Archive for February, 2012

First A Global Deflationary Credit Collapse Then Monetary Anarchy Worldwide

February 29, 2012

Financial Market Report For February 29, 2012

Introduction
Bubbles are readily seen in all fiat asset classes, that is stocks, bonds, and commodities, as credit liquidity policies of the world wide central banks have stimulated inflationism. The world major currencies, DBV, and emerging market currencies, CEW, have reinflated since the 2011 summer sell-off when investors feared, with justification, that a debt union had formed in the EU, with the result that world stocks, VT, and junk bonds, JNK, have risen over the last eight months.

Yet the bubble money machines have reached the end of sustainable bubble making capability. The chart of total bonds, BND, and the charts of credit providers, such as Master Card, MA, seen in this Finviz Screener, suggests that peak credit is being achieved. Countries now turning lower include Argentina, ARGT, on a downturn in its banks, and Israel, EIS, on fears of a global Eurasia war.

Global Materials, MXI, manifested bearish engulfing today, suggesting a possible turn lower, in the mining shares, seen in this Finviz Screener. And World Financial Institutions, IXG, seen in this Finviz Screener traded lower turned lower as well, producing a spinning top doji in the S&P, SPY, at the top of an ascending wedge.

Please consider that today could be the topping out of an Elliott Wave 2 Up in the S&P, as seen in this monthly chart and the beginning of an Elliott Wave 3 Down. The 3rd Wave Down is the most destructive of all economic waves, as it for all practical purposes destroys all wealth created on the prior waves up.

Fiat money has expanded to its full potential. Soon, the global debt trade will exhaust, and  competitive currency devaluation, will turn risk appetite to risk avoidance, with the result being derisking out of stocks, and deleveraging out of commodities.

Monetary anarchy will eventually cause price inflation in countries outside of the US as they increasingly have to sell more and more of their currencies to buy commodities which are denominated in the US Dollar, $USD, UUP, which manifested bullish engulfing today. In testimony before Congress, Ben Bernanke warned on jobs. Soon real inflation will come to those without employment — having no income, the price of everything will seem really high.

Wealth can only be preserved by dollar cost averaging into, and taking possession of, and safely storing, gold bullion. In a world of failing sovereign, gold will be the premier form of sovereign wealth.

The dynamos of growth and profit that governed capitalism are losing their power through failure of the debt trade, specifically the failure of neo liberal credit and the failure of fiat money on the loss of confidence in central bank monetary policies. The dynamos of regional security, stability, and sustainability are powering up regional global governance.

The free monetary system as envisioned by Hayek, Rothbard, and Mises is simply a mirage on the Neoauthoritarian Desert of the Real. The diktat monetary system will provide diktat for both the money and credit needs for each of the world’s ten regions.

First A Deflatinary Credit Collapse Then Monetary Anarchy
Greece, and Portugal, are at the forefront of nations state that are losing their fiscal sovereignty as regional sovereign leaders and sovereign bodies dictate monetary policy, fiscal policy, and economic policy. The fiat monetary system is being replaced by the diktat money system, which will come to rule in each of the world‘s ten regions.

Regionalization is the new direction in globalism, as the ECB’s Sovereign Bond Action, and two regional framework agreements, the Fiscal Compact with its debt brake, and the Second Greek Bailout Agreement, have established a totalitarian collective in the Euro zone, where monetary cardinals under the monetary pope, Mario Draghi, will proceed with new economic and monetary policy, and budget commissioners will proceed with fiscal austerity and structural reforms. A monetary union, a fiscal union, and a structural union is forming to complement the Euro currency: a Federal Europe is now emerging. Tyler Durden writes “We suspect … CDS is pricing in the longer-term subordination and termed out insolvency risk much more clearly than the illiquid bond market does”. This communicates  that the ECB is now the sovereign monetary authority, having usurped the monetary authority of EU nation states. Also the ECB with its LTRO 1 and LTRO 2, has effectively regionalized European Financials into a One Euro Bank. Thus the ECB has effected a monetary coup d etat, and now has sovereign authority in the monetary affairs of Europe. Along these lines, Euro Intelligence reports Jean-Claude Juncker says he wants a EU Commissioner with the special task of co-ordinating the Greek reconstruction efforts. In an interview with Die Welt, Jean Claude Juncker revived the German idea of a Kommissar for Greece, but with some important modifications. He said the eurozone would have to strengthen the Greek infrastructure through a much better use of structural funds. The same applied to improvements in competitiveness. This job requires political coordination, and should be entrusted to a European Commissioner, with a specific responsibility for the reconstruction of the Greek economy. Juncker make clear he does not want a commissioner to enforce savings, but to aid in reconstruction. It was insufficient that finance ministers deal with this matter on a monthly basis.

The failure of the debt trade in Greek sovereign debt has pushed the European Central Bank to print Euros with its LTRO 1 and LTRO 2, and has caused political capital to rise to replace investment capital, with the three memoranda of 38 reforms, as well as with the February 9, 2012, memorandum of understanding, the Fiscal Compact with its country specific debt brakes, with the result that capitalism has died and regional global governance is rising to replace it.

Greek Socialism is a relic of the bygone era of Neoliberalism which featured a Banker regime. The world is transitioning into Neoauthoritarianism which features a Beast regime that occupies in all of mankind’s seven institutions and in all of the world’s ten regions. The Beast regime is rising out of the most profligate Eurozone state, that being Greece, which was a political machine that opposed any meritocracy and competition, and which provided pork based upon patronage. Greece was the most non competitive and socialistic nation in the EU, and as a result has been in a recession for the last four years. Greece was a country where tax enforcement policy was subject to bribery and where flaunting of tax authority is considered patriotic. The major industry, shipping, is run by Greek shipping magnates who have transferred their wealth into banks in Switzerland and the City of London, and into Caribbean Island Pirate Coves. Greece is now a client state of a Federal Europe.

Regional statism will likely be the next step forward in the New Europe, where monetary cardinals, that is regional stakeholders exercise economic oversight over resources and manufacturing, as well as provide credit, as financial armageddon, that is a credit bust and financial collapse, is being held in abeyance, but cannot be avoided. Lacking any money good, diktat will be de rigueur, and used for both money and credit.

The massive Second Greece Bailout Agreement, the defacto regionalization of banks creating a One Euro Bank, and LTRO 2, marks a turning point in mankind’s history as regional global governance is rising to replace capitalism.

Major world currencies, DBV, and emerging market currencies, CEW, will soon be turning lower, when it becomes apparent that Greece is an insolvent nation, and that its sovereign debt is unsustainable, as Open Europe writes Take III: Don’t bore me with the details. Felix Salmon writes The Improbable Greece Plan. Greece’s debt dynamics get even worse. But of course even with well-below-market interest rates, Greece is still never going to pay that money back. The cost of this plan is €130 billion right now, and €170 billion over three years, through the end of 2014; it just continues going up from there, with no end in sight. Remember that total Greek GDP, right now, is only about €220 billion and falling.

King World News relates Fears of debt contagion. These, as well as fears of decreased growth, will cause disinvestment out of stocks and delveraging out of commodities, as fiat money dies globally on competitive currency devaluation.

Future EU Leader’s framework agreements will serve as the constitution for the New Europe, and usher in the ten toed kingdom of regional global governance, where the Beast Regime of Neoauthoritarianism, will be replacing the Banker Regime of Neoliberalism.

Soon a New Charlemagne will rise to rule the Euro zone, where Germany will be preeminent, as a type of revived Roman Empire that governs the European continent.

Bob Janjuah writes in Zero Hedge, Monetary Anarchy. The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt, that is not subject to any collective action clause, is as Mark Grant writes, Opens Pandora’s Box. Ambrose Evans Pritchard describes the ECB’s actions as legerdemain, saying the European Central Bank has taken action to insure that it suffers no loss on its Greek holdings, automatically reducing other creditors to junior status; this sets a precedent for Ireland, Portugal. Spain, and Italy.

Out of the debt travails of the profligate Mediterranean Sea country of Greece, new sovereigns are rising to rule the Eurozone. Creative destruction is working to pass the baton of sovereignty from nation states to the EU ECB IMF Troika which is the ruling sovereign in the Euro zone.

Debt Sovereignty of the Eurozone nations has been suppressed by the ECB Greek Bond Swap. Reuters reports The ECB Greek Bond swap piles pressure on the EU. The European Central Bank’s decision to exempt itself from taking losses on its Greek bonds gives its senior status in the bond market and may push up borrowing costs of other debt-strained euro zone countries, Standard & Poor’s said on Friday. The ECB and the 17 euro zone central banks made cosmetic changes to the 62 billion euros worth of bonds they own this week to avoid being pulled into Greece’s debt reduction deal, which will see private investors lose well over half their money. S&P, which carried out a mass downgrade of nine euro zone states last month, said the ECB’s move was another blow for the bloc’s weaker countries, changing the ECB’s status at least in this instance “from implicit super-senior creditor to an explicit one.”

“We believe that this development (seniority of ECB) could further weaken the prospects of peripheral euro zone sovereigns currently receiving official funding to regain the ability to access the capital markets and could raise borrowing rates of those sovereigns still accessing the primary markets,” it said in a statement.

The ECB in announcing that it is swapping out their Greek debt for new Greek debt that is not subject to any collective action clause, establishes a Euro zone monetary union, to complement the debt union, that was established when EU leaders announced the first Greek bailout agreement in May 2010.

Regional trade imbalances is another catalyst for a EU Political Union, that is a Federal Europe. Germany exports products to the peripheral European countries, which run trade deficits. Greece has a trade deficit of about 10% of GDP. Greece must have a trade surplus if public debt as well as business credit and stock leverage is to be reduced. Until Greece runs a trade surplus, Greece cannot get their government and private budgets under control. Greece must cut its fiscal expenditures and/or raise taxes. As Greece does this, the Greek economy will continue to shrink, making it more difficult buy foreign goods. This leads to a deflationary spiral. And that same deflationary spiral will spin up to take in all of Europe.

These two catalysts, the loss of debt sovereignty and regional trade imbalances, will cause political leaders to meet in even more summits, waive even more national sovereignty, and establish a European federal political union, and establish the ECB, or the Bundesbank, as the Euro’s Bank, and a fiscal union, which by diktat will provide moneyness, that is seigniorage, and thus by defacto reasoning, define a debt union, where debt servitude will establish the EU as a totalitarian collective.

The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt that is not subject to any collective action clause, establishes Greece as a client state within a Euro zone region of global governance. Julia Amalia Heyer in Der Spiegel A Political Establishment In Freefall, Greece Lurches to Left Amid Radical Austerity, communicates that Greece is the Eurozone’s first colony.

Mark Grant of Out Of The Box writes in Zero Hedge For Greece Tomorrow Has Arrived. Greece will shortly be placed into “Default” by S&P and Fitch which will trigger default language in all kinds of securitizations including Greece’s $90Bn in derivatives and may cause disgorgement from accounts that are forbidden to hold defaulted bonds.

After the country has been placed into “Default” the banks will soon follow and once again there will be all kinds of consequences in interbank lending, collateral agreements, securitizations, et al from all of this. The CDS contracts for Greece may or may not function as they stand but, as I am quite certain will happen, not enough bond holders tender their bonds for the new debt so that Greece will pass the “Collective Action Clause” which will certainly trigger CDS in my opinion and if not will show the fallacy of that market. The structure of the deal puts the IMF/EU/ECB clearly in control of the finances of Greece so they have replaced some sort of Czar with the bureaucrats of the Troika and the country no longer will control its own finances as they traded away their sovereignty for cash. In fact, an escrow account will be set up for Greece which will be controlled by the Troika and Greece is being forced to change their Constitution pledging to pay their creditors before providing any money for the country. A quick study of the math reveals that Greece will get about 19 cents on the Dollar and the rest of the money is the sovereign nations of Europe paying back their banks with the money they have supposedly lent to Greece. Greece is now nothing more than a conduit for the nations of Europe to pay back their own financial institutions. Now we will see if the Parliaments in Europe will go along with this plan as many still have to approve it and a careful reading of the math involved here may be troubling for some governments especially Finland and the Netherlands. We will also see, with Greek elections looming, how the citizens react to all of this either in the polling booths or in the streets as an additional $4Bn of spending cuts have been mandated by the Troika and they state that the money will not be paid to Greece until they are implemented which must be by the end of February.

The total outstanding debt for Greece will now rise to $1.270Tn as new debt pays off old debt in a country with substantial negative growth so that the real situation, regardless of what we are told, worsens. In early May Greece faces its next bond payments so there may be a re-do for all of this in several months’ time. If Greece is actually going to get the next round of the bailout then the other side of the coin is the increased debt being taken on by the other countries in Europe which could cause more downgrades as the new debt to GDP numbers are assessed.

WSWS writes The purpose of the so-called “aid packages” for which the Greek population must sacrifice is not to help the people, but to enrich the banks, hedge funds and speculators.

And WSWS writes The €130 billion plus package of loans agreed by euro zone finance ministers does nothing to protect Greece from bankruptc

People’s lives are being reduced to a predetermined subordination of the dominant philosophical and political system, as regional global government unfolds as foretold in bible prophecy . A Eurodämmerung, a Götterdämmerung, that is a clash of the current sovereign authorities with investors, will destroy credit and money, as they have been known. Out of the ensuing chaos, fate is working through creative destruction, directing that regional global governance be established.

Daniel’s interpretation of Nebuchadnezzar’s dream presents the statue of the progressions of kingdoms, Daniel 2:31-45. Kings have ruled mankind throughout history; these have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority. Soon ten kings will come to rule, each in his own regional power base. Most recently two iron kingdoms, the combine of the UK and European rule, and the US Hegemony, have governed the world; their power is now flowing into a ten toed kingdom of regional global governance, Daniel 2:31-33.

God’s Sovereign Will, Ephesians 1:1-11, not any human action, will bring forth a revived Roman Empire, that is a German led Europe. In the supranational New Europe, national sovereignty will be seen as a relic of a bygone era. God at the appropriate time will open the curtains, and onto the world’s stage will step the most credible of Europe’s political leaders, the Sovereign, Revelation 13:5-10. He will be accompanied by Europe’s banker, the Seignior, Revelation 13:11-18. These will have have EU wide sovereign authority. The Little Authority, Daniel 7:24-25, will work behind the scenes in regional framework agreements to change our times and laws. The people will be amazed by this, and place their faith and trust in the Sovereign; they will give their allegiance to his diktat, Revelation 13:3-4.

Certainly, the objective of a European economic government will continue throughout the coming years, especially as the economic crisis continues.

Life in Europe can now be characterized as a totalitarian collective. Totalitarian collectivism is the EU’s future. European Socialism will die in 2012. Diktat will provide seigniorage, that is moneyness, to replace the seigniorage of national treasury bonds. Diktat will become a currency, that is a payment used in the exchange of goods or services.

The seigniorage of fiat money is failing, and the seigniorage of diktat is rising in its place, as is seen in the rise of power of the EU ECB IMF Troika to appoint technocratic government in Greece and Italy as well as in the massive Second Greek Bailout Agreement. The fiat monetary system is being replaced by the diktat money system, which will eventually rule in each of the world‘s ten regions.

The Beast regime of Neoauthoritarianism, Revelation 13:1-4, is rising to replace the Banker regime of Neoliberalism. This monster of statism and collectivism is rising from the profligate Mediterranean countries of Italy and Greece. The Beast’s seven heads are rising to occupy in all mankind’s institutions, and its ten horns are rising to govern in all of the world’s ten regions. The Beast regime is to replace the Banker regime of Neoliberalism, The Beast regime is coming like a terminator that can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.

Conclusion
The Second Greek Bailout marks a transition from the fiat monetary system of capitalism into the diktat monetary system, where regional global governance is rising to rule the Euro zone.

Regionalization is the new direction in globalism, as the ECB’s Sovereign Bond Action, and two regional framework agreements, the Fiscal Compact with its debt brake, and the Second Greek Bailout Agreement, have established a totalitarian collective in the Euro zone. Monetary cardinals under the monetary pope, Mario Draghi, will proceed with new economic policy and monetary policy, and budget commissioners will proceed with fiscal austerity and structural reforms. A monetary union, a fiscal union, and a structural union is forming to complement the Euro currency.

The failure of the debt trade in Greek sovereign debt has pushed the European Central Bank to print Euros with its LTRO 1 and LTRO facility, and has caused political capital to rise to replace investment capital, with the three memoranda of 38 reforms, as well as with the February 9, 2012, memorandum of understanding, with the result that capitalism has died and regional global governance is rising to replace it.

Greek Socialism is a relic of the bygone era of Neoliberalism which featured a Banker regime. The world is transitioning into Neoauthoritarianism which features a Beast regime that occupies in all of mankind’s seven institutions and in all of the world’s ten regions. The Beast regime is rising out of the most proliferate Eurozone state, that being Greece, which was a political machine that opposed any meritocracy and competition, and which provided pork based upon patronage. Greece is a country where tax enforcement policy was subject to bribery and where flaunting of tax authority is considered patriotic. The major industry, shipping, is run by Greek shipping magnates who have transferred their wealth into banks in Switzerland and the City of London, and into Caribbean Island Pirate Coves.

A Eurodämmerung, a Götterdämmerung, that is a clash of the current sovereign authorities with investors, will destroy credit and money, as they have been known. Out of the ensuing chaos, Fate is working through creative destruction, Revelation 6:1-2, directing that regional global governance be established.

The dynamos of growth and profit that governed capitalism are losing their power through failure of the debt trade, specifically the failure of neo liberal credit and the failure of fiat money. The dynamos of regional security, stability, and sustainability are powering up regional global governance. The free monetary system as envisioned by Hayek, Rothbard, and Mises is simply a mirage on the Neoauthoritarian Desert of the Real. The fiat monetary system provided by the Free to Choose script of Milton Friedman, is an anachronism of a bygone era.  Lacking any money good, diktat will be de rigueur, and used for both money and credit, in all of the world’s ten regions. The diktat monetary system will soon rule all of mankind.

In today’s news
The Euro, FXE, European Financials, EUFN, and European Shares, VGK, traded lower, on news that LTRO 2 has been completed, with Zero Hedge relating The LTRO Outcome. From SocGen’s Lauren Rosborough,  €529.53bio was allocated to 800 institutions (compared with €489.19bio allocated to 523 institutions in Dec). The net increase, according to our economists, is €311bio (adjusted for yesterday’s MRO reduction, 3m LTRO allotment this morning, and the roll-off of the 3m and 6m LTROs tomorrow). The allocation was above our and at the upper end of the market range of expectations.

Tyler Durden comments The LTRO outcome opens the way for further positive risk moves (high-beta, non-Japan Asia, lower DXY) but recent price action suggests to us that the rally is fatigued.” Net: this means that following settlement, European banks will park not €500 billion but up to €810 billion with the ECB, on which they will collect 25 bps (while paying 1%, aka inverse carry as described here first). It also means that in three years Europe’s bank will have to not only pay the ECB €1 trillion in case (assuming there is no perpetual rollover of the LTRO, which there will be), but also delever by another €2.5 billion, for net asset drop of €3.5 trillion. Good luck building up shareholder equity by the same amount to offset unchanging liabilities.

Mr Durden adds, ING Groep didn’t tap 3-Yr ECB Loans, spokesman says. We fully expect the “Long Non-LTRO bank, Short LTRO” bank pair trade to be the most profitable source of alpha for a long time.  I comment that ING, traded off more  today than the European Financials, EUFN,

Zero Hedge relates Crown Thomas reports A Busy Two Months for the New York Fed as it sells Maiden Lane II and mortgage backed securities back to the private sector. These assets are approximated in value by the Fidelity Capital And Income Fund, which invests in distressed securities.  The chart of  FAGIX shows that it has outperformed junk bonds over the last two years. It’s reasonable to believe that the Fed has made a profit on the assets being sold.

FT reports CDS payouts on Greek bond deal on agenda.  A group of banks and investors in the credit derivatives market will meet on Thursday to determine whether Greece’s planned debt swap deal should trigger payments on its default insurance…The question facing the International Swaps and Derivatives Association is whether the deal constitutes a “credit event” because it creates two classes of bond holders – the European Central Bank, which is spared losses, and private investors, who are being forced to take losses of up to 75 per cent on their Greek bond holdings. Nature economist Elaine Meinel Supkis says “If this isn’t a ‘credit event’ then nothing is a credit event”.

US Stocks, VTI, were sustained today by a rising US Dollar, $USD, UUP. And World Stocks, ACWX,  were sustained today by a synthetic carry trade, coming from a falling Yen, FXY, and rising World Currencies, DBV, and rising Emerging Market Currencies, CEW.

Recent US Infrastructure leading stocks, Small Cap Technology, PSCT, Semiconductors, XSD, Small Cap Pure Value, RZV, Steel, SLX, and Metal manufacturing, XME, traded lower today, joining other other investments that are now turning lower on the exhaustion of neo liberal credit.

World financial institutions, IXG, seen in this Finviz Screener traded lower

Soon exhaustion of neo liberal credit, and competitive currency devaluation, coming from the failure of confidence in sovereign debt globally, and fears of Greek debt contagion, will be turning world stocks lower, beginning most intensely with EUFN, RZV, PKB, SLX, ITB, XBI, EWX, PSP, GREK, PFF as presented in this Finviz Screener.

This article has been posted on the Internet.

Is Greece Headed To Default Exit And Devaluation, Or Will A Federal Europe, Led By Germany Form In The Euro Zone?

February 29, 2012

Financial Market Report for February 28, 2012

1) … Dow closes above 13,000 as investors rotate into large cap and discretionary shares.
Reuters reports Dow, S&P hit milestones on confidence, lower oil. The Dow closed above 13,000 for the first time since May 2008 on Tuesday, and the S&P 500 also hit a milestone, as buoyant U.S. consumer confidence data and a sharp drop in oil prices nudged the nearly. Consumer Discretionary, VCR, rose to new rally high, on rising shares of consumer stocks such as Nike, NKE.

Large cap shares, JKE, were responsible for taking the Dow, DIA, higher; these include global infrastructure stock, IP, Express Scripts, ESRX, Apple, AAPL, Eaton, ETN, and Master Card, MA.

2) … The safe haven rally in US stocks is starting to break down, as a Greek Default becomes a foregone conclusion.  
Reuters reports ECB puts Greek banks on emergency aid after downgrade. The National Bank of Greece, NBG, led Greek Shares, GREK, lower today.

Transports, IYT, Utilities, XLU, continued lower.

The US Infrastructure Rally has ended with Design Build Shares, PKB, trading 1% lower. The design build shares have been an important component of a former safe haven rally out of Euros and into North American stocks, VTI, of all types. Other former safe haven rally were small cap pure value, shares, RZV. small cap industrial PSCI, biotechnology, XBI.  Housing, ITB. Charts show these to have rounded tops which are turning over.  

The design, build, and construct stocks can be followed by using this Finviz Screener; stocks trading lower include URS, NX, MHK, HOFT, EXP, NCS, DY.

Small cap value stocks can be followed by using this Finviz Screener; these include MOH, NTSP, FHCO, PSEC, POOL.      

Nearly every one of the small cap industrial shares seen in this Finviz Screener is now trading lower; largely on the exhaustion of neo liberal credit, failure of carry trade investing, and growing fears of the failure of growth; these include HEES, WCC, DXPE, SXI, PNR.

Master Limited Partnerships, MLPs, have been a yet another safe haven rally. The chart of AMJ shows one of the most fantastic ascending wedge stock patterns of all time, and today it finally broke, trading 0.8% lower; component OKS, fell 4.6%.

The trade lower education companies, APOL, DV, ESI, BPI, STRA, LOPE, evidences a failure of neo liberal credit. We are witnessing the beginning of the end of credit, and the beginning of the age of deleveraging, where the diktat monetary system, will provide diktat for both money and credit.

The trade lower in Residential REITS, REZ, Industrial Office REITS, FNIO, and REITS, RWR, illustrates the end of the current investment cycle.

Precious Metal Mining stocks rose, SSRI, SIL, GDX, GDXJ, as Bloomberg reports Gold Gains in New York on US Dollar Weakness. Gold advanced to a three-month high and silver posted its biggest gain in eight weeks as investors bought precious metals as an alternative to a weakening dollar. Platinum and palladium also rose. (Hat Tip to Between The Hedges).

Precious metals, JPP, are rising on an investment demand for gold on fears of Greek Sovereign Default.  The rise in gold also came with a rise in the Euro, FXE, on its short selling covering, and on a broad rise in major currencies, DBV, and emerging market currencies CEW. The Euro FXE, rose near to its recent high. The US Dollar, $USD, UUP, traded lower into a region of strong support.

The end of the business super cycle comes by the exhaustion of neo liberal credit and failure of carry trade investing. Bloomberg reports U.S. Durable Goods Orders Slump Most in 3 Years. Orders for U.S. durable goods fell in January by the most in three years, led by a slowdown in demand for commercial aircraft and business equipment. Bookings (DGNOCHNG) for goods meant to last at least three years slumped 4 percent, more than forecast, after a revised 3.2 percent gain the prior month, data from the Commerce Department showed today in Washington. Economists projected a 1 percent decline, according to the median forecast.  And Bloomberg reports IBM Cuts More Than 1,000 Workers, Group Says International Business Machines Corp, the world’s largest computer-services provider, fired more than 1,000 workers in North America this week, according to an employee advocacy group.  And Reuters reports Brazil Lending Falls for First Time in Three Years. Bank lending in Brazil contracted in January for the first time in almost three years while more consumers and companies fell behind on their loan installments, in another sign of the abrupt slowdown afflicting Latin America’s largest economy. Outstanding loans in Brazil’s banking system fell 0.2 percent in January from December, the first month-on-month drop since the 0.02 percent decline recorded in February 2009, the central bank said.  (Hat Tip to Between The News)

The global debt trade, and the global carry trade, are ending, with disinvestment coming out of country stocks such as EPHE, VNM, and EIS with the latter falling lower on fears of a Global Eurasia War. Vietnam received the LTRO carry trade juice and now it is falling lower.  One can follow country share trading by using this Finviz Screener.

It was a good day to dollar cost average a buy into volatility shares, seen in this Finviz Screener, TVIX, VIXY, VIXM, seen in this combined chart, as in a bull market one buys into dips, and in a bear market one sells into strength.  The greatest bear market is about to commence as total stock VT, seen in this weekly chart and ACWX, seen in this weekly chart, are peaking in an Elliott Wave 2 Up, and are going to enter an Elliott Wave 3 Down.

Retail, XRT, and US Consumer services, IYC, traded higher today, on report of consumer confidence and use of credit. Retail shares can be followed using this Finviz Screener. But as motioned above, small cap value shares, RZV, and design build, PKB, biotechnology, XBI, small cap industrials, PSCI, are trading lower. The combined chart of IYC, RZV, PKB, XBI, PSCI illustrates ongoing moneyness in consumer services, but the failure of moneyness in neo liberal credit. One can follow an overall view of the stock market with this Finviz Screener of a broad spectrum of shares.  

Great Depression 2 commenced with the Second Greek Bailout, will be commencing soon on exhaustion of neo liberal finance, and failure of carry trade investing, as seen will be seen in the combined chart of the most leveraged stocks falling the fastest, as will be seen in the combined chart of RZV, PKB, XBI, PSCI, ITB, SLX, SCIF, EWZS, PSP, the fast fallers can be followed with this Finviz Screener.   

The expansion of neo liberal credit is seen in the chart of MA,V, AXP, DFS, NICK, NNI, COF. peak credit is coming soon.

3) … Junk bonds traded higher today on rising currencies: the world is attaining peak credit, as peak value of fiat money is being achieved.
Total Bonds, BND, traded unchanged, but non US Treasury credit instruments seen in this Finviz Screener rose today, on higher world major currencies, DBV, and emerging market currencies, CEW. Junk Bonds, JNK, rose to a new rally high,

4) … Is Greece headed to default, exit and devaluation; or will a Federal Europe led by Germany form in the Euro Zone?   
John Mauldin provides the PDF document A Primer on the Euro Breakup: Default, Exit and Devaluation As The Optimal Solution.

Yet, fate is relentlessly moving towards a greater credit and investment crisis, which will eventually result in European leaders meeting in more summits and waiving sovereignty, or perhaps said pooling sovereignty, and announcing regional framework agreements to establish a Federal Europe.

Angels gave the apostle John a vision of today’s events, of which he described as those things which must shortly come to pass, Revelation 1:1, meaning that events are falling like lined up dominoes fatefully toppling upon one other, picking up increasing speed toward a common destiny. All things are of God, 2 Corinthians 5:17-18, there is no human action. The fore ordained plan of God was foretold in bible prophecy, that being regional global governance, Revelation 2:31-33.
 
Tyler Durden writes of the creation of Federal Europe’s first client state. Greek Colonization 102: Europe Calls For Reconstruction Commissioner In Athens. First they force now officially defaulted Greece to bailout European banks courtesy of a Greek funded Escrow package, then they make Greek pays for the privilege of having a job, then they send in German tax collectors, and finally they prepare to pilfer the gold. And simply because nobody is home, the colonization continues, with the formal take over of the country by a “Kommisar”. Die Welt reports Junker calls for reconstruction commissioner for Athens. Since not even this colonial escalation will do much if anything to stir the locals, we can’t even imagine what the next annexation steps will be … I comment that reconstruction commissioners will part of monetary commissioners employed by the EU ECB IMF Troika, to work in the diktat monetary system for the security, stability and sustainability needs of the region.  

Tim Price, Director of Investment at PFP Wealth Management, courtesy of Sovereign Man writes in Zero Hedge, The Existential Financial Problem Of Our Time  The modern, debt-based economy requires constant economic expansion if only to service all that debt. So what happens when the modern economy goes ex-growth and stops expanding? Iceland already found out. Greece is in the process of discovering. But we will all get a chance to participate in this lesson. Runaway fiscal and monetary stimulus throughout the western economies is in the process of destroying the concept of creditworthiness at the centre of the modern monetary system.  Private investors, we suspect, have little or no conception of the extent to which the state is now the predominant player in the financial markets. Central banks control the money supply and interest rates. Central banking and commercial banking interests have essentially become fused. The ECB’s long-term refinancing operations are banking bailouts by the back door. Central banks are now also the swing players in government bond markets which directly influences the price for corporate credit. Central bank monetary stimulus also directly influences equity market direction and confidence. Be careful, be very careful about the sort of government debt you hold. You may well end up being paid in whole; but in such depreciated terms that being “kept whole” will be meaningless in real terms. … I comment that the current fiat monetary system is failing and the diktat monetary system is rising in its place, where the regional global govenance will provide diktat as both money and credit. It is the fear of sovereign failure that is creating a renewed investment demand for gold.  

Bloomberg reports Ireland to Hold Vote on EU Fiscal Compact. Ireland will hold a referendum to ratify the European fiscal compact, after government ministers said such a vote would effectively amount to a show of commitment to the euro.

Bloomberg reports JPMorgan Says Credit, Swaps Lead Trading-Revenue Sources in Rare Breakdown. JPMorgan Chase & Co. (JPM) said interest rate swaps and credit are among the biggest sources of revenue in its trading businesses, as it broke with most U.S. rivals by releasing a breakdown typically kept secret. JPMorgan generates $375 million from credit trading in a “typical quarter” and $350 million each from interest-rate swaps and foreign-exchange spot and futures trading, the New York-based bank said today in a presentation to investors. Cash equities produces about $325 million, while the bank gets $300 million a quarter from asset-backed securities (Hat Tip to Between The Hedges) I comment that the investment bankers came by these interest rate swaps as “consideration paid” for being primary dealers and carrying out POMO activities for the US Federal Reserve.

5) … In today’s news
Invesco PowerShares Capital Management LLC, a leading global provider of exchange-traded funds (ETFs), today announced the anticipated listing of two new ETFs that will provide investors with access to high-beta strategies covering emerging and international developed markets, EEHB, PowerShares S&P Emerging Markets High Beta Portfolio, and IDHB, PowerShares S&P International Developed High Beta Portfolio. I expect EEHB to be a fast faller in the Age of Deleveraging.

Santorum, More Than Romney, Wins Favor Of Low Income Conservatives And Evangelical Christians, With Talk Of Vocation, Family, And Religion

February 28, 2012

Santorum, more than Romney, wins favor of low income conservatives and Evangelic Christians, with talk of vocation, family, and religion, thus moving the Republican party further right.

February 28, 2012

1) …Associated Press writes Differences between Santorum, Romney crystallize. Day by day, event by event, Michigan’s critical primary on Tuesday is crystallizing the dramatic differences between Santorum and Romney.

When Santorum told a Michigan crowd they had come to see him because “freedom is at stake in this election,” a man in the crowd shouted a word that’s almost never heard at Mitt Romney’s campaign events: “Amen!” Standing at a podium in a nightclub on the outskirts of town, Santorum outlined a vision of American greatness driven by the workers who he says built it. “We know what works in America. Bottom up. Bottom up has built a great country,” Santorum told a crowd of about 600 on Sunday. Many were still dressed in their church clothes; others wore Detroit Red Wings jackets and camouflage hunting caps. He spoke for nearly an hour before taking questions, the crowd following him the whole time, whistling and cheering and shouting back, running through the Declaration of Independence like a call-and-answer sports cheer. “They are endowed by their ..” Santorum started. “CREATOR!” the crowd shouted back.

On the other hand Romney focuses on his general economic message.

In early primaries and caucuses, exit and entrance polls show Romney has done far better among higher income voters than he has with those who make less than $50,000 a year. And people who don’t identify themselves as evangelical Christians backed him in much higher numbers than those who say they are evangelical. As he looks to take on Romney, Santorum is selling himself as the conservative crusader, a deeply religious man from a blue-collar state who will go to Washington and stand fast against the cultural and economic forces that he says are encroaching on traditional families and manufacturing jobs. “More people go to church on Sunday than go to all the professional sporting events combined in a year,” he said. He dubbed his jobs plan “supply side economics for the working man.” “There are a lot of people in this country who want to use their hands and their minds together to make something,” Santorum said Saturday in St. Clair Shores, where he appeared without almost no senior staff in tow and spoke from a podium that was nearly level with the crowd. “That’s their vocation, that’s what they were made to do, that’s what they want to do, that’s what they love doing. And guess what, there’s less and less chance to do that.” A man shouted in response: “No one even knows how to run a machine anymore!” “That’s right,” Santorum replied.

2) … NYT reports Santorum Makes Case for Religion in Public Sphere. In an escalation of the sometimes fiery language that he has used throughout the race, Mr. Santorum declared that colleges were no longer a “neutral setting” for people of faith and described how he had become sickened after reading John F. Kennedy’s 1960 speech calling for the rigid separation of religion and politics.

“What kind of country do we live in that says only people of nonfaith can come into the public square and make their case?” Mr. Santorum said on the ABC News program “This Week.”

Polls shows the candidates running roughly even in Michigan, as well as nationally, and the question for both of them is how Mr. Santorum’s provocative and assertive outreach to the religious right will resonate with voters, both in the contests this week and in the dozen on “Super Tuesday” on March 6. The two leading Republicans are trading increasingly caustic and personal attacks as they challenge the depth of the other’s conservatism. Mr. Romney has portrayed Mr. Santorum, a former senator from Pennsylvania, as a creature of Washington who was willing to compromise his beliefs to vote for the federal No Child Left Behind law and to back the 2004 re-election of Senator Arlen Specter of Pennsylvania, a supporter of abortion rights. Mr. Santorum has accused Mr. Romney of lacking a (true right) ideological backbone, pointing to his previous support of abortion rights and to the heath care plan he enacted in Massachusetts. “I don’t understand what team he’s on,” Mr. Santorum said on the NBC News program “Meet the Press” on Sunday. “It’s not the same team that I’m on.”

3) … Jeff Zeleny and Jim Rutenberg of the NYT report For Doubts on Romney, Michigan Primary a Testing Ground In the presidential primary on Tuesday, a defeat for Mitt Romney could send the nominating fight onto an unpredictable path and reset the Republican race. Mr. Santorum has made appeals to religious voters in ways that Mr. Romney, who supported abortion rights until 2005, cannot, stressing his opposition to abortion and the fact that he is a Roman Catholic who home-schools his children.

4) …Michigan is an epicenter of childhood poverty. David Walsh writes in WSWS Extreme poverty in US has more than doubled since 1996. A new study from Kids Count, “Data Snapshot on High-Poverty Communities,” reports on the high percentage of children in some of America’s largest cities living in concentrated poverty. Detroit leads the nation in this category, with 67 percent of children residing in high-poverty neighborhoods. Some 57 percent of Cleveland’s children live in such conditions, along with 49 percent of children in Miami, 48 percent in Milwaukee and 43 percent in both Fresno, California and Atlanta. Overall, 22 percent of children in large cities live in communities of concentrated poverty. About 8 million children in the US as a whole reside in such economically deprived areas. In Michigan in 2010, 341,000 children lived in high-poverty areas, an increase of 124,000, or 57 percent, over 2000. Related reading Kids Count report: Extreme poverty doubles in Michigan.

5) … I am a Christian, living on low income. I am not going to vote for anyone, as none of the candidates talk about  the Beast of regional global goverance seen in Revelation 13 rising from the Mediterranean Sea nations of Greece and Italy to rule mankind.

This article is posted on the Internet

World Shares Trade Lower As Angela Merkel Lays The Foundation For A European Chancellor To Lead An European Economic Government

February 28, 2012

Financial Market Report for February 27, 2012

1) World shares traded lower today, while the S&P, Dow, and Nasdaq traded higher.
Volatility TVIX, VIXY, VIXM, rose today as World Shares, VT, traded lower, led so by EWX, EEM, VSS, and EEB, as the Dow came ust in under 13,000, and the S&P traded at its highest since 2008.

The trade lower in the world shares means that the global debt trade has come to an end on the exhaustion of US central bank and ECB credit policies, as the ECB now has effected sovereignty over national debt with its Greek Debt Collective Action Clause Initiative, and as the EU ECB and IMF Troika have issued 3 Memorandum with 38 stipulations in addition to the Initial Memorandum of the Second Greek Bailout Agreement, and as fears arise over the possibility of Greek Default on its sovereign debt.

The end of the sovereign nation state age has arrived. Fate working through creative destruction is commencing the age of regional global governance, where diktat will underwrite credit and money, as fiat money perishes with confidence and trust in government evaporates.

Political capital is rising to replace investment capital, as the dynamos of growth and profit that powered capitalism are loosing their vigor, and the dynamos of regional security, stability and sustainability are being vitalized powering up regional global governance.

FT reports 160 German tax collectors will descend on Greece to help the country set up an efficient system of tax collections. While the Greek government welcomed the technical assistance, the FT writes that the arrival of the German officials in Athens could reawaken anti-German sentiment, and quotes a front-page headline in a Greek tabloid talking about “an assault force of German tax collectors.”

Today, February 27, 2012, is a pivotal point in world history as capitalism transitions into regional global governance; and where the iron hegemony of world power passes from the US and the UK, into a ten toed kingdom of partly iron diktat and clay democracy.

The National Bank of Greece, NBG traded lower, turning European Financials, EUFN,  India Earnings, EPI, Brazil Financials, BRAF, Too Big To Fail Banks, RWW, and Chinese Financials, CHIX, lower. Argentina Banks, BMA, GGAL, traded lower. India Banks, IBN, HDB, traded lower on a lower Indian Rupe, ICN. UK Area Banks HBC, RBS, LYG, traded lower on the British Pound Sterling, FXB.

European Shares, EWS, VGK, EWD, traded lower on a lower Euro, FXE. And India Shares, INXX, INP, INDY, SCIF, led EPHE, IDX, THD, EWT, FXI, EWZ, ARGT, EWY, GMF, and EWJ, lower.

Small Cap Pure Value Shares, RZV, Communication Services, AMT, Leveraged Buyouts, PSP, US Infrastructure, PKB, Steel, SLX, Automobiles, CARZ, VROM, Shipping, SEA, traded lower.

Education Shares APOL, DV, ESI, BPI, STRA, traded lower. And Materials, MXI, URA, XME, COPX, KOL, ALUM, COPX, traded lower.

Preferred, PFF, Mid Caps, JHK, Pharmaceuticals, XPH, IHE, Health Care Provider, IHF, Industrials, IYJ, led US shares, VTI, higher.  Retail shares, XRT, led by CHRS, seen in this Finviz Screener traded higher as the New York Post reports US credit-card debt nearing toxic levels
The currency demand curve, that is the ratio of the Small Cap Pure Value Shares relative to the Small Cap Pure Growth Shares, RZG, RZV:RZG, traded lower reflecting that competitive currency devaluation has commenced, as is seen in the chart of the Japanese Yen, FXY, trading lower and Major Currencies, DBV, topping out, and Emerging Market Currencies, CEW, trading lower. The US Dollar, $USD, UUP, traded up to close at 78.50. Falling currencies is the last thing that central bankers want as Wall Street Journal reports Brazil minister says global currency war is intensifying.

Investors cannot leverage carry trade lending in a growth exhausted world, as the seigniorage of sovereign debt, US Debt, TLT, EDV, ZROZ, Italy Debt, ITLY, world government bonds, BWX, is turning lower and emerging market bonds, EMB, is reaching over extension, on soon coming debt deflation, that is currency deflation, as fiat money dies and bond vigilantes call interest rates higher globally, as will be reflected in the Flattner ETF, FLAT, falling, and the Steepner ETF, STPP, rising, which will be seen in the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, continuing its rise in an Elliott Wave 3 Up.     

The loss of Greek debt sovereignty poses systemic risk. The fastest fallers are likely to be these ETFs seen in this Finviz Screener,  EUFN, PFF, RZV, PKB, SLX, ITB, SCIF,EWZS, PSP, GREK. It may take a while for the Preferred Shares, PFF, to turn lower; but when they cut loose, they will fall dramatically, just as they did in the last downturn. Stock trading higher today included SNX, URI, IP, NP, FAST, MTW. These are likely to be fall quickly, because they have risen quickly, or because they are debt ridden, or both.

Tyler Durden writes S&P Cuts Greece To (Selective) Default From CC”We lowered our sovereign credit ratings on Greece to ‘SD’ following the Greek government’s retroactive insertion of collective action clauses (CACs) in the documentation of certain series of its sovereign debt on Feb. 23, 2012. We do not generally view CACs (to the extent that they are included in an original issuance) as changing a government’s incentive to pay its obligations in full and on time. However, we believe that the retroactive insertion of CACs will diminish bondholders’ bargaining power in an upcoming debt exchange. Indeed, Greece launched such an exchange offer on Feb. 24, 2012.” Translation: Greece better have that PSI in the bag or else the “Selective” goes away and “Greece would face an imminent outright payment default.” Our question for former Goldmanite and current ECB head Mario Dragi: does the ECB allow defaulted bonds to be pledged as collateral within the Euro System?

Tyler Durden writes How Much Is That Greek Doggy Worth In The PSI Window?  Credit markets are not priced for Greek PSI Nirvana. With the Greek government bonds (GGBs) and CDS basis package trading at its highest in six months (over 96% of Par) and GGBs trading below 20% of Par (compared to considerably higher ‘expected’ PSI-based valuations), it seems the market is much more convinced of an imminent credit trigger and no PSI deal than headlines are crowing about. Combining the new 30Y bond, 2Y EFSF add-on, and GDP warrant, BARCAP arrives at a price of around 26.6% of Par for PSI-able bonds – considerably above the current depressed price of GGBs and together with S&P’s negative outlook change to the EFSF this morning, it would appear that market participants are not expecting a deal to get done by March 20th

2) … Angela Merkel is laying the foundation for a European Chancellor to lead an European Economic Government as she and the German Parliament throw dirt into capitalism’s grave.  
The Sovereign Lord God, Psalm 2:4-5, has granted his Son, Jesus the Christ, the authority to open the seven seals, and unleash the First Horseman of the Apocalypse Rider on the White Horse, with his bow and no arrows, Revelation 6:1-2, to effect a global political, economic, momentary, currency and financial coup de etat, to pass the baton of sovereignty from nation states to sovereign leaders, in each of the world’s ten regions, to establish a ten toed kingdom or regional global governance, Daniel 2:31-33.   

Angela Merkel has heard and heeded the 1974 clarion Call of the Club of Rome, and has been fate’s agent to effect its clear, trumpeting and ringing message for regional global governance.  

Obfso writes blog article EU Needs Elected President, Former PM Tony Blair Says. Tony Blair became the third British prime minister and the fourth British statesman to receive, in Aachen, the annual Charlemagne Prize, which is awarded to the statesman, of whatever ever nationality, who has done most for promoting European unity. Aachen, the “Rome of the North, was the favourite city and seat of Charlemagne (742-814), first of the Western emperors. It was in this delightful little city, with its hot springs and Roman remains, that he set about his titanic task of bringing back order to the Europe that had fallen apart with the fall of the Roman Empire itself. He did not hesitate to use the awesome name of Rome for his purpose: he was himself a patrician of Rome: on Christmas Day, 800, in St Peter’s basilica, in Rome, he had been crowned, Imperator Romanorum. The Holy Roman Emperor (German: Römisch-Deutscher Kaiser, or “Roman-German Emperor”) is a term used by historians to denote a medieval ruler who, as German King, had also received the title of “Emperor of the Romans” from the Pope. After the 16th century, this elected monarch governed the Holy Roman Empire (later called Holy Roman Empire of the German nation), a Central European union of territories of the Medieval and Early Modern period, according to Wikipedia in coverage of the Holy Roman Emperor.

Janeh writes The Dark Ages are the period between the fall of Rome and the installation of Charlemagne as Holy Roman Empire on Christmas Day in 800. The Dark Ages were Dark not because religion ruled them, but because nobody did. When Rome fell, all effective government in Western Europe pretty much disintegrated. Nobody had the power or the resources to keep order, and the result was predictable.

Alex writes Charlemagne was saluted as Pater Europae. The division of Christendom due to the Reformation with the 1520s sounded the close for any Holy Roman Empire. It wasn’t theology which was the predominant drive from the break-up of Europe’s non secular unity. Quite, it absolutely was the ambition and avarice of kings and popes, and the expansion of nationalist sensation resentful of global command Third Period European Nation States. In 1751 Voltaire defined Europe as: A form of fabulous republic divided into a vary of states, some monarchical, the many people blended, but all corresponding with each other.

Steve Barnes provides the Andrew Garvin Marshall, Research Associate with the Centre for Research on Globalization, article, The High Priests of Globalization.  Last year, Belgian Prime Minister Yves Leterme endorsed such an idea of a ‘European Economic Government’ when he stated: The idea of strengthened economic government has been put on the table and will make progress. In the end, the European Debt Agency or something like it will become a reality. I’m convinced of this. It’s about Europe’s financial stability and it’s not an ideological debate about federalism. I myself am a federalist. But more integration and deeper integration are simply logical consequences of having a single currency. Daniel Hannan, European economic government is inevitable, Telegraph Blogs, 17 March 2010.

The plans for an ‘economic government’ require the strong commitment of both France and Germany, which may explain Merkel’s reported appearance at Bilderberg. In March of 2010, the German and French governments released a draft outline that would “strengthen financial policy coordination in the EU.” The plan, seen by German publication Der Spiegel, “calls for increased monitoring of individual member states’ competitiveness so that action can be taken early on should problems emerge.” Luxembourg Prime Minister Jean-Claude Juncker stated in response to the plan, “We need a European economic government in the sense of strengthened coordination of economic policy within the euro zone.” Spiegel, Plans for European Economic Government Gain Steam, Der Spiegel, 1 March 2011.

Two German leaders, Angela Merkel and Jean Claude Trichet, are laying the foundation for the rise to power of a European Chancellor.  These two have received the much coveted, Charlemagne Prize, for strengthening the Union and shepherding the Euro through a time of sovereign crisis. Spiegel reports Angela merkel was awarded the Charlemagne prize on April 30, 2008. Angela Merkel is a globalist and very much dedicated to global governance, as the BBC reported on May 20, 2010, Angela Merkel as saying “If we are to have a global order and global governance we need to have an understanding for each other. Note that she said “for each other”, and not “of each other”; in other words there is to be a singular understanding that underwrites regional global governance in Europe. And on June 2, 2011,  Jean-Claude Trichet, soon to be retired president of the European Central Bank, (ECB), was awarded the Charlemagne Prize in Aachen. The general idea about the Charlemagne Prize, is that an honor is given to an individual who has worked to further the construction of “Europe”.

On August 2, 2011, The Guardian reports France and Germany have set out plans to create the first “true European economic government” headed by a single appointed leader, as part of major moves to synchronise tax and spending to save the failing eurozone.

Angela Merkel spoke at the Bundestag and won the approval of the German Parliament for the Second Greek Bailout, and in so doing she and the German Parliament buried capitalism in the earth’s grave.

Greece was the most extreme form of socialism. With the arrival of the German tax collectors and the approval of the Second Greek Bailout, together with its 3 Memorandum, Greece is a client state of a Federal Union, where economic experience is debt servitude in a totalitarian collective of regional statism. Youtube presents Nigel Farage, Euro Currency Crisis: Trapped Inside An Economic Prison.

Sovereign insolvency and banking insolvency is destroying fiat money. In its place, diktat is rising to  both as money and credit.  

The Libertarian Prophets of freedom, free enterprise, and a free monetary system, such as Hayek, Rothbard and Mises are dead. There is no human action, there is only fate, bringing forth the Apostle of Diktat, Angela Merkel, who is effecting diktat, regionalization, and a diktat monetary system.     

Greek Crisis relates that the WSJ reports with a solid majority of Germans opposed to the package and growing opposition in her own coalition, Ms. Merkel could find it difficult to secure continued support down the line. Yet, Angela Merkel has crossed the Economic And Political Rubicon, taking the entire world from democracy into regional global governance. With the first bailout in May of 2010, the Beast Regime of Neoauthoritarianism rose out of the profligate Mediterranean Sea state of Greece. Now this monster of regional statism has made landfall in Germany, and has taken hold of its institutions, where it will now resides preeminent over all of the Euro zone. The Los Angeles Times reports Germany finds itself back in power in Europe. Germany is the unquestioned boss amid Europe’s debt crisis and economic woes; but the turnaround has inspired discomfort among its neighbors and among Germans. Greece once the poster nation for the debt trade, is now an epitaph on the tombstone of the Milton Friedman Free To Choose floating currency regime. Milton Friedman and his Free To Choose Script is history; Angela Merkel and her true European Economic Government script shows that the new economy of regional global governance, not capitalism, is the future.    

The Iron Lady, is a precursor, for the Iron Ruler, who will emerge in the EU as the most credible sovereign to provide order out of chaos. After Financial Armageddon, The Little Authority, Daniel 7:24-25, will work behind the scenes in regional framework agreements to change our times and laws. He will rule Europe as a type of Revived Roman Empire. The people will be amazed by this, and place their faith and trust in the Sovereign, Revelation 13:5-10, and his banker, the Seignior  Revelation 13:11-18, they will give their allegiance to his diktat, Revelation 13:3-4.

3) … The death of fiat money and the rise of regional global governance means the end of value investing and the deleveraging of many commodities.
Value investing cannot work in a credit evaporated and deb deflationary investment world. Associated Press reports Proponent of value investing Billionaire Warren Buffett said that stocks remain relatively cheap compared to other investments as the economy continues to improve.

One scientific tool used for value investing is MSN’s StockScouter which analyzes four attributes of each stock, Fundamental, Ownership, Valuation, and Technical, to come up with a total score representing the expected stock price appreciation during the next six months. StockScouter has beaten the market, but the market has been rising, not falling. Its recommendation of a buy for Region’s Financial, will not work as the S&P, seen in this monthly chart, is cresting into an Elliott Wave 2 Up, and is ready to enter an Elliott Wave 3 Down. These economic waves are the most destructive of all waves as they destroy practically all of the wealth produced in all of the prior five waves up.

Region’s Financial, RF, as seen in this six month chart has out performed Regional Banks, KRE. But it is not suitable as an investment to garner or preserve wealth in a capital depleting environment. The yearly chart of RF, suggests that it is now a good short seller at the top of this current bull market.     

All forms of fiat wealth will be falling lower as currencies fall in value and as risk appetite wains. The failure of growth and no where left to hide from debt contagion and falling currencies, will cause fast derisking out of stocks and out of many commodities. The large cap growth, JKE, seen in this comparative chart, will likely be slower to fall than the stocks which have benefited from LTRO 1 financing such as JHK, IWO, RZG, PKB, INXX.

Bloomberg reports Bullish futures exceed 1 million for first time in 2012. Bullish commodities futures rose above 1 million contracts for the first time in five months as U.S. growth prospects improved and Goldman Sachs Group Inc. predicted further price gains.

The burning platform writes Extend and Pretend coming to an end.  Base Metals, DBB, will be falling lower, having risen parabolically on LTRO liquidity and soon coming competivive currency deflation. i doubt that even further LTRO neo liberal finance cause a crack up boom in US Commodities, USCI, and world commodities, DBC, as inflationism is turning to destructionism, and it will come in very forcibly, strongly deleveraging even commodities.  LTRO 2 may never happen as Business Week reports Draghi may have shelved ECB bond program as loans fuel rally.  So either way, the spigots of investment liquidity, that is neoliberal credit coming from carry trade lending or from central bank monetary policy, is turning toxic and/or running dry.

4) … Conclusion: in the age of deleveraging, the only money good will be diktat.
Gold will be the best investment that garners and wealth as fiat assets fall in value.  I recommend that one dollar cost average a purchase of gold bullion and take physical possession of it and store it in a safe at home and declare and insure its value with an insurance company.

Between The Hedges reports Shanghai Copper Inventories are near their all time high. Stockpiles of copper are used as collateral for lending in China. These are high only because the spigot of credit liquidity is running full open in China as well as around the world. When steel stocks, SLX, turn lower on competitive currency devaluation, then Copper, JJC, and the whole financial China Structure, CHIM, CHIX, CHII, and TAO, seen in this combined chart, will crumble. And when the debt trade finally gives way, and financial armageddon comes, then diktat, not fiat money, will rule economically in ten regions of global governance.

In a credit depleted world, people in China, Europe, and North America, will look to sovereign leaders, and place their trust in them, giving them their full allegiance, relying not on fiat money, but rather their word, will and way for economic livelihood Revelation 13:3-4.

The Second Greek Bailout Introduces The Diktat Monetary System To Replace The Fiat Monetary System

February 25, 2012

Financial market report for the week ending February 24, 2012

1) … World shares, excluding the US, and bonds, rose slightly this week; yet the divergence between transports and industrials suggests that the stock market is peaking.
WSJ reports that the S&P, SPY, inched up to reach its highest close since June 2008,

The chart of Junk Bonds, JNK, Bonds, BND, World Shares, ACWX, and US Shares, VTI, shows that World Shares excluding the US and Bonds rose slightly this week. Bloomberg reports Junk ETFs Draw Most Cash on Record as High-Yield Hunt Speeds Up.

Retailer, BODY, Mid Cap, HOG, Small Cap Value, LTM, SNX, Consumer Good, ECL, Paper Manufacturer, NP, and US Infrasturcture, CBI, rose to new highs, while, homebuilders, ITB, and traded lower this week, suggesting that the safe have rally in US Stocks, is coming to an end, as AP reports New-home sales dip after 4 straight monthly gains.

Long term care provider, KNH, fell strongly as Marketwatch reports the health-care services company reported it swung to a fourth-quarter loss of $1.40 a share from a profit of 52 cents a year earlier

Vietnam, VNM, Thailand, THD, Russia, RSX, Russia Small Caps, ERUS, Egypt, EGPT, South Africa, EZA, Sweden, EWD, Canada, EWC, Europe, VGK, Switzerland, EWL, rose this week.

Greece, GREK, Indonesia, IDX, India Small Caps, SCIF, India Infrastructure, INXX, India Earnings, EPI, Brazil Financials, BRAF, Homebuilders, ITB, Banks, KRE, Airliners, FAA, REITS, RWR, FNIO, REZ, Small Cap Consumer Discretionary, PSCD, Small Cap Industrial, PSCI, Small Cap Material, PSCM, and Semiconductors, XSD, traded lower this week. North America Infrastructure Stocks already falling lower include, CX, MHK, USG, ARII, NAS, NX, DCI, EXP, MTW, and automobile stocks falling lower include GPI, AXL, TRW, JCI, GM, F.

The divergence between transports, IYT, down 3.4%, this month, and industrials, IYJ, up 3.6% this month, seen in this Yahoo Finance Chart, suggests that the stock market is peaking.

While basic materials, MXI, URA, ALUM, COPX, traded up on higher world currencies, DBV, and Emerging Market Currencies, CEW, global debt deflation, that is global currency deflation has commenced with the trade lower in the Japanese Yen, FXY.

The failure of fiat money has started to turn a number or world financial institutions  IXG, lower. The death of capitalism has commenced with the exhaustion of neo liberal finance, turning National Bank of Greece, NBG, Ireland Bank, IRE, India Bank IBN, HDB, Argentina Banks, GGAL, BMA, BFR, BBVA, South Korea Banks, WF, KB, Nasdaq Community Banks, QABA, US Regional Banks, KRE, such as Regions Financial, RF, and these seen in this Finviz Screener, lower this week.

International Corporate Bonds, PICB, rose on rising Major World Currencies, DBV; and Emerging Market Bonds, EMB, rose on Emerging Market Currencies, CEW.

The announcement of the Second Greek Bailout stimulated the Euro, FXE, higher, it was a carry trade week with, the Swiss franc increased 2.7%, the Swedish krona 2.6%, the Norwegian krone 2.5%, the euro 2.3%, the South African rand 1.9%, the Russian ruble, 1.6%,  the New Zealand dollar 0.4%, the British pound 0.3%, the Singapore dollar 0.3%, and the Brazilian real 0.2%. On the downside, the Japanese yen declined 2.0%, the Mexican peso 1.1%, the Canadian dollar 0.3%, the Indian rupe 0.2%, the Australian dollar 0.1%, and the Taiwanese dollar 0.1%; the US Dollar, $USD, UUP, declined 1.2% this week.  Matthew Bristow of Bloomberg reports Brazil’s current account deficit in January was the widest on record after the real appreciated the most of any major currency this year. The deficit in the current account rose to $7.1 billion from $6 billion in December.” (Hat tip to Doug Noland) One can follow currencies using with this Finviz Screener.

Elmwood Data reports Traders remain short the Euro. Short term traders remain extremely short the Euro, FXE, and this leaves them vulnerable to further short covering the the coming weeks. We would be cautious on becoming too negative toward the Euro at this point, until we have seen traders cover more of their shorts.

It’s reasonable to believe that the 200% of volatility, TVIX, Volatility, VIXY, and Volatility, VIXM, will rise the week beginning February 27, 2012, which can be seen in this combined chart.

2) … When the stock market trades lower, these ETFs are likely to be the fastest fallers.
When the stock market trades lower, these ten ETFs seen in this Finviz Screener, are likely to be the fastest fallers, GREK, EUFN, EPI, RZV, PKB, SLX, ITB, SCIF, BRF, EWZS,  In other words, Greek Debt contagion will spread most quickly from Greece to the European Financials, India Banks, Small Cap Value, North America Infrastructure, Steel, Homebuilding, India Small Caps, and Brazil Small Caps.

Competitive currency devaluation has commenced with the Yen, FXY, down 5.9% this month. The currency demand curve, RZV:RZG, is turning over confirming that competitive currency devaluation has commenced; the collapse of fiat money will delever commodity prices.

3) …  Doug Noland presents his theory of Contemporary Theory of Money and Credit.   
Doug Noland writes in Prudent Bear article Contemporary Monetary Analysis.  “The Washington Post ran a long and well-wrought article on Modern Monetary Theory over the weekend. The piece, by Dylan Matthews, starts with Jamie Galbraith’s experience trying to explain to a large audience of economists in the Clinton White House that the budget surpluses the federal government was running was immensely destructive. Or, rather, it starts with those economists laughing at Galbraith’s attempt to explain this. It was obvious to me way back before I had ever heard of MMT that governments should probably never run a budget surplus—or should do so only in dire emergencies. When the government runs a surplus, that means it is taking more money out of the economy than it is spending back into the economy. It is making us poorer.” … In my initial CBB back in 1999, I trumpeted the need for a Contemporary Theory of Money and Credit. Some thirteen years later, I lament that the void remains as large as ever. Mr. Matthews’ Washington Post article highlighted “Modern Monetary Theory,” an alternative economic framework with Keynesian roots that is receiving heightened attention in our age of unrelenting government stimulus. I will not be jumping on board.

From Mr. Matthews’ article: “‘Modern Monetary Theory’ was coined by Bill Mitchell, an Australian economist and prominent proponent, but its roots are much older. The term is a reference to John Maynard Keynes, the founder of modern macroeconomics. In ‘A Treatise on Money,’ Keynes asserted that ‘all modern States’ have had the ability to decide what is money and what is not for at least 4,000 years. This claim, that money is a ‘creature of the state,’ is central to the theory. In a ‘fiat money’ system like the one in place in the United States, all money is ultimately created by the government, which prints it and puts it into circulation. Consequently, the thinking goes, the government can never run out of money. It can always make more.”

And from Wikipedia: “Chartalism is a descriptive economic theory that details the procedures and consequences of using government-issued tokens as the unit of money, i.e. fiat money… The modern theoretical body of work on chartalism is known as Modern Monetary Theory (MMT). MMT aims to describe and analyze modern economies in which the national currency is fiat money, established and created exclusively by the government. In MMT, money enters circulation through government spending; Taxation is employed to establish the fiat money as currency, giving it value by creating demand for it in the form of a private tax obligation… Because the government can issue its own currency at will, MMT maintains that the level of taxation relative to government spending (the government’s deficit spending or budget surplus) is in reality a policy tool that regulates inflation and unemployment, and not a means of funding the government’s activities per se.”

My “contemporary theory…” takes an altogether different approach. “Money” is not foremost a creature “ultimately created by the government,” but is instead primarily an issue of market perceptions. “Money” is as money does (“economic functionality”). The reality is that we today operate in an age of globalized electronic Credit – a comprehensive virtual web of computerized general ledger debit and Credit entries linking creditors and debtors round the globe. This “system” of electronic IOUs comprises myriad types of financial obligations of diverse structure, maturity, Creditworthiness and currency units of accounts. Importantly, if the marketplace perceives that a Credit instrument will act as a highly liquid and stable store of nominal value, this Credit enjoys “moneyness.” It is the nature and nuances of contemporary marketable debt – especially with respect to the prominence of governmental and central bank support – that should be the analytical focal point. A static view of government-based “fiat money” is anachronistic

The lack of respect for “money” and moneyness is a primary issue I have with most monetary analysis. They don’t get it. From the perspective of my analytical framework, money is both powerful and precious. Historically, sound money has been as rare as government-induced monetary inflation has been commonplace. The biggest risk coming out of the 2008 crisis was that runaway Washington fiscal and monetary stimulus would destroy Creditworthiness at the heart of our monetary system. We’re well on our way. Throughout history, mistakes in monetary management have tended to beget only bigger mistakes.

Somehow, many “monetary” economists seem to believe that money is like Doritos chips: don’t fret, quite easy for us to make a lot more. After witnessing the consequences of a collapse in confidence in Wall Street Credit and, more recently, the Credit obligations of Greece and Portugal, there is no excuse for such complacency. Yet conventional wisdom holds that Washington will always enjoy the capacity to “print” its way out of trouble. Default risk is a myth, it is believed. It is similar thinking that ensured the spectacular mortgage Credit boom and bust. It is one thing to issue fiat currency; it is quite another to sustain market confidence when Credit is expanding uncontrollably.

The GSE/mortgage monetary inflation was not as conspicuous. Today, we are witnessing in broad daylight the dangerous side of “money.” The Treasury is issuing Trillions of debt – in an environment of virtually insatiable demand. Over the years, I’ve noted how a boom fueled by risky junk bonds wouldn’t be that dangerous from a systemic point of view. Limited demand for junk would create self-imposed market constraints. A Bubble in “money,” on the other hand, would tend to last longer, go to greater excess and, as such, have much greater deleterious impacts on financial and economic structures. And severe structural impairment can require multi-decade workouts and restructuring periods (think Great Depression and Japan). Money, even in its modern form, remains precious and, potentially, extremely dangerous – and this is the bedrock of my Contemporary Theory of Money and Credit.

Fine, economists can sit around and debate deficit spending and the role of fiscal stimulus in recessions and recoveries. Meantime, there is scant discussion of the extraordinary monetary backdrop and untested experimental nature of monetary management. Governments have assumed unprecedented roles in the marketplace, much to the advantage of a multi-Trillion global leveraged speculating community. Government market backstops have been instrumental in the mushrooming of global derivative positions to the hundreds of Trillions. A financial insurance marketplace of unfathomable scope has been operating on the flimsy premise of liquid and continuous securities markets. Meanwhile, most economists, “monetary” and otherwise, argue that tame inflation ensures that there is little risk associated with ongoing massive government stimulus and market intervention.
Most today fail to appreciate the potential catastrophic consequences of a crisis of confidence in “money” – a crisis of confidence in the moneyness of government debt and associated obligations.

I sense little appreciation for the momentous role played by “money” as the core foundation of overall global Credit – or for Credit as the fuel for global economic activity. We saw again in 2011 how abruptly things can begin to unravel when the marketplace perceives that policymakers don’t have the situation under control. We’ve witnessed, as well, how quickly aggressive concerted global policy responses can transform de-risking/de-leveraging back to re-risking/re-leveraging. In a span of a few weeks, problematically illiquid markets morphed right back into liquidity abundance and speculative excess.

From a monetary and market perspective, we’ve returned to the precarious stage. Risk embracement and leveraging create market liquidity abundance. Strong markets then emboldened the perception that policymakers have everything under control, which stokes even more speculation and stronger risk market inflation. And global risk asset prices – from stocks, to junk bonds to sovereign debt to emerging market debt and equities – enjoy inflated prices based on the view that policymakers can ensure a low-risk macro backdrop. Market players impute moneyness upon Trillions of debt instruments of suspect quality – Credit that will be vulnerable in the next bout of risk aversion and attendant de-leveraging.

I just don’t believe that policymakers have the situation under control. Sure, they can incite a reversal of short positions and risk hedges. They so far retain the capacity to foment “risk on” and speculative excess. Yet, in reality, this is more destabilizing than it is a source of system stability. The amount of mercurial speculative finance has become so enormous as to be unmanageable. When this massive pool embraces risk things can quickly get out of hand (how about $150 crude?). But when this pool inevitably turns risk averse, illiquidity and market disruption once again become immediate problems. And it all hinges on the perception of the efficacy of policymaking and the moneyness of sovereign debt – and, in the end, the sustainability of the massive issuance of non-productive government Credit. The analysis of Bubbles and Bubble dynamics is integral to a Contemporary Theory of Money and Credit.

This afternoon, former Bundesbank Vice President and ECB Executive Board member Juergen Stark warned that public finances in advanced economies were in “dire straits” and that fiscal deficits were “unsustainable.” He was also critical of the ECB bond purchase program, warning that “intervention in the sovereign bond markets postponed adjustment requirements.” I’m with Mr. Stark on this – and I’m with the German economic viewpoint more generally. Indeed, my analytical framework draws heavily from the “Austrian”/German perspective of the overriding importance of stable money and Credit. The Germans well appreciate the danger of monetary inflation, flawed policymaking doctrine, economic maladjustment and Bubbles. And most American economists believe the Germans remain hopelessly fixated on the Weimar hyperinflation experience. I fear our economic community remains hopelessly fixated on flawed economics.

4)  … The Diktat Theory of Money and Credit is being used to establish regional global governance. An inquiring mind asks will the Euro zone break apart, or will a political, monetary, and fiscal union form, where diktat serves both as mney and credit?
Ambrose Evans Pritchard relates Graeme Leach, the Institute of Directors’ chief economist, said Berlin’s “fiscal compact” to police the budgets of EU deficit states is in no sense a fiscal union. “Germany has not agreed to eurobonds or North-South fiscal transfers. Europe can’t find a solution because there isn’t one. “There is zero chance that the eurozone will survive in current form this year, and Greece will be out by the summer, just in time for cheap holidays,” he said.

Yet, nation states such as Greece are losing their fiscal sovereignty as sovereign leaders and sovereign bodies dictate monetary policy, fiscal policy, and economic policy.

The FT reports Harsher terms leave a ‘bitter taste in mouth’ for bondholders. About 20-25% of Greek bonds are now in the hands of hedge funds, which may complicate the deal. It quoted a bond experts as saying that he expected to see an execution risk. The article said that even some banks may not participate given the rise in the net present value loss to 75%. The Greek CDS will now almost certainly be triggered by this deal. The attempt to avoid a CDS trigger was the original motivation to engage in a voluntary debt exchange deal.

Regionalization is the new direction in globalism, as the ECB’s Sovereign Bond Action, and two  regional framework agreements, the Fiscal Compact with its debt brake, and the Second Greek Bailout Agreement, have established a totalitarian collective in the Euro zone, where monetary cardinals under the monetary pope, Mario Draghi, will proceed with new monetary policy, and budget commissioners nd economic commissioners will proceed with fiscal austerity and structural reforms.  A monetary union, a fiscal union, and a structural union is forming to complements the Euro currency.

The failure of the debt trade in Greek sovereign debt has pushed the European Central Bank to print Euros with its LTRO 1 and soon LTRO facility, and has caused political capital to rise to replace investment capital, with the three memoranda of 38 reforms, as well as with the February 9, 2012, memorandum of understanding, with the result that capitalism has died and regional global governance is rising to replace it.

Greek Socialism is a relic of the bygone era of Neoliberalism which featured a Banker regime. The world is transitioning into Neoauthoritarianism which features a Beast regime that occupies in all of mankind’s seven institutions and in all of the world’s ten regions. The Beast regime is rising out of the most proliferate Eurozone state, that being Greece, which was a political machine that opposed any meritocracy and competition, and which provided pork based upon patronage. Greece is a country where tax enforcement policy was subject to bribery and where flaunting of tax authority is considered patriotic. The major industry, shipping, is run by Greek shipping magnates who have transferred their wealth into banks in Switzerland and the City of London, and into Caribbean Island Pirate Coves.

Regional statism will likely be the next step forward in the New Europe, where monetary cardinals, that is regional stakeholders exercise economic oversight over resources and manufacturing, as well as provide credit, as financial armageddon, that is a credit bust and financial collapse, is being held in abeyance, but cannot be avoided. Lacking any money good, diktat will be de rigueur, and used for both money and credit.

This second massive Greece Bailout Agreement ushers in the age of regional global governance to replace capitalism.  Major world currencies, DBV, and emerging market currencies, CEW, will soon be turning lower, when it becomes apparent that Greece is an insolvent nation and that its sovereign debt is unsustainable, as Open Europe writes Take III: Don’t bore me with the details. Felix Salmon writes The Improbable Greece Plan. Greece’s debt dynamics get even worse. But of course even with well-below-market interest rates, Greece is still never going to pay that money back. The cost of this plan is €130 billion right now, and €170 billion over three years, through the end of 2014; it just continues going up from there, with no end in sight. Remember that total Greek GDP, right now, is only about €220 billion and falling.

King World News relates Fears of debt contagion. These as well as fears of decreased growth, will cause disinvestment out of stocks and delveraging out of commodities, as fiat money dies globally.

Future EU Leader’s framework agreements will serve as the constitution for the New Europe, and usher in the ten toed kingdom of regional global governance, where the Beast Regime of Neoauthoritarianism, will be replacing the Banker Regime of Neoliberalism.

Soon a New Charlemagne will rise to rule the Euro zone, where Germany will be preeminent, as a type oof revived Roman Empire that governs the European continent

Bob Janjuah writes in Zero Hedge, Monetary Anarchy. The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt, that is not subject to any collective action clause, is as Mark Grant writes, Opens Pandora’s Box. Ambrose Evans Pritchard describes the ECB’s actions as legerdemain, saying the European Central Bank has taken action to insure that it suffers no loss on its Greek holdings, automatically reducing other creditors to junior status; this sets a precedent for Ireland, Portugal. Spain, and Italy.

Out of the debt travails of the profligate Mediterranean Sea country of Greece, new sovereigns are rising to rule the Eurozone. Creative destruction is working to pass the baton of sovereignty from nation states to the EU ECB IMF Troika.

Reuters reports The ECB Greek Bond swap piles pressure on the EU. The European Central Bank’s decision to exempt itself from taking losses on its Greek bonds gives its senior status in the bond market and may push up borrowing costs of other debt-strained euro zone countries, Standard & Poor’s said on Friday. The ECB and the 17 euro zone central banks made cosmetic changes to the 62 billion euros worth of bonds they own this week to avoid being pulled into Greece’s debt reduction deal, which will see private investors lose well over half their money. S&P, which carried out a mass downgrade of nine euro zone states last month, said the ECB’s move was another blow for the bloc’s weaker countries, changing the ECB’s status at least in this instance “from implicit super-senior creditor to an explicit one.”

“We believe that this development (seniority of ECB) could further weaken the prospects of peripheral euro zone sovereigns currently receiving official funding to regain the ability to access the capital markets and could raise borrowing rates of those sovereigns still accessing the primary markets,” it said in a statement.

The ECB in announcing that it is swapping out their Greek debt for new Greek debt that is not subject to any collective action clause, establishes a Euro zone monetary union, to complement the debt union, that was established when EU leaders announced the first Greek bailout agreement in May 2010.

Regional trade imbalances is another catalyst for a EU Political Union, that is a Federal Europe. Germany exports products to the peripheral European countries, which run trade deficits. Greece has a trade deficit of about 10% of GDP. Greece must have a trade surplus if public debt as well as business credit and stock leverage is to be reduced. Until Greece runs a trade surplus, Greece cannot get their government and private budgets under control. Greece must cut its fiscal expenditures and/or raise taxes. As Greece does this, the Greek economy will continue to shrink, making it more difficult buy foreign goods. This leads to a deflationary spiral. And that same deflationary spiral will spin up to take in all of Europe.

These two catalysts, the loss of debt sovereignty and regional trade imbalances, will cause political leaders to meet in even more summits, waive even more national sovereignty, and establish a European federal political union, and establish the ECB, or the Bundesbank, as the Euro’s Bank, and a fiscal union, which by diktat will provide moneyness, that is seigniorage, and thus by defacto reasoning, establish a debt union, where debt servitude will establish the EU as a totalitarian collective.

The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt that is not subject to any collective action clause, establishes Greece as a client state within a Euro zone region of global governance. Julia Amalia Heyer in Der Spiegel A Political Establishment In Freefall, Greece Lurches to Left Amid Radical Austerity, communicates that Greece is the Eurozone’s first colony.

Mark Grant of Out Of The Box writes in Zero Hedge For Greece Tomorrow Has Arrived. Greece will shortly be placed into “Default” by S&P and Fitch which will trigger default language in all kinds of securitizations including Greece’s $90Bn in derivatives and may cause disgorgement from accounts that are forbidden to hold defaulted bonds.

After the country has been placed into “Default” the banks will soon follow and once again there will be all kinds of consequences in interbank lending, collateral agreements, securitizations, et al from all of this. The CDS contracts for Greece may or may not function as they stand but, as I am quite certain will happen, not enough bond holders tender their bonds for the new debt so that Greece will pass the “Collective Action Clause” which will certainly trigger CDS in my opinion and if not will show the fallacy of that market. The structure of the deal puts the IMF/EU/ECB clearly in control of the finances of Greece so they have replaced some sort of Czar with the bureaucrats of the Troika and the country no longer will control its own finances as they traded away their sovereignty for cash. In fact, an escrow account will be set up for Greece which will be controlled by the Troika and Greece is being forced to change their Constitution pledging to pay their creditors before providing any money for the country. A quick study of the math reveals that Greece will get about 19 cents on the Dollar and the rest of the money is the sovereign nations of Europe paying back their banks with the money they have supposedly lent to Greece. Greece is now nothing more than a conduit for the nations of Europe to pay back their own financial institutions. Now we will see if the Parliaments in Europe will go along with this plan as many still have to approve it and a careful reading of the math involved here may be troubling for some governments especially Finland and the Netherlands. We will also see, with Greek elections looming, how the citizens react to all of this either in the polling booths or in the streets as an additional $4Bn of spending cuts have been mandated by the Troika and they state that the money will not be paid to Greece until they are implemented which must be by the end of February.

The total outstanding debt for Greece will now rise to $1.270Tn as new debt pays off old debt in a country with substantial negative growth so that the real situation, regardless of what we are told, worsens. In early May Greece faces its next bond payments so there may be a re-do for all of this in several months’ time. If Greece is actually going to get the next round of the bailout then the other side of the coin is the increased debt being taken on by the other countries in Europe which could cause more downgrades as the new debt to GDP numbers are assessed.

WSWS writes The purpose of the so-called “aid packages” for which the Greek population must sacrifice is not to help the people, but to enrich the banks, hedge funds and speculators.  For many experts and officials, the bankruptcy of Greece is a foregone conclusion. According to Spiegel Online, they admit off the record: “Of course, the 130 billion [euros] will not solve the problem. It is only a question of buying time. Time until the financial markets have stabilized to the extent that they can handle the bankruptcy of Greece without a chain reaction.” Of the €130 billion agreed by European finance ministers on Monday, €30 billion will flow directly to the accounts of creditor banks, which are guaranteed repayment (with interest) of a portion of their loans to Greece already written off. The remaining money goes into an escrow account to ensure that it is used to pay off debts and not to finance essential government functions.

And WSWS writes The €130 billion plus package of loans agreed by euro zone finance ministers does nothing to protect Greece from bankruptcy.  It merely postpones the inevitable, while European and international finance capital use Greece as a testing ground for their scorched-earth policy of savage austerity being rolled out across the continent. Nothing is guaranteed as yet.

Under the plan, holders of privately-held Greek bonds are to be asked to participate in their voluntay restructuring, accepting losses of up to 53 percent. It will not be clear until March whether this has been accepted. Moreover, Monday’s package is entirely dependent on further spending cuts of €3 billion: only if this is achieved in a timely and effective manner will aid be forthcoming from the EU.

Yet an additional €20 billion is expected to be needed to recapitalise Greek banks—making a total of €50 billion—due to the flight of capital from the country. There is also to be a massive extension of privatisation projects, up from five to 35, meaning the wholesale sell-off of state land and buildings.

To enforce this, control over Greece’s economy has been placed entirely in the hands of the troika, in what the BBC’s Gavin Hewitt described as a “humiliating and unprecedented intrusion into Greece’s sovereignty.” European Commissioner for Economic and Financial Affairs Olli Rehn confirmed that a separate account is to be created for the latest bailout package. This is to ensure that debt and interest payments to the banks take priority over government funding of public services and wages.

A leaked confidential report prepared by analysts for the troika admitted that its targets were unachievable and that, even under the most optimistic forecast, the cuts and demands being imposed can only produce greater indebtedness and economic crisis.Everyone knows this to be the case. The latest bail-out package is broadly acknowledged to be a “suicide pact”, by which the Greek population is subject to ever greater penury while the troika prepare contingency plans for a supposedly “orderly default.” Many are forecasting that D-Day will be around March 20, when Greece is due to repay €14.5 billion of debt.

And WSWS writes of Dickensian social inequality as it relates the marking of the 200th anniversary of the birth of Victorian age English novelist Charles Dickens.

Tyler Durden relates The FT reports The Second Greek Bailout includes three memoranda of reforms, in addition to initial memorandum of February 9 2012, that are assigned for completion by the end of February. The reforms, spelt out in three separate memoranda of a combined 90 pages, are the price that Greece has agreed to pay to obtain a €130bn second bail-out and avoid a sovereign default.

The 38 measures, (that are assigned for completion by the end of February), are a mix of laws that must be passed by parliament, ministerial decisions and presidential decrees and focus on spending cuts, bank regulations, and economic reforms. Among the measures that must be completed in the next seven days are reducing state spending on pharmaceuticals by €1.1bn; completing 75 full-scale audits and 225 value added tax audits of large taxpayers; and liberalising professions such as beauty salons, tour guides and diet centres. Even the longer-term reforms must be completed quickly. A draft 49-page “memorandum of understanding on specific economic policy conditionality”, dated February 9, includes dozens of measures that must be completed in the first half of the year.

Landon Thomas of the NYT writes As Greek restructuring looms, bondholders think twice about other sovereign debt. The hard line approach Athens has taken to force steep losses on creditors has prompted fears that other weak countries in Europe may do the same.

GlobalResearch.ca writes Euro currency crisis: trapped inside an economic prison.

The Automatic Earth writes Our depraved future of debt slavery (Part II)

Tyler Durden relates The colonization begins: Germany may send 160 tax collectors to Greece

Shaun Richards writes The latest Greek bailout has Euro zone leaders acting like the March Hare from Alice in Wonderland. It would appear that there is to be no halt to the economic vandalism that is currently being inflicted on Greece. Another 3.3 billion Euros of public-spending cuts will be piled on an economy which is spiralling downwards in 2012. So we can expect more of the vicious circle of austerity leading to economic decline meaning more austerity is needed and repeat. It will not be too long before bailout number three is required and as the amounts spiral it is quite plain that not starting the process with a debt haircut was a fatal error in methodology.

Bloomberg reports European services and manufacturing output unexpectedly shrank in February as the euro-area economy struggled to rebound from a contraction in the fourth quarter. A euro-area composite index based on a survey of purchasing managers in both industries dropped to 49.7 from 50.4 in January.”  And Reuters reports Euro zone economy set to shrink in 2012, deficits in focus.

5) … Financial armageddon, that is a world wide credit bust and global financial collapse is coming.
Santiago Zabala writes in the NYT The European Union must reconsider the existential nature not only of citizens but also of philosophy. When we speak of being from the existential-hermeneutic point of view, as those interested in philosophy well know, we are not referring to the factual existence of things but rather to the force of the people, thinkers and artists who generated our history. Thus, each epoch can be alluded to in the name that great philosophers have given to being in their work — “act” in Aquinas Middle Ages, “absolute spirit” in Hegel’s modernity, or “trace” in Derrida’s postmodernity. It is between being and nothing. But being also denotes how our existence is hermeneutic, in other words, a distinctive interpretative project in search of autonomous life. We exist first and foremost as creatures who manage to question our own being and in this way project our lives. Without this distinctiveness we would not exist; that is, our lives would be reduced to a predetermined subordination to the dominant philosophical or political system. The problem in 2012 is that E.U. policies are presented as if we have reached the end of history: after decades of war, Europe is finally united culturally, economically and soon also militarily. This, in the E.U. conception, is the best possible governance we could hope for. But as the ongoing protests throughout Europe point out, history has not ended: as citizens we continue to project our lives in ways that diverge from the Union’s neoliberal game plan. The fact that they are promoting technocratic governance does not imply that the nations of Europe are incapable of governing themselves but rather that they are being trammeled into compliance with the E.U. measures, classifications and rankings.

People’s lives are being reduced to a predetermined subordination to the dominant philosophical or political system, that being emerging regional global government as foretold in bible prophecy . A Eurodämmerung, a Götterdämmerung, that is a clash of the current sovereign authorities with investors, will destroy credit and money, as they have been known. Out of the ensuing chaos, Fate is working through creative destruction, directing that regional global governance be established.

Daniel’s interpretation of Nebuchadnezzar’s dream presents the statue of the progressions of kingdoms, Daniel 2:31-45. Kings have ruled mankind throughout history; these have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority. Soon ten kings will come to rule, each in his own regional power base. Most recently two iron kingdoms, the combine of the UK and European rule, and the US Hegemony, have governed the world; their power is now flowing into a ten toed kingdom of regional global governance, Daniel 2:31-33.

God’s Sovereign Will, Ephesians 1:1-11, not any human action, will bring forth a revived Roman Empire, that is a German led Europe. In the supranational New Europe, national sovereignty will be seen as a relic of a bygone era. God at the appropriate time will open the curtains, and onto the world’s stage will step the most credible of Europe’s political leaders, the Sovereign, Revelation 13:5-10. He will be accompanied by Europe’s banker, the Seignior, Revelation 13:11-18. These will have have EU wide sovereign authority. The Little Authority, Daniel 7:24-25, will work behind the scenes in regional framework agreements to change our times and laws. The people will be amazed by this, and place their faith and trust in the Sovereign; they will give their allegiance to his diktat, Revelation 13:3-4.

Steve Barnes provides the Andrew Garvin Marshall, Research Associate with the Centre for Research on Globalization, article, The High Priests of Globalization. Foundations had been central in promoting the ideology of globalism that laid the groundwork for organizations. Foundations effectively blur boundaries between the public and private sectors, while simultaneously effecting the separation of such areas in the study of social sciences. This boundary erosion between public and private spheres “adds feudal elements to our purported democracy, yet it has not been resisted, protested, or even noted much by political elites or social scientists.” Zbigniew Brzezinski, foreign policy strategist, Joan Roelofs, “Foundations and Collaboration,” Critical Sociology, Vol. 33, 2007, page 480.

As the imitation of American ways gradually pervades the world, it creates a more congenial setting for the exercise of the indirect and seemingly consensual American hegemony. And as in the case of the domestic American system, that hegemony involves a complex structure of interlocking institutions and procedures, designed to generate consensus and obscure asymmetries in power and influence. Ibid, page 481.

In 1957, two years later, the Treaty of Rome was signed, which created the European Economic Community (EEC), also known as the European Community. Over the decades, various other treaties were signed, and more countries joined the European Community. In 1992, the Maastricht Treaty was signed, which created the European Union and led to the creation of the Euro. The European Monetary Institute was created in 1994, the European Central Bank was founded in 1998, and the Euro was launched in 1999. Andrew Rettman ‘Jury’s out’ on future of Europe, EU doyen says, EUobserver: March 16, 2009

The European Constitution (renamed the Lisbon Treaty) was a move towards creating a European superstate, creating an EU foreign minister, and with it, coordinated foreign policy, with the EU taking over the seat of Britain on the UN Security Council, representing all EU member states, forcing the nations to “actively and unreservedly” follow an EU foreign policy; set out the framework to create an EU defence policy, as an appendage to or separate from NATO; the creation of a European Justice system, with the EU defining “minimum standards in defining offences and setting sentences,” and creates common asylum and immigration policy; and it would also hand over to the EU the power to “ensure co-ordination of economic and employment policies”; and EU law would supercede all law of the member states, thus making the member nations relative to mere provinces within a centralized federal government system. EU Constitution – the main points. Daily Mail , June 19, 2004.

The Constitution was largely written up by Valéry Giscard d’Estaing, former President of the French Republic from 1974 to 1981. The Treaty, passed in 2009, created the position of President of the European Council, who represents the EU on the world stage and leads the Council, which determines the political direction of the EU. The first President of the European Council is Herman Van Rompuy, former Prime Minister of Belgium. On November 12, 2009, a small Bilderberg meeting took place, hosted by Viscount Etienne Davignon and including “international policymakers and industrialists,” among them, Henry Kissinger. Herman Von Rompuy “attended the Bilderberg session to audition for the European job, calling for a new system of levies to fund the EU and replace the perennial EU budget battles.” Ian Traynor, Who speaks for Europe? Criticism of ‘shambolic’ process to fill key jobs. The Guardian, 17 November 2009:

Following his selection as President, Van Rompuy gave a speech in which he stated, “We are going through exceptionally difficult times: the financial crisis and its dramatic impact on employment and budgets, the climate crisis which threatens our very survival; a period of anxiety, uncertainty, and lack of confidence. Yet, these problems can be overcome by a joint effort in and between our countries. 2009 is also the first year of global governance with the establishment of the G20 in the middle of the financial crisis; the climate conference in Copenhagen is another step towards the global management of our planet.” Herman Van Rompuy, Speech Upon Accepting the EU Presidency, BBC News, 22 November 2009:

Among the EU power players attending this years meeting was the first President of the European Council, Herman van Rompuy, who was appointed as President following an invitation to a private Bilderberg meeting in November of 2009, at which he gave a speech advocating for EU-wide taxes, allowing the EU to not rely exclusively upon its member nations, but have its “own resources.” Bruno Waterfield, EU Presidency candidate Herman Van Rompuy calls for new taxes, The Telegraph, 16 November 2009:

European Central Bank President, Jean-Claude Trichet, “said governments should consider setting up a finance ministry for the 17-nation currency region as the bloc struggles to contain a region-wide sovereign debt crisis.” Trichet asked: “Would it be too bold, in the economic field, with a single market, a single currency and a single central bank, to envisage a ministry of finance of the union?” Further in line with this thought, and with the ideas laid out in the Bilderberg meeting in favour of a ‘power grab’, Trichet said he supports “giving the European Union powers to veto the budget measures of countries that go ‘harmfully astray,’ though that would require a change to EU Treaties.” Such a finance ministry would, according to Trichet, “exert direct responsibilities in at least three domains”.
They would include “first, the surveillance of both fiscal policies and competitiveness policies” and “direct responsibilities” for countries in fiscal distress, he said. It would also carry out “all the typical responsibilities of the executive branches as regards the union’s integrated financial sector, so as to accompany the full integration of financial services, and third, the representation of the union confederation in international financial institutions.”  Bloomberg, European Central Bank President Jean-Claude Trichet calls for Euro Finance Ministry, The Economic Times, 3 June 2011.

Last year, Belgian Prime Minister Yves Leterme endorsed such an idea of a ‘European Economic Government’ when he stated: The idea of strengthened economic government has been put on the table and will make progress. In the end, the European Debt Agency or something like it will become a reality. I’m convinced of this. It’s about Europe’s financial stability and it’s not an ideological debate about federalism. I myself am a federalist. But more integration and deeper integration are simply logical consequences of having a single currency. Daniel Hannan, European economic government is inevitable, Telegraph Blogs, 17 March 2010.

The plans for an ‘economic government’ require the strong commitment of both France and Germany, which may explain Merkel’s reported appearance at Bilderberg. In March of 2010, the German and French governments released a draft outline that would “strengthen financial policy coordination in the EU.” The plan, seen by German publication Der Spiegel, “calls for increased monitoring of individual member states’ competitiveness so that action can be taken early on should problems emerge.” Luxembourg Prime Minister Jean-Claude Juncker stated in response to the plan, “We need a European economic government in the sense of strengthened coordination of economic policy within the euro zone.” Spiegel, Plans for European Economic Government Gain Steam, Der Spiegel, 1 March 2011.

In December of 2010, German Finance Minister Wolfgang Schaeuble stated that, “In 10 years we will have a structure that corresponds much stronger to what one describes as political union.”  Andrew Willis, Germany predicts EU ‘political union’ in 10 years, EU Observer, 13 December 2010.

Mario Draghi is the current President of the Bank of Italy, as well as a board member of the Bank for International Settlements – the BIS (the central bank to the world’s central banks). In an interview posted on the website of the BIS in March of 2010, Mario Draghi stated that in response to the Greek crisis, “In the euro area we need a stronger economic governance providing for more coordinated structural reforms and more discipline.”  Mario Draghi: “We need a European economic government”  interview in PDF Handelsblatt, The Bank for International Settlements, March 2010.

Certainly, the objective of a ‘European economic government’ will continue throughout the coming years, especially as the economic crisis continues.

Life in Europe can now be characterized as a totalitarian collective. Totalitarian collectivism is the EU’s future. European Socialism will die in 2012. Diktat will provide seigniorage, that is moneyness, to replace the seigniorage of national treasury bonds. Diktat will become a currency, that is a payment used in the exchange of goods or services.

The seigniorage of fiat money is failing, and the seigniorage of diktat is rising in its place, as is seen in the rise of power of the EU ECB IMF Troika to appoint technocratic government in Greece and Italy as well as in the massive Second Greek Bailout Agreement. The fiat monetary system is being replaced by the diktat money system which will rule in each of the world‘s ten regions.

Corieriser publishes the Robin Niblett, Chatham House, Elcano Royal Institute, article Economic Crisis And Emerging Powers: Towards A New International Order? which presents the case for regionalization for security, stability, and sustainability. For the next 10 to 20 years at least, as the emerging powers acquire greater political power and autonomy, they are likely to repeat what the Western powers have done, promoting their interests within institutions rather than handing any more power than absolutely necessary to them. In other words, the world’s most powerful states will seek to manage their interdependence through international political negotiation, rather than through new forms of global governance.

The real challenges to the existing international order will come not from the established or emerging powers, but from global forces that are beyond their control and also from those non-state entities and groups which seek to undermine the process of globalisation that links all states and societies ever closer together. Ensuring the continuation and deepening of international order in the next decades of the 21st century will require governments in both the West and among the emerging powers to improve their domestic resilience to internal and external shocks and, as suggested below, to use deeper regional cooperation as a testing ground for higher levels of international cooperation.

Two priorities stand out in this context. First, all states need to professionalise and improve their delivery of key services that promote security and enable sustainable growth and prosperity. For countries in the West, this will involve major reforms to welfare systems that remain industrial in their scale and approach and have not yet adapted to the West’s changed demographic profile and reduced future rates of economic growth. it will also mean finding more affordable ways of maintaining their internal and external security, both in terms of lessening the appeal and impact of extremist or criminal attacks on their societies, and in terms of contributing to enhanced levels of security beyond their borders. In this regard, military deterrence will be as important as incentives to reduce the disparities in wealth and human security between them and their poorer neighbours.

For the emerging powers themselves and for most countries in the developing world, the priority will be to build the political institutions and processes, including functioning judicial systems and vibrant civil societies, that will embed a culture of greater transparency and accountability. otherwise, rising levels of economic growth could lead to social upheaval or to unsustainable economic bubbles, either of which could bring to a jarring halt the process of global economic and political rebalancing that is currently under way.

Finally, deeper forms of regional integration may serve as a useful bridge to a future in which the term ‘global governance’ starts to have a real meaning. Although few groups of states are likely to emulate the EU in terms of building supranational institutions and methods of political governance, the deepening of consultation and cooperation of groupings in Asia (such as ASEAN and ASEAN plus 3), in Latin America (UNASUL) and sub-Saharan Africa (the African Union and ECOWAS) is serving two useful purposes. First, it is bringing pressure to bear on the emerging powers themselves to adhere to norms and processes that they do not control. and secondly, it is enabling the development of best practices in economic cooperation, market opening and political consultation at a regional level which could gradually be elevated to an international or global level, as and when a consensus begins to emerge on the validity of those best practices across regions.

Hedley Bull, the renowned British international-relations theorist, wrote that international order would at best resemble the notion of an ‘international society’, where states chose to adhere to certain rules and norms as a way of avoiding falling into anarchy and war. The rebalancing of economic and political power from the West and North to the East and South, and the deepening interdependence that is accompanying this process, now offers an opportunity for the world to test out Hedley Bull’s vision. The birth of an international society is by no means foreordained, but governments, companies, civil society and individual citizens now have the opportunity to see if they can put his theory of international order into practice.

The Beast regime of Neoauthoritarianism, Revelation 13:1-4, is rising to replace the Banker regime of Neoliberalism. This monster of statism and collectivism is rising from the profligate Mediterranean countries of Italy and Greece. The Beast’s seven heads are rising to occupy in all mankind’s institutions, and its ten horns are rising to govern in all of the world’s ten regions. The Beast regime is to replace the Banker regime of Neoliberalism, The Beast regime is coming like a terminator that can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.

6) … The Fed continued buying 30 Year Treasuries to prevent bond vigilantes from calling US Interest rates higher.
The WSJ reports Fed Buying Lifts Fed Buying Lifts 30-Year Treasury Bond.  Boosted by a supportive Federal Reserve, the 30-year Treasury bond pocketed some gains Friday in a listless session. The lackluster move, with the benchmark 10-year note trading flat, came amid a dearth of fresh news on the euro zone’s sovereign debt crisis. A round of mixed U.S. data on consumer sentiment and new home sales also failed to energize bond investors. Instead, it was the Fed’s busy buying schedule that drew some attention. The 30-year bond was the best performer as the central bank bought $1.926 billion in Treasurys maturing between Feb. 15, 2036, and …

US Federal Reserve purchases of longer out America’s sovereign debt helps sustain the value of the debt. The practice prevents bond vigilantes from calling US Interest rates higher across the board. The Interest Rate on the US 10 Year Note ^TNX hit a triple bottom on December 19, 2011, and January 17 and January 30, 2012, and is now trying to come up above 2.0%.

The chart of the 10 Year US Note, TLT, shows a rise of 0.65% while the chart of the 30 Year US 30 Year Bond, EDV, shows a 0.95%. And the chart of the Flattner ETF, FLAT, shows a rise to a triple top high; and the chart of the Steepner ETF, STPP, shows a fall to a triple top bottom, a descending triangle bottom, from which it will soon explode from.

The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, is coming up from an Elliott Wave 2 bottom, rising up in an Elliott Wave 3, meaning that the interest rate on the longer duration bonds is going to rise much faster than the interest rate on the shorter duration bonds. Thus the 30 Year US Treasuries, EDV, and the Zeroes, ZROZ, and are going to fall like a rock, and investors are going to flee US Sovereign Debt. Gold, GLD, as well as oil, USO, will explode substantially higher. Silver, SLV, might explode higher as well.

As competitive currency devaluation commences and grows in intensity all mining stocks ,MXI,  EMMT, even GDX, GDXJ, and SIL, are going to fall lower as will be seen in MXI, EMMT, GDX, GDXJ, SIL, and SSRI.  Silver Standard Resources Inc, SSRI, was the most favored carry trade investments of all time; its chart reflects the death of fiat money in May through July of 2011.

RYANMBURKE19 writes Our economy has increasingly moved from borrowing via bank loans and bonds to secured funding. With available returns so low, most investors do not want to lend on an unsecured basis at low rates. Hence, they demand collateral. Given near-zero rates going out several years, there is little incentive to take additional risk. Thus my decision to move from a money market to a treasury only fund. Similarly, many large institutions are no longer letting their cash be used by financial institutions for repos and re-hypothecation ….. By not terming out US government debt, the Treasury is virtually guaranteeing that rates can NEVER be raised, as doing so would drive up interest expense and overwhelm tax revenues. As long as the Treasury maintains its current term structure, the US will continue running high deficits without the ability to raise rates. At some point in the future (3-5yrs in my estimation), the markets will likely force up rates and the US will be forced to refinance at rates high enough to destroy our budget even more. What will we do then? … My reply to RYANMBURKE19 is to buy and take possession of gold now; put it in a gun safe and store both in your home.

7) … In today’s news
WSWS reports Highland Park Michigan school district faces closure threat. Michigan Governor Rick Snyder is threatening to force the closure of the entire Highland Park, Michigan school district in response to a cash shortage that has left the district unable to make payroll this week.

The announcement follows the suspension of the emergency manager (EM) appointed by Snyder to run the district. A judge suspended Jack Martin after a lawsuit filed by a Highland Park school board member who said his appointment violated the state’s open meeting law. The school district is reportedly $150,000 short of the cash needed to make payroll this Friday. The district ended the 2011 school year with a cumulative $11.3 million deficit. Enrollment has dropped sharply following wave after wave of school closings and budget cuts, falling from 3,179 in 2006 to less than one thousand currently.

Snyder says the state will likely not make further emergency loans to keep Highland Park schools open. Instead, the governor raised the possibility of contracting with another district to operate the schools for the rest of the year, or contracting with a charter school operator. The governor indicated he would quickly reappoint Martin as EM as soon as the review panel that recommended him for the post holds another meeting in compliance with state open meeting requirements.

In late January Martin ordered the closure of Barber Focus School for grades K-12, one of three schools remaining in Highland Park, and its merger with Henry Ford Academy. The announcement came within hours of Martin’s appointment as emergency manager and provoked widespread outrage among parents and staff.’

The attack on public education in Highland Park is part of an effort by both Democrats and Republicans to force the economic crisis onto the backs of working people by slashing jobs, wages and social services. The threat to close the Highland Park Schools follows within days the announcement of Detroit Public Schools Emergency Manager Roy Roberts that 16 school buildings will be closed this fall. A succession of state appointed emergency managers at the Detroit Public Schools have shuttered scores of buildings and imposed massive concessions on teachers, including a 10 percent pay cut last fall.

Jack Martin is himself on the financial review team appointed by Governor Snyder to consider a possible state takeover of the finances of the city of Detroit. Martin, an African American, is part of Detroit’s business elite and a proponent of for-profit charter schools. In 2002 President Bush named him chief financial officer of the US Department of Education (DOE). He later left the DOE to become the CFO of White Hat management, an operator of charter schools noted for its unscrupulous practices. Currently Martin serves on the board of directors of Knowledge Investment Partners, a hedge fund management company that specializes in the education sector. (see: “Who Is Jack Martin?”)

Michigan’s Public Act 4 law, giving expanded powers to emergency managers, is thoroughly undemocratic. It gives EMs the right to void union contracts, impose budget cuts and sell city assets. At the same time, the Democratic Party establishment and the trade union bureaucracy in Michigan are posing as opponents of the EM law to make it appear that they are defending the interests of working people. However, their main argument is that drastic cuts on the working class can be imposed through the existing city political establishment.

Typical of this posturing was a panel discussion on the emergency manager law Tuesday in Highland Park, convened by Michigan Democratic Congressman John Conyers. The meeting, which drew few working class residents of the city, brought together leading figures in the Democratic Party establishment in the Detroit area. This included Congressmen Gary Peters and Hansen Clarke, Detroit City Council member JoAnne Watson, Detroit Federation of Teachers President Keith Johnson and American Federation of State, County and Municipal Employees (AFSCME) Council 25 president Al Garrettt.

Several legal experts testified that the Michigan emergency manager law was unconstitutional because it violated the commerce clause of the US constitution in relation to contracts. Jocelyn Benson, a professor at the Wayne State Law School, testified that the EM law might also be in violation of the voting rights act because it was disproportionately affecting minority voters in Michigan.

Whatever the merits of the legal arguments advanced, Conyers and other Democrats are covering for the fact that the emergency manager law in its initial form was enacted under Democratic Party administrations. In fact, Democratic Governor Jennifer Granholm appointed the majority of emergency managers currently operating in Michigan.

Meanwhile, union officials like Johnson and Garrettt, while denouncing the emergency manager law, are themselves involved in imposing concessions on their members. Johnson in fact boasted that he oversaw givebacks by teachers in 2009 amounting to $120 million. For his part, Garrett is overseeing concession talks with the city of Detroit aimed at extracting more than $100 million from city workers.

In his remarks, Congressman Gary Peters articulated the real content of the Democrats’ opposition to the emergency manager law, which is to work instead through the trade union bureaucracy to impose cuts. “The labor unions are willing to make sacrifices,” Peters said, referring to the massive concessions handed over by the United Auto Workers in 2009 as part of the Obama administration’s forced bankruptcy and restructuring of General Motors and Chrysler. “The auto workers stepped forward, now GM is making record profits,” he continued.

A number of the panelists, such as Reverend Anthony Bullock of the Rainbow PUSH Coalition in Detroit, attempted to present the emergency manager law in racial terms in order to obscure the class issues. “We will not be consigned to second class citizenship,” said Bullock. However, Bullock and other black Democrats are part of an affluent minority who have benefited from programs like affirmative action, while the vast majority of African American residents in Detroit and Highland Park struggle in poverty or near poverty.

The only proposal advanced at the panel discussion was to support the petition drive, backed by the unions, seeking a referendum to repeal the law. The campaign is in its final stages, currently totaling more than 200,000 signatures that will be delivered to the secretary of state’s office in Lansing on February 29 for certification. However, even if signatures are validated and the EM law is suspended, Governor Snyder has indicated he will rely on the previous emergency manager act, which is nearly as onerous.

8) … Conclusion
The Second Greek Bailout introduces the diktat theory of money and credit, where regional global governance will rise to rule the Euro zone.

Regionalization is the new direction in globalism, as the ECB’s Sovereign Bond Action, and two  regional framework agreements, the Fiscal Compact with its debt brake, and the Second Greek Bailout Agreement, have established a totalitarian collective in the Euro zone, where monetary cardinals under the monetary pope, Mario Draghi, will proceed with new monetary policy, and budget commissioners nd economic commissioners will proceed with fiscal austerity and structural reforms.  A monetary union, a fiscal union, and a structural union is forming to complements the Euro currency.

The failure of the debt trade in Greek sovereign debt has pushed the European Central Bank to print Euros with its LTRO 1 and soon LTRO facility, and has caused political capital to rise to replace investment capital, with the three memoranda of 38 reforms, as well as with the February 9, 2012, memorandum of understanding, with the result that capitalism has died and regional global governance is rising to replace it.

Greek Socialism is a relic of the bygone era of Neoliberalism which featured a Banker regime. The world is transitioning into Neoauthoritarianism which features a Beast regime that occupies in all of mankind’s seven institutions and in all of the world’s ten regions. The Beast regime is rising out of the most proliferate Eurozone state, that being Greece, which was a political machine that opposed any meritocracy and competition, and which provided pork based upon patronage. Greece is a country where tax enforcement policy was subject to bribery and where flaunting of tax authority is considered patriotic. The major industry, shipping, is run by Greek shipping magnates who have transferred their wealth into banks in Switzerland and the City of London, and into Caribbean Island Pirate Coves.

Regional statism will likely be the next step forward in the New Europe, where monetary cardinals, that is regional stakeholders exercise economic oversight over resources and manufacturing, as well as provide credit, as financial armageddon, that is a credit bust and financial collapse, is being held in abeyance, but cannot be avoided. Lacking any money good, diktat will be de rigueur, and used for both money and credit.

A Eurodämmerung, a Götterdämmerung, that is a clash of the current sovereign authorities with investors, will destroy credit and money, as they have been known. Out of the ensuing chaos, Fate is working through creative destruction, directing that regional global governance be established.

The dynamos of growth and profit that governed capitalism are losing their power through failure of the debt trade, specifically the failure of fiat money and the failure of neo liberal credit. The dynamos of regional security, stability, and sustainability are powering up regional global governance. The free monetary system as envisioned by Hayek, Rothbard, and Mises is simply a mirage on the Neoauthoritarian Desert of the Real. The diktat monetary system will diktat for both the money and credit needs for each of the wordl’s ten regions.

This article has been posted on the Internet

Is Greece Unstable or Instable?

February 23, 2012

A report on the Second Greek Bailout as of February 23, 2012

An inquiring mind asks, is Greece, GREK, and its major bank, NBG, unstable or are they instable?

Euro Intelligence provides the best in Eur zone reporting; this comes at a cost; I suggest that one purchase their daily subscription service.

Satyajit Das writes Why the Greek Bailout may not work, again!  Greece may live to default another day. Other embattled European nations will be scrutinising the Athenian sub-plot extremely closely as to clues as to their future as they await the battles that lie ahead.  A declaration of victory in the European debt wars would be premature.

Berlin says it does not want to discuss the merger of EFSF funds and the ESM; Angela Merkel does not want any complications that might get in the way of the Bundestag’s approval of the Greek programme.

FT reports Germany fights eurozone firewall moves that the German government is now digging in over demands to merge the EFSF and ESM. The article quotes Steffen Seibert, Angela Merkel’s spokesman, as saying that the German position had not changed on this issue, that it was not necessary to merge the two. The article says that Merkel fears a backlash in her own coalition, and in the country at large, over the €130bn Greek programme, as a result of which she has to be seen being tough on the question of raising Germany’s overall exposure. But the article also said that Germany may eventually change position on this, quoting an official as saying that Germany will commit to discussing the issue, as promise, at some point in March, but not necessary during the March 1/2 summit. The official also said that Germany wanted to avoid any subjects right now that would complicate the vote on the Greek programme. The Dutch have changed their position, and are now supporting the increase in the funds of the ESM.

CACs are approved by Greek parliamentary committee, and to be voted on by the full parliament later today.A parliamentary committee approved the collective action clauses (CACs), Kathimerini reports Race to pass bailout legislation  reports. The CAC could be activated if Greece is unable to convince enough of its bondholders to take part in a voluntary swap. The bill, which was approved by coalition MPs but rejected by opposition deputies, is to be voted on by Parliament’s plenary session on Thursday. Several other pieces of legislation must be approved by the House in the next coming days, before eurozone finance ministers meet again next Wednesday or Thursday. Other legislation tabled in Parliament Wednesday sets out the €3.2bn in spending cuts that Greece will have to make this year.

Antonis Samaris invites ousted MPs  back in if they support reform programme. New Democracy leader Antonis Samaras, likely to win the elections in April, invited those 21 MPs, who had been ousted from the party for voting against the terms of Greece’s new loan agreement earlier this month, to rejoin the conservatives if they back the bailout bills that will go before Parliament over the next few days,Kathimerini reports Samaras softens stance on ND rebels. Commentators see this as an attempt by the conservative leader to heal any open wounds before general elections and to obtain the widest support possible for the legislation that will be voted in Parliament in the days to come.

Wolfgang Proissl calls on Draghi and Weidman to repeat a Trichet-Weber type confrontation. Commenting in Financial Times Deutschland Wolfgang Proissl calls upon Jens Weidmann and Mario Draghi to work on avoiding another damaging confrontation as their predecessors Axel Weber and Jean-Claude Trichet had had. Proissl argues that the initially good relations between the presidents of the Bundesbank and the ECB risk turning sour because of a series of policy decisions the ECB has recently taken against the Weidmann’s will. Among them are the second surprise interest rate cut in December, the extremely generous conditions of the 3yLTRO’s, the imposition of a senior creditor status of the eurosystem for its Greek bonds and the attempts to earmark future profits from Greek bonds for governments so they can pass the money on to Greece. Weidmann has started to come out publicly against those decisions thus risking to put the Bundesbank back into the dissident role unable to form coalitions as was the case under Weber. Proissl calls on both central bankers to work out a mature relationship because working against each other damages the euro and the prospect for both to be successful on their respective jobs.

Nomura explains the broken monetary transmission channel.  FT Alphaville reports How the ECB transmission mechanism is broken, which has  a useful elementary discussion about the two most important channels of monetary policy, the interest rate channel and the bank lending channel. The first operates more direct, via money market interest rates, as ECB interest rate cuts (or increases) are passed on through the system to the end-borrower. The bank lending channel operates through the banks‘ balance sheets, and impacts the quantity of money banks are willing to lend.

Sebastian Dullien and Ulrike Guerot argue that the Germans are digging in over austerity, and the best way to co opt Germany is to advocate EU-level investment programmes, and a shift in taxation power to Brussels. In an ECFR paper, Sebastian Dullien and Ulrike Guerot take a closer look at the German position, in which they say that Berlin is determined to force a German solution to the crisis. They argue that Germany’s rigidity is not just about simple national interest and the psychological scars of Weimar-era hyperinflation. It is about a broadly-held belief in the foundations for economic success, as shown by German historical success. Austerity is not just about teaching others a lesson: it is about building the foundations for sustainable economic growth. And attacking excessive austerity and demanding a renegotiation of the new fiscal treaty will simply fall on deaf ears. Instead, a more promising strategy might be to demand pan-European growth and investment programmes with more spending and taxation power shifted towards the EU level

Anomic Breakdown Presents The Opportunity To Discover Genuine Freedom, That Being Freedom To Become A Child Of God And Mature In The Identity Of Christ

February 23, 2012

1) … Judgement is the means by which God is now calling people to himself in a world where democratic government, the rule of law, and a sound economy is failing.
It was God’s desire that people live in the Garden of Eden and enjoy fellowship with him. But through sin, that is doubt, the first progeny failed, and the Garden of Eden was lost, but it’s experience is being recovered by Christ. Witness Lee wrote the book Ten Lines in the Bible which explains this very well.

God’s love for the individual, is the basis for faith in Him, which one supplements with virtue (arete, which is Greek word #703), and virtue with knowledge, and knowledge with self-control, and self-control with steadfastness, and steadfastness with godliness, and godliness with brotherly affection, and brotherly affection with love, 2 Peter 1:5-8. Self control is largely a matter of a decision for chase (hagnos) communication, speech, and action. Hagnos is Greek word #53 and is found in Phil 4:8, (whatever is pure), 1 Tim 5:22, (chaste from sin, that is doubt), 1 Peter 3:2, (pure conversation), and 1 John 3:3, (clarity, like water or light). This that one might have maturing life in Christ and be  ever more pleasing to Him and finding genuine freedom therein, as put forth in  John 1:12, “But as many as received Him, to them He gave the right to become children of God, to those who believe in His name.”

Shlomo Sand wrote The Invention of the Jewish People, communicate that there is no archaeological record of the Jewish people in Palestine at the time the Bible alleges that they were there. I do not dispute with him, I simply believe the Bible on faith, without any corroborating physical evidence, as I must believe that God is, and is a rewarder of those who earnestly seek him.

The Revelation of Jesus Christ, is a book which communicates God’s Judgment. In the first three chapters, Christ judges the churches, which has been ongoing since the first century. God’s Judgement of the world commenced with fears of sovereign failure, specifically fears of a European Sovereign Debt Crisis, which turned the Euro, FXE, lower on December 5, 2011, as the S&P placed its long-term sovereign ratings on 15 members of the eurozone on “CreditWatch” with negative implications. Specifically in Revelation 6:1-2, “Christ opened the first of the seven seals, and I heard one of the four living creatures saying with a voice like thunder, “Come and see.” And I looked, and behold, a white horse. He who sat on it had a bow; and a crown was given to him, and he went out conquering and to conquer.”

The Judgement of Christ, commenced with a Eurozone coup d etat. And this started the Beast Regime of Neoauthoritarianism to rise to from the profligate Mediterranean Sea countries of Greece and Italy, to replace the Banker Regime of Neoliberalism, Revelation 13:1-4, which is the same as the ten toed kingdom of regional global governance, Daniel 2:31-33.

This Minotaur can never be defeated, as it comes by fateful action of the Sovereign Lord God, Psalm 2:4-5 and Revelation 2:26-27.  It is coming like a terminator that can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.

2) …Goldy character is formed in the forge of adversity; it comes from developing a good conscience. Godly character is the means of having life; some have no conscience and are comatose; these are zombies raised up by Lucifer to trouble the godly.
Chaste character, is foundational to godly character; chaste comes from the Greek word hagnos, meaning pure, specifically character pure from carnality of wrath, greed, sloth, pride, lust, envy, and gluttony, and comes from upholding virtue, which comes from the Greek word arete, meaning set of moral excellencies, which provides peace and strength in one’s mind.

Through character, one either gives way to violence or to peace.

Reuters reports Athens Mayhem Raises Fears Of Greek Social Explosion. I was saddened by European parliament member Nigel Farage blames the Troika for the violence and destruction in Greece stating, “Violence and destruction in Greece that you saw on Sunday is being caused directly because people have had their democratic rights taken from them. What else can they do? If I was a Greek citizen I would have been out there joining those protests. I would be out there trying to bring down this monstrosity that has been put upon those people,” … as I took his words to condone rebellion. I am for resistance and turning away, which is quite different from rebellion.

One’s character comes from one’s identity. If one has identity out of virtue, then one accepts adversity, poverty, dishonor, and disappointment, as one looks beyond the temporal to the eternal. It is out of the forge of adversity that one becomes a moral person.

A person of genuine and good faith will supply virtue to one’s soul and forsake carnality, withdrawing  from every brother who walks disorderly and not according to the apostle’s tradition, 2 Thes 3:6.

As one lets concepts of grace and truth sink in to ones’ life attitudes, then a strong and good conscience develops and the moral person emerges and mortifies the carnal nature and one grows in emotional and spiritual strength and peace.

Scripture verses on godly attitude, character formation and the creation of the moral person Philippians 4:8 2 Peter 1:5-8 1 Thes 5:21-24 2 Peter 3:18 James 3:17 2 Corinthians 13:5-10

3) … Out of life, specifically the life of Christ, one comes to have both an identity and a right, and from that, genuine freedom, the freedom to mature as the child of God.
In Four Sources To Determine One’s Rights I wrote tyrannical rule is God’s forge and furnace, hammer and anvil where one’s right, the right to become the son of God, is learned, developed and exercised. John revealed the only right there is in 1 John 1:12. “But as many as received Him, to them He gave the right to become children of God, to those who believe in His name.”

Paul served as living example of the only right there is, stating in 2 Corinthians 4:7-10: “We have this treasure in earthen vessels that the excellence of the power may be of God and not of us. We are hard pressed on every side, yet not crushed, perplexed, but not in despair; persecuted, but not forsaken; struck down, but not destroyed always carrying about in the body the dying of the Lord Jesus, that the life of Jesus also may be manifested in our body.not your own: for ye are bought with a price.” With the price being the blood of Jesus.

An inquiring mind asks, have Libertarians have usurped the principle of Liberty, from Christ, who said in John 8:32, You will know the Truth, and the Truth will set you free and who said in John 8:36 If the Son sets you free, you are free indeed

It’s only through Christ that one has life and one has freedom. As the Apostle John said in John 6:63, It is the Spirit who gives life; the flesh profits nothing. The words that I speak to you are spirit, and they are life. And As the Apostle Paul said in Romans 8:2, For the law of the Spirit of life in Christ Jesus made me free from the law of sin and of death.

Could it be that some Libertarians “peddle” Liberty for the sake of filthy lucre?

Robert Wenzel, writes in “Anomic Breakdown” and Beyond, “The bankster controlled elitist states around the world are collapsing. Greece is a preview. So what is happening in Greece? Social breakdown. Under the headline: Struggling Greeks Losing Belief In The State, Paul Mason at the BBC reports: During the autumn, Greek commentators began to speak of “anomic breakdown”, where people begin to disobey laws and social norms individually. There are all kinds of factions developing: hard-right, extreme left, anti-German, most appear unaware that central planning is itself the problem. Most just want their central planners in power. Governments around the world are all at varying stages of collapse. I fear what will replace them. Anomic breakdown, itself, sounds like something close to the spontaneous breakdown of current state tyranny. If it stopped there, new free markets would develop. However, many will seek to replace the power removed by anomic breakdown. The danger is in these replacements. The real problem is that the masses may not be able to tell the difference between freedom and chains, and thus simply choose new shiny chains”.

Ongoing political conflicts in Europe may mean that Angela Merkel and Nicolas Sarkozy will not be able to stay in office, but this does not mean the destruction of the Euro zone, as bible prophecy communicates that the Sovereign Lord God, Psalms 2:4-5, is effecting a global coup d etat, Revelation 6:1-2, through the destruction of fiat money.

The death of fiat money commenced in July 2011 with world currencies, DBV, and emerging market currencies, CEW, trading lower. This has caused the investment, economic and political tectonic plates to shift, with the result that a Euro zone authoritarian economic and political structure is rising, to govern those nations that use the Euro currency.

Greece has lost its monetary sovereignty, and Portugal, Italy and Spain have as well, this being acknowledged by ongoing sovereign debt ratings downgrades by rating agencies and increasing oversight by the EU ECB IMF Troika. Investment capital is being destroyed by debt deflation, that is currency deflation; and now, political capital is rising in its place.

The dynamo of choice provided by the Milton Friedman Free To Choose Script, that governed for the last forty years is history. Now, the dynamo of diktat, implied in the 1974 Clarion Call by the Club of Rome for regional global governance, is rising to govern human economic and political activities.

Fate is the order of the day, which through creative destruction is terminating Neoliberalism and producing Neoauthoritarianism. There is no human action, there is only destiny destroying choice and democracy, as neo liberal credit fails. Libertarianism will not see the light of day; there will not be any Freedom, Free Enterprise and a Free Monetary System, as envisioned by Hayek, Rothbard and Mises; such things are simply mirages on the Neoauthoritarian Desert of the Real.

Those who taken the Red Pill, know that the debt economy of capitalism is coming to an end, with the result that the dynamos of growth and profit are failing. The recent driver of investment reality has been the European Central Bank’s LTRO, facility which has provided cheap three-year liquidity to banks, which in turn has fueled fiat asset purchases across the board including Portugal, Italy and Spain Sovereign Debt. The effect of that last injection of neo liberal credit is likely to be fleeting as fears of debt contagion arise an competitive currency devaluation recommences and investors derisk out of stocks and bonds, and delever out of commodities.

In a decapitalized world, one is either going down the path of anomic breakdown, where people begin to disobey laws and social norms individually, or one is going down the path of life in Christ, hopefully ever maturing in the only right there is, and finding genuine freedom therein, as put forth in  John 1:12, “But as many as received Him, to them He gave the right to become children of God, to those who believe in His name.”

Going down the path of anomic breakdown, will destroy one’s arete, that is one’s set of moral excellencies. A failure of faith and trust in the Lord in the coming economic and political collapse is a great threat to one’s arete and opens the door to searing one’s conscience, and becoming a psychopath or supporting those who are psychopaths. Wikipedia relates that Robert D. Hare’s Psychopathy Checklist, Revised (PCL-R) is the psycho diagnostic tool most commonly used to assess psychopathy. One is to mark and avoid those those who appear to be psychopaths as they cause divisions and offenses, contrary to sound doctrine, Romans 16:17-18.

4) … The negative reality of both capitalism’s debt trade and the tragic death of Greek Socialism comes to light in the Second Greek Bailout.
The negative reality of the economics of the forty year debt trade of the Milton Friedman Free To Choose floating currency regime, also known as the Banker regime of Neoliberalism, is that once lucrative inflationism, is now through creative destruction, turning into destructionism, where the Angela Merkel and EU ECB IMF Troika diktat regime, also known as the Beast regime of Neoauthoritarianism, is coming to claw back every bit of wealth garnered by capitalism, with the result being a Euro gulag of debt servitude governed by totalitarian collectivism and regional statism.

The Second Greek Bailout is the nail in the coffin for capitalism, which was based on growth and profit. Through creative destruction and regionalization, capitalism is being replaced by regional global governance, specifically a ten toed kingdom of regional global governance, where diktat is de rigueur.

Socialism Today writes What Is The Future Of Socialism.  George Monbiot, a prominent figure in the anti-globalisation and anti-capitalist movement. The European Social Forum (Paris, November 2003), commented Monbiot, represented a bottomless pit of discontent. (Rattling the bars, Guardian, 18 November 2003) “Whenever anyone announced that capitalism in all its forms should be overthrown, everyone cheered. But is this what we really want? And, if so, with what do we hope to replace it? And could that other system be established without violent repression?”

Is there life after capitalism? Monbiot’s ‘answer’ is another list of questions: is “totalitarianism the only means of eliminating capitalism? If so, and if, as almost all of us profess to do, we abhor totalitarianism, can we continue to call ourselves anti-capitalists? If there is no humane and democratic answer to the question of what a world without capitalism would look like, then should we not abandon the pursuit of unicorns, and concentrate on capturing and taming the beast whose den we already inhabit”. In other words: No. There is no alternative to capitalism! Monbiot cannot see beyond the totalitarian model of Stalinism.

Why should the elimination of capitalism take a totalitarian form, as Monbiot believes? In fact, a genuine socialist transformation can only be carried through with the overwhelming support of the population. The heavy battalions of the working class internationally, concentrated in the advanced and some semi-developed countries, are today on a much higher economic and cultural level than the Russian working class of 1917. They have a preponderant social weight, and have experienced political democracy and mass trade union organisation. In other words, they have the capacity to ensure the democratic transformation of society and democratic running of socialist states.

But, argues Monbiot, “as long as incentives to cheat exist (and they always will) none of our alternatives could be applied universally without totalitarianism”. This is a variant of the ‘human nature’ objection to socialism: ‘people are selfish and greedy’. As if the egotistical pursuit of self-interest has not been generated by capitalism over many generations, based as it is on the exploitation of workers’ labour power and the accumulation of wealth by a minority, in other words a system based on greed for profit. Monbiot, it seems, cannot conceive of a social system operating on a higher level than capitalism, steadily eliminating scarcity (wiping out poverty and overcoming inequality). A socialist planned economy, run under workers’ democracy, would provide the basis for social cooperation and human solidarity on an international level. Setting out the ideological underpinnings of the struggle to change society remains the paramount task for Socialism Today.

Unknown to the socialists as well as to the libertarians, is that Daniel’s interpretation of Nebuchadnezzar’s dream presents the statue of the progressions of kingdoms, Daniel 2:31-45. Kings have ruled mankind throughout history; these have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority. Soon ten kings will come to rule, each in his own regional power base. Most recently two iron kingdoms, the combine of the UK and European rule, and the US Hegemony, have governed the world; their power is now flowing into a ten toed kingdom of regional global governance, Daniel 2:31-33.

God’s Sovereign Will, Ephesians 1:1-11, not any human action, will bring forth a revived Roman Empire, that is a German led Europe. In the supranational New Europe, national sovereignty will be seen as a relic of a bygone era. Martin Luther wrote correctly in On the Bondage of the Will, there is no free will for humanity because any will they might have is overwhelmed by the influence of sin.

God at the appropriate time will open the curtains, and onto the world’s stage will step the most credible of Europe’s political leaders, the Sovereign, Revelation 13:5-10. He will be accompanied by Europe’s banker, the Seignior, Revelation 13:11-18. These will have have EU wide sovereign authority. The Little Authority, Daniel 7:24-25, will work behind the scenes in regional framework agreements to change our times and laws. The people will be amazed by this, and place their faith and trust in the Sovereign; they will give their allegiance to his diktat, Revelation 13:3-4.

Life in Europe can now be characterized as a totalitarian collective. Totalitarian collectivism is the EU’s future. European Socialism will die in 2012. Diktat will provide seigniorage, that is moneyness, to replace the seigniorage of national treasury bonds. Diktat will become a currency, that is a payment used in the exchange of goods or services.

The seigniorage of fiat money is failing, and the seigniorage of diktat is rising in its place, as is seen in the rise of power of the EU ECB IMF Troika to appoint technocratic government in Greece and Italy as well as in the massive second Greek bailout agreement.

The very nature of government is changing. Sovereign nation states are being replace by regional global governance. The Beast regime of Neoauthoritarianism, Revelation 13:1-4, is rising to replace the Banker regime of Neoliberalism. This monster of statism and collectivism is rising from the profligate Mediterranean countries of Italy and Greece. The Beast’s seven heads are rising to occupy in all mankind’s institutions, and its ten horns are rising to govern in all of the world’s ten regions. The Beast regime of regional global governance is to replace the Banker regime of capitalism. The Beast regime is coming like a terminator that can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.

Polemicist Tyler Durden writes Zero Hedge Negative Salaries, Negative Bailout and Now Negative Gold – Greece Just Became The Bankster’s Paradise. While Iceland is now known as the country that is the closest earthly approximation to banker hell, it is safe to say that Greece is the terrestrial equivalent of banker heaven. Because as explained earlier today, the country’s population is about to get a worse deal than your average run of the mill slave – they may get whipped, but at least never have to pay for the privilege, unlike the Greeks. Hence negative salaries. As also explained, the European bailout of Greece, is now formally a Greek bailout of Europe, funded by the country’s already negative primary surplus, or better said – deficit (don’t try to make mathematical sense of that – a scene out of Scanners is guaranteed). Hence, negative bailout. But the piece de resistance, and the reason why Greece is the in situ version of bankster heaven is the news from the NYT that Greece is also about to have negative gold. Ms. Katseli, an economist who was labor minister in the government of George Papandreou until she left in a cabinet reshuffle last June, was also upset that Greece’s lenders will have the right to seize the gold reserves in the Bank of Greece under the terms of the new deal. Well, they may be broke, and they may be bailing out Europe, but at least they’ll have no gold: sounds like a sweet deal – it makes perfect sense that Greeks are taking every incremental humiliation from a syndicate of few fat, bald types who have access to a digital money printer, with the supine determination of an Oliver Twist.

And Tyler Durden writes Projected PIIGS Pillage: 3233.5 Tons Of Gold To Be Confiscated By Insolvent European Banks. As the World Gold Council shows in its latest update, between all the PIIGS, who will with 100% certainty suffer the same fate as Greece (which has shown that unlike during World War 2, it is perfectly willing to turn over and do nothing) there is 3234 tonnes of gold to be plundered. And likely more as further constitutional amendments will likely make the confiscation of private gold the next big step. how much does this amount to? At today’s prices this is just shy of $185 billion. Of course by the time the market grasps what is going on the spot price of the yellow metal will be far, far higher.

And Tyler Durden writes Greece’s Lenders Have The Right To Seize National Gold Reserves.

And Tyler Durden writes Greece To Receive Negative Cash From Second Bailout.  Earlier today, we learned the first stunner of the Greek “bailout package”, which courtesy of some convoluted transmission mechanisms would result in some, potentially quite many, Greek workers actually paying to retain their jobs: i.e., negative salaries. Now, having looked at the Eurogroup’s statement on the Greek bailout, we find another very creative use of “negative” numbers. And by creative we mean absolutely shocking and scandalous. First, as a reminder, even before the current bailout mechanism was in place, Greece barely saw 20% of any actual funding, with the bulk of the money going to European and Greek banks (of which the former ultimately also ended up funding the ECB and thus European banks). Furthermore, we already know that as part of the latest set of conditions of the second Greek bailout, an ‘Escrow Account” would be established: this is simply a means for Greek creditors to have a senior claims over any “bailout” cash that is actually disbursed for things such as, you know, a Greek bailout, where the money actually trickles down where it is most needed – the Greek citizens. Here is where it just got surreal. It turns out that not only will Greece not see a single penny from the Second Greek bailout, whose entire Use of Proceeds will be limited to funding debt interest and maturity payments, but the country will actually have to fund said escrow! You read that right: the Greek bailout #2 is nothing but a Greek-funded bailout of Europe’s insolvent banks… and the Greek constitution is about to be changed to reflect this!

I encourage one who has financial wealth to dollar cost average into gold bullion and take possession of it and store it in a gun safe on one’s property.

This article is posted on the Internet

Competitive Currency Devaluation Commences As Fears Of Greek Default And Greek Debt Contagion Arise And Neo Liberal Credit Exhausts

February 23, 2012

Financial Market Report for February 22, 2012

1) … Today competitive currency devaluation commenced as fears of Greek default and Greek debt contagion arose and neo liberal credit exhausted causing US Banks, Community Banks, Homebuilding, Steel, US Infrastructure, Biotechnology, Airlines, International Financials, India and REITS to trade lower.
The Yen, FXY, plummeted further as currency vigilantes punish the Bank of Japan for its recent monetization of debt which announced a monetary policy of asset purchases.

A trade lower in the British Pound Sterling, FXB, coming again from currency vigilantes effecting punishment for Bank of England monetary policy, forced UK area banks IRE, RBS, LYG, BCS, HBC lower. This is the beginning of the end for the City of London, one of the premier financial trading centers in the world.

Greek shares, GREK, and the National Bank Of Greece, NBG, fell lower on a likely soon coming default, turning European Financials, EUFN, World Financials, IXG, India Banks, HDB, IBN, EPI, South Korea Banks, WF, KB, Argentina Banks, GGAL, BMA, BBVA, BFR, US Banks, KRE, and US Community Banks, QABA, lower.

US Home Construction, ITB, traded lower on exhaustion of the safe haven rally in US Stocks.

Likewise US Infrastructure, PKB, traded lower as well on the exhaustion of the safe haven rally in US Stocks such as MHK, USG, FLR, JEC, MTW, TEX, SPX, NCS, BECN, TREX, NX, APOG, FBN, LOW, ETH, FBHS, PRIM, GLDD, SNX, CX, EXP, MLM,

Value stocks trading lower on the exhaustion of the safe haven rally in US Stocks include airlines, FAA, and RCL, MGM, SHFL.

Growth shares Steel, SLX, and Biotechnology, XBI, as well as Integrated Circuits, DIOD, Printed Circuit Board Manufacturers, BHE, Semiconductor Manufacturer, INTC, MU, trading lower on the failure of global growth due to the exhaustion of neo liberal finance.

India INP, INDY, India Infrastructure, INXX, India Small Caps, SCIF, Copper Producer, SLT on the failure of neo liberal finance, as did REITS, RWR.

Open Europe reports The scheme for private sector involvement will be launched today, with significant uncertainty surrounding the level of participation it will achieve. The Greek parliament is preparing to retroactively introduce collective action clauses to Greek bond over the next few days, which will allow Greece to force all bondholders into a restructuring if 66% agree to the deal.

Open Europe’s Director Mats Persson wrote in the Telegraph on the second Greek bailout stating “New debt issued by the Greek government in 2014/2015 will essentially be junior to existing debt. This raises the question why private creditors would want to purchase Greek debt at all in three years’ time, given that they would be first in line for any losses if Greece’s economy goes down the tubes. Taken together with the tough austerity targets which could choke of any chance of recovery, as the [debt sustainability analysis] admitted, this may force Greece to seek another €50bn bailout after 2014,” as investors will have little incentive to hold Greek bonds.

Fate is passing the baton of sovereignty from nation states to European leaders, such as Angela Merkel, and the EU ECB and IMF Troika. Nation states such as Greece are losing their fiscal sovereignty as sovereign leaders and sovereign bodies dictate monetary policy and fiscal policy. Bloomberg reports  German Chancellor Angela Merkel indicated she will maintain pressure on Greece to meet debt- cutting pledges required for its second financial rescue, saying fiscal discipline is needed to hold the euro area together. “If you have a single currency you naturally have to be able to trust each other,” she told members of her Christian Democratic Union party in Demmin, Germany, today. While “it is right” to bail out Greece, Portugal and Ireland, “we have to say again and again that everyone must do their homework because otherwise this Europe can’t hold together.”  And FT reports EU Beefs Up Powers Over State Budgets. European Union finance ministers on Tuesday agreed on rules that will give the EU more powers to scrutinise eurozone countries’ budgets, even before they are approved by national parliaments. The European Commission will be able to deploy its experts unilaterally to countries in need of bail-outs to give technical assistance, along the lines of the “task force” assisting the Greek government by overseeing the implementation of its EU-imposed reforms. The legislation comes on top of measures agreed last year that sought to enforce long-flouted debt and deficit rules put in place at the creation of the euro. They are intended to move the EU closer to a “fiscal union”.

Open Europe relates Il Sole 24 Ore notes that with the second Greek bailout, “Europe enters into the heart of the state’s supreme authority, showing that monetary and fiscal policies are now detached from the sphere of the nation’s exclusive prerogatives.” In Spanish business daily Expansión, Juan Castañeda wrote, “This European way out of the crisis in which national institutions democratically elected by citizens are gradually losing the effective ability to rule their countries …to the advantage of European institutions chosen by states will do nothing but distance even more the citizens from the so-called European project.”

The FT reports Harsher terms leave a ‘bitter taste in mouth’ for bondholders.  About 20-25% of Greek bonds are now in the hands of hedge funds, which may complicate the deal. It quoted a bond experts as saying that he expected to see an execution risk. The article said that even some banks may not participate given the rise in the net present value loss to 75%. The Greek CDS will now almost certainly be triggered by this deal. The attempt to avoid a CDS trigger was the original motivation to engage in a voluntary debt exchange deal.

2) …Through soon coming competitive currency devaluation, as well as current oversupply and down trending demand, most commodity prices will be turning lower.
Commodities, DBC, USCI, blasted strongly yesterday, on news of the second Greek Bailout, Base Metals, DBB, rose with Aluminum, JJU, Nickel, JJN, Tin, JJT, Aluminum, JJU, and Copper, JJC, rising strongly. The always volatile Silver, SLV, rose, as did Gold, GLD. Oil, USO, broke out, and caused Gasoline, UGA, to rise. Timber, CUT, rose, which moved paper manufactuers, WOOD, higher.

The Great Deflation is imminent. As currencies begin to trade lower in competitive currency devaluation, Commodities, DBC, with the exception of gold, GLD, unleaded gas, UGA, and oil, USO, will trade lower again, led so by JJA, DBB, CUT, and SLV. This will be seen in the chart of DBC, JJA, DBB, CUT, SLV, GLD, USO

Bloomberg reports Record Nickel Supply Expanding Glut Thwarts Bull Market Rally. Commodities. Mining companies and refineries are producing more nickel than at any time in history, expanding a glut that threatens to reverse this year’s rally. Production will exceed demand by 45,000 metric tons, a 73 percent jump from 2011, Barclays Capital estimates. That’s equal to 46 percent of stockpiles tracked by the London Metal Exchange. Refined output will rise 12 percent, the most in at least eight years, according to Morgan Stanley. Prices, which rose 8 percent to $20,230 a ton this year, may fall as much as 13 percent to $17,630 a ton by Dec. 31, the median of 11 analyst estimates compiled by Bloomberg shows. With new supply expected from Australia to Madagascar to Brazil, consumption still won’t expand fast enough to absorb the extra metal. Most markets for stainless steel, accounting for 76 percent of nickel demand, remain “depressed,” Deutsche Bank AG said in a report Feb. 15. “We’ll get more and more supply over the course of the year,” said Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt. “We expect huge surpluses for nickel not only this year, but next year, and probably in 2014. It’s mainly due to an increase in supply, but on the other side the stainless steel industry is facing a tough time

Currencies trading lower today include, The Japanese Yen, FXY, the British Pound Sterling, FXB, the South Korean Won, and the Argentine Peso. The currency demand curve, RZV:RZG, is turning over suggesting that competitive currency devaluation is going to commence soon, and this will delever commodity prices.   

3) … The 10 30 US Sovereign Yield Curve is steepening suggesting that interest rates are headed higher and that a recession is coming.
Th Steepner ETF, STPP, has been rising and the Flattner ETF, FLAT, falling, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, has been rising since February 1, 2012. The interest rate on the US 10 Year Note, ^TNX, closed above 2% today, as The US 10 Year Notes, TLT, have fallen 2% over the last week, as is seen in this ongoing Yahoo Finance Chart of TLT, EDV, ZROZ and ^TNX   

4) … Eventually there will come a time …
There is no human action, rather all things are of God, 2 Corinthians 5:17-18, and through his Sovereign Will, Ephesians 3:9, there will come a time when the most credible leader will step onto Europe’s stage and win the affirmation of Europe’s leaders … this person will be the Sovereign, Revelation 13:5-10, and he will be accompanied by Europe’s Banker, Revelation 13:11-18, and together their word will and way will govern Europe, and the people will place their trust and confidence in them, Revelation 13:3-4.  One leading candidate for the Sovereign is Herman Van Rompuy and one leading candidate for the Seignior is Mario Draghi.     

5) … In today’s news
CNBC reports UK and Japan Warn Volcker Rule Poses Threat to Recovery. The UK and Japan have urged the U.S. to rewrite its so-called “Volcker rule”, claiming that trading restrictions on U.S. banks could hit the international sovereign debt market at a delicate moment in the global recovery. George Osborne, the British chancellor, has joined forces with Jun Azumi, his Japanese counterpart, in warning in a column in today’s Financial Times that the U.S. banking reforms could make it “more difficult, costlier and riskier for countries to issue and distribute debt”, at a time when many eurozone countries are already under strain. The article is the highest profile expression of international concern about the impact of the U.S. reforms, coming from the finance ministers of two countries regarded as among Washington’s greatest economic allies. (Hat Tip to Between The Hedges)

CNBC reports Huge Private Debts Pose Another Hurdle for Euro Zone. Away from the markets’ fixation with the debts of Greece and other governments, concern is growing at the painfully slow progress Europe is making in tackling a much bigger mountain of corporate and household debt .(Hat Tip to Between The Hedges)

The ECB By Changing The Rule Of Law, Asserts Itself As The Euro’s Sovereign Authority … A Region Of Global Governance Arises More Visibly Out Of The Eurozone Sovereign Debt Crisis

February 21, 2012

Investment report for Tuesday February 21, 2012

1) … Introduction
The Euro was built without exits. New sovereign authority, coming through the ECB’s debt swap proposal, as well as a second massive Greece bailout agreement, means that a Euro zone super state is rising to rule politically and economically, out of the sovereign debt woes of the profligate Mediterranean Sea nation of Greece.  European Socialism, and Greek Socialism, were effectively terminated today. The traditional rule of law has been abrogated, and diktat is now the order of the day, calling for austerity and structural reforms, which will provide for regional security and stability.

Greece lost its debt sovereignty with the first bailout. Now Greece has traded its fiscal sovereignty for a second bailout. Guardian writes of Greece’s sovereign restructuring, European monitors will move into Athens ministries.  Regionalization is the new direction in globalism, as today’s regional framework agreements have established a totalitarian collective in the Euro zone, where monetary cardinals under the monetary pope, Mario Draghi, will proceed with new monetary policy in the EU.  Given the recent framework agreement for country debt brakes, as well as today’s bailout, and ECB sovereign bond action, a EU fiscal union, to be overseen by budget commissioners, now complements the Euro currency.

Statism will likely be the next step forward in the New Europe, where regional stockholders exercise economic oversight over resources and manufacturing, as well as provide credit, as financial armageddon, that is a credit bust and financial collapse, is being held in abeyance, but cannot be avoided. Lacking any money good, diktat will be de rigueur, and used for both money and credit.

This second massive Greece Bailout ushers in the age of regional global governance to replace capitalism, where major world currencies and emerging market currencies will soon be turning lower as details of today’s agreement unravel, when it becomes apparent that Greece is an insolvent nation and that its sovereign debt is unsustainable, as Open Europe writes Take III: Don’t bore me with the details. Felix Salmon writes The Improbable Greece Plan. Greece’s debt dynamics get even worse. But of course even with well-below-market interest rates, Greece is still never going to pay that money back. The cost of this plan is €130 billion right now, and €170 billion over three years, through the end of 2014; it just continues going up from there, with no end in sight. Remember that total Greek GDP, right now, is only about €220 billion and falling.

King World News relates Fears of debt contagion. These as well as fears of decreased growth, will cause disinvestment out of stocks and delveraging out of commodities, as fiat money dies globally. The EU Leader’s framework agreements serve as the constitution for the New Europe, and usher in the ten toed kingdom of regional global governance, where the Beast Regime of Neoauthoritarianism, will be replacing the Banker Regime of Neoliberalism.

CNN Money reports Greece will avoid an outright default in the short run now that eurozone finance officials have signed off on a second bailout for the debt-stricken nation. But the rescue package worth €130 billion is contingent on a historic debt reduction agreement with private sector investors that must be approved before any bailout money can be released. If private sector investors sign off, Greece should be able to secure the funds it needs to make a €14.5 billion bond payment in March.

The terms of the private sector agreement include a write down of 53% on the face value of Greek government bonds, steeper than the previous 50% reduction agreed to in October.  The proposal will now be presented to members of the Institute of International Finance, which represents the private sector. The IIF’s full committee will review the details and make a decision “in accordance with their own individual processes,” according to a statement. IIF director Charles Dallara said in an interview with CNN’s Richard Quest that he expects a high participation rate, but he acknowledged that each investor has the right to make their own decision.

Under the terms of the agreement, Greece’s debt load will be cut by about €107 billion, equal to 50% of the nation’s estimated economic output for the year. It will also reduce the amount of debt Greece needs to refinance over the coming years by roughly €150 billion, according to the IIF. In addition to the write down, investors would exchange existing bonds for securities with lower interest rates. At the same time, investors would receive securities that could increase in value as the Greek economy improves, and EU officials would kick in a €30 billion “sweetener.” According to the IIF, the agreement represents the largest sovereign debt restructuring in history. Overall, the deal will result in losses of 74% for the private sector, according to Marc Chandler, head of global currency strategy at Brown Brothers Harriman.

The concern is that a large number of investors will balk at the deal, forcing the terms to be renegotiated. That could delay the just-approved bailout and put Greece back at risk of a disorderly default. The Greek government is expected to pass legislation this week that would force investors who reject the agreement to take losses on Greek bonds issued under domestic law, which make up the majority of the nation’s debt load. The presence of so-called collective action clauses would not qualify as a “credit event,” according to the International Swaps and Derivatives Association. But the association suggested that activating the clauses could trigger credit default swaps, a form of insurance that investors use to protect against a default.

Bloomberg reports Greek rescue leaves Europe default risk alive.  OfTwoMinds writes Do We Really Know Greece’s Default Will Be Orderly

Tyler Durden writes IIF’s Dallara Warns Holdout Greek Bondholders Could Kill “Successful” Greek Deal. And Tyler Durden also relates that Open Europe writes Many questions around the second Greek bailout remain unanswered. We’re still trawling through the responses, analysis and documents to come out of the meeting, meaning there are likely to be plenty more questions and uncertainties to come. The one thing that is clear is that even if this bailout is ‘successful’, it will set Greece up for a decade of painful austerity and low growth leading to social unrest, while the eurozone will have to provide on-going transfers to help it keep its head above water. Sorry to be killjoys but as Dutch Finance Minister Jan Kees de Jager put it, the deal isn’t “something to cheer about”.  And Tyler Durden writes As Greece Deems 66% CAC Bondholder Acceptance Sufficient, Has It Threatened To Scuttle Its Bailout All Over Again? And Tyler Durden writes Goldman’s Greek deal summary: increased likelihood of CDS trigger and CAC use will lead to volatility. And Tyler Durden writes Second Greek Re-Bailout: terms, conditions and next steps. And Tyler Durden write A European, US, Japanese and increasingly global debt crisis will not be solved by creating more debt and making taxpayers pay odious debts incurred through massively irresponsible lending practices of international banks.

Soon a New Charlemagne will rise to rule the Euro zone, where Germany will be preeminent, as a type of revived Roman Empire that governs the European continent.

The EU ECB IMF Troika is conquering and establishing nations, establishing leadership, and exercising direct control over the profligate periphery nations, particularly Greece.  The ECB’s and Angela Merkel’s iron will, is rising supreme over clay democratic processes. Bloomberg reports Merkel as Debt Crisis Iron Lady Bucks German Street on Greek Aid. Angela Merkel is having a Margaret Thatcher moment. Having spent six years in office defying comparison with Britain’s first woman prime minister, Merkel is being likened to Thatcher as she steers Europe’s response to the financial crisis with demands for debt reduction and tighter economic controls. Media including the Frankfurter Allgemeine Zeitung, the newspaper of record in Germany’s financial hub, dub her “Europe’s Iron Lady.” Strengthened by record-low joblessness at home, Merkel has rejected calls to either cut Greece loose from the euro area or ease her conditions for aid. By bucking the German street and steering the middle course, she is gambling that policy makers will continue to prevent a euro meltdown, helping her win re- election next year and match Thatcher’s third term. “If Merkel were to go into elections with a collapsed euro zone she’d have a lot of difficulty winning,” Giles Merritt, head of Friends of Europe, a Brussels-based research group that promotes debate on the European Union, said in an interview. “Finally her statesman side is kicking in

2) ,.. The ECB By Changing The Rule Of Law, Asserts Itself As The Euro’s Sovereign Authority … A Region Of Global Governance Arises Out Of The Eurozone Sovereign Debt Crisis  
Ongoing political conflicts in Europe may mean that Angela Merkel and Nicolas Sarkozy will not be able to stay in office, but this does not mean the destruction of the Euro zone, as bible prophecy communicates that the Sovereign Lord God, Psalms 2:4-5, is effecting a global coup d etat, Revelation 6:1-2, through the destruction of fiat money. The death of fiat money commenced in July 2011 with world currencies, DBV, and emerging market currencies, CEW, trading lower. This has caused the investment, economic and political tectonic plates to shift, with the result that a Euro zone authoritarian economic and political structure is rising, to govern those nations that use the Euro currency.

Greece has lost its monetary sovereignty, and Portugal, Italy and Spain have as well, this being acknowledged by ongoing sovereign debt ratings downgrades by rating agencies and increasing oversight by the EU ECB IMF Troika.  Investment capital is being destroyed by debt deflation, that is currency deflation; and now, political capital is rising in its place.

The dynamo of choice provided by the Milton Friedman Free To Choose Script, that governed for the last forty years is history. Now the dynamo of diktat, implied in the 1974 Clarion Call by the Club of Rome for regional global governance, is rising to govern human economic and political activities.

Fate is the order of the day, which through creative destruction is terminating Neoliberalism and producing Neoauthoritarianism. There is no human action, there is only destiny destroying choice and democracy, as neo liberal credit fails. Libertarianism will not see the light of day; there will not be any Freedom, Free Enterprise and a Free Monetary System, as envisioned by Hayek, Rothbard and Mises; such things are simply mirages on the Neoauthoritarian Desert of the Real.

Those who taken the Red Pill, know that the debt economy of capitalism is coming to an end, with the result that the dynamos of growth and profit are failing. The recent driver of investment reality has been the European Central Bank’s LTRO, facility which has provided cheap three-year liquidity to banks, which in turn has fueled fiat asset purchases across the board including Portugal, Italy and Spain Sovereign Debt.

The race to debase will soon have its logical conclusion: competitive currency devaluation will recommence. Tyler Durden writes The Marginal Utility Of Central Bank Intervention Is Rapidly Diminishing. Yes, the power of neo liberal finance will soon be exhausted, this will be seen in the chart of ITLY, EMFN, EMMT, EMIF, KRE, PKB, RZV, where the debt of ITLY will likely be sustained by the ECB’s LTRO 1 and LTRO 2, yet, the rally in the current safe haven stocks fizzles. The reach of ECB credit liquidity will soon fail to continue supporting S&P Materials, MXI, and S&P Global Financials, IXG, as is seen in the chart of  SPY, MXI, IXG.

Political capital will soon command economic transactions, as the dynamos of regional security and stability gain traction, providing order out of chaos. Investment capital that fueled growth and profit will literally be washed away into the pit of financial abandon as regional global governance replaces capitalism.

The loss of debt sovereignty is a catalyst for the formation of a European Super State based upon unified fiscal rules in the Leaders Fiscal Pact, which provides for a debt brake in each EU country, and now the New Greek Bailout, and the rise of the ECB as sovereign authority over countries that use the Euro currency, with its ECB Debt Swap Initiative of which Open Europe writes Decoding the ECB bond swap

Bob Janjuah writes in Zero Hedge, Monetary Anarchy. The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt, that is not subject to any collective action clause, is as Mark Grant writes, Opens Pandora’s Box. Ambrose Evans Pritchard describes the ECB’s actions as legerdemain, saying the European Central Bank has taken action to insure that it suffers no loss on its Greek holdings, automatically reducing other creditors to junior status; this sets a precedent for Ireland, Portugal. Spain, and Italy.

The ECB in announcing that it is swapping out their Greek debt for new Greek debt that is not subject to any collective action clause, establishes a Euro zone monetary union, to complement the debt union, that was established when EU leaders announced the first Greek bailout agreement in May 2010.

Regional trade imbalances is another catalyst for a Federal Europe. Germany exports products to the peripheral European countries, which run trade deficits. Greece has a trade deficit of about 10% of GDP. Greece must have a trade surplus if public debt as well as business credit and stock leverage is to be reduced. Until Greece runs a trade surplus, Greece cannot get their government and private budgets under control. Greece must cut its fiscal expenditures and/or raise taxes. As Greece does this, the Greek economy will continue to shrink, making it more difficult buy foreign goods. This leads to a deflationary spiral. And that same deflationary spiral will spin up to take in all of Europe.

These two catalysts, the loss of debt sovereignty and regional trade imbalances, will cause political leaders to meet in even more summits, waive even more national sovereignty, and establish a European federal political union, and establish the ECB, or the Bundesbank, as the Euro’s Bank.

The ECB by declaring on its own and without judicial or parliamentary review, a swapping out of their Greek debt for new Greek debt that is not subject to any collective action clause, establishes Greece as a client state within a Euro zone region of global governance. Julia Amalia Heyer in Der Spiegel  A Political Establishment In Freefall, Greece Lurches to Left Amid Radical Austerity, communicates that Greece is the Eurozone’s first colony.

Mark Grant of Out Of The Box writes in Zero Hedge For Greece Tomorrow Has Arrived. Greece will shortly be placed into “Default” by S&P and Fitch which will trigger default language in all kinds of securitizations including Greece’s $90Bn in derivatives and may cause disgorgement from accounts that are forbidden to hold defaulted bonds. After the country has been placed into “Default” the banks will soon follow and once again there will be all kinds of consequences in interbank lending, collateral agreements, securitizations, et al from all of this. The CDS contracts for Greece may or may not function as they stand but, as I am quite certain will happen, not enough bond holders tender their bonds for the new debt so that Greece will pass the “Collective Action Clause” which will certainly trigger CDS in my opinion and if not will show the fallacy of that market. The structure of the deal puts the IMF/EU/ECB clearly in control of the finances of Greece so they have replaced some sort of Czar with the bureaucrats of the Troika and the country no longer will control its own finances as they traded away their sovereignty for cash. In fact, an escrow account will be set up for Greece which will be controlled by the Troika and Greece is being forced to change their Constitution pledging to pay their creditors before providing any money for the country. A quick study of the math reveals that Greece will get about 19 cents on the Dollar and the rest of the money is the sovereign nations of Europe paying back their banks with the money they have supposedly lent to Greece. Greece is now nothing more than a conduit for the nations of Europe to pay back their own financial institutions. Now we will see if the Parliaments in Europe will go along with this plan as many still have to approve it and a careful reading of the math involved here may be troubling for some governments especially Finland and the Netherlands. We will also see, with Greek elections looming, how the citizens react to all of this either in the polling booths or in the streets as an additional $4Bn of spending cuts have been mandated by the Troika and they state that the money will not be paid to Greece until they are implemented which must be by the end of February.

The total outstanding debt for Greece will now rise to $1.270Tn as new debt pays off old debt in a country with substantial negative growth so that the real situation, regardless of what we are told, worsens. In early May Greece faces its next bond payments so there may be a re-do for all of this in several months’ time. If Greece is actually going to get the next round of the bailout then the other side of the coin is the increased debt being taken on by the other countries in Europe which could cause more downgrades as the new debt to GDP numbers are assessed.

Financial armagetton, that is a world wide credit bust and global financial collapse is coming. This Eurodämmerung, a Götterdämmerung, that is a clash of the current sovereign authorities with investors, will destroy credit and money, as they have been known. Out of the ensuing chaos, Fate is directing that regional global governance be established.

Daniel’s interpretation of Nebuchadnezzar’s dream presents the statue of the progressions of kingdoms, Daniel 2:31-45. Kings have ruled mankind throughout history; these have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, Angela Merkel ruling the EU, and George Bush, The Decider, ruling America with Unilateral Authority. Soon ten kings will come to rule, each in his own regional power base. Most recently two iron kingdoms, the combine of the UK and European rule, and the US Hegemony, have governed the world; their power is now flowing into a ten toed kingdom of regional global governance, Daniel 2:31-33.

God’s Sovereign Will, Ephesians 1:1-11, not any human action, will bring forth a revived Roman Empire, that is a German led Europe. In the supranational New Europe, national sovereignty will be seen as a relic of a bygone era.

God at the appropriate time will open the curtains, and onto the world’s stage will step the most credible of Europe’s political leaders, the Sovereign, Revelation 13:5-10.  He will be accompanied by   Europe’s banker, the Seignior, Revelation 13:11-18. These will have have EU wide sovereign authority. The Little Authority, Daniel 7:24-25, will work behind the scenes in regional framework agreements to change our times and laws. The people will be amazed by this, and place their faith and trust in the Sovereign; they will give their allegiance to his diktat, Revelation 13:3-4.

Life in Europe can now be characterized as a totalitarian collective. Totalitarian collectivism is the EU’s future. European Socialism will die in 2012. Diktat will provide seigniorage, that is moneyness, to replace the seigniorage of national treasury bonds. Diktat will become a currency, that is a payment used in the exchange of goods or services.

The seigniorage of fiat money is failing, and the seigniorage of diktat is rising in its place, as is seen in the rise of power of the EU ECB IMF Troika to appoint technocratic government in Greece and Italy as well as in today’s massive bailout agreement.

The Beast regime of Neoauthoritarianism, Revelation 13:1-4, is rising to replace the Banker regime of Neoliberalism. This monster of statism and collectivism is rising from the profligate Mediterranean countries of Italy and Greece. The Beast’s seven heads are rising to occupy in all mankind’s institutions, and its ten horns are rising to govern in all of the world’s ten regions. The Beast regime is to replace the Banker regime of Neoliberalism, The Beast regime is coming like a terminator that can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.

3) … Stocks and currencies traded volatily today.
European Shares, VGK, the National Bank of Greece, NBG, Greece, GREK, traded lower, as European Financials, EUFN, world financial institutions, IXG, traded higher on the Eurozone bailout news. Energy shares, PSCE, WCAT, XLE, and IEZ, traded higher on higher oil, USO, which caused airline shares, FAA, to tumble.

A number of Asian Banks, such as KB, WF, MFG, SMFG, MTU, as well as UK Bank, BCS, traded lower.

Asia shares, EPP, traded higher on today’s higher Euro, FXE, led by Australia Small Caps, KROO, Australia, EWA, and Vietnam, VNM. China Financials, CHIX, China Industrials, CHII. Phillippines, EPHE; but Emerging Asia, GMF, traded lower.

Argentina banks led Argentina, ARGT, higher.

India Small Caps, SCIF, led World Small Caps, VSS, and Emerging Market Small Caps, EWX, higher.

The Dow Jones industrial average, DIA. briefly touched 13,000 for the first time since May 2008, powered higher by the Greece bailout and strong corporate earnings reports from Home Depot, HD.

Uranium Miners, URA, Copper Miners, COPX, Rare Earth Miners, REMX, Aluminum Producers, ALUM, Metal Manufacturing, XME, Steel, SLX,  S&P Mining, MXI, and Automobiles, CARZ, and VROM, traded higher.

The chart of the Morgan Stanley Cyclicals Index, $CYC, shows a topping out.

The ratio of shipping stocks, SEA, largely comprised of Greek companies, relative to the Baltic Dry Index, $BDI, SEA:$BDI, reflects the leverage and speculation of neo liberal finance.

Shares trading lower included PSP, FAA, PSCI, ITB, XBI, XRT, RZV, XSD, IYR, QABA, KRE, REM, FNIO, ROOF, REZ, IYT, EMIF, CVCO, XPH, IHE, XLP. PXN, Annaly, Capital Management, NLY, a leading Mortgage REIT, traded lower.

Bespoke Investment Blog writes Dow Transports Diverge From Industrials The ongoing trade lower in Transportation, IYT, as well as Utilities, XLU, provide non confirming Dow Theory logic that the market and Industrials, IYJ, will be headed lower.

Emerging Markets, EEM, and the Brics, EEB traded lower.

Growth stocks from this Finviz Screener of 50 Growth Stocks turning lower today included GPC, MU, TSm, NKE, AMGN, NTGR, LPL, INTC.

All of these automobile dealers seen in this Finviz Screener of Automobile Dealers turned lower including KMX, SAH, ABG, RMT, LAD, GPI.

Chemical stocks from this Finviz Screener of 20 Chemical Manufacturers turning lower included IPAS, WLK, KRA, LYB, HUN, OM, ASH.

Almost all of the stocks seen in this Finviz Screener of Small Cap Technology Stocks turned lower.

Value stocks seen in this Finviz Screener of 50 Value Stocks turning lower included BC, THO, CCO, MGM, RCL, WGO, URI, DUF, CUGW.

Commodities, DBC, USCI, blasted strongly higher. Base Metals, DBB, rose with Aluminum, JJU, and  Copper, JJC, rising strongly.. The always volatile Silver, SLV, rose, as did Gold, GLD. A rise in Oil, USO, caused Gasoline, UGA, to rise. Timber, CUT, rose, which moved paper manufactuers, WOOD, higher.

As currencies begin to trade lower, Commodities, DBC, with the exception of gold, GLD, unleaded gas, UGA, and oil, USO, will trade lower again, led so by JJA, DBB, CUT, and SLV. This will be seen in the chart of DBC, JJA, DBB, CUT, SLV, GLD, USO

The US Dollar, $USD, UUP, traded lower, as the Russian Ruble, FXRU, the Swiss Franc, FXF, the Swedish Krona, FXS, and the Euro, FXE, rose, taking emerging market currencies, CEW, higher. World Major Currencies, DBV, traded lower. The USD/JPY continued higher, and it inverse, the JYN, traded lower.

Junk bonds, JNK, International Corporate Bonds, PICB, Emerging Market Bonds, EMB, World Government Bonds, BWX, traded higher on world central bank liquidity and carry trade investing.

4) … As debt contagion spreads an competitive currency devaluation picks up steam,  Canada, Mexico and the US will be regionalized into a North American Union, and be known as CanMexAmerica.
Greg Quinn of Bloomberg writes Credit And Commodities Drive Canada “In the land of the blind, the one-eyed man is king, and that is Canada right now,” said Eric Lascelles, chief economist at Royal Bank of Canada Global Asset Management, which oversees about C$250 billion ($252 billion). “The two big things driving Canada are credit and commodities,” and “we have avoided some of the real headaches that the heavily indebted countries have encountered.”

Canada’s currency will trade close to parity with the U.S. dollar into next year, based on the median estimate of 24 responses to a Bloomberg News survey. Two-year bond yields will remain below 2 percent, according to a separate Bloomberg survey, as inflation slows and the government reduces its C$31 billion deficit, which officials are projecting will be eliminated by the 2015-2016 fiscal year.

Record Debt Purchases. Foreign purchases of Canadian debt have set records in the past three years, including a tenfold jump in money-market investment last year to C$32 billion and C$96 billion of bonds in 2010, according to Statistics Canada. Pacific Investment Management Co., the world’s largest bond-fund manager, is betting on the country’s longer-term debt because of Canada’s stability and its “strong resource sector,” which makes it “less sensitive to shocks,” Ed Devlin, who manages Pimco’s $11 billion Canadian portfolio, said in a Feb. 10 interview. The world’s 10th largest economy, Canada has the third-largest pool of oil reserves, and, according to a 2010 speech by Finance Minister Jim Flaherty, is the biggest producer of potash, second largest supplier of nickel and third largest provider of aluminum.

World’s Soundest Banks. Canada’s banks were named the soundest in the world for the fourth consecutive year in 2011 by the World Economic Forum, and Bank of Canada Governor Mark Carney was chosen in November by leaders of the Group of 20 nations to head the Financial Stability Board. The board is charged with overseeing efforts to write new rules for international finance to help avoid another global credit crunch. The International Monetary Fund projects Canada will lead the G-7 with a gross debt-to-output ratio of 73 percent at the end of 2016, lower than 75 percent for Germany (IGS%DEU), 115 percent for the U.S. (IGS%USA) and 253 percent for Japan (IGS%JPN).

Canada’s central bank dropped a “conditional commitment”to keep its benchmark overnight lending rate at a record low 0.25 percent in 2010, and Carney, 46, has held it at 1 percen tsince September of that year, the longest pause since the 1950s. In the same period, eleven of the 20 biggest economies have cut rates, and the U.S., Japan, U.K., Switzerland and European Central Bank adopted or extended emergency stimulus or lending in the last year.

All this has supported Canada’s dollar, which has appreciated 5.7 percent against the U.S. currency since Sept. 1, 2010. Canadian government bonds have returned 8.5 percent in the same period through Feb. 17, compared with 6.6 percent for U.S. Treasuries.

Financial armageddon will be the genesis for regionalization of North American resources into a collective hive for the security and stability of the North American Continent. The Canadian Energy Income Companies, ENY, and all Canadian Energy Production Companies, will be regionalized and overseen by public private partnerships, where stakeholders from government and industry meet to oversee the production and provide for credit needs of companies such as  BTE, CVE, NXY, PVX, SU, TLM, ENB, TRP

5) … Judgement is the means by which God is now calling people to himself in a world where democratic government, the rule of law, and a sound economy is failing
It was God’s desire that people live in the Garden of Eden and enjoy fellowship with him. But through sin, that is doubt, the first progeny failed, and the Garden of Eden was lost, but it’s experience is being recovered by Christ. Witness Lee wrote the book Ten Lines in the Bible which explains this very well.

God’s love for the individual is the basis for faith in Him, which one supplements with virtue (arete, which is Greek word #703), and virtue with knowledge, and knowledge with self-control, and self-control with steadfastness, and steadfastness with godliness, and godliness with brotherly affection, and brotherly affection with love. Self control is largely a matter of a decision for chase (hagnos) communication, speech, and action. Hagnos is Greek word #53 and is found in Phil 4:8, (whatever is pure), 1 Tim 5:22, (chaste from sin, that is doubt), 1 Peter 3:2, (pure conversation), and 1 John 3:3, (clarity, like water or light). This that one migh have ever maturing life in Christ and ever more pleasing to him.

Shlomo Sand wrote The Invention of the Jewish People, communicate that there is no archaeological record of the Jewish people in Palestine at the time the Bible alleges that they were there. I do not dispute with him, I simply believe the Bible on faith, without any corroborating physical evidence, as I must believe that God is, and is a rewarder of those who earnestly seek him.

The Revelation of Jesus Christ, is a book which communicates God’s Judgment. In the first three chapters, Christ judges the churches, which has been ongoing since the first century. God’s Judgement of the world commenced with fears of sovereign failure, specifically fears of a European Sovereign Debt Crisis, which turned the Euro, FXE, lower on December 5, 2011, as the S&P placed its long-term sovereign ratings on 15 members of the eurozone on “CreditWatch” with negative implications. Specifically in Revelation 6:1-2, “Christ opened the first of the seven seals,  and I heard one of the four living creatures saying with a voice like thunder, “Come and see.”  And I looked, and behold, a white horse. He who sat on it had a bow; and a crown was given to him, and he went out conquering and to conquer.”  The Judgement of Christ, commenced with a Eurozone coup d etat. And this started the Beast Regime of Neoauthoritarianism to rise to from the profligate Mediterranean Sea countries of Greece and Italy, to replace the Banker Regime of Neoliberalism, Revelation 13:1-4, which is the same as the ten toed kingdom of regional global governance, Daniel 2:31-33.

This article was posted on the internet.

Will Greece Be Ejected From The EU … Or Will A New Federal Eurozone Super Structure Emerge?

February 19, 2012

Currency and credit report for the week ending February 17, 2012

1) … The USD/JPY traded up this week; Japan Shares traded up on surprise BOJ liquidity operation; and the LTRO rally took emerging market infrasturcture, EMIF, US business services and small cap value shares, RZV, and Chinese real estate, TAO, to new heights.
Bloomberg reports “Japan’s economy shrank an annualized 2.3% in the fourth quarter, more than economists estimated, as slumping exports undermine a recovery from last year’s record earthquake.”

Bloomberg reports “Japan’s central bank unexpectedly added 10 trillion yen ($128bn) to an asset-purchase program and set an inflation goal after an economic slide fueled criticism it has been slower to act than counterparts. An asset fund increased to 30 trillion yen, with a credit lending program staying at 35 trillion yen… The BOJ also said that it will target 1% inflation ‘for the time being.’ Stocks rose and the yen weakened against the dollar as the central bank expanded stimulus for the first time since October to revive an economy that shrank an annualized 2.3% last quarter.”

Bloomberg reports  “Bank of Japan Governor Masaaki Shirakawa said that setting an inflation objective was a better policy option for Japan than following the Federal Reserve in crafting a time-frame for the end of policy stimulus. While the Fed pledged to keep exceptionally low rates through late 2014, it ‘holds significant reservations with regard to such anticipation being subject to change depending on economic and price outlooks,’ Shirakawa said… ‘We judged it’s more effective and credible to set an inflation goal rather than specifying the timing of an exit as Japan faces high uncertainties for the outlook of the economy and prices,’ he said…”

The chart of the USD/JPY shows its trade higher; its inverse, JYN, traded lower.  Kubota, KUB, traded vertically higher, with Japan, EWJ, rising parabolically higher, as the Bank of Japan announced a liquidity operation.

Bloomberg reports on terrific credit expansion “Brazilian state-controlled banks are boosting credit four times faster than non-government lenders, making it harder for policy makers to lower interest rates while meeting the country’s inflation target. Government-run banks including Banco do Brasil SA and Caixa Economica Federal, which accounted for almost half of all lending in December, boosted credit by 4% that month, compared with 1% for non-state lenders.”  

The Finviz ETF report communicates energy and emerging market infrastructure rose on LTRO neo liberal finance
EGPT 8.4
SCIF 8.0
GREK 7.0
INXX 6.6, led by SLT, TTM,
EPI 6.0
TAO 5.8
XOP 5.4
INP 5.4
PSCE 5.2
BRF 5.5
EWZS 4.8 led by GFA
IEO 4.7
CARZ 4.5
BRAF 4.4
FXI 4.3
BRXX 4.2, led by FBR, SBS,  CPL
SEA 4.3
EWN 4.2
EMIF 3.4
TUR 4.1
RSX 3.8, led by SNX
ERUS 3.2 led by MBT
EWD 3.2 led by VIP
CHII 3.1
CHIX 3.0
THD 3.0
IHF 3.0
IXG 2.7
XSD 2.6
PSCD 2.5
RZV 2.3 led by SNX
EWX 2.3
PKB 2.0
ITB 0.4

Loss leaders for the week included
CVCO
SLX
FAA
COPX

2) … Credit for airline deals is currently guaranteed by the US Government; this stimulates sales at Boeing.
Reuters reports U.S. Loan Guarantees Part Of Lion Air Deal For Boeing Jets

How do you stump up the money for a $22 billion aircraft deal? The case of Indonesia’s Lion Air, which signed a record order with Boeing this week, is typical of many mega-aircraft deals: with a little help from the taxpayer.

The U.S. government is offering loan guarantees to help the low-cost carrier buy 230 jets, under a system operating on both sides of the Atlantic to promote exports of strategic goods such as the jetliners built by Boeing or rival Airbus. In theory, it means U.S. taxpayers could pick up part of the tab if the deal falls through.

Bankers and officials involved in such transactions say experience suggests this is unlikely to happen, or any losses could be recouped by recovering assets.

Indonesian entrepreneur and Lion Air co-founder Rusdi Kirana blazed a trail at the Singapore Air Show, signing deals for 259 aircraft worth $23 billion this week, including Boeing and Hawker Beechcraft jets and European ATR turboprops.

The three-day splurge left some wondering how an airline little known internationally, and banned in Europe over safety concerns, could afford to pay for the planes.

Similar questions swirled in 2005 when Lion Air placed what was then considered a huge order for 60 aircraft. This has since propelled it to become Indonesia’s top domestic airline.

A senior U.S. official familiar with the deal dismissed concerns about the airline’s ability to pay.

“We believe Lion Air has a good business model and a management team that is successfully implementing it,” Robert Morin, vice-president of the transportation division at the Ex-Im Bank, told Reuters.

“Rusdi Kirana won’t have trouble financing Lion Air’s new big order because the deliveries are stretched over several years and he will probably tap a variety of sources of financing.”

The methods cannot be verified in detail, because Lion Air has declined to open up its finances. U.S. airlines says deals involving U.S. backing should be more transparent.

“We are the custodians of U.S. taxpayers’ money and we take that role very seriously,” Morin said. “Rest assured, Ex-Im Bank does its homework.”

In practice, industry sources say only a fraction of the $22 billion touted for the Boeing deal will be paid any time soon.

So how does it work?

Price Discounts

It is no secret that airlines often get discounts. But Boeing and Airbus never comment on them and buyers are sworn to secrecy over their deals, so their size is hard to determine.

Classified documents released by WikiLeaks gave glimpses of aircraft deals as seen by U.S. diplomats, and spoke of discounts as high as 50 percent, though industry sources dismiss this.

Lion Air can expect a hefty discount for two reasons: it has placed the largest commercial order ever received by Boeing and it is a launch customer for the revamped Boeing 737 MAX 9.

On the other hand, airline industry sources say, launch pricing can mean airlines get a less generous support package.

One person familiar with industry practices speculated the discount for part of the Lion Air order could reach 40 percent, but acknowledged the real amount was anyone’s guess.

Buy Now Pay Later

Airlines mainly pay for aircraft when they take delivery, not when they order them. Deliveries won’t start until 2017.

By the time the later planes are delivered, some of the previously ordered ones may be coming up for retirement, which means they can be parked, scrapped or sold, potentially releasing equity to go back into the purchase of later planes.

Kirana said he would take delivery of 30-40 planes a year.

Deposit

Initially, all Lion Air is likely to have to pay is a deposit to secure slots on the production line in Renton, Wash.

Deposits are typically 5 percent or more, experts say.

Pre Payment Deliveries

Airlines have to make further down payments as the clock ticks down to delivery, especially from about 24 months out.

However, some banks offer financing products even for these “pre-delivery payments” (PDPs).

By delivery day, an airline has typically paid 20 percent of the aircraft’s net value but this can be as high as 50 percent.

Since they eat into cash flow, PDPs are an important item for the health of an airline. “More than one airline has gone bankrupt just because of PDPs,” an industry banker said.

D-Day

Each aircraft is fully paid for on delivery.

Usually airlines have financing in place for some 80 percent of the price. Some sell the aircraft simultaneously to a leasing company and rent it back, a process called sale-and-leaseback.

Others take a commercial loan or go to the capital markets, but the latter option is little used outside the U.S.

Export Import Credit Financing

Many commercial loans are backed by guarantees given by Ex-Im bank, France’s Coface and others. Ex-Im Bank covered about half the fleet already ordered by Lion Air, and is expected to step up for a similar proportion of the new deal.

The agency rarely loans from its own balance sheet. It issues a guarantee against which commercial banks lend funds. It charges for the guarantee and says it has only lost on one deal.

The cost of such finance is rising after a pact between Organisation for Economic Co-operation Development (OECD) member countries last year. The agency typically guarantees up to 85 percent of the value of the U.S. content of the aircraft

Helen Cooper of the NYT reports On Boeing’s Stage Obama Pushes Exports, President Obama, wrapping himself in one of the country’s most glamorous exports, Boeing’s new 787 Dreamliner, vowed on Friday to boost government help for American companies seeking to sell their goods overseas.

I want us to sell stuff,” Mr. Obama said as he finished a trip to the West Coast, calling on Congress to continue supporting export financing agencies and announcing an array of plans aimed at helping manufacturers.

As this is an election year, Mr. Obama went for the ultimate photo op, using the spectacle of a new United Airlines Dreamliner as his backdrop to ask Congress not to cut financing for the Export-Import Bank, the American export credit agency.

The event exceeded the standards of the usual presidential factory tour. Boeing’s plant here, Mr. Obama said, is the biggest building in the world, and the president seemed to delight in his tour of the new plane, marveling at windows that tint turquoise at the touch of a button.

Mr. Obama even struck a nostalgic chord, telling workers that the plane he arrived on — Air Force One — was made at this Boeing plant 25 years ago. “One of the guys I met on the tour worked on the plane,” Mr. Obama said. “I told him he did a pretty good job. It’s flying smooth.”

For Mr. Obama, export growth is one area where he can point to success. Two years ago, he said in his State of the Union speech that he would work to double United States exports in five years, an announcement that sparked incredulity among trade economists. At the time, Mr. Obama had yet to articulate a trade policy.

Since then, the president’s goal seems less pie-in-the-sky, thanks in part to, of all countries, China. While China still serves as a foil for American politicians who want to talk about unfair trade practices and to score points with labor unions and manufacturing companies simultaneously, the reality is that China’s economic growth — and the ascendance of its middle class — have enlarged the market there for American goods. United States exports last year hit record levels, buoyed by export growth to China, the Commerce Department reported.

The Obama administration has had some success in its efforts to pressure the Chinese government to allow its currency to appreciate; administration officials took up the issue again this week, when China’s presumed next leader, Vice President Xi Jinping, was in Washington.

The president lavished praise on Boeing during his visit for helping to lead American export growth. But the White House also carefully calibrated the optics of the trip, choosing to visit a unionized Boeing plant in Washington State just a few months after the National Labor Relations Board dropped a lawsuit against Boeing over complaints that it built a nonunion plant in South Carolina to retaliate against the union in Washington State for strikes.

The case was dropped after the machinists’ union approved a contract extension with Boeing, but the issue has been trumpeted on the Republican presidential campaign trail as an example of the government — and Mr. Obama — trying to beat up Boeing. A spokesman for Boeing said there was no connection between the dropped labor complaint and Friday’s visit by the president.

Labor leaders were buoyed by Mr. Obama’s visit, interpreting it as a sign of presidential support. During his remarks, the president steered clear of the labor-management fight, filling his visit with oratory about Boeing, and its new 787, as the perfect example of American ingenuity. But he also managed to entwine his remarks with homages to American workers.

“In December 2009, the first Dreamliner took off on its maiden flight right here in Everett,” Mr. Obama said. “It was a cold and windy day, but that didn’t stop more than 13,000 employees from coming out to see the product of all their hard work finally take to the skies.”

He spoke of one Boeing worker, Sharon O’Hara, who was there, and who was in the audience on Friday, and quoted her as saying: “I had goose bumps and tears. We said we would do it and we did.”

Mr. Obama concluded: “You said you would do it, and you did. That’s what we do as Americans.”

3) … In the soon coming currency depleted and credit evaporated world, regional global governance will change the nature of credit; credit will come through diktat as regional stakeholders work with monetary cardinals and the monetary pope, to finance industry critical to the region’s security and stability.
Mike Mish Shedlock reports a Germany draws up plans for Greece to leave the Euro. What’s likely early next week is a debt swap in which the ECB gets new bonds guaranteed in Euros, then immediately transferred to the EFSF making the ECB whole. Some relatively short time later, the Troika will refuse to lend more money to Greece forcing Greece to go back on the Drachma

Ambrose Evans Pritchard writes just as Greece complies at last, Europe pulls the plug.

Nick Beams writes Euro zone ministers tighten screws on Greece

Christopher Brooker writes The European project is splitting apart at the very core. A gulf is growing between France and Germany over the future of the eurozone. What makes this moment so significant is not just that the disintegration of the eurozone will be by far the most serious check to the hitherto seemingly irresistible drive for “ever closer union”, but that it marks the rending apart of that Franco-German alliance which has been seen, ever since the Elysee Treaty of 1963, as the central “motor” of European integration. As the slow-motion crisis inches towards breaking point, France and the European institutions are on one side of an unbridgeable divide, and Germany and its increasingly restive people on the other. The latter see that the gamble of the euro has failed just as dismally as the Bundesbank had warned it would back in the 1980s, before being ruthlessly outmanoeuvred by Jacques Delors and Helmut Kohl.

Anna White of The Telegraph reports Greek rescue threatens eurozone structure. European leaders are working through the weekend to finalise the details of a second €130bn (£108bn) bail-out package for Greece, ahead of a key meeting on Monday. A conference call is expected to be held on Sunday by finance ministry officials from the 17 eurozone countries. If the package is adopted, Greece’s finances will be placed under stringent watch to ensure it delivers deep cuts and meets loan requirements. The respected Ernst & Young ITEM Club said: “This could be the template for a future European fiscal union.” Marie Diron, economic advisor to the ITEM Club, said: “In practice countries will watch closely over the finances of others, ensure laws are passed and implemented, and corrective measures can be taken to avoid future debt contagion between member states.”

Ms White continues, Chancellor Merkel’s government indicated its determination to avoid separating the timetable of the aid from the writedown of Greek debt to private bondholders, and agree to the deal as one package. Greece’s cabinet approved a final set of austerity measures yesterday ahead of a key deadline on March 20 when the debt-laden country must pay €14.5bn or trigger sovereign insolvency. A government official said the cabinet had agreed to launch a debt swap for private creditors by March 8 with the aim of completing it by March 11. The swap is intended to accompany the rescue deal and will mean creditors take a 70pc cut in the real value of their holdings. The sands of time run out on March 20 when debt-laden Greece must pay €14.5bn or trigger sovereign insolvency – the first of its kind in the 13-year history of the single European currency.

The NY Times writes Europe’s failed course. Struggling euro-zone economies like Greece, Portugal, Spain and Italy cannot cut their way back to growth. Demanding rigid austerity from them as the price of European support has lengthened and deepened their recessions. It has made their debts harder, not easier, to pay off. This is not an issue of philosophical debate. The numbers are in. As The Times’s Landon Thomas Jr. reported this week, Portugal has met every demand from the European Union and the International Monetary Fund. It has cut wages and pensions, slashed public spending and raised taxes. Those steps have deepened its recession, making it even less able to repay its debts. When it received a bailout last May, Portugal’s ratio of debt to gross domestic product was 107 percent. By next year, it is expected to rise to 118 percent. That ratio will continue to rise so long as the economy shrinks. That is, indeed, the  very definition of a vicious circle. Meanwhile, shrinking demand and fears of a contagious collapse keep pushing more European countries toward the danger zone of unsustainable debt.

Bloomberg reports ECB said to negotiate with Greece on investment portfolio bond exemptionn.  The European Central Bank is negotiating with Greece on behalf of its member central banks to exempt the Greek bonds in their investment portfolios from a debt restructuring, two euro-area officials said. The ECB wants to swap the investment portfolio bonds for debt that’s exempt from collective action clauses, or CACs, to avoid losses in a private-sector debt restructuring, the officials said late yesterday. The central bank has already swapped Greek bonds it bought as part of its asset-purchase program for such securities, a third official with knowledge of the situation said. Greece wants the bonds in the central banks’ portfolios to be included in a private-sector deal aimed at slicing 100 billion euros ($132 billion) off its debt, the officials said. The central banks are arguing they would have dumped the bonds if they were normal investors and that they shouldn’t be forced to take losses on them, the officials said. An ECB spokesman declined to comment. Greek government spokesman Pantelis Kapsis wasn’t immediately available to comment. The tussle comes as euro-area finance ministers gather in Brussels on Feb. 20 to decide on a second bailout for the embattled nation and sanction the private-sector bond swap.

Soon fears of debt contagion will arise again as they did in July 2011 where investors feared that a debt union had formed. And new fears that the world central banks credit will no longer stimulate and liquefy financial assets will cause investors to derisk out of stocks and delever out of commodities and sell the currencies globally; the fastest fallers will likely be the Swedish Krona, FXS, the South African Rand, SZR, the Brazilian Real, BZF, and the Indian Rupe, SZR. In as much as hot money has recently flowed once again into the BRICS, especially Brazil, Russia, and India, overheating their exports relative to their imports, the Brazil Small Caps, EWZS, the Russian Small Caps, ERUS, and especially the India Small Caps, SCIF, are likely to be the fastest stock fallers.       

With trust fleeting credit will turn bad, and interest rates on all types debt will rise.  Soon there will be money good, and no sustainable level of debt.

Bible prophecy of Revelation 13:3-4, foretells that out of financial armageddon, that is a credit bust and financial system collapse, sovereign leaders will arise from regional framework agreements to replace sovereign nations. Lacking any money good, people will place their trust and faith in the word, will and way of these leaders. The people will give their allegiance to the diktat of the new sovereigns, who will meet in summits, waive national sovereignty, and establish a Federal Europe, with the ECB or the Bundesbank empowered as the EU’s bank, appoint monetary cardinals as stakeholders to manage the factors of production and provide credit as necessary; and appoint a EU wide technocratic government featuring fiscal commissioners who oversee structural reforms and manage government spending, as well as impose austerity measures for regional security and stability.

Angela Merkel has heard and heeded the 1974 Club of Rome’s Clarion Call for regional global governance and will act with its authoritarian imperative to establish a fiscal and federal Europe.

Angela Merkel is God’s point person, that is His appointed vessel to act effectively to carry out his plans for the rise of the Beast Regime of Revelation 13:1-4, aka the ten toed kingdom of Daniel 2:31-33, to replace the Banker Regime of Neoliberalism, aka capitalism.

Fiat money and credit will soon die, putting capitalism in the grave. Diktat will serve as both credit and currency in the new economy of regional global governance.

The debt economy of capitalism is coming to an end, with the result that the dynamos of growth and profit are failing. The driver of investment reality is that the European Central Bank’s long-term refinancing operations has provided cheap three-year liquidity to banks, which has fueled fiat asset purchases across the board including Portugal, Italy and Spain Sovereign Debt.

The power of neo liberal finance will soon be exhausted, this will be seen in the chart of ITLY, EMFN, EMMT, EMIF, KRE, PKB, RZV, where the debt of  ITLY will likely be sustained by the ECB’s LTRO 1 and LTRO 2, yet, the rally in the current safe haven stocks fizzles. The reach of ECB credit liquidity will soon fail to continue supporting S&P Materials, MXI, and S&P Global Financials, IXG, as is seen in the chart of SPY, MXI, IXG.

Political capital will soon command economic transactions, as the dynamos of regional security and stability gain traction, providing order out of chaos. Investment capital that fueled growth and profit will literally be washed away into the pit of financial abandon as regional global governanc replaces capitalism.

Instaforex writes Ralf Nelson Elliott And His Wave Analysis. Ralf Nelson Elliott was an American accountant. In 1938 appeared the book “The Wave Principle” where he detailed the results of his studies and described his method. His next book entitled “Nature`s Law – The Secret of the Universe” was published in 1946.

The monthly chart of S&P, $SPX, traded by SPY, communicates that we are at the crest of an Elliott Wave 2 high, and are going to enter an Elliott Wave 3 Down, as is seen in Daneric’s Elliott Wave article 15 February 2012. These are the most destructive of all economic waves as they destroy practically all of the wealth accumulated on the way up. The Great Deleveraging, that is Great Depression 2, is about to commence.

Tim Price in Sovereign Man relates Warren Buffett’s most irritating thing ever said: stocks beat gold and bonds. For value investors of a certain age (e.g. mine), discovering that Warren Buffett could be wrong is like suddenly not believing in Father Christmas.

Buffett’s latest advertorial (for himself and for Wall Street), “Why stocks beat gold and bonds,” adapted from an upcoming version of one of his legendary shareholder letters and published in Fortune, may be the most irritating thing he’s ever written. As an investor, he rightly draws attention to the critical requirement to maintain one’s purchasing power in the face of rampant state inflationism. He accurately highlights the staggering reduction of real value in the US dollar since 1965 (some 86%). He fairly declares a dislike for currency-based investments in a world of rapidly inflating, unbacked fiat. And he then goes on to rubbish gold using the tired and specious argument that purchasers are simply displaying “greater fool” theory, eagerly awaiting new rises in price that will suck in new purchasers ad infinitum. It looks suspiciously as if Warren Buffett, for all his undoubted investment success, has never actually studied any monetary history.

The reason why Buffett’s views of gold should be ignored can be seen in the following charts, all courtesy of James Bianco at Bianco Research. The first shows the extent to which the eight largest central banks (China, the ECB, the US, Japan, Bank of England, Banque de France, Swiss National Bank, and Germany’s Bundesbank) have allowed their balance sheets to explode, in a desperate attempt to compensate for banking and private sector deleveraging since the debt crisis began. As Bianco points out, “If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE.” What’s particularly shocking about the data is that while every major central bank is busily printing money like it’s going out of fashion (which it is), one of the biggest culprits is the one most widely associated with sound monetary policy, namely the Bundesbank, which has been one of the biggest inflationists of all. Buffett’s preference for equity investment may have nothing to do with expectations regarding things like economic growth or profits, just money printing. This is not founded on sound economic reasoning, rather simply shifting capital into an ever-rising bath. What happens when central banks stop filling the bath? Or worse, take the plug out? Or worse yet, find that they are no longer in control of the water? The investment world does not come down to an all-or-nothing decision between debt (mostly rubbish, now, admittedly) and equity. While the bigger picture is fraught with monetary mismanagement in response to a grave crisis, there are plenty of other investment choices out there, and a growing argument underpinning the ownership of real assets.

In a destabilizing world, regionalization will be the key to security and stability. Soon banks will be nationalized, better said regionalized, and integrated into the government, and become known as the government bank, or gov banks for short. Moody’s Investors Service announced that it was placing more than 100 European banks under review for possible downgrades. The credit rating agency also said that it was putting more than a dozen banks with significant global capital markets operations under review for possible downgrades. Those banks included Barclays, BCS, HSBC Holdings, HBC, and Royal Bank of Scotland, RBS. These banks as well as Lloyds Banking Group, LYG, will be regionalized into a single UK bank, most likely the latter, as they are under the authority of the UK government, which has the British Pound Sterling, FXB, as a currency.     

In Europe, leaders will meet in summits and waive national sovereignty, and announce that the European Financial Institutions, such as Ireland’s IRE, will be integrated into the Bundesbank or the ECB, which will become known as the Euro’s bank.

In Switzerland UBS and CS will be integrated into the Swiss Central Bank

In Japan, MFG, MTU and SMFG will be merged into the Bank of Japan. In each of the world’s ten regions, diktat will serve as both money and credit

In India, IBN, HDB, will be integrated into the India Central Bank

In Brazil, BSBR, ITUB, BBD, will be integrated into the Brazil Central Bank

In Argentina, BBVA, BMA, BFR, GGAL, will be integrated into the Argentina Central Bank.

In Chile, BCH, and BCA, will be integrated into the Chile Central Bank.

In South Korea, KB, WF, SHG, will be integrated into the South Korea Central Bank.

A Eurozone guarantee will backup national bank deposit insurance schemes, to reduce retail bank runs. And in Japan, a national bank deposit scheme will act as capitol controls on retail bank accounts.

Soon a rising US Dollar, $USD, UUP, and competitive currency devaluation, as is seen in the chart of UUP, FXE, FXM, FXC, ICN, FXB, SZR, BZF, FXA, FXRU, CEW, will turn world stocks, ACWX, VSS, EWX, lower. Gasoline Futures, UGA, have risen strongly through LTRO Financing. These are likely to have an ongoing upward wave structure, while commodities, DBC, and USCI, trade lower.  

4) … In today’s news and commentary
AP reports German president quits in scandal over favors … WSWS reports German President Wulff resigns

You Tube Greece ‘first domino’ in end of financial sovereignty?

Gonzola Lira The deflationary undertow before the inflationary wave

Business Week Czech inflation rate reaches 3-year high as economy shrinks

Open Europe Blog The Greek crisis: Five key developments

Open Europe reports Die Welt reported that the ECB is planning to swap its holdings of Greek debt for new bonds, which would allow Greece to introduce collective action clauses into its bonds, while protecting the ECB from potential losses. The FT reports that the Bundesbank objected to the move, wary of the precedent it would set for special treatment of ECB bond holdings.

Open Europe reports German Chancellor Angela Merkel has been forced to postpone her meeting with Italian Prime Minister Mario Monti due to the resignation this morning of the German President, Christain Wulff, following a long-running scandal involving a low interest euro loan from the wife of a wealthy businessman, which he tried to conceal. BBC Times Welt FAZ FTD Les Echos Le Point Corriere della Sera Il Sole 24 Ore Liberation

MSN Philippines News EU’s Van Rompuy calls special euro summit March 2 Eurozone leaders will hold a special meeting on March 2 to discuss the currency’s debt firewall and elect a new eurozone boss, with EU president Herman Van Rompuy favoured to win the job. European Union leaders stage their next summit on March 1-2, 2012.

There will be a eurozone summit over lunch dedicated to the European Stability Mechanism (ESM) and the selection of the president of the euro summit,” Van Rompuy’s office told the 27 EU governments on Wednesday, internal EU papers seen by AFP on Thursday showed.

EU and governmental sources confirmed Van Rompuy’s plans, and his likely dual appointment as chairman of bi-annual summits of the 17-nation eurozone agreed under a new cross-border economic governance drive. He would work in tandem with Luxembourg’s head of the finance ministerial Eurogroup, Jean-Claude Juncker.

Despite Slovakia reiterating its opposition during this week’s talks, the ESM debate will focus on boosting the effective lending capacity of a new rescue fund that enters service in July, paving the way for governments to increase its 500-billion-euro effective lending capacity.

One way leaders are considering doing this is by adding in monies left over in the 440-billion European Financial Stability Facility (EFSF) that was due to be phased out in the summer of 2013.

The discussion comes amid efforts to raise the resources available to the International Monetary Fund via extra loans mainly from the Group of 20 major and emerging economies.

This debate follows fears that the eurozone might not have enough firepower at its disposal should debt-crisis contagion spread once again to Italy or Spain.

The summit, which will also focus on whether to grant Serbia EU accession candidate status, will see the bloc’s new inter-governmental Treaty on Stability, Coordination and Governance presented for signing on March 2. Twenty-five of the 27 governments, minus Britain and the Czech Republic, have said they will implement a “golden rule” (a debt brake) enshrined in the treaty to move quickly towards balanced budgets.

The treaty negotiations have closed, with an EU source adding that two contentious questions have been resolved by a “special agreement” among leaders behind the scenes.

The first, concerning the right for an unhappy government to take another state to the European Court of Justice if pledges are not carried through, has been resolved “so you don’t see the smoking gun”, or the country calling the shots, he said.

The second, which may cause ructions in Ireland, whose highest legal officer has yet to declare whether the treaty will need endorsement by a referendum, would see, this official said, the treaty regarded as “non-referendum compatible” under a “gentleman’s agreement”.

Nature Economist Elaine Meinel Supkis writes on the soon coming debt servitude for the masses. Here is an EU report about the crisis that tries desperately to explain the housing and government credit collapse but can’t figure out any solution except to crush the workers and savers and then make them all pay dearly for this mess,  Alert Mechanism Report 2012. This Alert Mechanism Report (AMR) marks the first step in implementing the newsurveillance procedure for the prevention and correction of macroeconomic imbalances (hereafter called the Macroeconomic Imbalance Procedure – MIP). This report also contains the final design of the scoreboard of indicators (presented in Table 1 and Section 2).  Surveillance to prevent and correct macroeconomic imbalances under the MIP is a new instrument of the strengthened framework for economic governance in the EU. It was adopted as part of the so-called ‘six-pack’ governance package which also provides for asignificant reinforcement of surveillance on fiscal policies. Surveillance on macroeconomic imbalances under the MIP forms part of the “European semester” which takes an integrated and forward looking approach to the economic policy challenges facing the Union in ensuring fiscal sustainability, competitiveness, financial market stability and economic growth. So, the world’s top elites want to have macroeconomic controls!  More and bigger and presumably, better!  The gross failure of all the dominant imperial systems was due to it not being a big enough imperial system with some kindly emperor at the helm, no?  HAHAHA.  We live and never learn.

Simon Black writes in Sovereign Man, Friedrich Hayek On Our “Dictatorship of the Proletariat”.

John Embry, Chief Investment Strategist, Sprott Asset Management writes debt saturation will make for higher levels of gold and silver. Trade The relentless growth in debt throughout the world. In the wake of Global Financial Crisis 1 in 2008 (and I can assure you that the next one is coming very soon) there has been much talk of debt deleveraging. To be fair, in the private sector, there has been some evidence of that in the U.S. and Europe, although most of it has related to outright default rather than the old-fashioned practice of saving current income to pay down existing debt.

This minor event, however, has been totally overwhelmed by an explosion in sovereign debt as governments worldwide have been forced to step in to save their essentially insolvent banking systems and prop up their foundering economies.

I regret to say that it doesn’t take more than a cursory examination of the facts to conclude that the problem is endemic throughout the industrialized world and is even affecting some of the key emerging economies. More importantly, I am afraid it will be terminal for the financial system we have known since the end of World War 2.

The poster child for this development has been the good old U.S.A., and in case you think I am anti-American, I must hasten to tell you that I was born in the U.S.A. exactly nine months before Pearl Harbor and spent the first eight years of my life in the environs of Washington, D.C. Since then I have lived in Canada, always within 100 miles of the U.S. border, and I have always viewed the country at close quarters with great fondness. Having said that, the dramatic financial deterioration that I have witnessed in this country over the past several decades has been truly astonishing and most discouraging.

There is always some arcane statistic that really makes a point and I think the one that resonates with me is that when Ronald Reagan assumed the presidency 31 years ago, the gross federal funded debt was $907 billion. This amount had been accumulated in a little less than 200 years, a period that encompassed two major world wars, a civil war, numerous other skirmishes, several financial panics, and a horrific depression in the 1930s. Now, a mere 31 years later, the U.S. is chalking up more than that amount in a six-month period.

It was just mid-summer last year that the agonizing debt limit debate was resolved and the limit initially rose by $900 billion in two tranches. Well, that has already been exhausted and now the hope is that another $1.2 trillion increase will get us through the November election. I think that is unlikely.

What I find amazing is that remarkably few people seem to find this unusual, although I must admit that I think very few people even actually think about it. However, I believe in the immutable law of mathematics and when you reach the point of no return, there is obviously, by definition, no going back. In my estimation, the U.S. debt situation is so far beyond the point of no return that you can’t even catch a glimpse of it in the rear-view mirror.

The actual funded federal debt of over $15 trillion is just a small part of the problem. The state and local governments are in various states of disarray. As an example we are currently in the epicenter of dysfunctional finance, the otherwise wonderful state of California. Then there are the off-balance sheet items of the federal government such as government-sponsored entities like Fannie and Freddy which have many trillions of debt supported by very dubious assets. But the true elephant in the room is the unfunded liabilities for social security, Medicare, etc., which, using the most conservative estimates, easily exceed $50 trillion.

Thus, without even stretching, the total federal government debt liabilities in the U.S. are, at a bare minimum, more than five times the current nominal GDP. One of the few reasons that this remarkable debt edifice is still standing is the Fed’s Z.I.R.P. undertaking (I love that acronym), the zero interest rate policy, which Fed Chairman Ben Bernanke recently announced, would be extended until 2014, in conjunction with massive Fed monetization of Treasury debt, has kept the interest rates on government debt ridiculously low, and thus the charade has been allowed to continue.

Mark my words, if the interest rates on U.S. government debt truly reflected both the real level of inflation in this country and the rising risk of some form of default, rates would already by sky-high and the U.S. would resemble a massive Greece.

I do believe that this whole process has a very limited shelf life at this point, which is neatly encapsulated in the economist Herbert Stein’s timeless comment in 1986: “If something can’t go on forever, it will stop.” I think that we are very close to that unhappy moment and the implications for the U.S. dollar and economy are simply horrific.

To me, it all seems crystal clear at this point. To avert a near-term economic and financial implosion the authorities throughout the developed world will have to hold their noses and stimulate to whatever degree necessary. No politician today wants to see the system collapse on his watch, so the world will risk eventual hyperinflation and a collapse of the present currency regime rather than voluntarily accept a debt deflation.

Ironically this was all foretold many years ago by Ludwig Von Mises, the founder of the Austrian School of Economics, which, incidentally, is the only economics I have discovered in my lengthy search for reason that makes eminent sense to me.

Von Mises, in his epic book “Human Action,” published in 1949, stated succinctly: “There is no means of avoiding the final collapse brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system.”

Given that this credit cycle has dwarfed anything seen in the history of mankind, its resolution is going to be something to behold. Global Financial Crisis No. 1 in 2008 was merely the hors d’oeuvre and we are now awaiting the main course.

I envision something along the lines of a hyperinflationary depression accompanied by the final denouement of the latest experiment with pure fiat currency — that is, the worst of all worlds.
In the event that I am right, I can assure you that the demand for physical gold and silver is going to overrun all possible sources of supply and even the most outrageously bullish price projections for gold and silver may be exceeded.

To conclude, I would like to quickly mention two other subjects.

The first is cognitive dissonance. When I try to convey the seriousness of this whole issue of monetary debasement and its disastrous impact on society, most people are resistant or, more often than not, seem indifferent to the whole subject. I attribute this to a state of cognitive dissonance, which unfortunately appears to affect the vast majority of society. Basically, most individuals when confronted with an unpleasant issue that is at odds with what they choose to believe go to great pains and extreme lengths to deny it. They are hugely biased to think of their choices as correct, irrespective of any concrete contrary evidence which is provided. My younger brother, who it pains me to say is a whole lot smarter than I am, has done a fair amount of research on this subject and has concluded that there is essentially some sort of blocking mechanism in most human minds which permits people to stick their heads in the sand rather than confront a difficult issue before it is too late.

I think a fascinating example of this phenomenon appeared in Michael Lewis’ latest book, “Boomerang,” which I highly recommend. The hedge fund manager Kyle Bass, who is rapidly becoming legendary, had arrived some time ago at the same malign conclusions about sovereign debt that I have just described to you. He took his findings to the Harvard professor Kenneth Rogoff, who along with Carmen Reinhard, was just preparing to release a new book, “This Time It’s Different,” about national financial collapse. When Bass revealed his numbers on the subject to Rogoff, the professor responded, “I can hardly believe it is this bad.” Bass’ reaction was: If this guy is the world’s foremost expert on sovereign balance sheets and he isn’t prepared to deal with reality, what hope is there? Bass was astounded.

Finally, I can’t make a speech about our terminal financial state without a couple of points on derivatives, which continue to proliferate. The justly reviled ex-Fed Chairman Alan Greenspan used to extol derivatives as vehicles for spreading risk and making the system more resilient while he strenuously opposed any attempts to regulate OTC derivatives. This was just one of his many damaging initiatives and history has completely refuted him. In fact, derivatives have tended to concentrate risk as a large majority of them has ended up in a few hands, creating too-big-to-fail financial entities that are imperiling the whole system.

The idea that they net out and thus it is really a zero-sum game is equally ridiculous. Since every derivative has a counterparty, to suggest that an investor is satisfactorily hedged because derivatives offset a long with a short is simply wrong. If the counterparty fails on either the long or the short, the entire notional value is at risk. Given that the notional value of all outstanding derivatives would easily exceed a quadrillion dollars had not the Bank of International Settlements changed definitions to intentionally understate the true amount, the toxicity of this garbage is obvious.

It wasn’t without reason that Warren Buffett many years ago termed them “Financial Weapons of Mass Destruction.” If sufficient liquidity is not continuously made available in the entire global system, a potential implosion of derivatives would be activated and rapidly annihilate the entire global banking system.

Just another reason why quantitative easing to infinity is virtually assured.

I believe that investors can’t own enough gold and silver

Simon Black writes in Sovereign Man Introducing the next best place in the world to store gold. It’s official. Starting October 1, 2012, Singapore will be the best place in the world to store gold. As a major international financial center, Singapore is rapidly becoming THE place to invest and do business in Asia. Why? Because it’s just so easy. Regulation is minimal, corruption is among the lowest in the world, and the tax structure is very friendly to businesses and investors. With one exception. Traditionally, physical gold and silver purchases in Singapore have been taxed at a 7% GST rate (like VAT, or a national sales tax). The only legitimate exception was purchasing (and subsequently storing) at the Freeport facility, adjacent to the main airport.

In just-released budget documents, however, the government of Singapore announced that it will begin waiving GST on purchases of investment grade gold, silver, and other precious metals effective October 1st. This is huge… and it should really make Singapore the best place in the world to buy and store gold. Prices are already incredibly competitive, with ultra-low premiums and very reasonable storage costs. The Cisco Certis secure storage facility, for example, is incredibly safe, insured, and open up to 14-hours per day. Annual charges for a box are as little as S$99 (roughly $75 USD).