US Treasury Bonds Blast Higher As World Banks Suffer Sharp Drop Which Turns World Stocks, Commodities, and Currencies Lower

Today, May 30, 2012, Reuters reports Wall Street falls amid Eurozone debt fears. Stocks dropped on Wednesday, as rising bond yields for Italy and Spain and the latest poll results in Greece worsened fears about a spiraling of the euro zone’s debt crisis.

Gary Langer of ABC News reports Romney rebounds among women, while Obama’s favorability slips.

Andre Damon of WSWS reports Mounting signs of deepening global slump. New economic figures point to a renewed downturn of the world economy amid a growing debt crisis in Europe and the threatened breakup of the euro zone

Open Europe reports The EU Commission will on June 6 propose new rules for dealing with failing banks. This marks a move towards greater integration of member states’ banking systems, and could also see all countries contributing to future bail-outs. The new rules will also give regulators “aggressive intervention powers”, enabling them to take control of stricken banks, break them up and impose losses on their bondholders. Reuters Commission Proposals Eleconomista.

Bloomberg reports  Spain credit default swaps surge to record

CNBC reports Big shift in ECB balance sheet a sign of banking stress?

OC Register reports Demand for O.C. homes seen at 7-year high

Zero Hedge relates Germany Has A Generous Proposal To The Broke PIIGS: Cash For Gold as The Telegraph reports Europe’s debtors must pawn their gold for Eurobond Redemption: Southern Europe’s debtor states must pledge their gold reserves and national treasure as collateral under a €2.3 trillion stabilisation plan gaining momentum in Germany.

EuroIntelligence provides the best of news reporting and analysis; I recommend that one purchase its daily email service which relates Martin Wolf argues that the key to the eurozone’s survival lies in Berlin. “This is how I understand the views of the German government and monetary authorities: no eurozone bonds; no increase in funds available to the European Stability Mechanism (currently €500bn); no common backing for the banking system; no deviation from fiscal austerity, including in Germany itself; no monetary financing of governments; no relaxation of eurozone monetary policy;and no powerful credit boom in Germany. The creditor country, in whose hands power in a crisis lies, is saying “nein” at least seven times.” 

I comment that bible prophecy reveals that out of a global monetary and financial collapse, Revelation 13:3, Germany will rise as a type of revived Roman empire, to be preeminent over the EU, Revelation 13:1-4, and Daniel 2:30-33. The New Europe will be formed as leaders meet in summits, and renounce national sovereignty and pool sovereignty. Banks, such as Banco Santander, STD, will be integrated with their country of origing, ie with Spain, EWP, and all banking will be eurozone banking unified and regionalized in a federal EU bank, such as the ECB or the Bundesbank.

On Monday of this week, Mike Mish Shedlock wrote, Ponzi Financing in Greece Continues; Greek Banks Receive €18bn Transfer. Greek banks have been shut off from regular ECB liquidity operations due to lack of sufficient collateral. Today the Banks have that collateral thanks to a disbursement of funds from the EFSF which in turn will be used as collateral for more loans from the ECB. If this makes little sense to you it is because it should not make any sense to anyone. It is another act of desperation in a long line of desperate acts. Please consider the FT article Greek banks receive €18bn transfer.

In response to the NYT article New York Times reports Athens no longer sees most of its bailout aid, Mike Mish Shedlock writes If the money never goes to the borrower, then it is not a loan.  Of the €141.7 billion bailout, only €47.2 can be construed as a loan all of which nearly all went to government operations, none to the average Greek citizen …  Nearly three-quarters of Greece’s debt, or €182 billion, is now effectively owned by the EU the ECB or the IMF, according to estimates by the investment bank UBS … The ECB’s share is estimated to be between €35 billion to €55 billion.

I comment that of course it is not a loan, the Second Greek Bailout is seigniorage aid, that is moneyness granted by the EU Seignior and EU Sovereign, that is the Troika, to provide for the fiscal needs of Greece and to sustain banks and bondholders. 

Everyone is waiting for another massive wave of liquidity from the ECB. Bloomberg reports EU weighs direct aid to banks as antidote to crisis. The European Commission challenged Germany’s remedies for the financial crisis, calling for direct euro-area aid for troubled banks and insisting on a “roadmap” for common bond issuance. The commission, the European Union’s central regulator, sided with Spain in proposing that the planned permanent rescue fund, the European Stability Mechanism, inject cash to banks instead of channeling the money via national governments.

We are witnessing the birth pains of a One Euro Government, where political authority, banking authority, monetary authority, economic authority and fiscal authority, are all unified in a Federal Eurozone region of governance.  This is exactly what is foretold in bible prophecy by John the Revelator, as he wrote in Revelation 1:1, of those things which shortly come to pass, meaning that once they start to occur, they proceed rapidly, like dominoes falling one upon another.  

Total Bonds, BND, traded higher as, US Treasuries, ZROZ, EDV, TLT, and US longer duration bonds, BLV, LTPZ,  blasted higher as Market Watch reports Treasury 10-year yields retouch all-time low. The Interest rate on the US Ten Year Note, $TNX, traded  lower to 1.62%. The chart of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, shows a strong fall lower, as reflected in the Flattner ETF, FLAT, rising; and the Steepner ETF, STPP, trading lower. World Government Bonds, BWX, Junk Bonds, JNK, and International Corporate Bonds, PICB, traded lower.

Gold, GLD, and Silver, SLV, rose  slightly as Commodities, DBC, were led lower by Oil, USO, Copper, JJC, Timber, CTU, Base Metals, DBB, Agricultural Commodities, RJA, and Food Commodities, FUD.

The US Dollar $USD, UUP, blasted higher, as the World Major Currencies, DBV, and Emerging Market Currencies, CEW, traded strongly lower.

The chart of Brazil Small Cap, BRF, Homebuilder, GFA, illustrates the death of the Brazilian Real, BZR, as a currency, and illustrates the death of credit, coming to small cap stocks, as opposed to larger cap stocks which are still able to obtain some credit.

The National Bank of Greece, NBG, Spain’s Banco Santander, STD, and Ireland’s IRE, led European Financials, EUFN, Emerging Market Financials, EMFN, the World Major Banks, IXG, and US Regional Banks, KRE, Nasdaq Community Banks, QABA, Chinese Financials, CHIX, lower. Leading banks traded lower; these included India’s IBN, Brazil’s ITUB, BSBR, the UK’s LYG, BCS, HBC, South Korea, WF, SHG, Argentina’s GGAL, BFR, BBVA, BMA, and Japan’s MTU

Greece, GREK, Spain, EWP, Italy, EWI, Germany, EWG, and France, EWQ, led Europe, VGK, lower.

India, INDY, SCIF, Russia, RSX, ERUS, Brazil, EWZ, BRF, and China, YAO, HAO, led the BRICS, lower.

Argentina, ARGT, traded strongly lower on the decline in its banking shares, evidencing the end of the global debt trade and the failure of neoliberal finance.   

The World Small Caps, VSS, led world stocks, VT, lower. with Energy Service, OIH, IEZ, Eneergy, PSCE, XLE, Homebuilding, ITB, US Infrastructure, PKB, Copper Mining, COPX, Paper Producers, WOOD, Mining, MXI, lower.  Needless to say Risk Assets, ONN, traded lower. High dividend shipping stocks, SEA, and Steel, SLX, traded lower.

Debt laden tility stocks, XLU, such as Next Era Energy, NEE, attempted to rise higher on the falling interest rates, but turned lower.

Today’s trade lower in fiat stocks, and rush to perceived safe haven investment in US Government Bonds, together with the rise of gold evidences the death of fiat wealth, and sovereign nation states, and the rise of gold, as a money good invesment.

We are witnessing the destruction of investment capital and the rise of political capital. The fiat money system and credit is relegated to the Age of Leverage as Ambrose Evans Pritchard writes Europe’s money contracts again. The diktat money system is appropriate to the Age of Deleveraging, where diktat will serve both as money and credit.  Soon, regional leaders in Brussels and Berlin will lead the New Europe out of the Financial Armageddon, that is a credit bust and global financial breakdown.

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