World Small Cap Shares And Asia Banks Fall Lower On The Failure Of China Growth

Financial market report for May 16, 2012

A brief bit of monetary history: Monetization of debt, particularly the world government bonds, BWX, and US Treasuries, ZROZ, EDV, TLT, and IEF, finally started to have an impact in April 2011, as investors rightly became alarmed that debt union had formed in the EU presenting a challenge to global growth and global trade

An inquiring mind asks, what is money? Money is the value of exchange, that is coinage given by governance, to fiat investments such as stocks and bonds, money market accounts, checking accounts, savings accounts, farmland, intellectual property, artwork, antiques, equipment, textiles, vehicles, personal services, real estate, commodities such as corn,  base metals, like lead, and precious metals, like gold and silver, and currencies. After the soon coming Financial Armageddon, that is credit collapse and global financial breakdown, diktat will be considered to be money.    

Some people have money and some do not. I do not have any money, neither do the Argentines, the Greeks, the Cubans, or the Egyptians.  My blog does not feature pictures, as I don’t have money to buy the right to show intellectual property.

Money died with the rise of the US dollar in April 2011, as seen in the ETF, UUP, trading higher, on awareness of sovereign insolvency and banking insolvency in Greece, when investors sold out of the South African Rand, SZR, the Indian Rupe, ICN, the Brazilian Real, BZF, and the Euro, FXE; this stimulated disinvestment out of the BRICS, EEB.

Neoliberalism, that is the Milton Friedman, Free To Choose,  floating currency regime, which commenced in 1971, died in June of 2011, as Angela Merkel and Nicolas Sarkozy, called in joint communique, for “true European economic government”.

Neoauthoritarianism, the Beast regime seen in bible prophecy of Revelation 13:1-4, is rising from the profligate Mediterranean country of Greece, GREK, to rule the world, as the Sovereign Lord God, Ephesians 1:1-21, and 2 Corinthians 5:17-18, has appointed his Heir, Jesus The Christ, to open the seven seals. Look and see in Revelation 6 as a rider on a white horse has been sent to pass the baton of sovereignty from sovereign nation states to regional authorities and bodies, and the rider on the black horse has been sent to bring death, to all existing forms of political and economic life; this so as to reveal the Son’s Kingdom, Revelation 2:26-27.

The Beast regime has seven heads, symbolic of its occupation in all of mankind’s institutions, and ten horns, symbolic of its rule in the world’s ten regions. This is the same monster as the Ten Toed Kingdom of Daniel 2:30-32, where regional global governance comes to replace the global hegemony of the UK and the US, as ten toes of iron diktat and clay democracy, replace crony capitalism and European socialism.

Competitive currency deflation since April 2011, has caused strong deleveraging out of commodities, DBC, such as natural gas, UNG, base metals, DBB, silver, SLV, and gold, GLD.

Credit died in March 2012, when debt deflation, that is competitive currency deflation, caused the US Dollar, $USD, UUP, to rise once again, and falling Major World Currencies, DBV, and Emerging Market Currencies, CEW, caused derisking out of risk assets such as ONN, AMJ, IEZ, URA, ALUM, KOL, COPX, REMX, CHIM, PXR, SLV, GDX, GLDX, SSRI, EUFN, BRAF, EPI, MXI, seen in this Finviz Screener; but came most intensely to China Minerals, CHIM, such as Aluminum Corporation of China, ACH, which has fallen 52% over the last year, as the US Dollar, $USD, UUP, started to rise.

The Apple ecosystem has also died, as witnessed by the sell off of IGN, SKYY, and FONE.

The fiat money system is history, as the seigniorage, that is the moneyness, of the world central banks and sovereign, of nation states and their banks have failed. The global government debt trade, that has given coinage to global growth and global trade, and that has underwritten Neoliberalism, has turned toxic, giving rise to Neoauthoritarianism.

Pleased do not be fooled into thinking by anyone that Greece is going to get kicked out of the EU or leave of its own accord, and return to the Drachma, this is simply dreaming on the part of Austrian economic philosophers who long for the day of a free market money system built on something of sound value such as gold. Angela Merkel is God’s appointed person of the hour and in CNBC interview she told interviewer, Silvia Wadhwa, “I want Greece to stay in the euro. I think that would be good for Greece and for all of us.” God is bringing the current chapter of mankind’s history to a close, and between the Beast regime, and the Four Horsemen of The Apocalypse, he is going to accomplish his ends, one of which is regional global governance.

Credit, that is Total Bonds, BND, cannot be rapid and turned lower today, as Junk Bond, JNK, World Government Bonds, BWX, and Emerging Market Bonds, EMB, turned lower once again.

The diktat money system will be rising, with regional sovereign leaders and bodies abolishing national wage laws, establishing structural reforms, implementing capital controls, providing public private partnerships for overseeing credit, production and human and natural resources, as well as imposing fiscal austerity.

Soon the only money good will be gold bullion as a storehouse of investment value and silver used for bartering. I recommend that cease from all investment trading, and that one live in Panama, Singapore and Blaine Washington, which has excellent airport via Allegiant and Bellingham Airport, and bank with Gold Is Money, and Bullion Vault, and buy and sell gold and silver bullion with a local jeweler.

More fuel was added to the bonfire of world banks, IXG, as the National Bank of Greece, NBG, plummeted, after appears what to have been a run on the bank and as Asian Banks in China, South Korea and Japan fell lower on the failure of China growth. The failure of national sovereignty in Europe, and the failure of the world central bank’s monetary authority has started a global stock, VT, VSS, sell off, with the European Financials, EUFN, India Banks, EPI, Brazil Banks, BRAF, and Argentina Banks, ARGT, leading the global banks, IXG, lower. The world small cap stocks, VSS, are leading world stocks, VT, lower, as they are more credit sensitive than their larger peers.

Today, China Banks, CHIX, South Korea Banks, WF, KB, SHG, Japanese Banks, MTU, NMR, SHG, Argentina Banks, GGAL, BMA, BFR, and the Too Big To Fail Banks, RWW, traded lower, turning world financial institutions, IXG, lower. The bonfire of the world’s banks grew stronger today on reports of the failure of growth in China. The NYT Blog For Europe’s Banks, Pinch of Debt Crisis Intensifies

Tyler Durden writes in Zero Hedge, Global Systemic Risk Soars To 5 Month Highs.  Only two weeks ago, we noted that the 30 most systemically important financial institutions in the world were seeing risk surging to 3-month highs. Today has seen that eclipsed dramatically as the credit risk of these entities soars to the year’s worst levels jumping 22% in the last two weeks alone. At 264bps, we are now close to the 3/9/09 peak crisis levels (of 274bps) and pushing up to the Q4 2011 peaks over 300bps as every region is deteriorating systemically – with the US and Europe worst (US below previous peak levels but Europe at record wides), Asia accelerating wider, and even the Aussie banks now losing it. While markets are staging a mini-recovery this morning, financials are not really participating as this index of global systemic risk has now retraced all of the LTRO benefits

We are witnessing the failure of neo liberal finance, carry trade investing, and POMO stimulus. Such things were part of the Age of Leverage. We have entered into the Age of Deleveraging which will be introducing debt servitude via regionalization, where leaders meet in summits, to renounce national sovereignty and announce regional framework agreements for the region’s security, stability and sustainability.

South Korea, EWY, fell 4%, and South Korea Small Caps, SKOR, fell 3%, China Small Caps, HAO, 2%, Australia Small Caps, KROO.  Asia Shares, EPP, fell 2%, and China Minerals, CHIM, traded lower, becoming the cumulative loss leader among China Stocks, CHXX, CHII, HAO, and CHIX. I expect that it will now be the Small Cap Chinese Stocks, HAO, to be the fastest falling of the China stocks as these are the most leveraged with shadow lending, which is collarteralized with stock piles of copper.

Gold miners, GDX, ralled today, being led higher by AUY, suggesting that the downturn in both gold and gold mining stocks is over. I expect the price of gold, GLD, and silver, SLV, to rise with ongoing falling stock, VT, and bond, BND, prices.  An investment demand for gold will come from the failure of both money and credit.

An inquiring mind asks what is credit? Credit is faith in the debtor’s ability to repay; loans are issued based upon the likelihood of successful return on capital invested. Investors take out loans because they trust they can repay both principal and interest. Under ZIRP, and with investment from Asia, credit has been steadily rising in China, stimulating the economy despite a trade lower in Candian Energy Income, ENY, and Canadian Small Caps, CNDA.

I have no credit, neither do Argentines, Greeks, Egyptians, or Cubans, as we have no ability to repay any debt.

The rise in credit default swaps, CDS, as well as a flight to perceived safety in US Government Treasuries, ZROZ, EDV, TLT, IEF, and US Corporate Debt, BLV, and TIPS, LTPZ, TIP,  reflects an increasing concern about the sustainability of global growth and global trade, as well as concern about sovereign debt in the Euro zone, and also reflects the death of credit.

The WSJ reports Wall Street Journal High-Yield Market Feeling Euro Fears, CDS Spreads Widen. Investors in the European high-yield bond market vented their euro-zone crisis fears Wednesday by buying protection against a default of their companies, but avoided selling their cash bond holdings so far, traders said. (Hat Tip to Between The Hedges)

Both new money and new credit is coming. After the soon coming Financial Armageddon, that is the credit bust and global financial collapse, held forth in Bible prophecy of Revelation 13:3-4, people will place credit in the Beast system of regional global government, and its leader the Sovereign, Revelation 13:5-10, and Revelation 13:12.  John the Revelator relates that people will place such trust in the Beast, that their level of faith can be called worship. Many people will be debt serfs living in regions of global governance such as Euroland, the North American Union, NAU, which I call CanMexAmerica, and eight other regions of global governance as called for by the 300 elite of the Club of Rome in 1972 to 1976 in such publications as Mankind At The Turning Point.

In today’s news 

AFP reports Facebook is as pleasurable as food or sex, Harvard study reveals. I know an addicted Facebook user. One divorced and retired grandmother spends all day on her wall interacting with all of her “friends”. I think she has obsessive compulsive disorder, and should be on a Big Parma drug, like Zoloft, and be in counseling.

EconomicReview Journal reports Non-gay marriage in the US is dying rapidly. The reason is largely a lack of jobs. America use to be a construction and manufacturing nation with all kinds of small manufacturing everywhere and the financial industry with low-interest rates supported home building. But now, those jobs are gone. Young men like to have the sex with young women, who want to have children. But the relationship ends with diapering and the jobless man goes out the door to live with buddies or in the car. I have to ask, why didn’t they guys get a vasectomy? Or it ends when, having no job he turns psychopathic, Yes, lack of employment is a leading cause of turning a person into a psychopath. Needless to say, he gets forced out of the home or leaves because he knows the home is too dangerous a hood for him.  I live in the inner city and I know many, yes many young women who have given up their children for adoption and now live on disability; they qualify because they have “mental issues”. I see them occasionally with their children as they get them on visits.  The marriages that are working, are the ones where both have college or university degrees, and at least one has a job sufficient to pay the bills and put food on the table. It’s most interesting, as there are different parts of town:  the young mommy and daddy hood is where the stroller set lives, the young professional hood is where the whole foods market is located, the upper crust hood is near the financial and boutique district, the single mommy townhouse hood is where the gangs hang out, the blue-collar apartment hood is where rentals abound, the retired living centers vary from nursing homes to upscale communities, the county hood where the business owners live, and yours truly lives in the inner city next to the dog day center and the tobacco store.  I’m convinced that for a family to succeed, there needs to be a father, who teaches boundaries, and who takes the lead in using teachable moments to communicate virtues. Not once did my parents talk to me about virtues or philosophy or religion. And that is why I’ve suffered all of my life with having behavior and health issues galore. It has only been through having many kinds of trouble and the grace and truth of God, plus some kindness by a couple, that I am alive and out of jail.  I pray daily that God will give me a good conscience, protect me from the poneros, and help me put to death my carnal nature inherited from my parents.

Rafael Azul of WSWS reports California governor demands massive new cuts in response to budge revision. On Monday, California’s Democratic Party Mayor Jerry Brown called for drastic cuts in health care and government worker pay, two days after the state announced a projected deficit increase of nearly $7 billion for next year. I comment that Jerry Brown is going to cut health care and education in California, but still it will not be enough as the budget gap is too large. California, and Illinois are our Greece. To many immigrants, yes a flood of immigrants have overwhelmed the state. California should be renamed Azteca and be established as a separate nation, with a separate currency and a separate sovereign debt. Their only salvation is to issue electronic gold coinage where all commerce is based on the gold in one’s electronic  account.

Bloomberg reports China Power Output Shows Deeper Economic Slump. China’s economic slowdown may be worse than forecast as growth in electricity generation, a leading indicator of gdp, was almost non-existent last month. Power generation rose .7% in April from a year earlier, down from 7.2% in March, the National Bureau of Statistics said on its website. Industrial production in the world’s second-largest economy, which accounts for more than 70% of electricity use, rose at the slowest pace in about three years last month. “Power production is one of the coincident indicators of the economy,” said Michael Parker, an analyst in Hong Kong at Sanford C. Bernstein & Co. “To see the number so sharply down, I think the problem of macro issues comes into question.”  I comment that the fall in electricity use establishes a recession.

Wall Street Journal reports China Big Four Banks barely issue new yuan loans.  China’s biggest four banks barely issued any new yuan loans in the first two weeks of May, extending the country’s weak credit growth last month, the state-run Shanghai Securities News reported Wednesday, citing an unnamed source. The four banks–Industrial & Commercial Bank of China Ltd. 1398.HK -2.08% (601398.SH), China Construction Bank Corp. 0939.HK -2.20% (601939.SH), Bank of China Ltd. 3988.HK -2.35% (601988.SH) and Agricultural Bank of China Ltd. 1288.HK -0.60% (601288.SH)–usually account for 30% of new yuan loans issued by China’s whole banking system. The rare and unusually dismal performance by the banks is expected to fuel concerns that despite Beijing’s efforts to step up credit easing, corporate demand for loans remains too weak to reverse the trend. I comment that the fall in demand for loans evidences a recession.

The spiritual thought of the day

Dvinelife writes God’s Sovereignty in Salvation from  You see, dear friend, the salvation of sinners dates back to the cycles of eternity, for we are told in Revelation 13:8 and in 1 Peter 1:18-20 that Christ was slain for them before the foundation of the world. Under this blessed subject comes repentance and faith, and the setting free of the condemned sinner by the grace of God through the righteousness of Christ and His substitutionary death upon the cross To whom do you give credit for your salvation? yourself or God?

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