A report on soon coming integration of banks and sovereigns in the developing New Europe.
Today, April 18, 2010, the European Financials, EUFN, led Spain, EWP, Italy, EWI, Greece, GREK, and Europe, VGK, lower, which induced Sweden, EWD, Poland, EPOL< and Austria, EWO, lower.
India, INDY, and Brazil, EWZ, led by Brazil Financials, BRAF, continued lower.
Small Cap Pure Value, RZV, was led lower by Small Cap Revenue Shares, RWJ. Other fallers of the day included Semiconductors, XSD, Biotechnology, XBI, Homebuilding, ITB, Smartfone, FONE, and Networking, IGN. Intel, INTC, fell 1.8% out of an ascending wedge pattern.
The chart of the Proshares 200% inverse emerging market ETF, EEV, shows it to be a steady gainer.
The Brazil Real, BZF, traded strongly lower today as Bloomberg reports.
Bloomberg reports Default Concern Mounts in Brazil as State Banks Cut Rates. President Dilma Rousseff is pushing state-run banks Banco do Brasil and Caixa Economica Federal to lower interest rates and boost lending to less-creditworthy borrowers, fueling concern that delinquencies will rise. The consumer default rate in Latin America’s biggest economy held at 7.6 percent in February, the highest since December 2009, the central bank said in a report last month. The overall default rate in Brazil was unchanged at 5.8 percent, compared with 2.47 percent in Mexico. (Hat Tip to Between The Hedges)
Agricultural Commodities, RJA, DBA, and Base Metal Commodities, DBB, led Commodities, DBC, sharply lower. Oil, USO, traded lower as Bespoke Investment Group reports Crude Oil Inventories Rise Again. Energy shares seen in this Finviz Screener, having hit strong support, traded basically unchanged.
Thus in addition to world stocks, VT, trading lower last week, that is the second week of April, we have additional evidence of the death of fiat money and credit today, April 18, 2010, with the fall lower in Commodities, DBC, on the exhaustion of the world central banks’ monetary policies to sustain growth, and failure of debt sovereignty of the peripheral European nations. Insolvent sovereigns and insolvent banks can’t support capitalism; capitalism is dying and regional global governance is rising in its place as foretold in bible prophecy of Daniel 2:31-33, and Revelation 13:1-4.
After the soon coming Sovereign Armageddon, that is a credit bust and financial system breakdown, caused by the collapse of sovereign debt, that is Treasury Debt, traded by the ETF BWX, and especially Treasury debt of the PIIGS, European banking and government will be integrated, and will be known as the Government Bank or Gov Bank for short.
Bloomberg reports Spanish Banks Gorging on Sovereign Bonds Shifts Risk to Taxpayer. Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors. Holdings of Spanish government debt by lenders based in the country jumped 26 percent in two months, to 220 billion euros ($289 billion) at the end of January, data from Spain’s treasury show. Italian banks increased ownership of their nation’s sovereign bonds by 31 percent to 267 billion euros in the three months ended in February, according to Bank of Italy data. German and French banks, meanwhile, have cut holdings of those countries’ bonds, as well as Irish and Greek debt, by as much as 50 percent since 2010 in some cases. That leaves domestic firms on the hook for a restructuring such as Greece’s last month and their main financier, the European Central Bank, facing losses. Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union. “The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.” (Hat Tip to Between The Hedges)
A comment in relation to the report that “Spanish, Italian and Portuguese banks are loading up on bonds issued by their own governments, a move that shifts more of the risk of sovereign default to European taxpayers from private creditors.” These banks realize that the end of Neoliberalism, that is Milton Friedman Free To Choose Era, is almost over, and are seeking to develop a new banking model, one not based upon investment capital, but rather a banking model based upon political capital. The bankers want to stay employed and they want power, the kind of power that comes from their firms being integrated with government.
And a comment in relation to the report that “Like Greece, governments would have to rescue their lenders with funds borrowed from the European Union. “The more banks stop cross-border lending, the more the ECB steps in to do the financing,” said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. “So the exposure of the core countries to the periphery is shifting from the private to the public sector.” The banks are not only integrating with their government, but they are integrated with the ECB, and have expanded moral risk, that is increased moral risk to all people living within the EU as a whole. This subordinates their banks and their governments to the ECB. This has broken down national sovereignty. Portugal, Italy, Greece, and Spain are no longer sovereign nation states. Rather the ECB is now the monetary authority for all of the Euro zone; the ECB is now the sovereign authority in Europe. There is no genuine independent European sovereign debt market place, rather there is a singular purchaser of Euro zone Treasury debt, that being the ECB. The ECB is not only the sovereign in Europe, it is also the seignior, that is the top dog banker who takes a cut. The ECB, not an independent Treasury debt market place, is the sole funder of fiscal spending in the periphery nations. The resource for fiscal spending of the PIGS is not from traditional Neoliberal sources, but rather from new Neoauthoritarian sources. Investment capital is waning and political capital is rising to grease Europe’s economic wheels.
Money and credit as they have traditionally been known, is history; capitalism is no longer providing money and credit in the Euro zone; neo liberal credit has been extinguished.
Neoauthoritarian credit is flowing as economic resource. Neoauthoritarian money and credit is rising to power Europe’s economy.
The seigniorage, that is the moneyness, of capitalism is history. The seigniorage, that is the moneyness of integrated banking and government is rising.
And Bloomberg reports Bank Credit Worst to Companies Since Crisis Peak. The debt of banks is trading at the biggest discount to the broader corporate bond market since the peak of the funding crisis in November as Europe’s sovereign crisis again threatens to rattle global financial markets. From Spain’s Banco Santander SA to Morgan Stanley(MS) in New York, the cost of credit-default swaps on a basket of the largest banks in Europe and the U.S. is 266 basis points, above the 137 for the Markit Europe Index of 125 companies with investment-grade ratings. The 129 basis-point spread is the most since it was 133 on Nov. 30. (Hat Tip to Between The Hedges)
The Financial Times reports IMF sees banks deleveraging by $2.6tn. A drastic contraction of European bank balance sheets during the next 18 months could jeopardise financial stability and economic growth in Europe and beyond, according to forecasts from the International Monetary Fund.
In its Global Financial Stability Report, published on Wednesday, the fund warned that European banks looked set to shrink their balance sheets by $2.6tn (€2tn) over that period. Unless officials improved their policy response, the IMF said, European banks would dump almost 7 per cent of their assets by the end of next year.
José Viñals, director of the monetary and capital markets department at the fund, said: “The key is to recapitalise, restructure and resolve.”
The warning comes a day after Olivier Blanchard, the fund’s chief economist called for taxpayer-funded bank recapitalisations to be put back on the policy agenda to counter the risk of a painful deleveraging.
An inuring mind asks is not banking in Europe for all practical purposes finished?
And Bloomberg reports Spain’s Surging Bad Loans Cast New Doubts on Bank Cleanup Plan. Spain’s surging bad loans are spurring doubt on whether the government can persuade investors that it can clean up the country’s banks without further damaging public finances. Non-performing loans as a proportion of total lending jumped to 7.91 percent in January, the highest level since 1994, from less than 1 percent in 2007, according to Bank of Spain data. The regulator is set to publish data for February today. Defaults are rising and credit is shrinking at a record pace as 24 percent unemployment corrodes the quality of loans built up in the country’s credit boom and saps the appetite of banks to make new ones. Doubts about the extent of Spain’s non performing loans problem is hurting bank stocks and driving up the government’s borrowing costs on investor concern that the expense of propping up ailing lenders may add to the debt burden. “One of our concerns in Spain is to what extent contingent liabilities could pass to the central government,” said Andrew Bosomworth, Pacific Investment Management Co.’s Munich-based head of portfolio management. Non-performing loans “will have to rise when you take into account the unemployment rate and what’s happening with the economy,” he said. (Hat Tip to Between The Hedges)
An inquiring mind asks, is not credit collapsing in Spain?
And Bloomberg reports Spain’s Wiling Economy Still Held in Franco’s Grip. Spain’s economic woes are triggering renewed fears over a potential default in the euro area, and much of the blame belongs to labor laws that date back to the dictatorship of General Francisco Franco. Unless the government succeeds in changing them, it’s hard to see the country returning to healthy growth even if it manages to stay solvent. (Hat Tip to Between The Hedges)
Bloomberg reports Italian Bonds Slide on Monti Deficit as Bunds Outperform. German bunds outperformed most of their euro-region peers as fresh concern about Europe’s debt crisis boosted demand for the safest assets while the nation’s borrowing costs dropped to a record at a sale of two-year notes. Italian bonds reversed gains after Prime Minister Mario Monti pushed back his balanced-budget goal and predicted a deeper contraction of the economy. Spanish government bonds pared an advance after the Bank of Spain said the country’s bad loans ratio climbed. The nation will auction two- and 10-year securities tomorrow. (Hat Tip to Between The Hedges).
European Socialism, and its high standard of living, was funded by the sovereign debt trade, which was part of the larger global government finance trade, whereby sovereign monetary authority and sovereign government authority, underwrote economic expansion, trade, employment, growth and profit.
European Socialism provided a high standard of living via national wage laws; there were no, and today there are no, structural reforms in place for economic flexibility or for labor reform. Spain benefited also from a tremendous amount of debt coming from the cajas, that is the regional Catholic Church banks to fund housing construction on a spectacular scale. People came from all over Europe to work in construction, and now unemployment is running high and ghost properties, that is abandoned properties, are on the rise. Those who bought real estate are indebted under recourse loans, unlike in America, where many have non recourse loans.
The trust which has underwritten European sovereign debt and European Socialism is now absent. Insolvent sovereigns, insolvent banks, and an inflexible economic structural framework can no long support Eurozone money, credit, governance, and its affluent lifestyle and economy. European socialism died in the second week of April 2012 as credit default swaps rose destroying Euro zone fiscal funding capability. Current fiscal spending in the Euro zone periphery is no longer sustainable.
Loans that cannot be paid, will be applied by the soon to materialize EU Gov Bank, to all those living in the Eurozone. Every man, woman and child will be a debt serf living in a region of global governance.
Euro Intelligence provides the best of reporting. I encourage one to purchase its for fee news service which relates that inn an interview with Handelsblatt, Francois Hollande positions himself as the anti-Merkel; says he will not sign fiscal pact, unless it is complemented by a growth initiative; says there will be no constitutional debt brake in France;the latest Ifop poll shows him beating Sarkozy 56% to 44% in second round; the IMF’s Fiscal Monitor shows the French deficit at 3.9% in 2013, thus overshooting the target.
I affirm that Francois Hollande is a dignified individual, and in that framework, an inquiring mind asks might it be Mr. Hollande is disconnected from awareness that the world central banks’ monetary policies no longer support growth and that there is sovereign debt crisis that presents systemic risk.
Antoine Lerougetel and Johannes Stern write in WSWS dueling open-air rallies in Paris on Sunday, incumbent President Nicolas Sarkozy and Socialist Party (PS) candidate François Hollande tried to boost their campaigns in the run-up to the first round of the presidential elections on April 22. Sarkozy spoke in the Place de la Concorde, while Hollande’s rally was at the Château de Vincennes.
In his speech on Saturday, Hollande tried to hide his pro-austerity agenda behind some populist phrases. “I hear anger against growing injustice, the disorders of the world, the pillage of our planet and the cynicism of the market” he said. He also claimed that he would be “the president of the end of privileges.”
With less than a week to go before the first round, Hollande is adapting to the rhetoric of Jean-Luc Mélenchon, the candidate of the Left Front, an alliance of the Left Party and the Stalinist Communist Party. Mélenchon is receiving increasing support for his proposals, such as a higher minimum wage and a tax on wealth, and currently polling at around 15 percent of the vote.
Hollande’s aim is to win over voters of the Left Front, presenting himself as the only realistic “left” alternative to Sarkozy. He called on voters who are considering Mélenchon in the first round, “not to take refuge in votes which have no future.” He argued: “I am the only candidate of the left who can lead France and translate popular anger into acts of the government.”
We are witnessing bible prophecy from the writings of John the Revelator, who was given a dream by angels of end time events, being fulfilled; not only that, but we see a greater picture of the True Sovereign Jesus Christ coming to light in today’s news events.
The True Sovereign, the Lord Jesus Christ, is seen in Revelation 2:26-27, as one who is wrapping up mankind’s experiences, so as to commence His Kingdom rule on planet earth.
Reuters reports EU Report to Show Rocky Road Ahead for Greek Recovery. Greece must liberalise its labour market and business environment and focus on its public finances and credit flow to companies if it wants to make a positive impact on its economy this year, a draft European Commission document showed. The European Union’s executive arm will publish on Wednesday a series of ideas on how the contracting Greek economy can return to growth, which the country badly needs to be able to service its huge debts. In the report that runs to more than 40 pages, however, officials list a litany of problems facing the Greek economy, whose recovery is key for the future of the euro currency. “Greece suffers from a lack of capacity to implement policy, manage public finances, collect taxes, open markets to competition, make public procurement work efficiently and innovatively, pay suppliers, or offer timely judicial review to its citizens,” they write in the document seen by Reuters
The banker regime of Neoliberalism is part of a bygone era of ponzi credit and speculative investing based upon floating currencies. The beast regime of Revelation 13:1-4, with its ten horns, symbolic of ten regions of global governance, and seven heads, symbolic of symbolic of mankind’s seven institutions, is rising up out of the profligate, non competitive, ultra socialist, Mediterranean Sea nation state of Greece.
This monster of statism and totalitarian collectivism, is the same one as foretold in Daniel 2:31-33, where a ten toed kingdom of regional global governance, with toes of iron diktat, and clay democracy, is rising out of the ashes of a soon to come failed UK and US global hegemony.
The True Sovereign has unleashed the first horseman of the Apocalypse. Look and see! Revelation 6:1-2, shows that Christ is now opening the first seal of his book of judgement, and has given the rider on the white horse, the one with a bow, but without any arrows, to effect bloodless economic, investment and political coup throughout the entire world. He is passing the baton of sovereignty from traditional sovereign nation states to regional authorities such as the ECB, as well as to the EU ECB IMF Troika. Fate is working through creative destruction and regionalization to bring forth regional blocs, that is regional global governance to replace democracy and capitalism.
In Europe, banking and government will be tightly integrated and manifest as one entity. In the EU, regional monetary authority will provide diktat as credit. Monetary cardinals will work under a monetary pope to oversee public private partnerships, as well as structural reforms, for regional economic security, stability, and sustainability. And a budget commissioner will provide the diktat of austerity for money.
Once a child, I now think as an adult, putting childish ways aside, and reflect on the resource of scripture, particularly the writings of the Apostle Peter in 2 Peter 1:1-10, where as the elect of God, I have experience in the like precious faith of Jesus Christ to know virtues, that is a set of moral excellencies, as the resource and experience for life.
I pray for a good conscience, that is an objective searchlight to reveal right from wrong, as well as to provide morally beneficial attitudes. Virtues, that is God’s Attributes, as well as a good conscience, are what deliver me out of my strong carnal nature; and they, with a God-given purity, that is a chaste way, as well as God-given holiness, that is a dedication to be used of God, is what I purpose for, every day.
Barbara Undell wrote the book 20 Teachable Virtues, these fall into four categories of inner strength, caring action, right way and good speech. She lists Resourcefulness and Self Reliance as two Virtues. These to me mean Capability, and Reliance On God. I seek the Capabilities which God gives, and I rely on the Reliable One, that is Jesus; I no longer live, but Christ lives in me; and the life I now live, I live by the faith of Jesus Christ. With ever-increasing experience, I seek life in the Divine realm, and not in the fiat realm. I purpose ever greater frequency to live in faith and out of Virtues in Divine Moments. The reward is the exceedingly great promises of God, as well as a mature spiritual life.
Thank God, I live as a single person; I have no responsibilities to a mate; and I am not burdened with the moral weaknesses of another; I have my own to deal with. As I look at the Christian couples who I meet; I see many who understand virtues and who have dealt with their sin nature, that is their carnal nature, so as to be a resource to their partner. I am not as some, a busy body in another’s affairs; I have my own affairs and I tend to them.
For example, I use the free one hour Public Library Internet service in addition to the Internet at home. And while there a young single mother and her young son came to sit next to me. I squeezed as far over as I could so that the two of them could sit in the space for one person. And he proceeded to bang on the keyboard. Then she took it away from him, and he slipped away and told his mother he was going off; he then returned and went under the desk to brush up against me and to stare up at me. I simply kept on writing; their rude activity was none of my concern; it’s a public space; just like public school, where rules are pretty relaxed. In other words, it constitutes a morally corrupting place, much like a tavern, that one enters and experiences at his own risk. Finally she said, “well you are brushing up against that man so that means we must go”; they got up and left. Many young women in their early twenties decide to have out-of-wedlock children. Personally I never fathered any children; and the only women I have spent any serious time with have been childfree, that is free from the responsibilities of child rearing. I believe that it takes two to effectively parent; and I believe that it takes a father to teach a number of virtues as well as boundaries. No father, then the risk of lack of virtues increase; as does the risk of no valid, that is objective, conscience increase; as does the risk of few boundaries increase.
This age is just about up. And Greece is leading the way down. God said in Revelation 13:1-4, that he would bring forth an end time beast system from the Mediterranean Sea nations of Greece and Italy; he has been executing his plan since the First Greek Bailout in May of 2010. Many, not those in state employment, in Greece are now starting to experience malnourishment . Whatever the experience of Greece is, will be the experience of all nations eventually.
Regional global governance will not be for the EU alone; in as much as money and credit died when stocks, VT, fell lower the second week of April 2010, and today Commodities, DBC, have fallen lower, capitalism, is history.
Capitalism has been crony capitalism. as Charles Hughes Smith writes in Zero hedge article, Crony Capitalism And The Experience Of The Central State. Nevertheless, the North American Continent will become a region of global governance, one of the ten called for by the Club of Rome in 1972 to 1976. A North American Union, that is an integrated fascist state characterized by crony capitalism will come when the global trade economy collapses in Sovereign Armageddon. This NAU will be what I call CanMexAmerica.
Mr Charles Hughes Smith writes Crony capitalism arises when an expansive Central State dominates the economy. The Central State can then protect crony-capitalist perquisites, cartels, quasi-monopolies and financialization skimming operations of the sort which now dominate the U.S. economy’s primary profit centers.
If we step back, the larger context is the purpose and role of establishing a State to protect its citizens from foreign and domestic predation and exploitation.
The Central State is granted the sole power of coercion by its membership (citizenry) to protect the membership from the predation of individuals, concentrations of wealth and other subgroups seeking monopoly. They grant the State this extraordinary power to insure that no subgroup or individual can gain enough power to dominate the entire membership for their private gain and to protect freedom of faith, movement, expression, enterprise and association.
Granting this power to the State creates a risk that the State itself may become predatory, supplanting the parasitic elements it was designed to limit.
The self-regulation mechanisms are supposed to act as a hedge against a runaway parasitic State.
We can properly understand the State as a concentration of risk and gain: its extraordinary powers of coercion render it a great risk to the membership, even as its protective shield of liberty offers the freedom to pursue individual happiness and self-fulfillment.
Since the State is a concentrator of both wealth and power, it also concentrates the risk that ontologically accompanies concentrated power and wealth: with such great power, the abuse, repression, exploitation and predation which the State could unleash on its citizenry are fearsome.
This concentration of wealth and power makes the State the primary attractor in the economy for those seeking to increase their private gain. What better way to enforce a monopoly than to persuade the State to limit your competition? What better way to lower the risk of enterprise than to persuade the State to grant its own contracts to your company? What better way to amass a fortune than to harness the coercive powers of the State to your own self-interest?
The State is thus the ultimate lever within the ecosystem. While $1 million buys little influence within the market, if spent to influence State policy then it will buy more power than $10 million spent in the marketplace.
There is a great irony in this concentration of power in the State: the power is concentrated to protect the citizenry from predation and exploitation, but that concentration becomes an irresistible attractor for all those seeking to increase their private gain via monopoly, cartels, collusion, fraud and other forms of predation.
The wealth that can be concentrated in private hands is not limited or self-regulated, and so private concentrations of wealth inevitably exceed the threat-gain threshold of individuals within the State. This structural imbalance leaves the State ontologically vulnerable to the influence of private wealth. Once this wealth has a foothold of influence within the State, it can then bypass the State’s internal immune system and become the financial equivalent of cancer: a blindly self-interested organism bent solely on growth at the expense of the ecosystem as a whole.
This financial/political cancer of single-minded self-interest creates a self-reinforcing feedback loop within the State: the more power and influence it gathers, the more it can weaken the State’s own immune response to its rising dominance. This erosion of restraint further frees it to increase its influence, which then gives it more power to weaken the State’s immune system, and so on, until private concentrations of wealth, in partnership with self-serving State Elites, bypass the State’s immune response.
At that point, the collusion of private wealth and State Elites comes to dominate the entire ecosystem. The State’s function as the system’s immune system has been subverted by private wealth and the State’s own extraordinary powers have been directed to serve the self-interests of private Elites and their cronies within the State.
Another name for the collusion of private wealth and State Elites is crony capitalism, which has reached its apex in an economy dominated by an expansive Central State (i.e. the Federal government).
I conclude with the thought that God has designed the Beast Regime of Neoauthoritarianism to be the ultimate human predator. Revelation 13:1-4, relates that it has the feet of a bear, these have paws which enable it to run swiftly to pursue its prey as well as to stand its ground in confrontation; the coat of a leopard for stealth to hide in shadows and to blend in with the ecosystem so as to capture its prey; and the mouth of a lion for crushing, ripping and consuming its prey. God has every intention of destroying all economic and political activity so that one might come to trust in His Son Jesus, Revelation 2:26-27, as sovereign.