Greece Averts Immediate Default With Bond Success … Yet European Financials, US Treasuries And World Government Bonds, Trade Lower On Competitive Currency Devaluation

Financial Market report for March 9, 2012

Introduction
Greece averted immediate default with bond success as 85% Of Greek bondholders swap debt and get 17 cents on the Euro, and New Bonds that yield 20%. Reuters reports ISDA declares Greek credit event, CDS payments triggered. After the CAC trigger, the total participation rate for all bonds will be 96%.

The EU ECB and IMF Troika will discuss the possibility of a second Greek bailout when the Euro Group meets next week; with Bloomberg reporting a decision scheduled for March 12, 2012.

The European Financials, EUFN, traded lower, as the National Bank of Greece, NBG, and Ireland’s IRE, trading strongly lower. Greece, GREK, Italy, EWI, and Spain, EWP, led Europe, VGK, lower; but world stocks, ACWI traded higher today.  Competitive currency devaluation, that commenced this month, picked up steam, causing debt deflation in sovereign debt, BWX, worldwide as the major world currencies, DBV, and emerging market currencies, CEW, traded lower, stimulating the US Dollar $USD, UUP, to rise. The Two Hundred Percent Volatility, TVIX and Volatility, VIXY,  plummeted; the Stockcharts.com chart of the latter, VIXY, suggests a bottom is being achieved.

Greece averted immediate default with bond success; the question is Will the EU, ECB and IMF Troika provide funding for the Second Greece Bailout?

Bloomberg reports Investors Agree to Swap About 85% of Greek Debt. Private investors agreed to swap about 85 percent of their Greek government bonds for new securities in the biggest sovereign debt restructuring in history, according to a banker briefed on the results. Preliminary indications showed that as much as 155 billion euros ($205 billion) of the 177 billion euros of Greek-law bonds were offered, said the banker, who declined to be identified. Twelve billion euros of debt not under Greek law was also tendered, as was 7 billion euros of bonds from state-owned companies guaranteed by the government, the banker said.

FT reports Financial markets are already betting Greece will default again in the future. Grey market pricing for the new Greek bonds to be issued as part of the exchange ranged from 17 to 28 cents on the euro, a highly distressed level, according to indicative quotes seen by the FT

Bloomberg reports Greece’s New Bond Yields May Reach 20% After Exchange, Morgan Stanley Says. Yields on Greece’s new bonds may climb to as high as 20 percent amid “material risks” stemming from implementation of terms for the biggest sovereign restructuring in history, according to Morgan Stanley. Traders are offering to buy and sell the potential new bonds at yields on 11-year securities of 22 percent, according to a person familiar with the prices who declined to be identified. Yields on exchanged Greek debt may be about 13 percent to 17 percent “in the medium term” as the nation faces an election and seeks to comply with terms of its bailout and debt-reduction programs.

As it stands today, Greece has not be kicked out of the EU. Greece has no debt sovereignty; it lost its debt sovereignty with the first bailout in May of 2010. Greece is no longer a sovereign nation state. Greece, is a client state of the EU ECB and IMF Troika, and Euro zone taxpayers are the hook for the debts of Greece,

Mike Mish Shedlock relates Greece “Credit Event” Triggers $3B in CDS Contracts; Wolfgang Schäuble Issues Another Warning to Greece; Eurozone Exit Trigger Is Cocked.  Greece will exit the eurozone. However, the timing is still in question. I suggest Greek politicians will not meet increasing conditions placed on Greece by Germany and that later this month funding will be cut off triggering a Greek return to the drachma. If so, look for enough funds to be dispersed to Greece in the next couple weeks that allow a quick round-trip to the ECB to make the ECB whole. Once the ECB is in a no-loss situation, the roof can easily cave in. The exit trigger is cocked. All it takes is for either Greece or Germany to pull it.

I believe the question, is Will the EU ECB and IMF Troika come through with the Second Greek Bailout, and provide for the fiscal spending needs of Greece?  

The ECB has established itself as the singular sovereign European financial institution by massively expanding its balance sheet by the printing of Euros, by the ECB, with LTRO 1 and 2, and by subordinating Greek sovereign debt (by swapping their Greek debt with new debt that has special status and is not subject to any CAC, that is any write-downs), and by extension it has subordinated all European treasury debt as Bloomberg reported on February 17, 2012, The European Central Bank’s plan to shield its Greek bond holdings from a restructuring may hurt private investors while paving the way for debt insurance contracts to be triggered. The ECB will exchange its Greek debt for new bonds with an identical structure and nominal value, though they’ll be exempt from so-called collective action clauses the government is reportedly planning. That implies senior status for the ECB over other investors, according to UBS AG, and the use of CACs may lead to credit-default swaps protecting $3.2 billion of Greek bonds being tripped.   

All private investor sovereign bond holdings are now subordinate to those of the Central Banks, the ECB is now the banking backbone of a One Euro Government. The ECB actions have regionalized banking in the EU. Furthermore, the ECB is now the unified sovereign monetary governmental authority in the Eurozone as for all practical purposes nations have been shut out of the sovereign debt market by the ECB’s subordination initiative as Bloomberg reports  Bill Gross says bond contract sanctity is hurt by Greece’s debt swap.  All that waits for a Federal Europe is a unified fiscal authority and a unified political authority and a unified economic authority; these will arise out of chaos.

So clearly, fate is passing the baton of sovereignty. Fate, not any human action, in continuing to pass the baton of sovereignty, and may possibly kick Greece out of the EU. Nevertheless, fate is working through creative destruction of capitalism to pool sovereignty regionally, and will not cease until a Federal Europe with a cohesive and unified monetary, fiscal, political and economic entity arises, where Germany will be preeminent in a type of revived Roman empire.   

Angela Merkel has heard and heeded the 1974 Clarion Call of the Club of Rome for regional global governance, as she and Nicolas Sarkozy, in joint comminique called for a true European economic government. The Call of the Club of Rome has replaced the Milton Friedman Free To Choose script that underwrote the Banker Regime of Neoliberalism; it is clear, distinctive and ringing for regional global governance to emerge out of the chaos of the failure of capitalism.  The Club of Rome’s Call comes with an authoritarian imperative that cannot be resisted.

The Beast Regime of Neoauthoritarianism is rising up out of the Mediterranean Sea nation of Greece with global dominion its destiny where it will occupy in all of mankind’s seven institutions in all the world’s ten regions, each with its own unique form of regionalization. Regional blocs have already formed these; CELAC and the Shanghai Cooperative Organization for example. The seigniorage, that is the moneyness of fiat financial instruments and credit, is waining. The seigniorage of diktat will emerge, with its own unique form in every country and region. Debt deflation will lead to economic contraction which will require regionalization for security, stability and security needs of economic life.

Yes Greece may be a casualty, a destitute and abandoned nation, but the more likely scenario is integration into a Federal Europe, thus making it geographically whole as part of the soon coming New Europe, that is the soon coming revived Roman empire.     

Bible prophecy foretells of a end time ruler rising to global power. Angela Merkel may lose office in a soon coming election, but Germany’s destiny is to be the dominant economic power in the Federal Europe. Tyler Durden of Zero Hedge reports Germany wants new European Constitution: “There are new centers of power In the world.”  Angela Merkel is simply a precursor for one greater, that being The Little Authority, Daniel 7:24-25, a person of seeming insignificant power. Soon out of financial armageddon, that is a credit bust and global financial collapse, the most credible leader will rise to provide order out of chaos. This one currently has a background role, but will be nick named the Little Authority, but will rise to be the New Charlemagne, Europe’s Sovereign as foretold in Revelation 13:5-10. Perhaps the EU’s soon coming Sovereign will be Herman Van Rompuy, as Reuters reports EU’s Van Rompuy warns over complacency in euro debt crisis.

As investment capital is further eroded by competitive currency devaluation, that commenced March 2, 2012, with the trade lower in the world’s major currencies, DBV, and the world’s emerging market currencies, CEW, as seen in this combined Yahoo Finance chart, http://tinyurl.com/7c9zlrk, political capital will grow replacing investment capital, as leaders meet in summits and announce regional framework agreements, which waive national sovereignty and establish regional bodies, such as the EU ECB and IMF Troika as the sovereign regional authority replacing former sovereign nation states.

In the EU, stakeholders from industry, finance and government will be appointed as monetary cardinals to work under the monetary pope Mario Draghi, which will establish a Eurozone monetary union; these leaders will provide monetary, credit and economic policy.  Likewise budgetary commissioners will work in technocratic government to effect fiscal policy which will define a EU fiscal union. Marianne Arens of WSWS reports along these lines, Monti government deregulates Italian jobs market. The Italian government and the employers’ federation are intent on abolishing the country’s employment protection laws and are relying on the support of the trade unions.

Walter Russell Mead of Via Meadia writes Brazil: The Country of the Future, Again? Growth is down in Latin America’s largest economy and nervous, shell shocked Brazilians are crossing their fingers that their economy isn’t still stuck in its historic trap of commodity-dependence and high inflation. Today the Brazilian Real, BZF, traded lower on fears of diminished growth; and in response Brazil EWZ, Brazil Small Caps, BRF, and EWZS, traded lower. Via Meadia continues Brazilians are largely blaming the meltdown on Europe. Guido Mantega, the country’s finance minister, said in FT, if the global crisis hadn’t worsened in the second quarter, our growth [for 2011] would have been closer to 4 per cent. Brazilians worry about a return to their days of weak or negative growth.

President Dilma Rousseff has long advocated lowering the country’s interest rate to stimulate lending and infrastructure development. But there is fear that lowering interest rates too fast without cuts to government spending will cause a blowup in inflation. In the middle to long term, only unpopular structural reforms can keep inflation at bay.

Brazil’s greatest fear is to be trapped between two choices: for slow growth or high inflation. This is what worries Dilma, as everyone in Brazil calls President Roussef; unfortunately, the only way to avoid the trap may be to make exactly the kind of policy choices (spending cuts, labor market deregulation, privatization) that Dilma’s electoral base doesn’t like.  Much depends on what Dilma does next.

Investors have been derisking out of stocks, particularly the small cap stocks, since competitive currency devaluation commenced March 2, 2012.

The world major currencies, DBV, seen falling since March 2, 2012, in this ongoing chart, and the emerging market currencies, CEW, have caused debt deflation, that is currency deflation most strongly in the small cap stocks, with KROO, EWO, SCIF, ARGT, ERUS, loosing the most in value since the market top on competitive currency devaluation, as confidence wains in the world central banks’ monetary policies. World stocks, VT, and World Small Stocks, VSS, are now trading lower, on the failure of fiat money. The fiat money system is dying; the diktat money system is rising in its place.  

Graham Summers of Phoenix Capital relates in Zero Hedge The Fed cannot and will not be unleashing QE 3 next week. For all this talk and hype, QE 3 is nowhere to be found. And it won’t be showing up anytime soon unless a full-scale Crisis hits. The Fed will disappoint, and we will get a market correction. All the macro and technical signs point towards something bad coming this way. The red flags are literally everywhere. And judging by the significance of them, we could very well be heading into a full-scale Crisis.

The strong decline in small cap pure value shares, RZV, relative to small cap growth shares, RZG, since the week of February 20, 2012, seen in this ongoing chart communicates that investors anticipate a global sell off of currencies. Sectors falling since the market top have included Copper, COPX, Semiconductors, XSD, Small  Cap Pure Value, RZV, US Infrastructure, PKB, US Small Industrials, PSCI, and Biotechnology, XBI.

The chart of the Morgan Stanley Cyclicals Index, ^CYC, compared to SCIF, KROO, EWD, RZV, communicates that it is the small cap stocks that are loosing the greatest value; and large cap, JKE, shares that have now turned lower include , ETN, CAT, NUE, DE, SLB, BA, GOOG, URS, RIO, GM.

Major countries falling strongly since the market top have included India, INDY, and its infrastructure, INXX, and Sweden, EWD, with India Banks, EPI, leading the way down, that being IBN, HDB. Argentina Banks, BMA, GGAL, BBVA, BFR, have been loss leaders as well, as have UK area Banks, RBS, HSBC, LYG, BCS.

The BRICS, EEB, are trading lower from their recent highs. Bloomberg reports BRIC Investors Losing as Statists Forgo Earnings‎. And India Times reports Reserve Bank of India pumps in more money into banks.  The Reserve Bank of India (RBI) on Friday cut the cash reserve ratio (CRR) requirement for banks by a more-than-expected 0.75 per cent, which will inject another Rs 48000 crore into the banking system for making credit available to corporates and individuals. However, bankers said the cut in the CRR would not lead to an immediate softening of interest rates on loans. CRR, the share of deposits that banks must keep as idle deposits with the RBI, has been reduced to 4.75 per cent from 5.5 per cent earlier. Banks borrowed Rs.1.26 lakh crore from RBI on Wednesday to balance their assets and liabilities reflecting the intensity of funds scarcity in banks. The move shows that RBI has started softening its hawkish tight money policy and could lead to a widely expected cutting interest rates in the coming months after 13 increases between March 2010 and October 2011,as both economic growth and inflation slow. India’s annual economic growth slowed to 6.1 per cent in the December quarter, its slowest pace in nearly three years. Headline inflation, meanwhile, slowed to its lowest level in more than two years in January. In response to the news India Infrastructure, INXX, blasted higher as did Automobile manufacturer, Tata Motors, TTM, and Copper miner, SLT. and Banks, HDB, IBN.    

Merco Press reports Argentine President Cristina Fernandez sent a bill to Congress on Thursday aimed at helping the government tap more central bank reserves to help repay foreign debt and defend the country’s currency.  Left Foot Forward reports the American Task Force Argentina activities include pressuring governments to ensure no World Bank funds are given to Argentina, and trying to throw Argentina out of the G20. In other words, they aim to capture foreign policy in order that this handful of creditors get paid. I expect Argentina, ARGT, to be a fast faller   

Sovereign insolvency and banking insolvency are the issues of the day. Insolvent sovereigns and insolvent banks are unable to support growth. Debt deflation will lead to economic contraction, and Sweden, EWD, traded lower today on awareness of soon coming negative growth shock. Austria, EWO, and Turkey, TUR, traded lower once again, on awareness that the debt trade both in Europe and the world is now history.

Carry trade investing, such as a sell of the Euro, FXE, and a buy of the Dollar, UUP, stimulated US Infrastructure, PKB, investment, and then recently, a sell of the Euro, FXE, and a buy of the Indian Rupe, ICN, stimulated India Infrastructure, INXX, investment as is seen in this ongoing six month chart of EMIF, INXX, BRXX, CHXX, PKB. Now, both INXX, and PKB, are both fast fallers.        

Banking, KRE, Retail, XRT, Consumer Discretionary, IYC, and, VCR, Regional Banks, KRE, and Home Builders, ITB, Pharmaceuticals, IHF, Paper Producers, WOOD, traded up in three white soldiers finales to the age of neo liberal finance.Notably, Peru Bank, BAP, Starbucks, SBUX, Lennar, LEN, Lowes, LOW, O’Reilly, ORLY, DTE Energy, DTE,  rose to new highs. This Finviz Screener provides a listing of 50 strongly performing retail stores.

Bond vigilantes have seized control of interest rates globally, and are now sovereign over the world central bankers.

Bond vigilantes have called the interest rate on the US Ten Year Note, ^TNX, higher this year; it rose today, and now stands at 2.04%, with the result that the 10 Year US Government Bond, TLT, has lost 4%, since January 1, 2012, as seen in this ongoing chart.

Both carry trade investing and neo liberal finance are now history, as debt deflation, that is currency deflation, has started the Second Great Depression, on the failure of the world central banks to stimulate growth.  

Bonds, BND, traded lower today, as US Government Debt, ZROZ,  EDV, TLT, traded lower on the higher sovereign interest rates, which have now carried over into the private sector, causing Longer Duration Corporate Bonds, BLV, Corporate Bonds, LQD, International Corporate Bonds, PICB,  to trade lower.  World government bonds, BWX, traded lower today, as bond vigilantes are calling sovereign debt interest rates higher globally: faith in sovereign debt is history. Doug Noland writes  Latent animosities between countries, cultures, societies, political parties, policy viewpoints and economic doctrines were unleashed. The euro 100bn ($130bn) write-down of Greek debt is but a small fraction of the true and ongoing cost of the Greek debt fiasco.

Sovereign risk is starting to manifest globally. Bond vigilantes are able to call interest rates higher world wide, as investors become increasingly fearful that the world central banks’ monetary policies are no longer able to stimulate growth.  Junk bonds, JNK, although rising today, have traded lower from their recent highs indicating a risk off investment arena. Only emerging market bonds, EMB, have been resistant to trading lower. With the underwriting of New Greek Bonds by the EU ECB  and IMF Troika, and the rise of the Interest Rate on the US Government Note, ^TNX, above 2.0%, the global government finance bubble has burst. The global debt trade is over; and the rule of debt servitude is commencing, with those in the Euro zone now responsible for not only the debts of Greece, but perhaps soon the financing of Greece’s ongoing fiscal spending. Shaun Richards writes A large default does not hide Greece’s continuing insolvency as her economic depression deepens. The WSJ writes Greece defaults and tries to move on. “Their problems are much greater than the solution that is in front of them,” says Pawan Malik of Navigant Capital in London. “Greece’s ability to come back to the market as a functioning and solvent sovereign is very doubtful.” This is especially the case as Tyler Durden writes in Zero Hedge, The Greek €107 Billion Contingent Liability Gorilla Exposed.

Base Metals, DBB, Timber, CUT, Agriculture Commodities, JJA, Precious Metals, JPP, Commodities, DBC, US Commodities, USCI, are trading lower from their recent highs, on lower World Major Currencies, DBV, and Emerging Market Currencies, CEW.  Currencies leading the way lower include the Brazilian Real, BZF, the British Pound, FXB, the Australian Dollar, FXA, The Euro, FXE, the Swiss Franc, FXF, the Indian Rupe, ICN, the Canadian Dollar, FXC, the Swedish Krona, FXS, and the Russian Ruble, FXRU. The Yen, FXY, plummeted lower again today; its chart suggests a bottom for now; this is confirmed in the chart of the 200% Short Yen, that is 200% inverse of the Yen, YCS.

The Yen, FXY, is the competitive currency devaluation loss leader. The Yen had to fall sharply, and plummet through the floor into the basement, so that its soon coming rise would strongly delever investors out carry trade loans, as currencies seen in this Finviz Screener trade lower on the exhaustion of the world central banks’ sovereign authority.       

The rise in the US Dollar, $USD, UUP, this month communicates that the Banker Regime of Neoliberalism, that came via Milton Friedman’s Free To Choose Script, which has underwritten capitalism, is dead. Confirmation of its death also comes from the USD/JPY rising from 76 to 81 and its  inverse ETF, JYN, plummeting

Conclusion: regional global governance is rising to replace capitalism; gold, oil and diktat will rise as the only forms of sovereign wealth.

Monetary policies of ZRIP, LTRO 1, and 2, QE 1, QE2, Dollar FX Liquidity Swaps, and carry trade investing have brought so much presure to bear on DGP, that the dissipative structures inherent in the financial markets are now totally compressed, and are set for a nuclear gib bang explosion; all that is needed is a spark of volatility, VIXY, TVIX, for Great Depression II, and the Great Deleveraging to commence. Take for example, International Paper, IP, which has been leveraged up over timber, CUT, prices; it, being debt laden will soon experience a fast fall lower.    

Floyd Norris in NYT article What’s Up New Orders In The US But Not In Most Of Europe provides charts of Monthly Survey Of New Orders for both manufacturing and services from the Institute for Supply Management and conducted by Markit, which shows an increase in growth in the US for the last six months, but a decrease in growth growth. “Within Europe, said Rob Dobson, a senior economist at Markit, “Germany and France were really holding up the euro zone averages” until recently. “They are now much weaker than they were one year ago.” Italy and Spain showed particular weakness in late 2011, with manufacturers suffering but service companies doing even worse. Ireland, on the other hand, has recovered enough so that new business orders, after falling in late 2011, are again growing at least a little. The worst performance, unsurprisingly, is in Greece, where Europe has decreed cuts in spending and income that have contributed to a continuing decline in the economy. Declines in new orders are more widespread among Greek manufacturers than they were during the financial crisis. The surveys measure other indications of business activity not shown in the charts, including whether production is rising or falling and whether jobs are being added or cut. Manufacturers in the United States are now also more likely than those in most countries to say they are increasing production and adding employees.”

Herman Daly writes in The Automatic Earth Uneconomic Growth: When Illth Trumps Wealth.  The matter-energy required to maintain and replace these stocks also comes from the ecosystem. The populations or stocks of all these things have in common that they are what physicists call “dissipative structures” — i.e., their natural tendency, thanks to the entropy law, is to fall apart, to die, to dissipate. The dissipated matter-energy returns to the ecosystem as waste, to be reabsorbed by natural cycles or accumulated as pollution. All these dissipative structures exist in the midst of an entropic throughput of matter-energy that both depletes and pollutes the finite ecosphere of which the economy is a wholly contained subsystem. When the subsystem outgrows the regenerative capacity of the parent system then further growth becomes biophysically impossible. But long before growth becomes impossible it becomes uneconomic — it begins to cost more than it is worth at the margin. We refer to growth in the economy as “economic growth,” — even after such growth has become uneconomic in the more basic sense of increasing illth faster than wealth. That is where we are now, but we are unable to recognize it.

Capitalism is failing, as the dynamos of growth and profit are winding down, on the exhaustion of the world central banks’ monetary policies, and the failure of fiat money.  The dynamos of security, stability, and sustainability, are powering up regional global governance, with the emergence of the ECB as the Euro region’s bank, the subordination of all Euro zone debt to the ECB, the mandate of technocratic government in Italy for structural reforms, and the emergence of the EU ECB Troika to underwrite the Second Greek Bailout. These developments are examples of diktat working in regionalization, to end the age of sovereign nation states.

Richard Barley of Dow Jones writes Central banking has become a global growth industry. But it is not just the size of balance sheets that’s changed: so too have their composition. With rates close to zero, the U.S., U.K., Japanese and European central banks have pumped cash into the financial system. But each has chosen a different method – and will face different challenges when they try to shrink again. The growth in balance sheets has been startling: the combined assets of the four central banks will top $9 trillion by the end of March compared to $3.5 trillion five years ago, Deutsche Bank says.

Doug Noland writes The history of inflationism is starkly clear: once inflationary dynamics attain a foothold, they secure powerful vested interests and become increasingly beyond control. Indeed, contemporary central banks are in the process of learning the same hard lessons learned by scores of governments and currency systems over generations: once the printing press gets cranked up, it becomes virtually impossible to turn down. Hope that monetary inflation will be contained (“just one final bout of stimulus”) leads invariably to increasing desperation and runaway inflation and debasement. And while traditional Credit inflation (currency printing) fueled distortions and rising prices foremost in the real economy, today’s brand of (electronic Credit and Central bank liquidity) inflationism has its greatest impact on interlinked electronic global financial markets. Whether they appreciate it or not, policymakers are today completely enveloped by a global whirlwind of speculative excess.  

The nature of inflationism: A slippery slope of intervention, obfuscation, rationalization and degradation. And, in the end, there will be no way out for policymakers. Yet, for now, the markets are more than content. From Hilsenrath’s article: “The Fed believes that reducing the amount of long-term bonds in the hands of investors drives down long-term interest rates, encourages more risk-taking, and thus spurs spending and investment by households and businesses.” The Bernanke Fed has convinced itself that it has fundamental responsibility to inflate bond, equities and risk asset prices. In Europe, the ECB has moved aggressively to inflate bond prices, especially those of Spain and Italy. All the while policymakers apparently fail to appreciate that unprecedented global central bank market interventions are leading to dangerous speculation throughout global markets – heightened market excesses that create susceptibility to waning confidence in the efficacy of liquidity backstops and aggressive policy interventions. Policy has for too long targeted the markets, and the marketplace has grown hopelessly dependent.

I comment that the Fed policy of reducing the amount of long term bonds in the hands of investors, has reached an end point as the 30 Year US Treasuries, EDV, have now lost 2.0% this month and 7.0% this year as is seen in this Google Finance Chart suggesting that inflationism has turned to destructionism.    

Dr. Worden writes European integration has involved a succession of shifts of governmental sovereignty both from county and state governments to the E.U. itself. Soon EU leaders will meet in more summits and announce regional framework agreements, whereby monetary cardinals will be appointed to work under the monetary pope Mario Draghi as stakeholders, to provide diktat as both money and credit, as well as provide public private partnerships for structural reforms and new regional economic structure. These eurocrats will compliment budget commissioners who will enforce austerity measures. Yes new sovereigns for the New Europe, and the new regime of regional global governance.

I can’t help but to believe that the backdrop is nurturing fragilities – global market risk to a dollar rally; risk to another bout of faltering euro confidence; market vulnerability to a surprising jump in bond yields; risk to surging oil and gas prices; fragilities associated with a highly speculative U.S. stock market. Truth be told, I guess I just don’t buy into the notion that unprecedented ongoing market intervention and egregious inflationism somehow avoid their comeuppance.

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” Do the Keynesians ever deeply, seriously contemplate perhaps Keynes’ greatest – and certainly most pertinent – monetary insight?

Not only is the death of capitalism a cause for the rise of the ten toed kingdom of regional global governance as foretold in bible prophecy of Daniel 2:31-33; but also Anglo American imperialism, with a war centered in Syria and Iran, the Ezekiel 38 War, will be a impetus for regionalization, as nations form confederations in response to global war. Bill Van Auken of WSWS writes Pentagon prepares war plans for Syria. In testimony before a Senate committee Wednesday, Pentagon chiefs confirmed that they are drawing up war plans against Syria at the Obama administration’s request.

The global fiat money experiment championed by Milton Friedman with his Free To Choose floating currency regime introduced by Richard Nixon in 1971 is going to end badly. In a world of insolvent and failed sovereigns, gold and oil will be the only money good. I encourage one to buy and take possession of gold bullion and store it safely, as well as to buy gold on Internet vaults. Tail risk of neo liberal finance is about to manifest. Tyler Durden writes China Posts Biggest Trade Deficit Since 1989 As Crude Imports Surge: Is China Recycling Export Dollars Solely Into Oil?  Chinese Lunar new year, which accidentally happens every year, is more than a little naive. Because as the charts below indicate, while exports did in fact tumble in a seasonal pattern as they do every February although more than expected, February imports of $146 billion not only did not drop, but posted a 19% increase compared to January, and soared 40% compared to a year prior. Why? Perhaps the second consecutive record high in monthly crude imports has something to do with it. Which in turn when considering the huge selloff of US Treasury paper by China in the last few months, indicates that the world’s fastest growing economy no longer has an interest in taking its export dollars and using them to fund purchases of US paper, but is in fact converting US fiat into real, hard goods. Such as crude (for all those curious where the marginal demand is coming from that is). And most likely gold. But we will only learn about the gold hoarding well after the fact, when China is prepared to see the price of the metal soar as it did in 2009.

And an inquiring mind asks will the interest rate derivatives position of the major US financial institutions, seen in this ongoing chart of BAC, MS, GS, C, JPM. These companies receive them free of charge as an incentive for being primary dealers for US Treasuries. Will formerly high beta BAC, be a fast faller or just a slow faller? Only time will tell.

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