule mankind, Daniel 2:31-45, Freedom and Free Enterprise, the Libertarian dream, has come only recently and existed for a brief period, that is from the end of the Revolution War to the beginning of the Civil War. Fate appointed kings have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority. And fate is pushing political and economic power of the UK and the US, the two iron legs of global hegemony, into the hands of ten kings, who will eventually come to rule, each in his own regional power base. With this distribution of power to regions, we see the rising of the Ten Toed Kingdom of regional global governance, where rule in the ten toes will be mired in the clay of democracy and the iron of diktat. The coming President of the EU will be one knowledgeable with the scheme of framework agreements. As credit instruments break down, not by any human action, but rather by fate, the curtains will open, and The Sovereign, Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will step onto the world’s stage. In a credit exhausted and currency devalued world, the people will come to place their faith in the word, will, and way of these two; they will give their full allegiance to their diktat Revelation 13:3-4.

Richard Fisher in speech on November 8, 2010, before the Dallas Fed, “The Federal Reserve will buy $110 billion a month in Treasuries, an amount that, annualized, represents the projected deficit of the federal government for next year. For the next eight months, the nation’s central bank will be monetizing the federal debt. This is risky business. We know that history is littered with the economic carcasses of nations that incorporated this as a regular central bank practice.”

The reproduction of bad money via credit easing policies, QE1, QE2, and now, coordinated central bank dollar FX Swaps, and the ECB’s LTRO, have goosed up stocks; but this constitutes global debt monetization, which eventually will destabilize all nations, and is resulting in an economic, and political coup de etat in Europe, whereby, a credible ruler and his banking partner, will rise to power and provide order out of chaos.  

Free market monetary policy has led to debasement of currencies and is giving rise to regional regional global governance. The failure of monetary credit will give rise to people placing trust in totalitarian rulers: totalitarian collectivism is the Eurozone’s future where public private partnerships work for the region’s security and stability.

An inquiring mind has Bernankeism and global central bank monetary policy reached the point of no return?  The financial crisis was a natural consequence of extravagant credit policies. Has the world reached another crisis point, that no central bank monetary policy can resolve? Has fiscal profligacy and central bank profligacy reached its toxic tipping point? Has central bank monetary policy only served to zombify banks? Will a sacrifice of sovereignty be required for such credit profligacy?

John Chapman writes in the Daily Capitalist Mises knew, and predicted, that a regime of fiat currencies everywhere in the world would not end well. He asserted at the time that this would lead to an era of unprecedented monetary instability, fiscal profligacy that guaranteed retrograde government policies, depressions, and inevitably, social conflict. Without a sound monetary system to facilitate trade and harmonious cooperation between countries, peaceful and progressive economic order disintegrates.

Mises Institute relates One of the most famous quotations of Austrian economist Ludwig von Mises is that “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.” In fact, the US economy is in a downward spiral of debt deflation despite the bold actions of the federal government and of the US Federal Reserve taken in response to the financial crisis that began in 2008 and the associated recession. Although the vicious circle of debt deflation is not widely recognized, precisely what von Mises described is happening before our eyes.

Neoliberalism was characterised by a Spirit of the Cat in the Hat, where bankers, national legislators and country presidents waived their magic wands and conjured up prosperity and electric growth. But Neoauthoritarianism is characterized by a Spirit of Wilding, where authoritarian leaders waive clubs and subject people to debt servitude.

Charles Hugh Smith, OfTwoMinds, writes of ZIRP addiction and its consequences in Travesty of a Mockery of a Sham, Phase II.  Keynes’ proposed to counter these worsening business cycle implosions with massive injections of Central State borrowing and spending. The atmosphere of fear as assets, credit and consumption all contracted would be replaced by a revival of “animal spirits” (the magical elixir of Capitalism), consumption would be stimulated by direct government spending on capital projects and welfare (fiscal stimulus), and banking credit would be restored via stimulative Central Bank credit expansion (monetary stimulus).

But Keynes failed to grasp what Marx had intuited: the ratchet effect. Once the Central State ramped up deficit spending and expansive credit, then the organic economy became dependent on that new level of Central State spending and credit expansion.

As I described in the Survival+ analysis, in effect the central State rescued Monopoly Capital by partnering with it. This results in a financial/State Plutocracy which “saves” the organic economy by taking control of its income streams, credit creation and financial assets.

That is the U.S. economy in a nutshell: a travesty of a mockery of a sham. The consumer became dependent on easy, cheap credit and home equity extraction to maintain his/her consumption. The student became dependent on easy, cheap credit to fund his/her increasingly costly college education. Monopoly capital became dependent on financial slight-of-hand, the debauchery of credit, fraudulent mispricing/masking of risk, stupendously leveraged bets on risk assets, etc. for its swollen profits. Politicians became dependent on unlimited borrowing and spending to keep the illusions of competence, sustainability and “growth” alive.

State and local governments became casinos, dependent on skimming the profits from asset bubbles and financial fraud. Where did New York City’s and New York State’s rising revenues come from? By playing dealer on Wall Street’s scam tables, skimming a steady share of the profits. Where did California’s bloated state revenues come from? The skimming of capital gains from the Ponzi-scheme real estate bubble.

The stock market rally circa 2003-2008 was merely Travesty of a Mockery of a Sham Phase I. In those glory years of the Central State/Cartel-Capital manipulation, it only required $2 of stimulus and credit expansion to blow $1 in asset bubble “growth.”

But alas, the growth was bogus, illusory, a simulacrum of organic growth, a house of credit cards and fraud that toppled when one card’s overleveraged precariousness was inadvertently exposed.

Now we are in Travesty of a Mockery of a Sham Phase II. As Marx had foreseen, the crises are ratcheting up: now it’s taking $7 of State/Plutocracy intervention to conjure up a pathetic $1 in
What Marx failed to foresee was the Central State’s rescue of Cartel-Capital via a partnership: the Central State is now as dependent on financial capital’s maximization of fraud and credit expansion as the Financial Plutocracy is dependent on the Central State to mask and enable its expansion of income and control.

The problem is, of course, that the system cannot support borrowing and spending $7 to create $1 of “growth” for long: eventually, as in all business cycles, the cost of borrowing will exceed the ability of the borrower to service that debt. That’s what Keynes failed to foresee: the way in which the partnership of Central State and Cartel-Capital requires ever greater credit and State debt expansion just to keep the system afloat, never mind growing.

If I loan you $1 trillion at zero interest, with no principal payments, then the cost of servicing that $1 trillion loan is zero. Pretty easy to service zero, isn’t it? That’s the core strategy of the Federal Reserve and the U.S. Treasury.

That’s been Japan’s “secret” for 20 years: as long as the lenders (the Japanese citizenry and life insurance companies, etc.) accepted near-zero interest, then the cost of borrowing additional trillions has been bearable.

But as soon as that $1 trillion requires a serious interest payment, then the ratchet-effect game ends. We are not there yet, but the endgame is no longer over the horizon.

What will TMS Phase III require? $10 in Central State stimulus for $1 in nominal GDP “growth”? Or will it be $20 for every $1 of bogus “growth”?

The stock market is a reflection of this ratcheting up of Central State/Monopoly Capital intervention and manipulation. The stock market took off in the mid-1990s in the “easy money” era, and that led to the Phase I bust of 2000-2001.

That required TMS Phase II, which led to the next asset bubble in 2007-08, and that orgy of fraud and credit/leverage expansion led to an even more severe Phase II bust 2008-09.

If the partnership attempts Travesty of a Mockery of a Sham Phase III, then the consequent bust should return the stock market to pre-Phase I levels: The Dow around 4,000 and the SPX around 400.

Neither the public nor the Standard-Issue Punditry (SIP) understand the addiction-like dynamics of the Central State/Cartel-Capital partnership’s increasingly ineffective interventions on behalf of a facsimile of normalcy and “growth.” Like the addicted junkie, the Central State/Cartel-Capital partnership is approaching the point where their “high” requires ever higher doses of smack.

Nobody knows when the higher doses finally become lethal, but we do know there is such a point.

Finally, love grows cold in the age of deleveraging. Kate Randall of WSWS reports Deadly shootings over Christmas holidays in the US.

The Death Of Fiat Money Is Giving Rise To The Ten Toed Kingdom Of Regional Global Governance As Well As To The Rise Of A Sovereign Ruler And His Banking Partner, The Seignior, In The Eurozone

December 27, 2011

Murry Rothbard reported that the fiat monetary system began on August 15, 1971, when the US government suspended the convertibility of the US dollar to gold.

The Sovereign Lord God, has plans to let the European sovereign debt crisis fester and to utterly destroy the fiat money system. There will be no free market money system as desired by Murray Rothbard and other Libertarians.

The death of fiat money, that is, the death of fiat currencies, began in August 2011, as the US Dollar, $USD, began to rise from 73.50. This was immediately after investors sold out of stocks in July 2011, when they became aware that a debt union had formed in the Euro zone. Then in August, they sold heavily again, when Angela Merkel and Nicolas Sarkozy called for a true European economic government, and when Herman van Rompuy called for a sovereignty union.

Bible prophecy found in Daniel and Revelation provides insight into current world events. As fiat money suffers debt deflation, nations loose their sovereign authority, and debt sovereignty, and have to look to a credible sovereign to provide seigniorage, that is moneyness. In the Euro zone we are witnessing fate is passing the baton of sovereignty from sovereign state to the EU ECB and IMF Troika, as technocratic government is being installed in profligate Italy and Greece, and as seigniorage aid is provided to Greece. The Beast Regime of Neoauthoritarianism is rising up out of the Mediterranean Sea. This monster of statism 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, Revelation 13:1-4.

Soon out of sovereign armageddon, that is a credit bust and financial system breakdown, Revelation 13:3-4, leaders will meet in summits to announce regional framework agreements, cede sovereignty to a Federal Europe, establish a fiscal union, provide a committee for fiscal sovereignty, announce austerity measures, institute structural reforms, and impose debt servitude, in order to provide for regional security and stability. The Sovereign Lord God, Psalms 2:4-5, is operating through the first horseman of the apocalypse, Revelation, 6:1-2, to effect a EU wide political, economic and military coup d etat which will result in the death of all forms of economic life. The economic capital of credit and carry trade investing is being replaced with the political capital of diktat. Investment capital is being replaced by technocratic governments which enforce strict fiscal rule demanding even more austerity measures in Ireland and Spain, fiscal tightening to eliminate welfare in Argentina, mandates to eliminate state worker patronage systems in Greece, and structural reforms turning back of national wage contracts throughout Europe.

Those living in the EU are no longer citizens of sovereign nations, but rather residents living in a region of global governance, as called for the 1974 Clarion Call of the Club of Rome for regional global governance. Totalitarian collectivism is Europe’s future. Libertarianism’s Freedom and Free Enterprise are mirages on the Neoauthoritarian Desert of the Real. Choice is an epitaph on the tombstone of a prior bygone age of Neoliberalism.

Throughout history, God has provided a series of kings and a progression of kingdoms to rule mankind, Daniel 2:31-45, Freedom and Free Enterprise, the Libertarian dream, has come only recently and existed for a brief period, that is from the end of the Revolutionary War to the beginning of the Civil War. Fate appointed kings have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority. And fate is pushing political and economic power of the UK and the US, the two iron legs of global hegemony, into the hands of ten kings, who will eventually come to rule, each in his own regional power base. With this distribution of power to regions, we see the rising of the Ten Toed Kingdom of regional global governance, Daniel 2:31-33, where rule in the ten toes will be mired in the clay of democracy and the iron of diktat. The coming President of the EU will be one knowledgeable with the scheme of framework agreements.

Coordinated provision Dollar FX Swaps and provision of the ECB’s LTRO facility have prevented the world’s financial markets from seizing up, but they have monetized the US debt and have commenced the loss of America’s debt sovereignty. This last week, Leveraged Buyouts, PSP, Junk Bonds, JNK, Municipal Bonds, MUB, California Municipal Bonds, CMF, Michigan Municipal Bonds MIW, rose. The Flattner ETF, FLAT, turned lower and the Steepner ETF, STPP, made what is a likely plummeting bottom, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, 2%, signaling the beginning of the end of US debt sovereignty and US Hegemony, that has accompanied the Inflationism, that came with the Banker Regime of Neoliberalism. The last remnant of the Milton Friedman Free To Choose Age floating currency regime of leverage, is now history, as the maximum safehaven value of US Treasuries appears to have been achieved.

A sell signal developed in US Treasuries and in corporate bonds: the longer out debt LTPZ, TMF, ZROZ, EDV, TLT, BLV — all turned lower more than their shorter duration counterparts. Mortgage Backed Bonds, MBB, turned down this week. The Finviz chart of Bonds, BND, LAG, AGG, all show topping out characteristics this week, signaling that Peak Credit has been achieved. Deflationism has come to bonds. Risk has turned the spigot of investment liquidity completely off.

Currency debasement has created “bad money”, replacing “money good” in the world’s financial system. Doug Noland writes in Financial Arbitrage Capitalism After 10 Years Bill Gross penned a discerning op-ed for this past Monday’s Financial Times, “The Ugly Side of Ultra-Cheap Money.” Never before had the possibilities for Credit creation, and resulting fees and speculative profits, been so unfettered and incentivized. That is, as long as asset prices continue to inflate. Over time, this resulted in “money” and Credit becoming dangerously and increasingly detached from real economic wealth and wealth-producing capacity .“Gresham’s law needs a corollary. Not only does ‘bad money drive out good,’ but ‘cheap’ money may as well,” began Mr. Gross’s FT writing. I would strongly argue that this deleterious process of bad “money” driving out the relatively better commenced decades ago – and then proceeded to accelerate momentously during the nineties. Over the past decade, both U.S. household and federal debt more than doubled, as consumption boomed and deindustrialization gathered momentum. GSE assets tripled to $6.7 TN. Hedge fund assets quadrupled to surpass $2.0 TN. The global over-the-counter (OTC) derivatives market ballooned from about $100 TN to exceed $700 TN. Global central bank balance sheets ballooned uncontrollably. “Bad money” took the world by storm.

Inevitably, a point would be reached where the quality of the underlying mountain of Credit obligations would prove incompatible with highly leveraged speculative positions and deeply maladjusted economic structures. Global fiscal and monetary policymakers have worked inexhaustibly to bolster increasingly vulnerable debt structures, through the unprecedented issuance of sovereign debt and government guarantees; by imposing ultra-low interest rates; and by massive purchase, (monetization) of marketable debt instruments. And especially post-2008, this fragile structure (and associated mania) has been buttressed by the perception that policymakers retained the necessary tools to ensure the situation remained under their control. From Mr. Gross: “Conceptually, when the financial system can no longer find outlets for the credit it creates, then it de-levers.” True enough. I would add that a system will find it increasingly challenging to find “outlets for Credit” once premises behind, and confidence in, the mania in credit instruments begins to break down.

As credit instruments break down, not by any human action, but rather by fate, the curtains will open, and The Sovereign, Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will step onto the world’s stage. In a credit exhausted and currency devalued world, the people will come to place their faith in the word will and way of these two; they will give their full allegiance to their diktat, Revelation 13:3-4.

The statue of the progression of human governments, Daniel 2:31-44, reveals that God has purposed for the destruction of fiat currencies and constitutional government to establish an eternal kingdom which will be ruled by His Son, Revelation 2:26-27, where He will reign in righteousness, Isaiah 11:4-5, … Isaiah 16:5, … Isaiah 32:1. His kingdom will be characterized by peace, Isaiah 2:4. The human life span of those with earthly bodies will increase, Isaiah 65:20-23, sickness and deformities will be healed, Isaiah 29:17-19, … Isaiah 33:24. The earth itself will also experience restoration as its decay will be reversed and the topography of the earth will be changed, Isaiah 2:2, … Ezekiel 47-48, … Zechariah 14:4-10, … Romans 8:19-23. There will be no double entry bookkeeping, and no credit or debt issued. Social problems of poverty will be solved, Psalm 72:12-13. The earth will enjoy productivity as even the deserts and wilderness will become useful, Isaiah 35:1-7, … Amos 9:13-14, … Zechariah 14:8.

Cheap Credit Begets More Cheap Credit … The Road To Serfdom Is Paved By Currency Debauchery

December 27, 2011

Report on money as of December 26, 2011

Introduction: The reproduction of bad money will end in diktat, as illegitimacy produces mongrels, not hybrids.  David Knox Baxter writes of The Road Not Taken. One road leads to the serfdom and dependence on government promises, the other to individual freedom and unlimited potential.  Along one road, greater national and individual sovereignty and liberty is a required sacrifice offered to the deity of the state and its various temples of centralized control.  And Paul Craig Roberts writes its a Road To War And Economic Collapse.

Cheap money comes with costs such as inflation destruction, economic stagnation, employment migration, loss of debt sovereignty, deleveraging into depression, derisking out of risky debt and carry trades, devolution into dictatorship and world wars.  News reports today communicate that a global Eurasia War is coming soon to the Middle East and will be centered in Syria and Iran.

Cheap money comes by currency debasement.

Cheap money is fathered by central banks, profligate nations, state governments and municipalities. These fathers beget more fathers who bet more cheap credit.  Cheap credit produces bad money.  Cheap credit paves what F. A. Hayek called The Road To Serfdom.

Alan Greenspan’s credit liquidity policies and Ben Bernanke’s ZIRP monetary policy have been the greatest liberating forces of all time: the US Federal Reserve policy of cheap credit and a falling US Dollar, set investors free.  The interest rates in the US have been close to zero, so investors borrowed that money and invested it in stock markets and commodities across the globe.

And this last week, cheap credit from Mario Draghi resurrected the European Financials, EUFN, and copper mining stocks, COPX.  Credit easing policies, QE1, QE2, and now, coordinated central bank dollar FX Swaps, and the ECB’s LTRO, have goosed up stocks;  but this constitutes global debt monetization, which eventually will destabilize all nations.  Some of this most recent credit easing made its way into the US stock markets, creating a grand finale sector rotation in consumer staples such as Kimberly Clark, KMB, despite the recently announced diminished profit prospects for next year. Another beneficiary of this tulip money was Procter & Gamble, PG, which sent consumer staples, XLP, to a new high. One of greatest beneficiaries of US central bank easing and now ECB credit easing, have been the preferred shares, producing a steady wealth gain, as is seen in the chart of Claymore Preferred Securities, FFC, which rose 2%.  

Doug Noland reports terrific monetary expansion has occurred through coordinated US and central bank operations. Global central bank “international reserve assets” (excluding gold), as tallied by Bloomberg, were up $1.256 TN y-o-y, or 13.9% to $10.279 TN. Over two years, reserves were $2.658 TN higher, for 35% growth. M2 (narrow) “money” supply jumped $32.3bn to a record $9.672 TN. “Narrow money” has expanded at a 9.9% pace y-t-d. And Mr. Noland relates William Launder of the WSJ reports “Use of the European Central Bank’s overnight deposit facility reached a new record high for the year, suggesting recent measures by central banks and policy makers still aren’t enough to restore confidence in inter-bank lending markets. Banks deposited €346.99 billion ($453.38bn) in the overnight deposit facility, up from €264.97 billion a day earlier and a previous high for the year of €346.36 billion, reached earlier this month. The high level reflects ongoing distrust in inter-bank lending markets, where banks prefer using the ECB facility as a safe haven for excess funds rather than lending them to other banks. And Mr. Noland relates that Tony Barrett of Bloomberg reports “A measure of European Central Bank leverage may grow from a record 30 times, raising the risk of a widening in sovereign bond spreads unless governments commit to a detailed rescue plan for members, Bloomberg Industries said. The central bank’s total assets have risen to 2.46 trillion euros ($3.2 trillion), driving the ratio to capital and reserves above levels reached during the 2008 global financial crisis.”

Neoliberalism has fallen to Neoauthoritarianism. Under leadership of wall street wizards, Neoliberalism’s inflationism benefited European and Argentine democracies. But, the global government finance bubble has burst, and the seigniorage of fiat money is collapsing, reflected in the ratio of world stocks relative to world government bonds, ACWI:BWX, trading lower once again. Deleveraging and derisking is seen in material stocks relative to basic materials, IYM:USCI, and XLB:DBC, turning lower. The failure of growth is seen in today’s strong fall in export leader South Korea, EWY, SKOR, turning lower, and in the ratio of Japanese large shares relative to their small cap peers, EWJ:JSC, turning lower.

 Under Neoauthoritarianism’s destructionism, technocratic governors and emergency financial managers will enforce austerity and debt servitude. Neoliberalism featured wildcat governance, a Doug Noland term, But Neoauthoritarianism features wild cat governance, where leaders bite, rip, and tear one another, and only the most fierce, rises to be top dog.

Murry Rothbard reported that the fiat monetary system began on August 15, 1971, when the US government suspended the convertibility of the US dollar to gold.

The death of fiat money, that is, the death of fiat currencies, began in August 2011, as the US Dollar, $USD, began to rise from 73.50.  This was immediately after investors sold out of stocks in July 2011, when they became aware that a debt union had formed in the Euro zone. Then in August, they sold heavily again, when Angela Merkel and Nicolas Sarkozy called for a true European economic government, and when Herman van Rompuy called for a sovereignty union.

Bible prophecy found in Daniel and Revelation provides insight into current world events. As fiat money suffers debt deflation, nations loose their sovereign authority, and debt sovereignty, and have to look to a credible sovereign to provide seigniorage, that is moneyness. In the Euro zone we are witnessing fate is passing the baton of sovereignty from sovereign state to the EU ECB and IMF Troika, as technocratic government is being installed in profligate Italy and Greece, and as seigniorage aid is provided to Greece. The Beast Regime of Neoauthoritarianism is rising up out of the Mediterranean Sea. This monster of statism 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, Revelation 13:1-4.

Soon out of sovereign armageddon, that is a credit bust and financial system breakdown, Revelation 13:3-4, leaders will meet in summits to announce regional framework agreements, cede sovereignty to a Federal Europe, establish a fiscal union, provide a committee for fiscal sovereignty, announce austerity measures, institute structural reforms, and impose debt servitude, in order to provide for regional security and stability.  The Sovereign Lord God, Psalms 2:4-5, is operating through the first horseman of the apocalypse, Revelation, 6:1-2, to effect a EU wide political, economic and military coup d etat which will result in the death of all forms of economic life. The economic capital of credit and carry trade investing is being replaced with the political capital of diktat. Investment capital is being replaced by technocratic governments which enforce strict fiscal rule demanding even more austerity measures in Ireland and Spain, fiscal tightening to eliminate welfare in Argentina, mandates to eliminate state worker patronage systems in Greece, and structural reforms turning back of national wage contracts throughout Europe.

As Berry Grey communicates in WSWS article, Banks Demand Deeper Cuts Following EU Summit, European socialism and Argentine socialism are soon going to the guillotine. And Andrew Davis of Bloomberg reports Mario Monti, who took office a month ago as head of an unelected government of non-politicians, is seeking to show investors he can tame a 1.9 trillion-euro debt, bigger than that of Spain, Greece, Portugal and Ireland combined. With no political base in parliament, Monti relies on support from both Berlusconi’s PDL and the Democratic Party, its chief rival, to remain in power. “The concern that there is always going to be with having a technocrat in charge is that the other parties might try and gain political capital,” said Peter Chatwell, a fixed-income strategist at Credit Agricole SA in London. “So, as long as the technocrat remains well backed, that’s good for Italy and good for stability.” Berlusconi criticized the austerity plan Dec. 15 and warned that the Monti government may not last until the end of the legislature in 2013. He pledged to vote in favor of the measure because “in an emergency you have to choose the lesser evil,” he said at a book presentation in Rome.

Those living in the EU are no longer citizens of sovereign nations, but rather residents living in a region of global governance, as called for the 1974 Clarion Call of the Club of Rome for regional global governance. Totalitarian collectivism is Europe’s future. Libertarianism’s Freedom and Free Enterprise are mirages on the Neoauthoritarian Desert of the Real. Choice is an epitaph on the tombstone of a prior bygone age of Neoliberalism.  

Throughout history, God has provided a series of kings and a progression of kingdoms to rule mankind, Daniel 2:31-45, Freedom and Free Enterprise, the Libertarian dream, has come only recently and existed for a brief period, that is from the end of the Revolutionary War to the beginning of the Civil War.  Fate appointed kings have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America with Unilateral Authority. And fate is pushing political and economic power of the UK and the US, the two iron legs of global hegemony, into the hands of ten kings, who will eventually come to rule, each in his own regional power base. With this distribution of power to regions, we see the rising of the Ten Toed Kingdom of regional global governance, Daniel 2:31-33, where rule in the ten toes will be mired in the clay of democracy and the iron of diktat. The coming President of the EU will be one knowledgeable with the scheme of framework agreements.

Michael Hudson provides a history of governments and currencies and asks Debt And Democracy: Has The Link Been Broken? Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.

The fact that the main Near Eastern creditors were the palace, temples and their collectors made it politically easy to cancel the debts. It always is easy to annul debts owed to oneself. even Roman emperors burned the tax records to prevent a crisis. But it was much harder to cancel debts owed to private creditors as the practice of charging interest spread westward to Mediterranean chiefdoms after about 750 BC. Instead of enabling families to bridge gaps between income and outgo, debt became the major lever of land expropriation, polarizing communities between creditor oligarchies and indebted clients. In Judah, the prophet Isaiah (5:8-9) decried foreclosing creditors who “add house to house and join field to field till no space is left and you live alone in the land.”  Creditor power and stable growth rarely have gone together. Most personal debts in this classical period were the product of small amounts of money lent to individuals living on the edge of subsistence and who could not make ends meet. Forfeiture of land and assets – and personal liberty – forced debtors into bondage that became irreversible. By the 7th century BC, “tyrants” (popular leaders) emerged to overthrow the aristocracies in Corinth and other wealthy Greek cities, gaining support by cancelling the debts. In a less tyrannical manner, Solon founded the Athenian democracy in 594 BC by banning debt bondage.

But oligarchies re-emerged and called in Rome when Sparta’s kings Agis, Cleomenes and their successor Nabis sought to cancel debts late in the third century BC. They were killed and their supporters driven out. It has been a political constant of history since antiquity that creditor interests opposed both popular democracy and royal power able to limit the financial conquest of society and an almost autonomous dynamic turning the economic surplus into interest-bearing debt claims for payment.

When the Gracchi brothers and their followers tried to reform the credit laws in 133 BC, the dominant Senatorial class acted with violence, killing them and inaugurating a century of Social War, resolved by the ascension of Augustus as emperor in 29 BC.

Matters were more bloody abroad. Aristotle did not mention empire building as part of his political schema, but foreign conquest always has been a major factor in imposing debts, and war debts have been the major cause of public debt in modern times. Antiquity’s harshest debt levy was by Rome, whose creditors spread out to plague Asia Minor, its most prosperous province. The rule of law all but disappeared when publican creditors arrived. Mithridates of Pontus led three popular revolts, and local populations in Ephesus and other cities rose up and killed a reported 80,000 Romans in 88 BC. The Roman army retaliated, and Sulla imposed war tribute of 20,000 talents in 84 BC. Charges for back interest multiplied this sum six-fold by 70 BC. Among Rome’s leading historians, Livy, Plutarch and Diodorus blamed the fall of the Republic on creditor intransigence in waging the century-long Social War marked by political murder from 133 to 29 BC. Populist leaders sought to gain a following by advocating debt cancellations (e.g., the Catiline conspiracy in 63-62 BC). They were killed. By the second century AD about a quarter of the population was reduced to bondage. By the fifth century Rome’s economy collapsed, stripped of money. Subsistence life reverted to the countryside as a dark Age descended.

When banking recovered after the Crusades looted Byzantium and infused silver and gold to review Western European commerce, Christian opposition to charging interest was overcome by the combination of prestigious lenders (the Knights Templars and Hospitallers providing credit during the Crusades) and their major clients – kings, at first to pay the Church and increasingly to wage war. But royal debts went bad when kings died. The Bardi and Peruzzi went bankrupt in 1345 when Edward III repudiated his war debts. Banking families lost more on loans to the Habsburg and Bourbon despots on the thrones of Spain, Austria and France.

Matters changed with the Dutch democracy, seeking to win and secure its liberty from Habsburg Spain. The fact that their parliament was to contract permanent public debts on behalf of the state enabled the Low Countries to raise loans to employ mercenaries in an epoch when money and credit were the sinews of war. Access to credit “was accordingly their most powerful weapon in the struggle for their freedom,” notes Ehrenberg: “Anyone who gave credit to a prince knew that the repayment of the debt depended only on his debtor’s capacity and will to pay. The case was very different for the cities, which had power as overlords, but were also corporations, associations of individuals held in common bond. according to the generally accepted law each individual burgher was liable for the debts of the city both with his person and his property.”

The financial achievement of parliamentary government was thus to establish debts that were not merely the personal obligations of princes, but were truly public and binding regardless of who occupied the throne. This is why the first two democratic nations, the Netherlands and Britain after its 1688 revolution, developed the most active capital markets and proceeded to become leading military powers. what is ironic is that it was the need for war financing that promoted democracy, forming a symbiotic trinity between war making, credit and parliamentary democracy in an epoch when money was still the sinews of war.

At this time “the legal position of the King qua borrower was obscure, and it was still doubtful whether his creditors had any remedy against him in case of default.” The more despotic Spain, Austria and France became, the greater the difficulty they found in financing their military adventures. By the end of the eighteenth century Austria was left “without credit, and consequently without much debt” the least credit-worthy and worst armed country in Europe (as Steuart 1767:373 noted), fully dependent on British subsidies and loan guarantees by the time of the Napoleonic Wars.

While the nineteenth century’s democratic reforms reduced the power of landed aristocracies to control parliaments, bankers moved flexibly to achieve a symbiotic relationship with nearly every form of government. In France, followers of Saint-Simon promoted the idea of banks acting like mutual funds, extending credit against equity shares in profit. The German state made an alliance with large banking and heavy industry. Marx wrote optimistically about how socialism would make finance productive rather than parasitic. In the United States, regulation of public utilities went hand in hand with guaranteed returns. In China, Sun-Yat-Sen wrote in 1922: “I intend to make all the national industries of China into a Great Trust owned by the Chinese people, and financed with international capital for mutual benefit.”

World War I saw the United States replace Britain as the major creditor nation, and by the end of World War II it had cornered some 80 percent of the world’s monetary gold. Its diplomats shaped the IMF and World Bank along creditor-oriented lines that financed trade dependency, mainly on the United States. Loans to finance trade and payments deficits were subject to “conditionalities” that shifted economic planning to client oligarchies and military dictatorships. The democratic response to resulting austerity plans squeezing out debt service was unable to go much beyond “IMF riots,” until Argentina rejected its foreign debt.

A similar creditor-oriented austerity is now being imposed on Europe by the European Central Bank (ECB) and EU bureaucracy. Ostensibly social democratic governments have been directed to save the banks rather than reviving economic growth and employment. Losses on bad bank loans and speculations are taken onto the public balance sheet while scaling back public spending and even selling off infrastructure. The response of taxpayers stuck with the resulting debt has been to mount popular protests starting in Iceland and Latvia in January 2009, and more widespread demonstrations in Greece and Spain this autumn to protest their governments’ refusal to hold referendums on these fateful bailouts of foreign bondholders.

Every economy is planned. This traditionally has been the function of government. Relinquishing this role under the slogan of “free markets” leaves it in the hands of banks. yet the planning privilege of credit creation and allocation turns out to be even more centralized than that of elected public officials. And to make matters worse, the financial time frame is short-term hit-and-run, ending up as asset stripping. By seeking their own gains, the banks tend to destroy the economy. The surplus ends up being consumed by interest and other financial charges, leaving no revenue for new capital investment or basic social spending.

This is why relinquishing policy control to a creditor class rarely has gone together with economic growth and rising living standards. The tendency for debts to grow faster than the population’s ability to pay has been a basic constant throughout all recorded history. Debts mount up exponentially, absorbing the surplus and reducing much of the population to the equivalent of debt peonage. To restore economic balance, antiquity’s cry for debt cancellation sought what the Bronze Age Near East achieved by royal fiat: to cancel the overgrowth of debts.

In more modern times, democracies have urged a strong state to tax rentier income and wealth, and when called for, to write down debts. This is done most readily when the state itself creates money and credit. It is done least easily when banks translate their gains into political power. when banks are permitted to be self-regulating and given veto power over government regulators, the economy is distorted to permit creditors to indulge in the speculative gambles and outright fraud that have marked the past decade. The fall of the Roman Empire demonstrates what happens when creditor demands are unchecked. Under these conditions the alternative to government planning and regulation of the financial sector becomes a road to debt peonage.

Democracy involves subordinating financial dynamics to serve economic balance and growth – and taxing rentier income or keeping basic monopolies in the public domain. Untaxing or privatizing property income “frees” it to be pledged to the banks, to be capitalized into larger loans. Financed by debt leveraging, asset-price inflation increases rentier wealth while indebting the economy at large. The economy shrinks, falling into negative equity.

The financial sector has gained sufficient influence to use such emergencies as an opportunity to convince governments that that the economy will collapse they it do not “save the banks.” In practice this means consolidating their control over policy, which they use in ways that further polarize economies. The basic model is what occurred in ancient Rome, moving from democracy to oligarchy. In fact, giving priority to bankers and leaving economic planning to be dictated by the EU ECB and IMF threatens to strip the nation-state of the power to coin or print money and levy taxes.

The resulting conflict is pitting financial interests against national self-determination. The idea of an independent central bank being “the hallmark of democracy” is a euphemism for relinquishing the most important policy decision – the ability to create money and credit – to the financial sector. rather than leaving the policy choice to popular referendums, the rescue of banks organized by the EU and ECB now represents the largest category of rising national debt. The private bank debts taken onto government balance sheets in Ireland and Greece have been turned into taxpayer obligations.

The same is true for America’s $13 trillion added since September 2008 (including $5.3 trillion in Fannie Mae and Freddie Mac bad mortgages taken onto the government’s balance sheet, and $2 trillion of Federal Reserve “cash-for-trash” swaps).

This is being dictated by financial proxies euphemized as technocrats. Designated by creditor lobbyists, their role is to calculate just how much unemployment and depression is needed to squeeze out a surplus to pay creditors for debts now on the books. what makes this calculation self-defeating is the fact that economic shrinkage – debt deflation – makes the debt burden even more unpayable.

Neither banks nor public authorities (or mainstream academics, for that matter) calculated the economy’s realistic ability to pay – that is, to pay without shrinking the economy. through their media and think tanks, they have convinced populations that the way to get rich most rapidly is to borrow money to buy real estate, stocks and bonds rising in price – being inflated by bank credit – and to reverse the past century’s progressive taxation of wealth.

To put matters bluntly, the result has been junk economics. Its aim is to disable public checks and balances, shifting planning power into the hands of high finance on the claim that this is more efficient than public regulation. Government planning and taxation is accused of being “the road to serfdom,” as if “free markets” controlled by bankers given leeway to act recklessly is not planned by special interests in ways that are oligarchic, not democratic. Governments are told to pay bailout debts taken on not to defend countries in military warfare as in times past, but to benefit the wealthiest layer of the population by shifting its losses onto taxpayers.

The failure to take the wishes of voters into consideration leaves the resulting national debts on shaky ground politically and even legally. Debts imposed by fiat, by governments or foreign financial agencies in the face of strong popular opposition may be as tenuous as those of the Habsburgs and other despots in past epochs. Lacking popular validation, they may die with the regime that contracted them. New governments may act democratically to subordinate the banking and financial sector to serve the economy, not the other way around.

At the very least, they may seek to pay by re-introducing progressive taxation of wealth and income, shifting the fiscal burden onto rentier wealth and property. Re-regulation of banking and providing a public option for credit and banking services would renew the social democratic program that seemed well underway a century ago.

Iceland and Argentina are most recent examples, but one may look back to the moratorium on Inter-Ally arms debts and German reparations in 1931.A basic mathematical as well as political principle is at work: Debts that can’t be paid, won’t be. 1.James Steuart, Principles of Political Oeconomy (1767), p. 353.2. Richard Ehrenberg, Capital and Finance in the Age of the Renaissance (1928):44f., 33.3. Charles Wilson, England’s Apprenticeship: 1603-1763 (London: 1965):89.4. Sun Yat-Sen, The International Development of China (1922):231ff.

Coordinated provision Dollar FX Swaps and provision of the ECB’s LTRO facility have prevented the world’s financial markets from seizing up, but they have monetized the US debt and have commenced the loss of America’s debt sovereignty. This last week, Leveraged Buyouts, PSP, Junk Bonds, JNK, Municipal Bonds, MUB, California Municipal Bonds, CMF, Michigan Municipal Bonds MIW, rose. The Flattner ETF, FLAT, turned lower and the Steepner ETF, STPP, made what is a likely plummeting bottom, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, 2%, signaling the beginning of the end of US debt sovereignty and US Hegemony, that has accompanied the Inflationism, that came with the Banker Regime of Neoliberalism. The last remnant of the Milton Friedman Free To Choose Age floating currency regime of leverage, is now history, as the maximum safehaven value of US Treasuries appears to have been achieved.  

A sell signal developed in US Treasuries and in corporate bonds: the longer out debt LTPZ, TMF, ZROZ, EDV, TLT, BLV — all turned lower more than their shorter duration counterparts. Mortgage Backed Bonds, MBB, turned down this week. The Finviz chart of Bonds, BND, LAG, AGG, all show topping out characteristics this week, signaling that Peak Credit has been achieved. Deflationism has come to bonds. Risk has turned the spigot of investment liquidity completely off.

Currency debasement has created “bad money”, replacing “money good” in the world’s financial system. Doug Noland writes in Financial Arbitrage Capitalism After 10 Years Bill Gross penned a discerning op-ed for this past Monday’s Financial Times, “The Ugly Side of Ultra-Cheap Money.” Never before had the possibilities for Credit creation, and resulting fees and speculative profits, been so unfettered and incentivized. That is, as long as asset prices continue to inflate. Over time, this resulted in “money” and Credit becoming dangerously and increasingly detached from real economic wealth and wealth-producing capacity .“Gresham’s law needs a corollary. Not only does ‘bad money drive out good,’ but ‘cheap’ money may as well,” began Mr. Gross’s FT writing. I would strongly argue that this deleterious process of bad “money” driving out the relatively better commenced decades ago – and then proceeded to accelerate momentously during the nineties. Over the past decade, both U.S. household and federal debt more than doubled, as consumption boomed and deindustrialization gathered momentum. GSE assets tripled to $6.7 TN. Hedge fund assets quadrupled to surpass $2.0 TN. The global over-the-counter (OTC) derivatives market ballooned from about $100 TN to exceed $700 TN. Global central bank balance sheets ballooned uncontrollably. “Bad money” took the world by storm.

Inevitably, a point would be reached where the quality of the underlying mountain of Credit obligations would prove incompatible with highly leveraged speculative positions and deeply maladjusted economic structures. Global fiscal and monetary policymakers have worked inexhaustibly to bolster increasingly vulnerable debt structures, through the unprecedented issuance of sovereign debt and government guarantees; by imposing ultra-low interest rates; and by massive purchase, (monetization) of marketable debt instruments. And especially post-2008, this fragile structure (and associated mania) has been buttressed by the perception that policymakers retained the necessary tools to ensure the situation remained under their control. From Mr. Gross: “Conceptually, when the financial system can no longer find outlets for the credit it creates, then it de-levers.” True enough. I would add that a system will find it increasingly challenging to find “outlets for Credit” once premises behind, and confidence in, the mania in credit instruments begins to break down.

As credit instruments break down, not by any human action, but rather by fate, the curtains will open, and The Sovereign, Revelation 13:5-10, and his banking partner, The Seignior, Revelation 13:11-18, will step onto the world’s stage. In a credit exhausted and currency devalued world, the people will come to place their faith in the word will and way of these two; they will give their full allegiance to their diktat, Revelation 13:3-4.

The statue of the progression of human governments, Daniel 2:31-44, reveals that God has purposed for the destruction of fiat currencies to establish an eternal kingdom which will be ruled by His Son, Revelation 2:26-27, where He will reign in righteousness, Isaiah 11:4-5, … Isaiah 16:5, … Isaiah 32:1. His kingdom will be characterized by peace, Isaiah 2:4. The human life span of those with earthly bodies will increase, Isaiah 65:20-23, sickness and deformities will be healed, Isaiah 29:17-19, … Isaiah 33:24. The earth itself will also experience restoration as its decay will be reversed and the topography of the earth will be changed, Isaiah 2:2, … Ezekiel 47-48, … Zechariah 14:4-10, … Romans 8:19-23. There will be no double entry bookkeeping, and no credit or debt issued. Social problems of poverty will be solved, Psalm 72:12-13. The earth will enjoy productivity as even the deserts and wilderness will become useful, Isaiah 35:1-7, … Amos 9:13-14, … Zechariah 14:8.

Monetary policy has privatized profits for the bankers and socialized losses to the public. Protesilaos Stavrou writes The policies that have been implemented so far in the Eurozone (and beyond) have largely benefited private banks at the expense of taxpayer money. The narrative from 2008 up until today, has been one of “generous” taxpayers bailing out reckless bankers, at the expense of greater debts, higher future taxes, self-defeating austerity, high unemployment and increasing inflation.

Prior to the start of the systemic crisis of the euro in 2010, private European banks were the recipients of masses of taxpayer money, to prevent them from collapsing due to their over-leverage (too much debt relative to equity) that made them unsustainable. That was the first round of direct bailouts, or of state-injected “liquidity” that was supposedly aiming to take state money, offer it to banks, who their selves would lend it out to the real economy – a plausible theory, only it never works that way, since no bank would lend out all that money when it could cover its capital gaps with no real cost and when the recession was creating uncertainty (instead they used that money to buy sovereign bonds that would pay back with interest!).

The second round of bailouts was of an indirect character. Insolvent states were bailed out not thanks to “solidarity” and “partnership” of the rest Europeans, but because of the exposure of certain major banks in these countries that would again lead to the dilemma of either direct bailouts or bank failures. Since direct bailouts for a second time within a few years would have been politically impossible, it was better to hide behind the “profligate” states, bail them out, so they could their selves pay back their creditors, who were those private banks.

Ever since 2008 the basic principles of capitalism, i.e. the profitable stay in business, the others go bankrupt and leave, have been violated time and again, leading to the creation of zombie institutions, distortions in the capital structure and huge black holes that absorb liquidity, retarding growth.

Similar with debt monetization by the ECB. Apart from the political discussion on whether a supranational entity such as the ECB should engage in national affairs and whether that would undermine its independence; the practice of buying sovereign bonds has never been a way of solving the underlying issues. At best it postpones a solution to the future, while the debt will probably increase, the economy will continue to under-perform and inflation will start increasing eating in the purchasing power of individuals effectively reducing even further the growth prospects. All this just to make sure that creditors in present time do not have to suffer from any debt restructuring. Again why prevent defaults or partial defaults, with policies that cause moral hazard, create false incentives, distort the capital structure and sustain the malady?

As already mentioned it yet remains unclear how will bankers will be served this time. On December 9 a European summit is taking place aiming, as did the previous ones, at a “comprehensive solution” to the systemic crisis of the euro. The discussion so far, which seems to prepare the ground for what will be decided is completely detached from such a solution. Instead it follows, just like the previous summits the same failing approach to the whole issue, one that has done much more harm than good and for which European citizens will be paying for long after this crisis ends. The malinvestment of these years of the crisis will bear unpleasant results in the future as Europe will not easily be able to achieve real growth, robust to a range of shocks.

Stefan Kaiser of Spiegel describes the bank funding crisis that banks face in 2012 and which communicates that the European banks are insolvent.  ECB President Mario Draghi told a committee of the European Parliament that Europe’s banks faced major dangers in the coming months. “The pressure that bond markets will be experiencing is really very, very significant if not unprecedented,” Draghi said. It will be a tough year for banks. In 2012 overall they will have to pay back €725 billion ($953 billion) in debt, of which €280 billion will fall due in the first quarter alone. They will have to borrow fresh money to service this debt, but it’s almost impossible for them to raise that money in the private market. Most of them have large holdings of European government bonds on their balance sheets, so they don’t have the mutual trust necessary to lend each other large sums of money.

“The interbank market is pretty shut,” said Dieter Hein, a finance expert at Fairesearch, an independent research company for institutional investors, banks and brokers. “Virtually no one outside is lending any money to euro-zone banks any more.”

Damian Reece of the Telegraph writes Draghi has had to ignore any sense of moral hazard and agree to fund weak banks at the expense of strong. He has opened a quantitative easing (money printing) exercise of enormous proportions. Weak banks unable to fund themselves on the open market are now hooked on cheap ECB money

James Richkards and Azizonomics explains The Problem With Debt Based Money is that it results in zombification of banks and the monetary system. Any monetary system that is fundamentally destabilised by deflation is probably not going to be viable in the long run

In a fiat monetary system the government can always create inflation to raise aggregate demand, though. Complaining about the dangers of debt-deflation in a fiat system trivialises the true dangers of debt deflation in a sound-money system, where the government can’t just devalue in the name of stimulus.

Don’t mistake being able to expand the monetary base as being able to expand the money supply. They are not the same thing. If they were, we would have had hyperinflation a long time ago, as would have Japan in the 1990s. Most obviously, the money supply (M2) is defined by lending by Primary Dealers, up to a reserve requirement.

But to understand what the money supply is, we have to use the definition that the mega-scale financial corporations use, and not the blinkered one central banks use.

The shadow banking sector does not use money in the traditional sense very much. They create their own monetary equivalents through securitisation and hypothecation. While in most countries hypothecation has a “reserve requirement” — in the US this is 130% of collateral — but some parts of the global (and almost borderless) financial system — for example, London do not have such reserve requirements. So, through huge shadow-banking credit creation we get a massive boom. Is it the Fed that has printed this money? No, it’s financial corporations and primary dealers. To understand QE, we must understand that it was a reaction to deleveraging (and thereby contraction of the money supply and thus debt deflation) in the shadow banking sector. QE is the Fed trying to expand the money supply with traditional money to the level that existed previous to the bust with securitised monetary equivalents.

Ultimately though, the problem the Fed has failed to see is that the boom was so ridiculous in nature, and is based around a system so deeply and dangerously interconnected that its destruction by debt deflation is entirely nature. Furthermore, sustaining high net debt to GDP levels is dangerous, because we know a) that this impinges on organic growth, and b) that creating inflation (the only debt erasure tool I see Krugman, Yglesias & DeLong suggesting) isn’t proven effective at combating high debt-to-GDP.  I have not yet seen any economist address these problems (suspension of market mechanisms, debt-driven stagnation) — what I refer to as “zombification” — satisfactorily in defense of economic interventionism

Charlie Fell writes Gold To Glitter In 2012. The historical record demonstrates that gold performs equally well, if not better, in the presence of a destructive debt deflation. The logic is easy to understand. Individuals scramble for liquidity and flee financial assets during deflations, but the deteriorating credit quality of currency issuers and the resulting loss of confidence, mean that gold is typically preferred to paper currency as a hoarding vehicle, simply because the precious metal is no-one’s liability and always pays off. In essence, gold is an effective insurance policy against a black swan event such as debt deflation.

It is important to appreciate that the precious metal does not require a black swan event in order to perform well. The gold market thrives on uncertainty, something that the equity markets abhor and, typically attracts investors during periods of increased risk aversion. It is said that the only thing that rises during bouts of market turbulence is correlations but, the historical record demonstrates that gold’s correlation with stock prices turns decidedly negative when equity markets stumble. In other words, the precious metal acts as an effective portfolio diversifier and helps to mitigate losses in uncertain times.

The precious metal also serves as a viable currency alternative, which means that it competes directly with the world’s major currencies. Since gold is a non-interest bearing asset, its relative attractiveness is determined by the return available on short-term government debt instruments in each of the major currencies. As the real interest rate falls, the opportunity cost of holding gold decreases and consequently its relative appeal rises. Near-zero interest rates across the developed world combined with quantitative easing programmes that place downward pressure on the associated currencies, means that the hurdle for gold has seldom been so low.

The gold price has come under pressure in recent weeks, which has seen the stale bulls declare an end to the precious metal’s spectacular run. A closer examination of the facts however, reveals that gold is likely to glitter in 2012 and beyond.

Robert Wenzel writes China Bans Gold Exchanges.  Here’s another indication that the price inflation in China is much greater than the official reports of around 4.0%. Gold exchanges in China outside of two in Shanghai have been banned, according to a statement from the the People’s Bank of China, the Ministry of Public Security and other regulators. This is a clear sign of panic among government officials. Chinese people were protecting themselves against the inflation by buying gold. Until this order, gold exchanges operated throughout China. “No local authority, institution or individual is allowed to set up gold exchanges,” said the notice dated December 20. The statement also said that the Shanghai Gold Exchange and the Shanghai Futures Exchange are enough to meet domestic investor demand for spot gold and futures trading. The PBOC said it would lead a team to insure that gold exchanges will be closed, banks will stop providing clearing services to them; and some people will be put under police investigation for possible irregularities at exchanges.

321Gold presents the May 4, 2010 Richard Russell prophetic article The Death Kneel. A great drama is unfolding. What we are seeing is the slow, steady decline of the greatest fraud ever perpetuated on the people of the world. The fraud I am referring to is fiat money. This is the so-called ‘money’ created by the central banks. Fiat (non-intrinsic) money can be created at will by a central bank via computer. As economies sink, governments create an increasing amount of fiat money in an effort to jump-start their sinking economies. Thus, what we are seeing is the perfect formula for the death of fiat money. But before death, the value (purchasing power) of a given fiat money must head down. Therefore, I view rising gold as the death knell for all fiat money. But first, investors will exit the weakest and most speculative of the various fiat monies. Right now we are seeing investors fleeing Greek money in favor of the US dollar. In the end, I believe this is a fool’s trade. Ultimately, we’ll see the final flight to safety. This will be the flight out of dollars into gold.

Conclusion: In July through August 2011, currencies began to sink and the US Dollar rise began to rise. Fiat money is dying. Insolvent banks cannot sustain growth and insolvent sovereigns cannot sustain order. The coordinated central bank effort of providing US Dollar FX Swaps and the ECB LTRO facility of taking in distressed securities, makes credit cheap, and creates “bad money”. The only “money good” in the age of deleveraging will be diktat and gold bullion; these will be the sole forms of sovereign wealth. The death of fiat money is giving rise to the ten toed kingdom of regional global governance as well as to the rise of a sovereign ruler and his banking partner, the seignior, in the Eurozone.

The World Is Passing Through Peak Credit … Diktat Will Provide Order Out Of The Chaos Of Deleveraging

December 26, 2011

Financial Market Report for the week ending December 23, 2011

1) … Currencies, Commodities, Stocks, And Municipal Bonds Rose This Week On Cheap Credit Provided By The ECB’s LTRO Facility
Currencies rising this week included the South African rand, 2.9%, the Russian ruble, 2.3%, the Canadian dollar 1.7%, the Australian dollar 1.7%, the New Zealand dollar 1.7%, the Singapore dollar 1.0%, the South Korean won 0.7%, the Swedish krona 0.6%, the British pound 0.3%, the Mexican peso 0.2% and the Taiwanese dollar 0.3%. On the downside, the Japanese yen declined 0.4%, the Brazilian real 0.3%, the Norwegian krone 0.3%, and the Swiss franc 0.1%. The euro and the Indian rupe, were unchanged on the week.

The Small Cap Pure Value Stocks, RZV, rose more than the Small Cap Pure Growth Stocks, RZG, as the world major currencies, DBV, and emerging market currencies, CEW, rose, taking commodities, DBC, stocks, ACWI, VSS, EWX, EEM, EPP, higher, and giving seigniorage, that is moneyness, to world government bonds, BWX, and emerging market bonds, EMB, as the US Dollar, $USD, traded lower to close at 79.93.

Yet, the seigniorage of fiat money is now declining as investors became aware in July 2011 that a debt union has formed in the Eurozone, and the world government credit bubble, BWX, popped in September, and turned international business bonds, PICB. lower. The failure of the seigniorage of fiat money is seen in the chart of world shares relative to world government bonds, ACWI:BWX, turning lower.

Commodities, DBC, rising this week included Timber, CUT, Base Metals, DBB, Grain, GRU, Corn, CORN, Copper, JJC, Oil, USO as is seen in the chart of DBC, CUT, DBB, GRU, CORN, JJC, USO

Large cap value, IVV, OEF, PXLC, PKW, RPV, EZY, FDV, FTA, IEV, JKF, PWV, SPYV, was the leading style this week.

Wildcatters, WCAT, Small Cap Energy, PSCE, Energy Service, IEZ, OIH, Energy, XLE, XOP, Semiconductors, XSD, Homebuilders, XHB, ITB, Real Estate, IYR, Copper Miners, COPX, China Materials, CHIM, Wood Producers, WOOD, Aluminum Producers, ALUM, Coal, KOL, European Financials, EUFN, Too Big To Fail Banks, RWW, Banks, KRE, Investment Bankers, KCE, Stockbrokers, IAI, Financials, XLF, World Financials, IXG, Small Cap Revenue, RWJ, were among the leading sectors this week.

Countries rising included Sweden, EWD, Norway, EWN, Austria, EWO, Germany, EWG, Italy, EWI, France, EWQ, Spain, EWP, Poland, EPOL, Europe, VGK, and Taiwan, EWT. Mexico Small Caps, MEXS, Canada Small Caps, CNDA, Russian Small Caps, RSXJ, and Germany Small Caps, GERJ, rose

Homebuilders, XHB, and ITB, rose this week.

Health Care, XLV, rose strongly, taking Health Care Providers, IHF, UNH, WLP, ESRX, HUM, CVH, HNT, WCG, AGP, CI, CNC, MOH, Health Care REITS, HCN, HCP, NHI, LTC, Pharmaceuticals, IHE, GSK, MRK, PFE, Prose higher.

The Morgan Stanley Cyclicals Index, ^CYC, traded higher this week.

High yielding investments, ABCS, PID, DWX, EDIV, BDCL, traded higher this week as is seen in this chart of ABCS, PID, DWX, EDIV, BDCL

Finviz Screeners show the following to be have been favorable trades this week: Banks, and Education Companies, APOL, DV, EDMC, ESI, BPI, STRA, EDU, XRS, CAST, Energy Partnerships, DPM, KMP, EEP, EPD, MWE, RGP, TLLP, EEP, NGLS, OKS, WMB, MMP, SE, PAA, TCLP, APL, Utilities, DTE, WEC, D,S O, DUK, GXP, XEL, PGN, AEP, VVC, UIL, EIX, NEE, HE, ETR, OKE, ED, XLU, TEG, Credit Companies, AXP, NNI, COF, NICK, MA, V, ADS, CATM, ARCC, GPN, AEA, WRLD, RCII, Wood Manufacturers, IP, DEL, WY, LPX, PCL, PCH, UFPI, Industrial Electrical Equipment Manufacturers, ETN, ROK, AME, AOS, ENS, FELE, Metal Manufacturers, NUE, STLD, XME, RS, AKS, SMS, Chemical Manufacturers, DD, ALB, ASH, WLK, HUN, CYT, NEU, RPM, Synthetics, MTX, GGC, NL, HWKN

Airlines, FAA, Rare Earth, REMX, Junior Gold Miners, GDXJ, traded lower.

Brazil Small Caps, BRF, fell 13% and India Small Caps, SCIN, fell 3%. Argentina, ARGT, traded lower on inflation destruction. Alexander Ragir of Bloomberg reports on credit tightening in Brazil. Brazil’s top banks may tighten their grip on consumer and small-business lending as record high borrowing costs and the end of emergency credit pinch smaller competitors struggling with fallout from Europe’s debt crisis. Bonds maturing in 2020 sold by Banco Cruzeiro do Sul SA and Banco Bonsucesso SA, yield 20% and 14%, after the banks were shut out of international markets for the past three months.”

Fibria Celulose SA, FBR, rose 12% this week, as Gabrielle Coppola and Cristiane Lucchesi of Bloomberg report Brazilian companies from Fibria Celulose SA to Gol Linhas Aereas Inteligentes SA are seeking to renegotiate bond contracts as the real’s tumble drives up the amount of $199 billion of foreign corporate debt in local currency terms.

2) … Best Performing Stocks Of The Year
This chart of FAST, AME, NEU, ROLL, FTI, GPC, SMP, CLC, CLH, SIX, PRIM shows a number of stocks that have benefited from a rising dollar. This Finviz Screener presents the Fabulous 50 Stocks that have benefited from a strong dollarr
Energy company of the year: KMP
Credit company of the year: NICK
Utility company of the year: DTE
Education company of the year: APOL, EDMC
Chemical manufacturer of the year: NEU
Electrical equipment manufacturer of the year: AME, AIMC, AMRC
Defense company of the year: ATRO, HXL
Energy service company of the year: FTI
Heavy construction company of the year: PRIM, DY,
Industrial supply company of the year: FAST, ROLL
Environmental service company of the year: CLH,
Industrial equipment manufacturer of the year: CLC, PLL
Automobile manufacturer of the year: AXL
Entertainment company of the year: SIX, IMAX
Consumer staple company of the year: KMB
Automobile part retailers of the year: GPC, SMP
Small tool manufacturer manufacturer of the year: LECO
Industrial component manufacturer of the year: HEES
Apparel clothing manufacturer of the year: OXM, CRI
Recreational vehicle manufacturer of the year: WGO, THOR
Drug related products company of the year: PRGO
Resort and casino company of the year: RCL, CCL
Semiconductor company of the year: SNDK
Electronics manufacturer of the year: WIRE
Software manufacturer of the year: TLEO, PMTC, ANSS, CDNS, SSYS
Marketing service company of the year: CCO
Retailer of the year: ROST, TJX
Residential property management company of the year: ESS, BRE
Railroad of the year: TRN
Agricultural equipment manufacturer of the year: NC
Paper producer of the year: IP
Lumber producer of the year: LPX
Scientific instrument manufacturer of the year: ZIGO, ROP
Industrial equipment wholesaler of the year: DXPE
Restaurant of the year: SBUX
Medical equipment manufacturer of the year: ISRG
Home builder of the year: MTH
Automobile retailer of the year: CRMT
Health plan provider of the year: AGP

3) … Credit Has Finally Expanded To Its Full Potential And A Sell Signal Appeared In US Treasuries This Week
Leveraged Buyouts, PSP, Junk Bonds, JNK, Municipal Bonds, MUB, California Municipal Bonds, CMF, Michigan Municipal Bonds, MIW, rose. The Flattner ETF, FLAT, turned lower and the Steepner ETF, STPP, made what is a likely plummeting bottom, as the 10 30 US Sovereign Debt Yield Curve $TNX:$TYX, steepened, 2%, signaling the beginning of the end of US debt sovereignty and US Hegemony, that has accompanied the Inflationism, that came with the Banker Regime of Neoliberalism. The last remnant of the Milton Friedman Free To Choose Age floating currency regime of leverage, is now history, as the maximum safehaven value of US Treasuries appears to have been achieved. A sell signal developed in US Treasuries and in corporate bonds: the longer out debt LTPZ, TMF, ZROZ, EDV, TLT, BLV, all turned lower more than their shorter duration counterparts. Mortgage Backed Bonds, MBB, turned down this week, even though Doug Noland reports Freddie Mac 30-year fixed mortgage rates declined 3 bps to a record low 3.91% (down 90bps y-o-y). Fifteen-year fixed rates were unchanged at 3.21% (down 94bps y-o-y). One-year ARMs fell to 2.77% (down 63bps y-o-y). Bankrate’s survey of jumbo mortgage borrowing costs had 30-yr fixed rates down one basis point to 4.68% (down 83bps y-o-y). The Finviz chart of Bonds, BND, LAG, AGG, all show topping out characteristics this week signaling that Peak Credit has been achieved. Deflationism has come to bonds. Risk has turned the spigot of investment liquidity completely off.

4) … Deleveraging Is At Hand As Financial Arbitrage Capitalism Has Run Its Course
Doug Noland writes in Financial Arbitrage Capitalism After 10 Years Bill Gross penned a discerning op-ed for this past Monday’s Financial Times, “The Ugly Side of Ultra-Cheap Money.” Never before had the possibilities for Credit creation, and resulting fees and speculative profits, been so unfettered and incentivized. That is, as long as asset prices continue to inflate. Over time, this resulted in “money” and Credit becoming dangerously and increasingly detached from real economic wealth and wealth-producing capacity .“Gresham’s law needs a corollary. Not only does ‘bad money drive out good,’ but ‘cheap’ money may as well,” began Mr. Gross’s FT writing. I would strongly argue that this deleterious process of bad “money” driving out the relatively better commenced decades ago – and then proceeded to accelerate momentously during the nineties. Over the past decade, both U.S. household and federal debt more than doubled, as consumption boomed and deindustrialization gathered momentum. GSE assets tripled to $6.7 TN. Hedge fund assets quadrupled to surpass $2.0 TN. The global over-the-counter (OTC) derivatives market ballooned from about $100 TN to exceed $700 TN. Global central bank balance sheets ballooned uncontrollably. “Bad money” took the world by storm.

Inevitably, a point would be reached where the quality of the underlying mountain of Credit obligations would prove incompatible with highly leveraged speculative positions and deeply maladjusted economic structures. Global fiscal and monetary policymakers have worked inexhaustibly to bolster increasingly vulnerable debt structures, through the unprecedented issuance of sovereign debt and government guarantees; by imposing ultra-low interest rates; and by massive purchases (monetization) of marketable debt instruments. And especially post-2008, this fragile structure (and associated mania) has been buttressed by the perception that policymakers retained the necessary tools to ensure the situation remained under their control. From Mr. Gross: “Conceptually, when the financial system can no longer find outlets for the credit it creates, then it de-levers.” True enough. I would add that a system will find it increasingly challenging to find “outlets for Credit” once premises behind, and confidence in, the mania in Credit instruments begins to break down.

5) … The World Is Passing Through Peak Credit … Diktat Will Provide Order Out Of The Chaos Of Deleveraging … Diktat Is The Dynamo In The Age Of Regional Global Governance
The word dynamo comes from Greek dynamis, means power, and carries the connotation of an electrical generator.

Credit and financial deregulation were the dynamos of the “age of the Milton Friedman Free To Choose floating currencies”. These created inflationism, innovation, growth, economic expansion and enabled democracy to support European socialism and Argentine socialism.

Milton Friedman was the “great liberator of women” as well as the “great liberator of investors”. 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 northern Europe nations 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. The period from 1971 through 2011 is known as a time of global liberation, and the age of leverage.

Now diktat and austerity measures, structural reforms, and debt servitude are the dynamos of the Beast regional global governance age; where deflationism, authoritarian rule, totalitarian collectivism are enforcing austerity measures, structural reforms, and debt servitude. Liberalism’s Freedom and Free Enterprise, are mirages on the Neoauthoritarian Desert of the Real. The Beast Regime of Neoauthoritarianism is going to claw back many of the advances of the former regime of Neoliberalism.

Diktat is the dynamo in the “age of regional global governance.” The seigniorage of diktat is now rising to replace the seigniorage of fiat money, as the political capital of diktat is rising out of the ashes of the Milton Friedman Free To Choose floating currency known as Neoliberalism. The economic capital that underwrote democracy is history. Choice is now a epitaph on the tombstone of a prosperous bygone era. The rule of bankers is being replace by the rule of authoritarians, as evidenced by the appointment of emergency financial managers in Michigan by Public Act 4, and by the appointment of technocratic governors in the EU’s periphery. Fate is passing the baton of sovereign authority from nation states to the EU ECB and IMF Troika, The Beast Regime of Neoauthoritarianism is rising out of the Mediterranean Sea nations of Italy and Greece, This monster of statism is being called forth by the 1974 Clarion Call of the Club of Rome for regional global governance, as a means of providing security and stability, in a world of chaos, that is coming from derisking and deleveraging out the Banker Regime of Neoliberalism.

Benjamin Hui of Bull Market Timer relates the yen carry trade is an example of how super low interest rates can destabilize the global financial system. Low interest rates encourage speculators to take on huge amounts of debt to invest in global assets. Once a currency carry trade unwinds itself, inflated global assets collapse and an economic bust occurs. With the yen carry trade, excess capital derived from unsustainable debt growth flowed from Japan to Iceland causing a boom and bust in Iceland’s economy.

Steve Ludlum of Economic Undertow relates US funds flow to China by way of the dollar carry trade. As long as there are dollars and an interest rate differential there will be investment funds flowing to China to construct millions of empty apartments that are now losing value if for no other reason than there are too many of them, far in excess of organic demand. What is emerging is the required correction and the accompanying deleveraging. According to Victor Shih and others, the total amount of debt carried by the Chinese is much larger than the establishment lets on. Notice that China analysts focus on official government debt or external debt rather than the total public and private, internal and external indebtedness. The Chinese are in hock up to their necks: debt-to-GDP ratio for China is little different from Euro-deadbeat Portugal. I add that the Chinese Materials, CHIM, and the Industrials, CHII, the Airlines, FAA, and the Shippers, SEA, were the first to experience deleveraging as is seen in the chart of CHIM, CHII, FAA, SEA, ACWI.

David Pierson of the LA Times writes of China’s Deflating Housing Bubble Falling home values. Debt-strapped borrowers. Real estate woes dogging the economy. It’s old news in the United States, but now the air has started to leak from another great housing bubble, in China. Home prices nationwide declined in November for the third straight month, according to an index of values in 100 major cities compiled by the China Index Academy, an independent real estate firm. Average prices in the Shanghai area are down about 40% from their peak in mid-2009, to about $176,000 for a 1,000-square-foot home. Sales have plummeted. In Beijing, nearly two years’ worth of inventory is clogging the market, and more than 1,000 real estate agencies have closed this year. Developers who once pre-sold housing projects within hours are growing desperate. A real estate company in the eastern city of Wenzhou is offering to throw in a new BMW with a home purchase. The swift turnaround has stunned buyers such as Shanghai resident Mark Li, who thought prices had nowhere to go but up. The software engineer closed on a $250,000, three-bedroom apartment in August, only to watch weeks later as the developer slashed prices 25% on identical units to attract buyers in a slowing market. Outraged, Li and hundreds of others who paid full price trashed the sales office, scuffled with employees and protested for three days before police broke up the demonstration. Walking away now would mean losing the $75,000 down payment that he borrowed from his working-class parents. “I still haven’t told them,” Li, 29, said of his home’s plummeting value. “It will just make them worry, and it’s already too late.” It’s all eerily similar to the early stages of the U.S. housing crash. The big difference is that the Chinese government intentionally slammed on the brakes. Over the last year it has tightened lending and prohibited the purchase of more than one home in several cities, in a bid to discourage speculators and bring down prices. Chart of Chinese Real Estate, TAO.

Bloomberg reports “Zhu Lei, a property agent for the Serenity Coast luxury residential and hotel complex in Sanya on China’s Hainan island, recalls clients carrying suitcases of cash to shop for holiday apartments last year. ‘We didn’t even have time for toilet breaks because there were just too many clients,’ Zhu said. Today, sales in the second-biggest city on the tropical island compared to Hawaii for its sandy beaches and weather, are ‘bleak,’ he said. A two-year lending binge and the government’s plan to transform Hainan, in the South China Sea, into an international tourism destination helped fuel a 48% surge in Sanya’s home prices last year. Sanya’s home prices have dropped 28% since last December.” (Hat Tip to Doug Noland)

Bloomberg reports “A copy of Manhattan, complete with Rockefeller and Lincoln centers and what passes for the Hudson River, is under construction an hour’s train ride from Beijing. And like New York City in the 1970s, it may need a bailout. Debt accumulated by companies financing local governments such as Tianjin, home to the New York lookalike project, is rising, a survey of Chinese-language bond prospectuses issued this year indicates. It also suggests the total owed by all such entities likely dwarfs the count by China’s national auditor and figures disclosed by banks.”
(Hat Tip to Doug Noland)

Tyler Durden writes China Insolvency Wave Begins As Nation’s Biggest Provincial Borrowers “Defer” Loan Payments.

Alan Greenspan’s credit liquidity policies and Ben Bernanke’s ZIRP monetary policy have been the greatest liberating forces of all time: the US Federal Reserve policy of cheap credit and a falling US Dollar, set investors free. The interest rates in the US have been close to zero, so investors borrowed that money and invested it in stock markets and commodities across the globe. And this week, cheap credit from Mario Draghi resurrected the European Financials, EUFN, and copper mining stocks, COPX. Credit easing policies, QE1, QE2, and now, coordinated central bank dollar FX Swaps, and the ECB’s LTRO, have goosed up stocks. Some of this most recent credit easing made its way into the US stock markets, creating a grand finale sector rotation in consumer staples such as Kimberly Clark, KMB, despite the recently announced diminished profit prospects for next year. Another beneficiary of this tulip money was Procter & Gamble, PG, which sent consumer staples, XLP, to a new high. One of greatest beneficiaries of US central bank easing and now ECB credit easing, have been the preferred shares, producing a steady wealth gain, as is seen in the chart of Claymore Preferred Securities, FFC, which rose 2% this week.

Doug Noland reports on the terrific expansion of money that has occurred through coordinated US and central bank operations. Global central bank “international reserve assets” (excluding gold), as tallied by Bloomberg, were up $1.256 TN y-o-y, or 13.9% to $10.279 TN. Over two years, reserves were $2.658 TN higher, for 35% growth. M2 (narrow) “money” supply jumped $32.3bn to a record $9.672 TN. “Narrow money” has expanded at a 9.9% pace y-t-d. And Mr. Noland relates William Launder of the WSJ reports “Use of the European Central Bank’s overnight deposit facility reached a new record high for the year, suggesting recent measures by central banks and policy makers still aren’t enough to restore confidence in inter-bank lending markets. Banks deposited €346.99 billion ($453.38bn) in the overnight deposit facility, up from €264.97 billion a day earlier and a previous high for the year of €346.36 billion, reached earlier this month. The high level reflects ongoing distrust in inter-bank lending markets, where banks prefer using the ECB facility as a safe haven for excess funds rather than lending them to other banks. And Mr. Noland relates that Tony Barrett of Bloomberg reports “A measure of European Central Bank leverage may grow from a record 30 times, raising the risk of a widening in sovereign bond spreads unless governments commit to a detailed rescue plan for members, Bloomberg Industries said. The central bank’s total assets have risen to 2.46 trillion euros ($3.2 trillion), driving the ratio to capital and reserves above levels reached during the 2008 global financial crisis.”

Beginning in November 2011, the US Dollar, $USD, has been on the rise, in relation to not only world currencies, DBV, and emerging market currencies, CEW, but also the Yen, FXY. This is seen in the USD/JPY rising from 75.7 to 78.0; and its inverse, JYN, falling from 77.9 to 75.5.

A global currency devaluation is underway. The US Dollar, $USD, will continue to rise and unwind carry traders who borrowed dollars for next to nothing in order to speculate on other assets. As competitive currency deflation picks up speed, and as debt, BND, in particular US Treasuries, EDV, TLT, and World Government Bond, BWX, and Emerging Market Bonds, EMB, turn lower, the only safe haven investment will be gold bullion. There will be a renewed flight to safety to gold from risk currencies and from the implosion of credit, causing gold to rise to levels previously thought impossible.

Eurozone sovereign default is inevitable, as the PIGS are among the first to loose their debt sovereignty, and as the global risk trade, being built on carry trade lending, reverses. Italy, EWI, may be the first EU nation to collapse, as it is suffers form chronic inability to access and collect taxes. Rachel Donadio communicates that Italy is now Raising The Stigma On Tax Evasion. An inquiring mind asks, is not Italy insolvent? Chiara Vasarri and Lorenzo Totaro of Bloomberg report Prime Minister Mario Monti’s market honeymoon is ending as Italian bond yields approaching 7% signal mounting concern his government may struggle to sell 440 billion euros ($574bn) of debt next year. And an inquiring mind asks are not the European banks insolvent? Fabio Benedetti-Valentini of Bloomberg reports BNP Paribas SA, Societe Generale SA, Credit Agricole SA and Groupe BPCE, France’s biggest banks, are struggling to fund about 37 billion euros ($48bn) of debt payments due in the first quarter.

History’s first sovereign default came in the 4th century BC, committed by ten Greek municipalities. Now sovereign default will encompass most all nations.

Sovereign Default will cause the most credible of sovereigns to rise to power, where they will work through regional framework agreements to establish global governance for the security and stability needs of the world’s ten regions. The rise of the ten toed kingdom of regional global government is already underway with the EU becoming the first totalitarian collective as technocratic government has been installed by the EU ECB and IMF Troika. And the rise of this monster is seen in the Tyler Durden report World’s Second And Third Largest Economies To Bypass Dollar, Engage In Direct Currency Trade.

The death of fiat money means that gold bullion and diktat will be universally recognized currencies.

Deleveraging leads to diktat. Out of sovereign armageddon, that is a credit bust and financial collapse, not by any human action, but rather by fate, the curtains will open, and The Sovereign, and his banking partner, The Seignior, will step onto the world’s stage. In a credit exhausted and currency devalued world, the people will come to place their faith in the word will and way of these two; they will give their full allegiance to their diktat.

6) … One Of The Best Deals Of The Year: Kinder Morgan Purchase Of El Paso Corporation
Deal Book reports on what was likely one of the best public deals of 2011, On October 16, 2011, Kinder Morgan agreed to buy the El Paso Corporation for about $21.1 billion in cash and stock, striking one of the biggest energy deals in history, to tap into a boom in natural gas drilling and production.Through the deal, Kinder Morgan, KMP, will become the biggest of North America’s midstream energy companies, which are entities that process oil and gas products before transporting them to production facilities. Kinder Morgan will own or operate about 67,000 miles of pipelines stretching across the continent. “If you believe in the future of natural gas, you believe in putting together the biggest possible network,” Richard D. Kinder, Kinder Morgan’s chief executive, said in an interview. He added that the deal was “a once-in-a-lifetime opportunity.” Drilling and producing oil and gas from shale and other tight rocks has taken off in the last five years, as Exxon Mobil and other major energy companies have purchased smaller players with sizable stakes in the big shale fields. But many of the country’s shale fields, including the Bakken in North Dakota, the Eagle Ford in south Texas and the Marcellus in Pennsylvania, lack the pipeline capacity to carry all the oil and gas being produced there. The surge in output has produced such a glut that the price of natural gas has plummeted, and excess gas is being burned off instead of being captured. Of note, Natural Gas, UNG, prices have been plummeting.

7) … Jobs Are Where The Oil And Gas Are
Floyd Norris of the NYT writes Jobs Are Where The Oil And Gas Are. States with oil and gas development have gained the most jobs; these being North Dakota, Wyoming, Utah, Texas, Oklahoma. States with the most toxic mortgage lending have lost the most jobs; these being Nevada, Michigan, Arizona, Florida, Georgia, These states were epicenters of the mortgage credit crisis. MyBudget360 relates that 4 states with a disproportionately large number of Alt-A mortgages, and a lot of no documentation, or low documentation loans, were primarily responsible for the toxic lending epidemic: Nevada, 48%, Arizona, 29%, Florida, 29%, California, 27%

8) … Enviornmental Mitigation Begins In Bellingham Bay
John Stark of the Bellingham Herald reports that Enviornmental Mitigation Work Employs 50 As Cleanup Of Bellingham Bay Gets Underway. Excavators have built a dirt berm around the margins of the site to reduce runoff into Bellingham Bay as work continues on an interim environmental cleanup project designed to reduce the leaching of contaminants from the half-century-old garbage deposits into the water. I relate that Bellingham is the epitome of gentrification in a university town and what was a former Georgia Pacific paper and pulp mill. Now beer gardens, brew pubs, upscale hamburger joints, vitamin stores, natural food retailers, bicycle shops, and home improvement stores, thrive. Carry trade investment flowed into Bellingham as the Canadian Currency, the Loonie, expanded over the years through mining and through migration from China in British Columbia, as well as building for the Olympics. Bellingham has benefited from relocation of retired Microsoft and Boeing workers moving out of the Seattle to the city of subdued excitement. Investors who years ago moved from Southern California, and bought rental properties have done quite well financially. Now a company that builds energy service rigs for offshore Alaska energy exploration and development is moving to town. And the fishing industry and seafood processing companies are thriving on a good seasonal harvest. Employment at Heath Techna, an aircraft interior manufacturer, and Sterling Life Insurance, has remained strong.

Kansas: A Tea Party Test Case

December 26, 2011

Annie Gowen and Magda Jean-Louis of The Washington Post writes in Seattle Times Kansas: A Tea Party Test Case If you want to know what a Tea Party America might look like, there is no place like Kansas.

In the past year, three state agencies have been abolished and 2,050 jobs cut. Funding for schools, social services and the arts have been slashed. The new Republican governor rejected a $31.5 million federal grant for a new health-insurance exchange because he opposes President Obama’s health-care law. That’s just the small stuff. An “Office of the Repealer” has been created to reduce the number of laws and regulations, and the Repealer is canvassing the state for more cut suggestions. Republican Gov. Sam Brownback now plans to roll out proposals to change the way schools are funded, taxes are levied and state penions are administered.

RightWeb relates Sen. Sam Brownback (KS-R), one of the Senate’s leading social conservatives, has also been a key promoter of an aggressive war on terror focused on the Middle East and potential threats to Israel. Brownback came to Washington in 1990 as a White House Fellow working under U.S. Trade Representative Carla Hills during the George H.W. Bush administration and in 1994 was elected to the House of Representatives as part of a wave of Republican victories that gave the GOP control of Congress. Self-described as a member of the “hard core” that drove the party’s anti-big government agenda, Brownback won the 1996 election for the Senate seat vacated by Bob Dole. He won a full term in 1998, was reelected in 2004.

A year after voters vaulted hundreds of tea-party candidates to power on Capitol Hill and in state capitals, the movement’s goals are being pursued aggressively in states such as Wisconsin, Ohio and Texas; but in Kansas, as nowhere else, tea-party fervor is reshaping government. The same elements of the Republican Party that are driving the confrontation over taxes and spending in Washington, D.C. completely control Kansas. The GOP controls the state House with the biggest majority in half a century. Emboldened, Brownback, the state’s former two-term U.S. senator, has embarked on his overhaul at a breathtaking pace. “It’s a revolution in a cornfield,” said Arthur Laffer, the 71-year-old architect of supply-side economics and former Reagan economic adviser who is working with the governor. “Brownback and his whole group there, it’s an amazing thing they’re doing. Truly revolutionary.” (Arthur Laffer founded the Free Enterprise Fund which lobbied for Social Security privatization, the permanent repeal of estate tax, and for tort reform; It is also opposed to the Sarbanes–Oxley Act.) Brownback, 55, declined to be interviewed but has said he wants to turn his small farming state into a national showcase for the virtues of limited government. “The states are to be the laboratory for democracy,” he said recently at a dinner at the Kansas Policy Institute, a think tank in Wichita. “Why not here and why not us and why not now?”

The governor has said his main concerns are creating jobs, cutting taxes and bringing new businesses to the state, which has been losing population over the past decade and ranks near the bottom in private-sector job creation. “We cannot continue on this path and hope we can move forward and win the future,” he said in the Wichita speech. “It won’t work. We have to change course, and we’re going to have to be aggressive about it.” Brownback has shown little patience with anyone who might stand in the way of the revolution. Nine moderate state Senate Republicans who crossed him face primary challengers in 2012.

Kansas has been one of the most reliably Republican states in presidential elections. Only three Democrats have won there in the past 100 years. In 2008, John McCain beat Obama 57 percent to 41 percent, winning all but three of the state’s 105 counties.

Earl Glynn writing in Political Party Trends in Kansas relates Wyandotte County is the “most Democratic” county while Washington County is the “most Republican” county with the 103 other counties in-between.
Wikipedia relates that in 2010 Washington County the Keystone-Cushing Pipeline, Phase II, was constructed, running north to south, with much controversy over tax exemption and environmental concerns if a leak ever occurs 3 and 4.
PBS Patchwork Nation relates that the demographic nature of Washington County, KS, is Tractor Country, where mostly rural and remote smaller towns with older populations predominate, and are typically among the least diverse counties, with a 95 percent white population
PBS Patchwork Nation relates that tea party numbers are located in the rural, agricultural “Tractor Country” counties, ie Sioux County, IA, and in the “Military Bastion” counties, which are located near bases for the armed forces. Next down the list are the wealthier “Monied ‘Burb” counties, and the “Mormon Outposts,” which have large numbers of LDS church members.
PBS Patchwork Nation continues, as one might predict, the three community types with the highest percentage of minorities, score lowest in terms of tea-party membership: the “Industrial Metropolis“, ie St Louis, and “Minority Central“, ie Edgecombe County, NC., ie Darlington County, SC, and Immigration Nation, ie Laredo, which is in Webb County, TX, where adult illiteracy prevails. Wikipedia also relates that Johnson County is largely suburban, being part of the greater Kansas City metropolitan area, and containing many of its affluent southwestern suburbs. As of the 2010 census, the county population was 544,179.1 Its county seat is Olathe,2 and its most populous city is Overland Park. The county has the highest median household income and highest per-capita income in Kansas and is among the most affluent in the United States, boasting the 19th highest median household income in 2000,3 and the 46th highest per-capita income in 2005.3 In 2010, Money magazine, in its list of the 100 Best Cities in the United States in which to live, ranked Overland Park 7th, and Shawnee 17th.4 In 2008 the same magazine also ranked Olathe 11th.5)

PBS Patchwork Nation relates that Citizens of Tractor Country realize that former Massachusetts Governor Mitt Romney is the GOP’s clear front-runner on the national level. For rural, conservative Iowans, a Romney nomination would be a re-enactment of McCain ‘08.
PBS Patchwork Nation relates It was evident fairly early in 2008 that Romney had problems with key parts of the GOP base — and key Republican-voting county types in Patchwork Nation. The caucuses in Hawkeye State kicked off the 2008 race as it always does. When you look at the results, you see the problems that may continue to haunt Romney. The win for former Arkansas Gov. Mike Huckabee was something of a surprise, but look at where he won, and Romney didn’t, and you’ll notice a pattern. There are nine rural, agricultural Tractor Country counties in Iowa and Huckabee won them all. Romney did better in the aging Emptying Nest counties and the Monied Burb counties. You can see the county breakdown of Iowa on the map below. Of course, Huckabee did better everywhere in the state, but his ability to run the table in those Tractor Country counties in 2008 was noteworthy. As we have noted in more in-depth reporting, those counties are among the most reliably Republican places in the country. And Romney’s inability to win any of them speaks to larger issues he has with solid GOP voting areas. The Burbs and Emptying Nests were more politically divided in 2008. And in 2011? Sioux Center, a Tractor Country community in the northwest corner of Iowa, has seen its share of 2012 politicking and some opinions are forming. “About 1 in 4 people [here] say they don’t want a Mormon,” Donald King, a professor at Dordt College, a Reformed Christian College, writes in an email. “We had a big turnout for [Michele] Bachmann, she is always really prepped for her audience and knows exactly which buttons to push (abortion and gay marriage).” … And Romney had similar problems with a different kind of county in 2008 in Missouri: socially conservative Evangelical Epicenters. The Show-Me State has 54 of those counties and Romney did not win a single one of them in the 2008 primary. Again, they mostly went to Huckabee. The map below shows how those counties, in the yellow, are scattered across Missouri

At the state level, though, Kansans routinely have elected moderate Republican governors. More recently, the state elected Democrat Kathleen Sebelius, now Obama’s secretary of health and human services.

Then came Brownback. For most of his long political career, he has been an unabashed social conservative and deeply religious man. He converted from evangelical Christianity to Roman Catholicism in 2002. He often speaks about how a brush with cancer deepened his religious views and influenced his political convictions. As governor, Brownback has pushed for stricter abortion controls, the expansion of faith-based programming and initiatives that promote marriage and fatherhood.

“For 40 years, we had this moderate Republican-Democratic coalition running the state, and suddenly it’s pretty much gone,” said Burdett Loomis, a University of Kansas political-science professor.

Brownback defied the Legislature in cutting funding for the arts, leaving Kansas as the only state without a state-funded arts commission. And his plan to shutter nine social-service offices also created a firestorm.

One of Brownback’s top lieutenants until this month was Robert Siedlecki, a former legal adviser on faith-based initiatives in the George W. Bush administration. As secretary of social and rehabilitation services, he cut dozens of jobs, closed offices, doubled the size of the team that investigates welfare cheats and rewrote state contracts to encourage state-services providers to promote pro-fatherhood and pro-family ideals. (Robert Siedlecki spoke at the Kansas Family Strengthening Summit)

He also hired a Florida pastor, Rick Marks, to head the state’s new healthy-marriage initiative.
To help fund its new fatherhood initiative, Kansas shifted $600,000 from an Early Head Start program in Riley County, which at 20%, has double the state’s percentage of residents in poverty. Head Start officials said they have strong fatherhood programming in place and would rather have used those funds to get children off the waiting list for day care.

Brownback has been so single-minded in his pursuit of smaller government that some accuse him of being an autocrat. T-shirts emerged with the slogan “Welcome to Brownbackistan.” While many in the tea-party movement have praised his cost-cutting, they also wonder whether Brownback, who sought the GOP presidential nomination in 2008, is using Kansas as a stage for another White House run. “We’re pleased with the cuts he is making,” said Lynda Tyler, 48, a Wichita stockbroker and tea partyer. “I hope the cuts he makes are able to last. For some reason, I don’t know why, I have this feeling he’s going to come in slashing and burning and he’s doing it so he can point back and say, ‘See what I did for Kansas? Maybe I can do it for the country.’ ”

The Kansas Policy Institute, where Brownback delivered his recent speech to warm applause, is funded by billionaire brothers Charles and David Koch. The Kochs, whose oil-and-energy conglomerate is based in Wichita, have been among his biggest supporters since he first ran for Congress in 1994 and have been boosters of the tea-party movement through their group Americans for Prosperity. The Koch family, Koch Industries and Koch employees have contributed at least $143,000 to Brownback’s campaigns over the years, according to federal and state election records.

Critics say the Kochs have too much say about what is happening in Kansas. Brownback appointed one Americans for Prosperity consultant to be his budget director and hired the wife of another leader as his spokeswoman. The Kochs “have been handed the keys to the governor’s office,” said state Senate Minority Leader Anthony Hensley, a Democrat. “They have a tremendous amount of influence in Kansas politics and nationally.” Bill Kassebaum, a GOP former state representative and son of former Sen. Nancy Landon Kassebaum, R-Kan., said Brownback has struck a tone that, so far, has resonated with many Kansans. “I would say the majority of voters are happy with it,” Kassebaum said. “I think a lot of people don’t realize the role government plays in their lives until it’s gone. They may not be happy with what’s left.” In a windswept corner of the prairie, Julie Britton is economic development director of tiny Rawlins County, population 2,519. She voted for the governor, but she also is a member of an arts group that works in rural counties that lost $9,000 in cutbacks. As a result, her town will have only two shows this year, a guitar concert and a children’s performance of “Chicken Little.”
“We all expected him to have to make some changes,” she said. “We didn’t expect for him to make as many drastic changes as he has made.”

As the opening session of the Legislature approaches in January, officials are preparing for another bruising budget battle. Brownback plans to cut income-tax rates and change the 20-year-old funding formula for schools, a move that opponents fear could benefit wealthier districts. “It will be a bloodbath,” said state Sen. Laura Kelly, a Democrat. “There’s going to be a raft of things that will come, but details are lacking. It’s all been so clandestine.” For his part, Brownback sounded a triumphant note during his speech in Wichita. “We’ve started our reforms,” he said. “It’s going to take some time. We’ve gotten off to a good start.”

Loma Linda: A Blue Zone And As A Result, One Of The Healthiest Communities In The World

December 26, 2011

The Blue Zone characteristics of Loma Linda residents, contribute to the city as being one of the healthiest communities in the world, as evidenced by the longevity of its residents; these are:

  1. Membership which includes five attributes, boundaries, emotional safety, a sense of belonging and identification, personal investment, a common symbol system.
  2. Influence works both ways: members need to feel that they have some influence in the group, and some influence by the group on its members is needed for group cohesion.
  3. Members feel rewarded in some way for their participation in the community.
  4. Shared emotional connection. The “definitive element for true community” (1986, p. 14), it includes shared history and shared participation (or at least identification with the history).

Other Blue Zone characteristics include, alcohol in moderation, sexual abstinence for singles, good sleep hygiene, limited food intake, and stress management.

Blue Zone individuals know their values, passions and talents, and how to share them on a regular basis. But inner city living, is marked by mental illness, divorce, promiscuity, out of wedlock children, unmarried females heading up households, a cynical view of the future, parents who have not completed high school, lack of a family ethic of education, lack of tutoring resources, antisocial, aggressive, and confronting behavior, where Elijah Anderson relates, the “code of the streets” prevails.

Blue Zone individuals find time each day to meditate, have a spiritual practice, nap, pray or enjoy a happy hour; but inner city living is marked by listening to rap music. Blue Zone individuals have a sense of faith and right conduct that does not involve confrontation or conflict with others.

Blue Zone individuals exercise daily. Loma Linda residents often go walking.

In Blue Zones, sexual relations are monogamous, and the functions of the family comes first. The family is where the individual develops socialization skills and learns healthy life habits.

But inner city living is marked by a lack of a family education ethic, which uses books and coaching to teach one to bridle physical desires, strengthen good morals, develop critical thinking skills, and learn positive values as well as self esteem. In the inner city, the family is not involved in vocabulary or math skill development, nor does sex education come at home. Kirby Anderson writes in The Teen Sexual Revolution that Whitehead concludes that comprehensive sex education has been a failure. For example, the percent of teenage births to unwed mothers was 67 percent in 1980 and rose to 84 percent in 1991. In the place of this failed curriculum, Whitehead describes a better program. She found that “sex education works best when it combines clear messages about behavior with strong moral and logistical support for the behavior sought.” One example she cites is the Postponing Sexual Involvement program at Grady Memorial Hospital in Atlanta, Georgia, which offers more than a “Just Say No” message. It reinforces the message by having adolescents practice the desired behavior and enlists the aid of older teenagers to teach younger teenagers how to resist sexual advances. Whitehead also found that “religiously observant teens” are less likely to experiment sexually, thus providing an opportunity for church related programs to stem the tide of teenage pregnancy.

Inner city living is often marked by a father’s use of corporal punishment. A wide variety of studies indicates indicates that corporal punishment, when compared with other methods of punishment, of older children and adolescents, is not effective and is associated with increased risk for dysfunction and aggression later in life. Research has proved Dr. Dobson’s dogma on corporal punishment to be in error.

Blue Zone individuals perceive of themselves as being of the right tribe and take stock of who they have as acquaintances and friends. Blue zone individuals know others who possess and practice healthy perspectives.

Dan Buettner, author and anthropological explorer, is the Minnesota native traveled to four countries to study the world’s heartiest humans. In Sardinia, Okinawa, Costa Rica, and Loma Linda, California, Buettner partnered with scientists to examine anomalous pockets where the number of centenarians vastly exceeded the statistical average. These areas became the subject of his book The Blue Zones: Lessons for Living Longer From the People Who’ve Lived the Longest, which is available from Amazon.

Dan Buettner’s research is covered in numerous National Geographic articles such as The Nine Secrets of a Long Life and the Quest For Longevity on Okinawa.

One can reside in an inner city neighborhood, yet live in a blue zone. I grew up in a middle class neighborhood, and often wondered why there was such a wide variation in the character of my peers. For many character was a matter of family childhood education. Those who have done well in life and who have had good jobs, came from a family that had a religion, and where education was practiced at home, and where a college bound desire was inculcated. For these, clean living came by a faith, whether it was Baptist, Mormon, or Jewish. Such contrasted with my next door neighbors, who were a school cheerleader and a local drug dealer, who by age 20 owned the best car of anyone in the neighborhood, a Maserati; they were loved and used by many. I’ve observed that genetics does play a large role in determining the health outcome of one’s life, where some are healthy and others not so healthy. Physical and mental health is determined in large part by what goes on in the womb. I’ve observed two people coming from the same mother, one is pliable, but the other bipolar. Health outcome is established in the womb. King David, was fortunate in that he was wonderfully made, faithfully minded, amazingly redeemed, caringly nurtured, truly blessed, highly favored and deeply loved. Yes, David was wonderfully made in his mother’s womb. For him, nothing interfered with God’s development process.

The sovereignty of God determines all things. Exchanged Life Ministries relates that in all things, the will of God prevails, And the Physician Luke wrote in the first century that God determines the times and places in which one will live. God’s word declares, “Remember the former things of old, For I am God, and there is no other; I am God, and there is none like Me, Declaring the end from the beginning, And from ancient times things that are not yet done, Saying, ‘My counsel shall stand, And I will do all My pleasure’,” Isaiah 46:9-10.  And His word states, “Now I tell you before it comes, that when it does come to pass, you may believe that I am He”, John 13:19.

End Time Prophecies provides a video describing the Bible prophecy in Daniel 7, where Daniel saw a vision of four beasts. This is a parallel prophecy to Daniel 2, where king Nebuchadnezzar had a dream of a statue. Just like the statue had four metals, each representing four kingdom, so does these four beasts each represent the same four kingdoms, namely Babylonian, Medo-Persian, Greek and Roman Empires respectively. Today a revived Roman Empire is forming in the Eurozone, and one day it will morph into a one world government as foretold in bible prophecy of Daniel 7:7, where a global leader, Revelation 13:5-10, and a global banker, Revelation 13:11-18, will install a one world currency providing for global seigniorage, Revelation 13:17-18. The good news is that “In the time of those kings, the God of heaven will set up a kingdom that will never be destroyed, nor will it be left to another people. It will crush all those kingdoms and bring them to an end, but it will itself endure forever”, Daniel 2:44. This verse is reminiscent of Isaiah 9:7, “Of the increase of His government and peace there shall be no end.”

A King Is Coming To Rule The Eurozone

December 23, 2011

The Lord is opening First Seal of the Apocalypse, Revelation 6:1-2, and he is bringing forth the EU ECB IMF Troika, and establishing its fiscal rule over Greece, as it has lost its debt sovereignty, and has to look to the sovereign authority of the Troika for fiscal aid. Yes, look! A white horse. The one riding it has a bow with no arrows affixed to it. A crown is given to him. He goes forth conquering so he might finish his conquest. We can identify several elements in this First Seal:

  • a crowned king
  • with a bow, having no arrows affixed to it
  • riding a white horse
  • having conquered

This first horseman of the apocalypse is passing the baton of sovereignty from nation states to the the EU ECB IMF Troika. With the provision of seigniorage aid to Greece, the appointment of technocratic government in Greece and Italy, and with Mario Draghi providing the Long Term Refinancing Operation, LTRO, that is the ECB’s funding facility, whereby the ECB takes in distressed securities and loans out money for three years, at the average of the ECB’s benchmark rate, currently 1%, over the period of the loan, the seigniorage of fiat money, that is the moneyness of fiat money, is failing, and the seigniorage of diktat is increasing.

The Sovereign Lord God, Psalms 2:4-5, is operating through the first horseman of the apocalypse to bring forth a New Europe, where the Sovereign, Revelation 13:5-10, and his banking partner, the Seignior, Revelation 13:11-18, will rule over a federal Europe, with fiscal rule and fiscal sovereignty coming through a fiscal union, and the ECB or the Bundesbank, empowered a federal bank.

The ten toes of regional global governance presented in Daniel 2:31-33, being mired in the iron of diktat and clay of democracy, will eventually crumble, and the Sovereign and the Seignior will eventually rise to rule the world, and install a one world government, Daniel 7:7, a one world currency, and provide global seigniorage, Revelation 13:17-18.

Other horsemen will follow in the first horseman’s steps to assure that regional global governance rules over all of mankind, red symbolizing violence and war, black symbolizing starvation and misery, and pale symbolizing devolution and death.

The first horseman has a single crown (Gk. stephanos) of victory, whereas in Revelation 19, Jesus has many crowns (Gk. diademata), signifying His sovereignty.

In  our increasingly credit devalued and currency depreciated world, only diktat can provide order and security. People will be amazed by this, they will marvel, and place their trust in diktat; they will give their full allegiance to it, Revelation 13:3-4. If one perceives freedom and choice, then enjoy it while one may. Open Europe relates that Welt and FTD report the former chairman of the Federation of German Industries Hans-Olaf Henkel, a well-known critic of the euro, has joined the ‘Free Voters’ political platform, which will run in the 2013 German national elections. A comment piece in FT Deutschland notes that “with Henkel, all those voters who are critical of eurozone bailouts can have a political voice.” Mr Henkel is an anachronism in the Age of Diktat, where only the Sovereign and the Seignior have political voice, and use their political capital to replace fiat money, as well as to rule in a totalitarian collective. The Zero Hedge report Swiss, Germans Set To Unleash Capital Controls, foretells draconian authoritarian measures over investments are coming.

The statue of the progression of human governments, Daniel 2:31-44, reveals that God has purposed for an eternal kingdom which will be ruled by His Son, Revelation 2:26-27, where He will reign in righteousness, Isaiah 11:4-5, … Isaiah 16:5, … Isaiah 32:1. His kingdom will be characterized by peace, Isaiah 2:4. The human life span of those with earthly bodies will increase, Isaiah 65:20-23, sickness and deformities will be healed, Isaiah 29:17-19, … Isaiah 33:24. The earth itself will also experience restoration as its decay will be reversed and the topography of the earth will be changed, Isaiah 2:2, … Ezekiel 47-48, … Zechariah 14:4-10, … Romans 8:19-23. There will be no double entry bookkeeping, and no credit or debt issued. Social problems of poverty will be solved, Psalm 72:12-13. The earth will enjoy productivity as even the deserts and wilderness will become useful, Isaiah 35:1-7, … Amos 9:13-14, … Zechariah 14:8.

God has moved artists to develop art depicting our apocalyptic age. There is a lot of apocalyptic sculpture and paintings at Denver International Airport, including the horse that one blogger says ”looks as if it galloped straight out of hell.”

Regional Global Governance Will Emerge To Rule In The World’s Ten Regions

December 23, 2011

Bible prophecy reveals that out of a credit bust and financial system breakdown, regional global governance will emerge to rule in the world’s ten regions.

In 1974, the 300 elite of the Club of Rome came forth with their Clarion Call for regional global governance as a resolution of the deleveraging, and derisking out of the Milton Friedman Free To Choose floating currency regime, known as Neoliberalism.

In July 2011 investors sold out of stocks when they became aware that a European debt union had formed, and then currency traders sold out of their carry trade investments in August through October after Angela Merkel and Nicolas Sarkozy called for a true European economic government, and after Herman Van Rompuy made for a plea for a sovereignty union. These leaders, together with world central bankers, have heard and heeded the Clarion Call, and are effecting both a Eurozone and world wide economic, banking, monetary and political coup d etat, Revelation 6:1-2, which will produce a ten toed kingdom of regional economic government, Daniel 2:31-33, where political diktat replaces fiat money.

The Beast Regime of Neoauthoritarianism is growing out of the two iron legs of global hegemony, the UK and the US, Daniel 2:31-33, that have governed the world since the late 1700s.

God, in 1776, through the First Anglo-Maratha War, developed the UK into a global hegemony power.

And God, through the Greenback Movement, named in honor of the Union’s Civil War currency, unbacked by gold and printed with green ink, developed fiat money, started the US on its road to global hegemony.

The presentation of the ECB’s LTRO lending facility of December 21, 2011, and the coordinated central banks dollar FX swaps of November 30, 2011, provide credit liquidity, but they do not address either bank insolvency or sovereign insolvency.

Sovereign Armageddon, that is a credit bust and investment collapse, is coming soon. And new sovereigns, will emerge. Even now, the Sovereign Will of God Ephesians, 1:1-11, is passing the baton of sovereignty from nation states such as Greece and Italy, to sovereign leaders and sovereign bodies, such as the EU ECB IMF Troika.

The credit bust and investment collapse will be the break in the progression of kingdoms seen in Daniel 2:31-33, that transitions government rule from the two iron legs of UK and US empire hegemony, to the ten toed kingdom of regional global governance, which will be totalitarian collectives where political diktat replaces fiat money.

With the provision of seigniorage aid to Greece, and the appointment of technocratic government in Greece and Italy, the seigniorage of fiat money, that is the moneyness of fiat money, is failing and the seigniorage of diktat is increasing.

The Sovereign Lord God, Psalms 2:4-5, is operating to bring forth a New Europe, where the Sovereign, Revelation 13:5-10, and his banking partner, the Seignior, Revelation 13:11-18, will rule over a federal Europe, with fiscal rule and fiscal sovereignty coming through a fiscal union, and the ECB or the Bundesbank, empowered a federal bank.

The ten toes of regional global governance presented in Daniel 2:31-33, being mired in the iron of diktat and clay of democracy, will eventually crumble, and the Sovereign and the Seignior will eventually rise to rule the world, and install a one world government, Daniel 7:7, a one world currency, and provide global seigniorage, Revelation 13:17-18.

The Sovereign’s rise to power will come via the first horseman of the apocalypse, the rider on the white horse, carrying a bow, with no arrow fitted to it, Revelation 6:1-2, to effect a bloodless economic and political coup d etat, transferring sovereignty from nation states to regional authorities, where fiscal sovereignty in Europe resides in the EU ECB IMF Troika. Other horsemen will follow in his steps to assure that regional global governance rules over all of mankind, red symbolizing violence and war, black symbolizing starvation and misery, and pale symbolizing devolution and death. The first horseman has a single crown (Gk. stephanos) of victory, whereas in Revelation 19, Jesus has many crowns (Gk. diademata), signifying His sovereignty.

In a credit devalued and currency depreciated world, only diktat can provide order and security. People will be amazed by this, they will marvel, and place their trust in diktat; they will give their full allegiance to it, Revelation 13:3-4. If one perceives freedom and choice, then enjoy it while one may. Open Europe relates that Welt and FTD report the former chairman of the Federation of German Industries Hans-Olaf Henkel, a well-known critic of the euro, has joined the ‘Free Voters’ political platform, which will run in the 2013 German national elections. A comment piece in FT Deutschland notes that “with Henkel, all those voters who are critical of eurozone bailouts can have a political voice.” Mr Henkel is an anachronism in the Age of Diktat, where only the Sovereign and the Seignior have political voice and use their political capital to replace fiat money, as well as to rule in a totalitarian collective. The  Zero Hedge report Swiss, Germans Set To Unleash Capital Controls, foretells draconian authoritarian measures over investments are coming.

The statue of human governments seen in Daniel 2:31-44 is provided to reveal that God has purposed an eternal kingdom ruled over by His Son, Revelation 2:26-27, where He will reign in righteousness, Isaiah 11:4-5, … Isaiah 16:5, … Isaiah 32:1. His kingdom will be characterized by peace, Isaiah 2:4. The human life span of those with earthly bodies will increase, Isaiah 65:20-23, sickness and deformities will be healed, Isaiah 29:17-19, … Isaiah 33:24.  The earth itself will also experience restoration as its decay will be reversed and the topography of the earth will be changed, Isaiah 2:2, … Ezekiel 47-48, … Zechariah 14:4-10, …  Romans 8:19-23. Social problems of poverty will be solved, Psalm 72:12-13. The earth will enjoy productivity as even the deserts and wilderness will become useful, Isaiah 35:1-7,  … Amos 9:13-14, … Zechariah 14:8.

There is a lot of apocalyptic art at Denver International airport, including the horse that one blogger wrote “looks as if it galloped straight out of hell.”