Archive for July, 2012

US Dollar Falls Lower And Gold Breaks Out As ECB Chief Mario Draghi Promises To Do Whatever It Takes To Preserve The European Monetary Union Intact

July 30, 2012

Financial Market Report for the week ending July 27, 2012; this is seventeenth week of entry into the Second Great Depression.

1) … On Thursday July 26, 2012, the US Dollar, $USD, UUP, fell sharply, as the Washington Post reports European Central Bank vows to protect the euro, sending stocks sharply higher.   World Stocks, VT, rose 2%, and Commodities, DBC, rose almost 1%, on Thursday’s open, after remarks by Mario Draghi, the ECB’s chief, vowed to “do whatever it takes” to keep the continent’s monetary union intact.

The investment demand for gold has finally arisen as Gold, GLD, broke out of a triangle consolidation pattern and Silver, SIL, bounced up from a double bottom.

Exxon Mobil, XOM, rose 1.2% near to its March 2012 high as Reuters reports Exxon Mobil Profit Rises 49%; the ongoing two year chart of Exxon Mobil shows that it has vastly outperformed its peers and the S&P..

Amgen, AMGN, led Biotechnology, XBI, higher, but still below its recent high.

Next Era Energy, NEE, led Utilities, XLU, higher, but still below its recent high.

AT&T, T, led Telecom, IYZ, higher but still below its recent high.

Dividend Stocks, DVY, rose 1.0%

Coca Cola, KO, and Disney, DIS, led Consumer Services, IYC, rose 1.3% to resistance.

Home Depot, HD, led Retail, XRT, 0.9% higher to resistance.

Mortgage REITS, REM, traded 0.5% lower.

Energy Services CAM, NOV, PDS, SPN, OIS, EXH, led XES, and IEZ higher; SLB, HAL, BHI, OII, led OIH higher.

2) … On Friday, July 27, 2012, stocks surged as hopes increased that the Federal Reserve and the European Central Bank may provide further stimulus.

World stocks, VT, rose another 2% today, forming a diamond top reversal pattern..

Spain, EWP, Italy, led Europe, VGK, higher. South Korea, EWY, led Asia, EPP higher. Brazil, EWZ, Russia, RSX, and China, FXI, led the BRICS, EEB higher.

NBG, BCS, LYG, STD, DB, CS, UBS, led European Financials, EUFN, and Global Financials, IXG, higher. Raymond James Financial, RJF, led stockbrokers, IAI, higher,

Steel, SLX, and Energy Service, XES, IEZ, OIH, rose strongly.

Semiconductors, XSD, Homebuilders, XHB, and Financials, XLF, rose to strong resistance.

International Paper, IP, led Paper Producers, WOOD, higher.

ARII, CP, WAB, TRN, and GBX, led Transports, IYT, higher.

GDI, LNN, CNH, TEX, IR and MTW led Construction Equipment higher

ASH, LYB, ROC, KWR, WLK, KOP led Chemicals higher

AIMC, BGC, ROK, AMRC, and ETN, led Electrical Equipment higher.

Electric Utilities, PNW, NVE, SCG, DTE, NEE, lead Utilities, XLU, higher.

GPI, CRMT, AB, PAG, led Automobile Dealers highe and Automobile Parts Manufacturers AXL, JCI, DAN, TEN, MGA,, SMP, VC, MTOR, WBC,, PCAR, ALV, BWA MOD,TTM, WNC, rose strongly.

GILD, AMGN, ARIA, SGEN, led Biotech, XBI, to a triple top high.

Exxon Mobil, XOM, led Dividend Shares, DVY. to a double top high.

Wal-mart, WMT, Colgate Palmolive, CL, and Kimberly Clark, KMB, led consumer staples, XLP, to a new high..

The breakout of gold, GLD, caused gold miners, GDX, to rise 3.4% for the week.

Of note on a monthly basis, Shanghai, CAF, and Japan, EWJ, are leading Asia, EPP, lower. Market Watch relates Japan’s deflation accelerated in June, as the core consumer price index fell 0.2% from a year earlier, compared to a 0.1% drop in May, according to government data Friday. The drop in core CPI, which strips out volatile fresh-food prices, outpaced a forecast 0.1% fall projected in a Dow Jones Newswires survey of economists. June’s core CPI was down 0.3% from May, while overall CPI fell 0.2% year-on-year and 0.5% month-on-month. Furniture and household utensils saw the largest price drop, falling 3.4% from a year earlier, while fuel, light and water led price gains, rising 3.5% from June 2011. The yen lost ground after the data release, with the U.S. dollar rising to ¥78.32, up from ¥78.22 just ahead of the numbers. More deflation makes the Bank of Japan more likely to expand its monetary easing,

The US Dollar, $USD, UUP, traded unchanged; and Commodities, DBC, rose slightly approaching strong resistance.

Bonds, BND, fell parabolically lower as Junk Bonds, JNK, and Emerging Market Bonds, EMB, rose to a double top high; and as the Zeroes, ZROZ, the 30 Year US Treasury Bonds, EDV, and the Ten Year US Government Notes, TLT, traded parabolically lower.

The Flattner ETF, FLAT, seen here in this ongoing Yahoo Finance Chart, traded lower and the Steepner ETF, STPP, traded higher, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened.

Mortgage Backed Bonds, MBB, traded lower as the 30 Year Mortgage Rates rose from a record low.

Ten Year US Notes, TLT, traded lower sharply lower as the Interest Rate of the 10 Year Note, TNX, jumped higher.to 1.56% from its low of 1.40.

3) … In the news

Patrick Allen of CIti relates Greek Exit in 2013 now 90 percent probability, Citi says

Reuters reports ECB may take losses in Second Greek Debt Restructuring

Mike Mish Shedlock writes How long this round of “we are saved” euphoria lasts over non-comments remains to be seen, but I suspect not long.

Graham Summers relates If you think the ECB can contain this mess, you’re wrong. The ECB is out of ammo.
1)   The ECB hasn’t bought a single EU Sovereign Bond in 16 weeks.
2)   The ECB blew over €1 trillion via LTRO 1 and LTRO 2 only to find that a) the effects lasted less than two months b) the markets punished those banks that called on the ECB for aid (these requests were seen as public admissions of insolvency)
3)   If the ECB hits the print button and monetizes, Germany will walk. End of story. The word Weimar is still fresh in the German collective memory.  And the German population is already outraged by their country’s EU interventions, the risk of losing their AAA status, and the fact they’re now heading into a recession.
4)   Angela Merkel has told Draghi and others that there will not be Eurobonds as long as she lives. Unlike Draghi, she’s not bluffing.
5)   And finally, the ECB’s balance sheet is roughly $4 trillion. The EU banking system is $46 trillion. And EU bank derivative exposure is north of $200 trillion. How exactly can the ECB contain this mess?
It can’t. Draghi is pulling a classic Central Banker stunt: verbal intervention. If Draghi could in fact solve this mess, he would have already done so. The EU Crisis started in 2010 after all. And here we are, over two years later, and even Greece, which only comprises 2% of EU GDP, has yet to see its problems solved.
If the ECB cannot solve Greece’s problems, how on earth could it solve those of Spain or the entire EU for that matter?
The answer is obvious: it can’t. Europe is doomed.

The WSJ Blogs writes ECB finds a way to buy sovereign debt..

Ambrose Evans Pritchard writes The European Central Bank has opened the door to emergency support for the Spanish and Italian bond markets, setting off a blistering rally on bourses across the world.
Mario Draghi, the ECB president, vowed to do “whatever it takes” to save the euro within limits of its mandate. “Believe me, it will be enough,” he said in London.
Picking codewords instantly understood by traders, Mr Draghi said the violent spike in bond yields in recent days was hampering “the functioning of the monetary policy transmission channels” – the exact expression used to jusfify each of the ECB’s previous market interventions.
Yields on Spanish two-year debt plunged 72 basis points to 5.47pc in barely an hour, with comparable moves on Italian debt – easing the pressure before a string of debt auctions in Rome over coming days. The MIB index of stocks in Milan surged by 5.6pc. Madrid’s IBEX rose 6pc, the biggest jump in two years, led by an explosive rise in bank shares.
Mr Draghi’s comments came as Spain claimed backing from France and Germany for activation of the eurozone’s rescue fund (EFSF) to buy Spanish bonds, though this would require calling the Bundestag’s finance committee back from holiday for a vote. Action by the EFSF would provide “political cover” for the ECB to join the fray in a two-pronged attack.
“We’re firing on all cylinders: that is what has ignited the markets,” said Hans Redeker, currency chief at Morgan Stanley
Joint statements from Madrid, Paris and Berlin said market turbulence “does not reflect the fundamentals of the Spanish economy, or the sustainability of its public debt”. The wording seems scripted to clear the way for intervention.
The euphoria is unlikely to last long unless the ECB comes through with concrete action after its pre-holiday meeting next week. Angel Gurria, head of the OECD, honed in on Mr Draghi’s caveat, saying the legal constraints are the nub of problem. The ECB must “explore the flexibility of its mandate”, he said.
Others were blunter. Marc Ostwald from Monument Securities said Mr Draghi’s words were “cheerleading bluster”, while Gary Jenkins from Swordfish called them “a bluff to get through the summer”.
“Spain is very close to the precipice, and its pretty much game over already, ” said Mr Jenkins. “Today’s action was a short-covering rally. The real trick is get bond investors to come in alongside the ECB, and that is much harder.”

Markets have become sensitive to the risk of “subordination” after the ECB and other EU bodies refused to take losses on holdings of Greek debt. Private creditors suffered bigger haircuts as a result.
Mr Jenkins warned that the purchases of Spanish and Italian bonds risk setting off further capital flight unless the ECB makes it “contractually clear” that it does not have senior status. “Investors will just try to get out,” he warned.
Critics say the ECB’s pin-prick purchases of Greek, Irish, Portuguese, Spanish and Italian bonds have fallen between two stools: enough to create subordination fears, without being enough to eliminate the risk of sovereign default. It would now take massive intervention by the ECB to repair the broken trust. Any such move would risk a showdown with the Bundesbank and its hawkish allies in the Teutonic bloc. “German resistance has risen over the past several months,” said Spiro Sovereign Strategy.

Elaine Meinel Supkis writes Congress mocks Ron Paul while Libor Scandal and debt scandals threaten world Banking. One of the most pathetic Washington Post stories about banking is the retirement of Ron Paul.  Bernanke and the corrupt members of the House Banking Committee all laugh at him while smugly patting themselves on the back…right in the middle of yet another of zillions of banking scandals.  The real scandal, of course, is the collapse of all sane oversight for bankers who then ran amok and by creating way, way too much credit, have caused the entire global banking system to collapse.

Ron Paul is right and his fellow House members are insane:  Dana Milbank: Ron Paul, fed up with trying to end the Fed – The Washington Post. “Policies never change. . . . No matter what the crisis is, we still do more of the same,” he lamented in what probably was his last public appearance with Bernanke before retiring from Congress at the end of the year. “I hoped in the past to try to contribute to the discussion on monetary policy, the business cycle and why it benefits the rich over the poor. And so far, my views have not prevailed, but I’ve appreciated the opportunity.”
For the fiery Paul, it was a subdued surrender. His colleagues — Democrats and Republicans alike — used this final hearing to honor Paul for his passionate service, treating him with the cautious affection one might use to address a crazy uncle.
“This may be his last committee meeting with the chairman of the Federal Reserve,” Chairman Spencer Bachus (R-Ala.) began. “And his leadership on the committee, especially during these hearings when we’ve had the Federal Reserve chairman appear before us, have certainly made the hearings more interesting and provided several memorable YouTube moments.” Many on the dais laughed, and even Bernanke smiled at the memory.
Oh yes, this is so, so funny.  HAHAHA.  Right!  Who is crazy here?  Ron Paul or the well-padded, well-fed clowns who created one of the worst banking messes in earth’s history?   True, dinosaurs didn’t have banks, the creation of banks is fairly recent in the geological record.  But the fact remains, after paying Congress to undo every single regulation imposed on banks after the 1929 crash, we had an identical series of crashes

The Libor Investigation Close To Making Arrests: Report.  The criminal charges would come alongside efforts by regulators to punish major banks with fines, and could show that the alleged activity was not rampant in the banks.
“The individual criminal charges have no impact on the regulatory moves against the banks,” said a European source familiar with the matter. “But banks are hoping that at least regulators will see that the scandal was mainly due to individual misbehavior of a gang of traders.”…
Reuters previously reported that more than a dozen current and former employees of several large banks are under investigation, including Barclays Plc, UBS and Citigroup, and have hired defense lawyers over the past year as a federal grand jury in Washington, D.C., continues to gather evidence.
So, the guys at the top, the Bilderberg gang who created this entire mess, the guys who bribed British and American politicians to eliminate all banking regulations and rules will not be punished????  How insane is that?
Arresting the near-powerless underlings is like putting the prison guards on trial at Nüremberg while letting the Nazi leadership go to Argentina.  Once again, displaying their immense political power bought by donating money to elections and hiring retired politicians to deliver speeches, the super-rich, Super-powerful bankers will skate away with billions in personal loot after exploiting loopholes they, themselves, created in the laws to give out credit at false interest rates based on near-zero capital.

The underlings working for these criminal bankers are going insane:  ‘Frustrated’ UBS broker arrested after ‘smashing windows with a slingshot and marbles’ | Mail Online.   A hot-shot investment banker, 58, has been arrested, accused of wrecking havoc in Los Angeles.
Michael Poret has allegedly been driving around and shattering windows since the beginning of the year, using a slingshot to fire marbles and nuts at buildings. Police said he must have ‘got a thrill from it’…
Poret was first arrested in Encino on July 3 after police officers spotted a slingshot in his car during a traffic stop for a vehicle code violation. A subsequent search of the vehicle turned over brass knuckles, knives and slingshot projectile. The 58-year-old was suspended from his post as vice president of investments at UBS Financial Services after his arrest. He had worked there for three years after being headhunted while at Merrill Lynch.

The moral degradation of our banking community is due to the entire ‘greed is good’ and sense of personal entitlement that has warped the mental health of everyone involved.  It isn’t just Britain and the US, the other banking catastrophe in the troika of first world banking giants is the moral and mental collapse going on in Japan:  Fitch downgrades three major Japanese banks ‹ Japan Today: Japan News and Discussion
Fitch said Friday it cut the credit rating of three of Japan’s biggest banks over concerns about Tokyo’s ability to support the financial sector, after the nation’s sovereign debt rating was also cut.
The ratings agency lowered its rating by one notch to ‘A-’ from ‘A’—the seventh highest on a 22-rating scale—for Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group (MHFG), and Sumitomo Mitsui Financial Group.
In the same statement, Fitch said it also lowered its rating for Sumitomo Mitsui Trust Bank to the same level as the major banks.
The credit bubble in Japan happened when the yen suddenly shot up in value versus the dollar when the US demanded Japan bring its currency into compliance with trade values.  This did nothing for the immense and continuous trade deficit the US runs and still runs with Japan.  It did create a deceptive banking situation which the bankers there exploited and thus ran up one of the biggest real estate bubbles in the history of finance. At the time.  Then the US proceeded to have a bubble even bigger than the Japanese bubble.  Japan is running everything in the red now including, for the first time since the 1970′s, a trade deficit.

Like the US, the Japanese political system is thoroughly and totally corrupt and completely incapable of even the smallest reforms of anything nor is able to respond to the series of terrible collapses including the collapse of all of society there.  Which takes me back to the US Congressional corruption news:  Financial Scandal Scorecard – NYTimes.com
And where were the regulators? “Subcommittee investigators found that the OCC” — that’s the Office of the Comptroller of the Currency, which is the nation’s primary bank overseer — “had failed to take a single enforcement action against the bank, formal or informal, over the previous six years, despite ample evidence” of money laundering, reads the report.
Good lord!  Who, pray tell, destroyed the regulation powers of the OCC?  Why, the Wall Street bankers and their buddies in the South and Midwest who met at Jekyll Island to plot the killing of this regulator!  They created the Federal Reserve which is a private consortium of bankers with minimal regulation from Congress! All of whom laughed at Ron Paul on Friday.  All the OCC could do was detail the immense rapid growth of the Derivatives Beast!  Which they dutifully did.  And which Congress ignored.  The people who defanged the OCC are generations of politicians who wanted the OCC dead and powerless.

Meanwhile, due to banking scandals in London and the many offshore royal tax havens, the British people are seeing their social system shredded.  This is very unpopular.  Now the biggest welfare queen on earth is Queen Elizabeth and her royal brood is being cut out of the payola:  Royal family members may lose guards – Telegraph  The cost of providing security for members of the Royal family and VIPs was disclosed for the first time in internal police budget figures in 2010, when it was put at £113.5 million a year, or £310,000 a day.

Doug Noland writes Monetary Madness. In commemoration of M2 surpassing $10.0 TN for the first time – not to mention the unfolding confrontation between ECB President Draghi and Germany’s Bundesbank – this week’s CBB will focus on Monetary Analysis.  It is worth noting that M2, the Fed’s narrow measure of “money” supply, surpassed $1 TN for the first time in 1975.  It made it past $2 TN in 1983, $4TN in 1997, $8 TN in 2008 and $9 TN in April 2011.  M2 has inflated another Trillion during the past 15 months. (M1 is approaching 2 TN). To set the backdrop, it is worth noting that early economic thinkers were obsessed with money.  These days, monetary analysis is little more than a footnote in contemporary economic doctrine.  Generations ago, great minds were trying to come to grips with monetary phenomena.  They came to appreciate that money and Credit had profound impacts on economies and societies, although throughout history even the most astute struggled with the complexity of it all.  These days, “monetary stimulus” is seen as good for the markets and, yes, good again for GDP.  Inflation, if it ever were to return, is not so good.  Today’s monetary analysis is not good but it is shallow.

I’ve for years posited that we live in an extraordinary period of “global wildcat finance.”  Fiat electronic Credit – much of it marketable debt instruments – has expanded unlike anything previously experienced.  In the “developed” West, inflated real and financial assets were a primary inflationary consequence.  In China and “developing Asia,” an unprecedented expansion of manufacturing capacity was integral to the incredible inflation of incomes and wealth.  As for fundamental “nuances” of this monetary and economic Bubble, one can point to so-called “globalization,” the explosion of computer and communications technologies, enterprising financial innovation, deregulated Credit and speculation, and monetary policy activism.

Myriad forces worked to break the traditional link between monetary excess and rapidly rising consumer prices.  The “developing” world, enjoying access to unlimited cheap finance, built manufacturing capacity to inundate the world with manufactured goods and technology products.  Global financial excesses allowed developed nations to indulge in cheap imports by issuing endless IOUs, while transforming economic systems from production-based to Credit-driven consumption and services.  And the seeming New Paradigm victory over “inflation” emboldened New Age central bankers.  They unwittingly nurtured an epic monetary inflation, and as this Credit Bubble has begun to buckle they have moved with extraordinary force to sustain it.

The eurozone is today locked in a disastrous monetary crisis.  The marketplace simply no longer trusts the liabilities issued by some its members.  Analysts continue to lambast European officials for failing to learn from our successful navigation through the 2008 crisis.  This is flawed analysis.  Europe is suffering from a late-cycle sovereign debt crisis.  In ‘08/’09, U.S. policymakers enjoyed unprecedented demand for Treasury (and even agency) debt securities.  Through the massive issuance of federal government debt along with Federal Reserve monetization, the U.S. system was able to sustain ongoing Credit growth.  U.S. non-financial debt expanded $1.9 TN in 2008 and, despite huge mortgage write-downs, U.S. non-financial Credit still grew almost $1.1 TN in 2009.  With federal debt expanding a then record $1.4 TN, total non-financial debt expanded 3.1% in 2009.  Washington was willing to jeopardize the creditworthiness of federal debt and the Fed was willing to risk its reputation – and a downward spiral was thwarted.  A new phase of monetary inflation was commenced, this time through the massive injection of federal government and Federal Reserve finance.

There are unappreciated costs associated with injecting such massive sums of unproductive Credit into a (maladjusted) system, which I return to below.  Today, because they now lack creditworthiness in the marketplace, Spain and Italy no longer have the capacity to inject sufficient new Credit into their economic systems.  This is a potentially devastating dynamic, as the lack of sufficient ongoing monetary inflation is illuminating deep structural economic impairment following years of Credit excess and attendant maladjustment.

Earlier this week, with Spanish and Italian yields spiking higher and their markets turning illiquid, the European debt crisis was again spiraling out of control – only months after the ECB implemented its latest $1.3 TN liquidity facilities.  And, once again, acute financial stress has provoked tough talk.  ECB president Draghi Thursday morning stated, “…the ECB is ready to do whatever it takes to preserve the euro… Believe me, it will be enough.”  German Finance Minister Schaeuble said he supported Draghi’s statement, while Chancellor Merkel and President Hollande came forward Friday with their own “bound by the deepest duty” to do everything to protect the euro.  And then there was this afternoon’s unconfirmed report that Mr. Draghi is prepared to present a “game changing” multi-prong plan at next week’s European Central Bank governing council meeting that will include ECB bond purchases and a banking license for the ESM.

Shifting 180 degrees from earlier in the week, rather than fearing Credit collapse the markets moved quickly in anticipation of yet another crisis-induced bout of monetary inflation.  And, seemingly, only the Bundesbank remains capable of taking a measured approach.  Friday morning (before afternoon reports of a Draghi’s “game changer”), from a Bundesbank spokesperson:  “There haven’t been any changes in our positions on bond purchases of the Eurosystem, bond purchases by the EFSF, or giving a banking licence to the ESM… The Bundesbank has repeatedly expressed in the past that it views bond purchases critically because they blur the line between monetary and fiscal policy… The Bundesbank continues to view the SMP [securities market program] in a critical fashion.  The mechanism of bond purchases is problematic because it sets the wrong incentives…  A banking license for the bailout fund would factually mean state financing via the printing press and would be a fatal route, which therefore is prohibited by the EU treaty.”

No doubt about it, the Bundesbank is increasingly isolated.  They are at odds with most European politicians and they are at odds with other central bankers.  They are clearly not on the same page with Mr. Draghi.  And no group of government officials anywhere more clearly appreciates myriad risks associated with monetary inflations.  The German/“Austrian” view of economics just has a very different perspective, and it goes way beyond some fixation on Weimar hyperinflation.  The focus is on how real wealth is created and how wealth is destroyed.  Monetary inflations are powerfully destructive.  And as a deepening European crisis applies incredible pressure on politicians throughout the region – certainly including Germany’s Merkel and Schaeuble – I suspect the Bundesbank will hold its ground.  They are both right on the analysis and have the support of the German people.  They understand that the German economy cannot support the massive debt of the entire eurozone.

Throughout already volatile global debt, equities, currencies and commodities markets, things have turned only more unstable. And there is no doubt in my mind that ongoing monetary injections – albeit European, American, Chinese, or others – come with the cost of increasingly unstable – I would argue perilously dysfunctional – global financial markets.  And there should be little doubt where Mr. Draghi was directing his “trust me, it will be enough” tough talk (kind of reminded me of, “go ahead, make my day”).  The Europeans believe hedge fund and other speculator bets against their bonds, stocks and euro currency are a major contributing factor to the region’s woes.  There wasn’t an issue back when speculators were leveraged long Europe’s (Greece’s, Spain’s, Italy’s, etc.) securities during the upside of the cycle.

This week demonstrated an even more powerful “risk on, risk off” dynamic.  For lack of attractive alternatives, ongoing global monetary injections ensure only more “money” flows to the global leveraged speculating community.  From there, the bets on red or black – either on or against policymakers’ capacity to sustain global risk market Bubbles – become bigger by the week.  Draghi and European policymakers this week hit the panic button – and those with bearish hedges and bets were again forced to run for cover.  Risk on wins again.

And as policymaking turns increasingly desperate, it is almost guaranteed that “risk on, risk off” turns only more unwieldy.  Indeed, it is clear at this point that the more global policymakers turn to monetary inflation to thwart the downside of the Credit cycle the greater the amount of fuel injected into a dangerous global speculative Bubble.  In anticipation of next week’s scheduled Federal Reserve and ECB meetings, CNBC’s Steve Liesman today referred to “Monetary Madness.

Jana Randow and Matthew Brockett, Courtesy of Bloomberg News  write in Wall Street Pit,  Draghi said to hold talks with Weidmann on bond purchses. European Central Bank President Mario Draghi will hold talks with Bundesbank President Jens Weidmann in the coming days in an effort to overcome the biggest stumbling block to a new raft of measures including bond purchases, two central bank officials said.
Having secured the backing of governments in Spain, France and Germany, Draghi is now seeking to win over ECB policy makers for a multi-pronged approach to reduce bond yields in countries such as Spain and Italy, the officials said on condition of anonymity because the talks are private.
Draghi’s proposal involves Europe’s rescue funds buying government bonds on the primary market, flanked by ECB purchases on the secondary market to ensure transmission of its record-low interest rates, the officials said. Further ECB rate cuts and long-term loans to banks are also up for discussion, one of the officials said.
The euro strengthened, and was up 0.4 percent on the day at $1.2337 as of 6:49 p.m. in London. U.S. stocks rallied and gold futures extended gains.
Draghi is trying to put together a game changer in the battle against the sovereign debt crisis, and winning Weidmann’s support would enable him to present a united front to financial markets. Draghi flagged the intervention yesterday, saying the ECB will do whatever it takes to preserve the euro. The Bundesbank responded today by reiterating its opposition to ECB bond purchases.

Draghi will speak with Weidmann before the ECB’s Governing Council convenes in Frankfurt on Aug. 2, the officials said. He has also reached out to other ECB policy makers in an effort to build consensus, they said. A Bundesbank spokesman declined to comment.
An ECB spokeswoman said in an e-mailed statement that it is usual practice and nothing special for Draghi to meet or talk with members of the Governing Council. She declined to comment on the content of any talks.
Draghi has already secured the endorsement of Germany and France for a plan to reduce bond yields in Spain and Italy, which are threatening the existence of the euro.
German Chancellor Angela Merkel and French President Francois Hollande echoed Draghi’s language after a telephone conversation today, pledging to do everything to protect the single currency. The two largest euro-area economies are “bound by the deepest duty” to keep the 17-nation currency bloc intact, Merkel and Hollande said in a joint statement. The WSJ reports Ms. Merkel and Mr. Hollande released a statement saying they are “determined to do everything to protect it, (the Eurozone) “
“German support increases the credibility of an ECB intervention immensely, as otherwise markets would have to fear a subsequent down-scaling of the policy action,” said Christian Schulz, senior economist at Berenberg Bank in London. “If the ECB is credible enough, bond yields would stabilize without the ECB buying many bonds at all.”

The yield on Spain’s 10-year bond dropped to 6.74 percent today from 7.62 percent on July 24 as markets rallied on Draghi’s signal of ECB intervention.
While granting a banking license to Europe’s permanent rescue fund, the European Stability Mechanism, is a long-term aim of Draghi’s, it is not part of the immediate crisis plan, one of the central bank officials said.
Government bond purchases have seen two German policy makers quit the ECB. ocal opponent Axel Weber stepped down as Bundesbank president last year and ECB chief economist Juergen Stark retired at the end of 2011. Both complained that the bond program blurred the line between fiscal and monetary policy and relieved pressure on governments to enact reforms.
A spokesman for the Frankfurt-based central bank said in a statement read over the phone earlier today that there haven’t been any changes in its position on bond purchases. The Bundesbank has repeatedly said in the past that it views such buying critically because it blurs the line between monetary and fiscal policy, he said.

The Telegraph reports ECB could take haircut on Greek bonds in ‘last chance’ plan. Central banks across Europe are facing more huge losses under the terms of last-ditch efforts being made by EU authorities to keep Greece in the eurozone by slashing the country’s debt exposure.

Business Insider relates Europe is running out of time, will decide on measures within days. German Chancellor Angela Merkel and Italian Premier Mario Monti “agreed that Germany and Italy will do everything to protect the eurozone” in a phone conversation Saturday, German government spokesman Georg Streiter said, a statement that was echoed by Monti’s office.
That was nearly identical to a statement issued Friday by Merkel and French President Francois Hollande, which followed Draghi’s comments.
Though they didn’t pledge any specific action, the comments raised expectations that the ECB might step in to buy Spanish and perhaps Italian government bonds to lower the countries’ borrowing costs, which have been worryingly high in recent weeks. Another possibility might be for the eurozone’s temporary rescue fund, the European Financial Stability Facility, to buy bonds.
“What measures we will take, we will decide in the coming days,” Jean-Claude Juncker, the Luxembourg prime minister who also chairs meetings of the eurozone finance ministers, or eurogroup, was quoted as telling the German daily Sueddeutsche Zeitung. “We no longer have any time to lose.” Italy and Spain have the eurozone’s third- and fourth-largest economies, respectively, behind Germany and France.
Merkel and Monti agreed that decisions made by last month’s European Union summit “must be implemented as quickly as possible,” Streiter said, again echoing Friday’s Merkel-Hollande statements.

Mike Mike Shedlock writes Implications of the German Court ruling. On September 12, the German constitution court is expected to rule on the ESM as well as the fiscal treaty chancellor Angela Merkel signed in March. Is it any wonder ECB president Mario Draghi is loathe to do anything but talk before the court meets?
Should the court rule both are OK, eurocrats like Jean-Claude Juncker will immediately seek to change what the ESM can do, including the use of leverage. Given that Germany is better off outside the eurozone, and the eurozone is arguably better off without Germany, hopefully, the constitutional court will say it’s time to put all of this to voters, including whether Germany should stay in the eurozone. Unfortunately, I expect the court will OK both the ESM and the Merkozy treaty, but give further warnings to Merkel and the ECB that 500 million euros is the limit

4) … Bible prophecy foretells of a global Eurasia War in Syria, Iran, Israel, Turkey, and Russia; and the establishment of regional governance as a replacement for the Anglo American Hegemony that has governed the world since the late 1700s.

Zero Hedges relates G 20 and ECOFIN meeting in mid September relates
13-14 September: G20 Finance Ministers and Central Bankers meeting. In Mexico; and
14 September: ECOFIN meeting. This is very likely the finance ministers meeting when adjustments to Greece’s second loan programme will be considered. The remaining EUR23bn recapitalisation of the Greek banks is due to complete by the end of September, assuming a positive review of the loan programme

Ambrose Evans Pritchard writes of a possible Mega Keynesian answer to the European sovereign debt and banking crisis. Markets seem persuaded that Chancellor Angela Merkel has given Mr Draghi a green light for radical action with her latest vow to save the euro, and specifically her call for all EU institutions to “fulfil their duties”. One might equally conclude that her throw-away acquiescence – before retiring to Bayreuth and then the Alps – signifies that nothing much has changed. So prepare for further foolish half-measures. The ECB’s earlier purchases of Greek, Irish, Portuguese, Spanish and Italian bonds were a textbook case of how not to proceed, violating the “Powell Doctrine” of overwhelming force: too timid to lower yields for long or reduce default risk, yet enough to push private investors down the creditor ladder.

Subordination matters, as pension funds (yours and mine) learned to their cost in Greece when EU bodies refused to share the pain of default. Remaining private holders were forced to absorb all of Europe’s losses as well as their own, suffering a 75pc haircut. Theft, you might say, and thieves usually steal again.
Unless Mr Draghi buys bonds on a mass scale he will merely accelerate capital flight – already running at €50bn or 5pc of GDP each month from Spain, according to Credit Suisse.
Much the same logic applies to the purported bail-out of Spain by the old rescue fund (EFSF) – denied in any case by Madrid and Berlin – since the markets do not believe assurances that the fund will forgo its senior status when push comes to shove.
Once a rescue begins for Spain, it must inevitably escalate towards €400bn to offset the “sudden stop” in private funding, and that in turn must surely pull Italy into the cauldron. Nomura says the combined needs of Spain and Italy amount to €1.1 trillion over three years. The money does not exist. Any attempt to raise such sums on the open market would expose the bluff behind the bail-out machinery. Mr Cailloux expects the two countries to require sovereign rescues “within weeks”. Citigroup’s Willem Buiter thinks both will be in full EU-IMF Troika rescues by the end of the year. If so, brace for trouble, because demands on this scale will push bail-out fatigue in Germany, Holland and Finland to breaking point. Only the ECB has the firepower and speed to halt a catastrophic replay of 1931 before the year is out.

Eric Margolis in Lew Rockwell asks Has the US Given Israel a Green Light To Attack Syria? and relates the road to Tehran runs through Damascus; I comment that according to Ezekiel 38, Damascus will be the epicenter of a Global Eurasia War.

Spain is an insolvent nation filled with insolvent banks and rebellious regions. Greece and now Spain have lost their monetary sovereignty. After Financial Armageddon, a global credit bust and financial collapse, foretold in bible prophecy of Revelation 13:3, the way forward will be by decree of regional leaders. The diktat money system will rise to replace the fiat money system, as leaders meet in summits to waive national sovereignty and pool sovereignty regionally to form a political union, specifically a Federal European Super State. Eurozone fiscal sovereignty will be established by Germany ruling over peripheral client countries.in a type of revived roman empire as the Beast Regime of Totalitarin Rule, rises from the profiligtate Mediterrean nation of Greece, to replace the Banker Regime of Neoliberal Rule, Revelation 13:1-4.

Mark Strauss writes in the April 2012 Smithsonian article Got Corn? Recent research supports the conclusions of a controversial environmental study released 40 years ago: The world is on track for disaster. So says Australian physicist Graham Turner, who revisited perhaps the most groundbreaking academic work of the 1970s,The Limits to Growth. Written by MIT researchers, (brought together by the Italian tycoon Aurelio Peccei), for an international think tank, the Club of Rome, the study used computers to model several possible future scenarios. The business-as-usual scenario estimated that if human beings continued to consume more than nature was capable of providing, global economic collapse and precipitous population decline could occur by 2030. However, the study also noted that unlimited economic growth was possible, if governments forged policies and invested in technologies to regulate the expansion of humanity’s ecological footprint. Prominent economists disagreed with the report’s methodology and conclusions. Yale’s Henry Wallich opposed active intervention, declaring that limiting economic growth too soon would be “consigning billions to permanent poverty.” Turner compared real-world data from 1970 to 2000 with the business-as-usual scenario. He found the predictions nearly matched the facts. “There is a very clear warning bell being rung here,” he says. “We are not on a sustainable trajectory.

Regionalization will replace both crony capitalism and European Socialism as the dynamos of global growth and corporate profitability wind down; and the dynamos of regional stability, security, and sustainability wind up regional governance God ordained in eternity past, that ten regional blocs form to govern mankind’s economic and political activity, Daniel 2:30-33,  While Neoliberalism featured wildcat finance, a Doug Noland term, Neoauthoritarianism will feature wildcat governance, where leaders bite, rip and tear, one another, and only the top tog leader will rise to rule Europe and eventually the world, Daniel 9:25.

There is neither personal sovereignty nor human action, as envisioned by natural law thinkers; there is only God’s Sovereignty, Ephesians 1:1-23,  Fate, Revelation 1:1, that is Destiny, 2 Corinthians 5:18, and the administrative law of Christ, which is operating for the fullness of times, Ephesians 1:10. This is what Witness Lee calls The economy of God. With the announcement of the first Greek Bailout in May 2010, Christ has been releasing the Four Horsemen of The Apocalypse, Revelation 6, to terminate all existing economic and political life, so that the His Kingdom will be established on planet earth, Revelation 2:26-27. There are seven dispensations or ages: 1)  The Fall From Grace, 2) The Addition Of The Law and Ordinances, 3) Grace And Truth, 4) Regional Governance, 5) Condemnation By The Two Witnesses, 6) The Kingdom of God On Earth, and 7) The New Jerusalem.

5 … I am spending more and more time in prayer and spiritual reflection; and will very soon stop bloggin on the issues of sovereignty and seigniorage; as I purpose to add virtue to the like precious faith of Jesus Christ. 2 Peter 1:1.

I write goodness is 1) goodwill accompanied by 2) honor, and 3) respect (and affection for the saints by living the one-another lifestyle). Goodness 4) practices peace, for without peace, no man will see God, and 5) turns away from all who walk disorderly. Goodness prays for a 6) good conscience, and 7) always does the right thing, and 8) never uses another for personal gain, and 9) never places evil for good. Goodness, 10) upholds the rights of others and 11) never is a busybody in in another’s affairs, and is 12) never rude.  Goodness is the quality that 13) helps another to mature and enjoy his mental and spiritual resources to obtain spiritual wisdom and understanding. For 14) Godly friendship to exist, goodness must be present in both parties. Goodness is the bedrock of 15) self moderation, and as CS Lewis communicates in Men Without Chests, that if we fail to 16) pass along specific standards of right and wrong of what is worthless, useless or harmful, then we must bear the consequences of failure of character. Peace is the partner of goodness. Peace is acceptance. Both of these virtues are facilitated by holiness (being set apart for God’s use) and purity (freedom from contamination of evil). Goodness and peace are spiritual fruit which comes from the reproduction of virtue, that is God’s character in one’s life.

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The US Dollar And US Bonds Rise As Stocks, Currencies, And Commodities Trade Sharply Lower As Europe Fears Surge That Greece Will Have Unmet Funding Needs, That Spanish Banks And Spain Itself Is Insolvent And That Ten Italian Municipalities Are Broke

July 25, 2012

Combined Financial Market Report for Monday July 23, 2012 and Tuesday July 24, 2012.

1) … On Monday, Bernard Condon, AP Business writes Stocks Sharply Lower As Europe Fear Surges.

The US Dollar, $USD, UUP, and US Debt, the Zeroes, ZROZ, 30 Year US Government Bonds, the US Ten Year Note, TLT, Build America Bonds, BAB, Long Term Tips, LTPZ, traded higher, as the Interest Rate on the US Ten Year Norte, ^TNX, traded to a new low at 1.44%, and as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, to trade to trade near a recent low, as the Flattner ETF, FLAT, traded near a recent high.

Junk Bonds, JNK, Senior Loans, BKLN, Short Term Tips, STPZ, International Corporate Bonds, PICB, Corporate Bonds, LQD, traded lower.

World Government Bonds, BWX, traded lower on lower Major World Currencies, DBV, with the South African Rand, SZR, the Australian Dollar, FXA, and the Indian Rupe, ICN, leading the way down. Bloomberg reports Euro Drops to 11-Year Low Versus Yen Before Spain Auction.

Emerging Market Bonds, EMB, traded lower on lower Emerging Market Currencies, CEW,

Utilities, XLU, US Preferred, PFF, and Biotechnology, XBI, traded lower from last week’s highs..

Reversing a six week trend, the small cap pure value shares, RZV, fell more than the small cap pure growth hares, RZG, communicating that competitive currency devaluation is underway again today. Specialized health care companies, ACHC, FMS, HLS, DVA, and MD traded lower. Gaming Shares, BJK, Credit provider, GCA, Office Supply Company, ACCO, and Apparel Retailiers, CROX, EXPR, BODY, HOTT, and GCO.

Australian Small Caps, KROO, South Korea Small Caps, SKOR, Russia Small Caps, ERUS, Brazil Small Caps, BRF, and India Small Caps, SCIF, led the World Small Caps, VSS, lower.

Russia, RSX, and India Infrastructure, INXX, led the BRICS, EEB, lower.

Taiwan, EWT, adnd South Korea, EWY, led Asia, EPP, lower.

Greece, GREK, Italy, EWI, Germany, EWG, Austria, EWO, Sweden, EWD, Europe, VGK, the UK, EWU, and Switzerland, EWL, traded lower. Mexico, EWW, fell from a double top

Emerging Market Mining Shares, EMMT, traded strongly lower, as Copper Miners, COPX, Rare Earth Miners, REMX, and Junior Gold Miners, GDXJ, traded sharply lower.

The National Bank of Greece, NBG, Deutsche Bank, DB, Europe Financials, EUFN, Brazil Financials, BRAF, South Korea’s SHG, KB, WF, India’s IBN, and HDB, the UK’s RBS, BCS, and HBC, and the Too Big To Fail Banks, RWW, led world banks, IXG, lower.

Prostate drug manufacturer, MDVN, rises to 52 week high.

Oil, USO, Copper, JJC, and Timber, CUT, led commodities, DBC, lower.

2) … In Monday’s news and commentary
Business Insider relates This Homicide Map Shows How Bad Things Are Getting In Chicago. (Hat Tip to Gary of Between The Hedges.

Open Europe relates Spanish crisis reaches critical stage as borrowing costs top 7.5%;  Up to six Spanish regions set to request financial aid from Spanish state
Spanish ten year borrowing costs reached a euro area record high of 7.54% this morning, with the rates on shorter term debt even rising as market jitters over Spain increase. Following the news on Friday that Valencia will seek financial aid from the central government, Ramón Luis Valcárcel, the governor of Murcia, said in an interview yesterday that his region could also seek a bailout soon, adding that the request could be for between €200m and 300m. On Saturday, El País suggested that up to five other Spanish regions are considering seeking financial assistance, including Catalonia and Andalusia – the country’s two most populous regions. However, in an interview with Spanish State TV Andreu Mas-Colell, Catalonia´s finance chief, dismissed such rumours. El Pais reported on Saturday that Spain’s 17 regions have €140bn in debt, €36bn of which needs to be refinanced this year. Spanish Economy Minister Luis de Guindos this morning ruled out a full sovereign bailout for Spain and will meet his German counterpart Wolfgang Schäuble in Berlin tomorrow to discuss the Spanish crisis, reports El Mundo.
Meanwhile, Spanish Foreign Minister José Manuel García Margallo launched a fresh call for action from the ECB on Saturday saying, “Somebody has to bet on the euro and now, given the architecture of Europe isn’t changed—who can make this bet but the ECB.” However, in an interview with Le Monde published the same day, ECB President Mario Draghi pre-emptively dismissed such calls stating that the “[ECB’s] mandate isn’t to solve the financial problems of states.”
El País El País 2 El País 3 El Mundo El Mundo 2 El Mundo 3 El Mundo 4 Expansión FT FT 2 CityAM WSJ Irish Times BBC Guardian FT 3 CityAM 2 WSJ 2 Telegraph: Evans-Pritchard CityAM: Evans Irish Times: Woodworth Handelsblatt

IMF set to withhold future funding from Greece due to significant delays in meeting programme conditions; German government rejects renegotiation of bailout package or further aid to Greece
Der Spiegel reported over the weekend that, according to unnamed EU officials, the IMF is considering withholding future tranches of Greek bailout aid since it is clear that Greece will not be able to make the target of a debt to GDP ratio of 120% by 2020. Bloomberg reports that delays in implementing reforms mean Greece could need between €10bn and €50bn in additional financial aid, something which the IMF and some eurozone states are unwilling to provide.
Meanwhile, Süddeutsche cites German government sources as saying that it would be “unthinkable” for Angela Merkel to ask the Bundestag to approve a third rescue package for Greece, while vice-Chancellor and FDP leader Philipp Rösler is quoted as saying that a Greek exit “had lost its terror”. Both German Foreign Minister Guido Westerwelle and CDU Parliamentary leader Volker Kauder had interviews over the weekend putting pressure on Greece.
Spiegel Süddeutsche Kathimerini Kathimerini 2 CityAM Bloomberg Irish Times WSJ Irish Times 2 WSJ 2 FAZ

Euro Intelligence relates in its for fee newsletter, which I recommend that one subscribe to, 10 Italian municipalities are at the verge of a financial crisis. Over 10 Italian big cities are on the verge of financial collapse, La Stampa claims. Debts, derivatives and mistakes: the Italian municipalities are in crisis. After the default of Alessandria, a big city in Piedmont (North-Western Italy), there are several risks for Turin, Milan, Napoli, Palermo, Reggio Calabria and other cities with over 50,000 inhabitants. “Too much debts, over 10 metropolitan cities should ask to Corte dei Conti (the Italian Court of Auditors) for an orderly default,” Graziano Del Rio, chairman of Italian Association of Commons, said to La Stampa. In last week the Sicily has asked for a financial support and has claimed over €1bn of credits to Italian government.

Doug Noland writes My thesis remains that, with Spain now fully engulfed, the European debt crisis has irreversibly afflicted the “core. Following in the footprints of Greece, Portugal and Ireland, markets assume the 100bn euro bailout will prove just the opening tranche of what would be an enormous financial commitment necessary to stabilize Spain within the eurozone.  In particular, Spain’s banking system is large and fragile.  And with Spain succumbing to crisis dynamics, the markets will now increasingly anticipate Italy as the next wobbling domino.  Italian banks appear especially susceptible, as does the European banking system more generally.  And let’s not forgot Greece, a troubled nation that very well could be a euro short-timer.  There is ample justification for markets further questioning the viability of euro monetary integration.

Christopher Drier of WSWS writes SYRIZA backs Greek government’s capitulation to the EU. The opposition party SYRIZA has reneged on its pre-election promises and now accepts the EU’s draconian conditions for financial aid to Greece.

Gary of Between The Hedges relates Wirtschafts Woche reports Samaras coalition may soon collapse, Papaconstantinou says. The Greek government led by Prime Minister Antonis Samaras may soon collapse amid conflict caused by his New Democracy party’s domination of the coalition, according to comments made by former finance minister George Papaconstantinou said. Samaras has overstaffed the Cabinet with New Democracy ministers “who weren’t exactly a success” in the last regime, Papaconstantinou is cited as saying. The Socialist Pasok party and the so-called Democratic Left Dimar party are underrepresented in the coalition, he said, adding he is “not optimistic” the alliance can survive.
Mike Mish Shedlock writes German Vice Chancellor “very skeptical” Greece can be rescued.  Robert Wenzel writes Is Germany about ready to kick Greece out of the Eurozone?  If Greece is kicked out of the EZ, it could be the best thing that could happen to it. It could default on its debt. Start out fresh with a new sound currency and eliminate the various government spending programs that caused the financial crisis in the first place.

I relate, Greece as well as the other periphery nations, such as Portugal, Italy, Ireland, and Spain, cannot be rescued; and according to bible prophecy of Revelation 13:1-4, they will not be kicked out of the Eurozone, as the Global Beast Regime of Totalitarian Collectivism, will rise from the profligate nation states of Italy and Greece, to establish a type of revived Roman Empire in Europe. The two iron legs of US and UK global hegemony, that have ruled the world since the late 1700s, seen in the Statue Of Empires.seen in Nebuchadnezzar’s Dream, of Daniel 2:17-44, will give way to form ten toes, that is ten regions of economic and political governance.  These being mired in the iron of diktat and the clay of democracy, will eventually crumble; and a one world government, with a global king coming from Europe, will rule mankind for 3 and ½ years, Daniel 9:25.

3) …On Tuesday, Chuck Mikolajczak of Reuters writes Wall Street Hit by Europe Woes: Apple Falls Below $600

Stocks added to sharp losses on Tuesday, with all key S&P sectors in negative territory amid ongoing worries over Spain and after officials said Greece may need further debt restructuring.

For the first two days, Transports, IYT, have fallen more than Industrials, IYJ, establishing a very bearish market sell off. And the Small Cap Pure Value Shares, RZV, have fallen more than the Small Cap Pure Growth Shares, establishing that competitive currency devaluation is underway.

Concerns about the euro zone focused on Spain’s high borrowing costs as the country paid the second highest yield on short-term debt since the launch of the euro. European Union officials said Greece had little hope of meeting the terms of its bailout.

Spanish five-year government bond yields rose above 10-year yields for the first time since June 2001 as investors fretted about the possibility that Madrid may need a full-blown sovereign bailout. The 10-year note last traded at around 7.6 percent.

The US Dollar, $USD, UUP, and US Debt, the Zeroes, ZROZ, 30 Year US Government Bonds, the US Ten Year Note, TLT, Build America Bonds, BAB, Long Term Tips, LTPZ, traded higher again today, as the Interest Rate on the US Ten Year Norte, ^TNX, traded to a new low at 1.40%.

Today, it was the Swedish Krona, FXS, and the Euro, FXE, leading currencies lower. Bloomberg reports Euro Near 11-Year Low Versus Yen on Spain, Italy Concern..

Spain, EWP, and Italy, EWI, traded strongly lower.

US Infrastructure, PKB, traded lower as Beacon Roofing, BECN traded sharply lower. Coal, KOL, Aluminum, and Steel, SLX, continued strongly lower again today. And Airlines, FAA, plummeted.

Banco Santander, and Deutsche Bank, DB, led European Financials, EUFN, lower.

Commodities, DBC, traded lower on lower as Agricultural Commodities, RJA, and JJA, traded down from their spike up high. Natural Gas, UNG, continued trading higher.

4) … In Tuesday news and commentary
Bloomberg reports China’s Stocks Decline to Lowest Since 2009 on Economy Concern. China’s stocks fell, dragging the benchmark index to its lowest level since 2009, on concern the slowing global growth will hurt earnings

Mike Mish Shedlock writes Spanish Finance Minister in Germany pleads for temporary credit line, and writes Social media panic in Italy, and writes Ten major Italian cities on verge of financial collapse, and writes Full Spanish bailout coming up.

Open Europe relates that FT notes that UKIP leader Nigel Farage has amassed a Europe-wide following on YouTube, with Italian, Greek and even Slovak versions of his speeches routinely pulling in hundreds of thousands of views.

I am considered a heretic and one involved in cults, in by most christians, as I believe in a reformed doctrine led by John Calvin, John Gill, and today by John McArthur, as well as recovery doctrine led by Witness Lee.

God’s Word presents that God has appointed Jesus Christ for the dispensation of the fullness of times; Witness Lee calls this The Economy of God. The Apostle Paul in Ephesians 1:10, communicates that Jesus is God’s administrative plan and element for experiencing life. There is no human action as perceived by natural law human philosophy. Christ is in the process of overseeing seven dispensations or ages:  1)  The Fall From Grace, 2) The Adddition Of The Law and Ordinances, 3) Grace And Truth, 4) Regional Governance, 5) Condemnation By The Two Witnesses, 6) The Kingdom of God On Earth, and 7) The New Jerusalem.

Christ was present in the Tree of Life in the Garden of Eden, He gave the Law and Ordinances, He came as Grace and Truth, John 1:17, and He has ordained that democracies and sovereign nation states be replaced by a ten toed king of regional sovereign leaders and sovereign bodies, Daniel 2:30-33, where toes, partly of iron diktat and partly of clay democracy, replace the iron global hegemony of the UK and the US, that has governed the world since the late 1700s. Regional governance is coming as the ten head seen in the beast regime of Revelation 13:1-4; this monster of totalitarian governance will occupy in all of mankind’s seven institutions. Jesus released the First Horseman of the Apocalypse, Revelation 6:1-2, to effect global economic and political coup d’etat, as the baton of sovereignty was passed from Greece to the Troika when Greece was bailed out when it lost its monetary sovereignty in May of 2010.

The Apostle Paul taught in Ephesians 3:10-11, that the All Inclusive Christ, another Witness Leeism, is to be one’s total life experience; there is neither Gentile or Jew, Austrian Economist or profligate Greek, psychopath or empath, as there is only the person of Christ with His Faith, His Virtues and His ethics living in the believer expressing God’s grace and truth, thereby overcoming the world, Revelation 12:7-11.

Spain’s Sovereign Debt Yield Soars Above 7% Establishing Spain as an Insolvent Nation .. The Ideology Of Capitalism And European Socialism Perishes As Spain’s Sovereign Debt Collapses

July 23, 2012

Financial Market Report for the week ending Friday July 20, 2012, this is the sixteenth week of entry into the Second Great Depression.

1) … Bonds, BND, rose higher this week as World Stocks, VT, traded unchanged, and Commodities, DBC, rose from being oversold, as Spain’s sovereign debt yield soars above 7% establishing Spain as an insolvent nation

On Wednesday July 18, 2012, the industrial shares, XLI, rose 2%, to resistance; Rockwell Automation, ROK rose 6%, and Emerson Electric, EMR, seen in this 3 month ongoing Yahoo Finance Chart, rose 4%. SWKS, gapped open higher leading Semiconductors, XSD, Cloud Computing, SKYY, and Networking, IGN, higher. Pharmaceuticals, IHE, rose to a new high. Verizon, VZ, and AT&T, rose to a new high. And Biotechnology, XBI, rose to a new high.

On Thursday July 19, 2012, the Risk On ETN, ONN, rose higher on parabolically rising Agricultural Commodities, JJA; these drove Agriculture, PAGG, 2.5% higher on the week. Airlines, FAA, fell all week for a total loss of 6.5%, largely on a parabolically rising price of oil, USO. .

In contrast, on Friday July 20, 2012, Brendan Conway of Barrons relates Spain, Italy Slump For the Same  Reasons. “After an unusually peaceful few weeks in European markets, Spain and Italy are falling out of bed again on Friday. Spain, EWP, slumped 7% in late-morning trading and Italy EWI is down 5% as Spanish bond yields have surged above 7.1%. The regional government in Valencia admitting it has a liquidity crisis and needs a bailout is one reason for the sour tone. Oh, and the government’s budget minister warned that Spain is running out of money to pay its bills. All this on the day that Europe’s finance ministers released about $37 billion of the bailout package for the heavily indebted nation’s banks. No wonder Italy is seeing a knock-on effect:” Austra, EWO, fell 4%.

Calculated Risk reports Eurozone approves Spanish bank bailout, yields increase.

Of Two Minds relates Sorry, bucko, Europe is still in a death spiral.

Bloomberg relates Spain bonds slide as Valencia aid request deepens crisis. Spain’s bonds fell, sending five and 30-year yields to euro-era records, as the region of Valencia prepared to seek a rescue,  deepening concern policy makers are failing to find solutions to the debt crisis. The nation’s 10-year bonds fell for a seventh day, increasing the extra yield investors demand to hold the securities instead of German bunds to the most on record, as Spain also cut its growth forecast. The Italian-German yield gap reached the most since January and Germany’s two-year yields fell to a record. Belgian and French 10-year bond yields declined to all-time lows as investors sought higher-yielding alternatives to benchmark German debt. “Valencia’s request for assistance underlines fears as to the central government’s ability to bring wayward regions to heel,” said Richard McGuire, senior fixed-income strategist at Rabobank International in London. “That puts Spain under a considerable degree of pressure.” Spanish five-year yields jumped 47 basis points, or 0.47 percentage point, to 6.88 percent at 5:21 p.m. London time, after touching 6.903, the most since the euro started in 1999. The 4.25 percent note due in October 2016 dropped 1.595, or 15.95 euros per 1,000-euro ($1,216) face amount, to 90.535. The euro fell to its lowest level since 2000 versus the yen and reached a two-year low against the dollar. The 10-year yield rose 26 basis points to 7.27 percent, having jumped 61 basis points this week. Spain faces a “death spiral” as higher yields push up borrowing costs, and that adds to concern the nation won’t be able to services its debt, McGuire said  (Hat Tip to Gary of Between The Hedges).

Banco Santander, STD, Deutsche Bank, DB, and Swiss Banks, UBS, and CS, led European Financials, EUFN, World Banks, IXG, and Europe, VGK, lower.

Japanese Banks, MFG, MTU, SMFG, led Japan, EWJ, lower as Fitch slashes credit ratings of Japan’s biggest banks. Fitch has cut the credit rating of three of Japan’s biggest banks over concerns about Tokyo’s ability to support the financial sector, after the nation’s sovereign debt rating was also cut

Argentina Bank, BBVA, led Emerging Market Financials, EMFN, lower.

Small Cap Revenue Shares, RWJ, such as HPY, CGA, led World Small Caps, VSS, lower.

China Small Caps, HAO, China Infrastructure, CHXX, China Consumer, CHIQ, led China, YAO, lower; and China Real Estate, TAO, fell from a double high.

Steel, SLX, Semiconductors, XSD, Automobiles, CARZ, Airlines, FAA, led World Stocks, VT, lower.

Chiptole Mexican Grill, CMG, TXRH, EAT, FRGI, led Restaurants and Special Eateries, such as DNKN, SBUX, PNRA, lower.

Universal Display, PANL, led Computer Peripherals lower.

International Utilities, IPU, and Global Telecom Shares, IST, plummeted.

Copper Miners, COPX, trade lower as Copper tumbles over 2 pct on Spanish fears, China.

Acacia Research Corporation, ACTG, fell strongly; Yahoo Finance reports that through its subsidiaries, acquires, develops, licenses, and enforces patented technologies in the United States. It assists patent owners with the prosecution and development of their patent portfolios; protection of their patented inventions from unauthorized use; generation of licensing revenue from users of their patented technologies; and enforcement against unauthorized users of their patented technologies. The company owns or controls the rights to approximately 200 patent portfolios, which include the United States patents and foreign counterparts covering technologies used in various industries. Acacia Research Corporation was founded in 1992 and is based in Newport Beach, California.

Biotechnology, XBI, led by Diagnostic Substances, such as IDXX, and Drug Manufacturers, such as VVUS, INFI, LXRX, SPPI, AUXL, ARNA, AGN, THLD, SPPI, traded lower.

Transports, IYT, fell more than Industrials, IYJ, confirming a bear market is underway again, despite, Energy Services IEZ, and OIH, such as TLLP, WFT, LUFK, and BHI, rising strongly, largely due to a rising price of oil, USO; and despite, Utilities, XLU, rising to a new high. Railroads, CNI, NSC, CSX, GWR, UNP, all traded lower.

Kimberly Clark, KMB, which has been rising strongly, traded lower.

Bonds, BND, rose as Zeroes, ZROS, 30 Year US Government Bonds, EDV, and 10 Year US Government Notes, TLT, Build America Bonds, BAB, Longer Duration Corporate Bonds, BLV, and Highly Margined Bonds, BOND, rose strongly as a safe haven investment, as the Interest rate on the 10 Year US Government Note, TNX, traded lower to 1.46%, which stimulated Mortgage Backed Bonds, MBB, to move higher. The flight to safety has increased the ultra safe SHY, from 84.37 to 84.54 this month.

Zero Hedge relates Peak Complacency And Peak Leverage.

Commodities, DBC, rose as Oil, USO, BNO, Natural Gas, UNG, and Grains, GRU, Corn, CORN, led Agricultural Commodities, JJA, higher.this week.

The US Dollar, $USD, UUP, rose as the chart of the Euro, FXE, shows a trade lower, nearing 120.

2) … Spain and its banks have collapsed. Spain has lost its debt sovereignty and its banks are failed financial institutions; the ideologies of both capitalism and European Socialism are history. God’s word communicates that EU leaders will meet in summits, announce regional framework agreements that waive national sovereignty and pool sovereignty regionally to establish regional economic and political governance.

Ambrose Evans Pritchard writes Spanish debt crisis returns.  Yields on five-year bonds jumped to a fresh crisis peak of 6.46pc at a closely-watched auction as hopes fade for fresh stimulus from the European Central Bank and direct recapitalisation of Spanish banks by the EU bailout fund, the European Stability Mechanism (ESM).

“Demand for Spanish paper is collapsing, even for shorter-dated debt which is very worrying and raises the spectre of Spain losing market access,” said Nicholas Spiro from Spiro Sovereign Strategy.

Marchel Alexandrovich from Jefferies Fixed Income said the markets are already bracing for second bigger rescue of around €400bn. “A few more weeks like this and Madrid is going to decide to it has nothing more to lose and call for a full sovereign bail-out,” he said. “Then we will find out if there really is any money in the EU kitty.

“If the ECB goes on holiday without doing anything more, this is going to snowball. We’re way past point where any country can deliver fiscal measures on its own. People are not going to buy Spanish and Italian debt right now whatever ever they do. There has to be a circuit breaker.” The failure to win back investors is a bitter blow for Spanish premier Mariano Rajoy as the country pushes through the harshest retrenchment in modern history, with cuts in public salaries of up to 7pc, lower dole payments, and a three-point rise in VAT to 21pc.

There will be no circuit breaker; the ideologies of Neoliberalism, specifically democracy, capitalism, and European Socialism have utterly failed on the collapse of Spain’s sovereign authority. The only ideology that will be implemented now is the twofold biblical dispensation, Ephesians 1:10, of regionalization, Daniel 2:30-33, and totalitarianism, Revelation 13:1-4. God in eternity past ordained that a ten toed kingdom of regional blocs form where diktat serve as both money and credit.

Mike Mish Shedlock, writes from the Austrian Economist perspective in article Expect Strikes and Protests to Spread to Italy; Another Look at Why Italy Will Exit the Eurozone Before Spain. “The net difference between those who think the euro is a good thing minus those who think it is a bad things is -4 percentage points in Spain, but -14 points in Italy. That is the biggest negative spread in the Eurozone.”

He continues: “The collapse of the Spanish bond market and the rise of protests in Spain are both very serious matters. There is every reason to believe those reactions will spread to Italy. And with elections pending, the rise of anti-euro sentiment in Italy is extremely important. Monti may even be ousted before 2013 via failed vote-of-confidence. Every day that passes, the more strength the Five-Star Movement will gain. The irony is that it would be in the best interest of the eurocrats to hold elections now rather than later, before the anti-euro movement becomes politically unstoppable.”

Unstoppable? I ask … Hardly. God’s word reveals that the paradigm of global growth and global trade, as well as sovereign democracies, which was based upon a banker regime, which financialized a global debt trade, will be replaced by a paradigm of regional governance, Daniel 2:30-33, which will be founded upon a beast regime of totalitarian collectivism., Revelation 13:1-4, that will impose debt servitude, and be established through regional framework agreements. Italians cannot be Germans, likewise Greeks cannot be Germans, yet all will be one, as the dispensation of God, that is what Witness Lee calls the economy of God, Ephesians, 1:10, will terminate all existing economic and political life so that the Kingdom of His Son will be established on planet earth, Revelation 2:26-27.

Mr. Pritchard continues “Madrid had thought the EU bailout terms would be “light” and that the ESM would inject money directly into Spain’s banks in order to break the dangerous nexus between banks and sovereign states, as sketched out at the summit deal in late June. It has obtained neither. The terms are draconian, with sweeping intervention across the gamut of fiscal policy as well as demands for a `bad bank’ and the closure of crippled lenders. The legislation passed by the Bundestag today made it clear that the government is entirely responsible for the cost of the bank package. “Spain made the request. The Spanish state will guarantee the money,” said finance minister Wolfgang Schäuble. While the ESM is supposed to take over the burden once an EU banking supervisor is in place, this part of the summit deal seems to have withered and died in Berlin. “There will be no direct recapitalisation of Spain’s banks, at least not with us,” said Social Democrat (SPD) leader Frank-Walter Steinmeier.”

“My parliamentary group is not at all convinced we are doing the right thing.. We’re only voting for this because the damage would be catastrophic if Germany refused aid,” he said.  Twenty-two of Chancellor Angela Merkel’s own coalition voted against the Spanish package, forcing her to rely on opposition support. Bond markets are deeply confused by the loan terms for Spain. Investors are taking their lead from the International Monetary Fund, which has already added the €100bn rescue costs to its estimate of Spanish public debt. The total has risen from 68pc to 90pc of GDP in a single year, underscoring the dramatic worsening in public finances.

“The IMF said in its yearly report on the eurozone that the deepening crisis raises concerns about the “viability of the monetary union itself”. It warned that the “adverse links between sovereigns, banks, and the real economy are stronger than ever.” The report said EMU is “unsustainable” as constructed and called for a radical shift in policy, including a monetary blitz by the ECB, a banking union, and debt pooling.”

“The plea seems starkly at odds with the mood in the Bundestag. Bail-out fatigue has reached exhaustion. “We create red lines, only to cross them. We can’t go on like this,” said Mr Steinmeier. “It’s a bottomless pit,” said Free-Democrat (FDP) spokesman Frank Schäffler. Most of the German people would agree.”
.
Bespoke Investment Group reports breadth is not confirming this week’s rally in the S&P, SPY. I comment that with the rise in Spain’s Sovereign Debt Yield, we are witnessing a failure of neoliberal finance and with the trade lower in China and Japan, we are witnessing a failure of global growth and global trade.

European 2 Year  yield core and semi core yield converge to zero, as seen in this Joe Weisenthal’s chart of the day, as seen in this Morgan Stanley chart,    Spreads are blowing out today in Spain, Italy, and so forth. But there’s another sovereign debt story in Europe, and that is the collapse of yields in core and semi-core countries. Morgan Stanley’s Anton Heese has a great report on the European “steamroller”,  ie the flattening of curves and spreads throughout the Eurozone. This chart is incredibly vivid. 2-year yields in Germany, France, Austria, The Netherlands, Finland, and Belgium are all zooming to 0%. Belgium’s move, from borrowing at nearly 5% last year, to borrowing at around 0% right now is incredibly impressive.

Open Europe reports Bundestag votes to approve Spanish bailout; Former East German dissident compares Bundestag to parliament of the DDR.  The German parliament yesterday voted to approve the €100bn bailout package for Spain with 473 of the 583 MPs who attended the extraordinary session voting in favour, 97 voting against, and 13 abstaining. 23 coalition MPs either voted against or abstained, meaning that Angela Merkel lost out on the symbolically important Chancellor’s majority – an absolute parliamentary majority based only on government MPs. During the debate, the SPD’s parliamentary leader Frank-Walter Steinmeier – whose party voted in favour – warned that the SPD would not continue to support bailouts for banks unless creditor involvement was agreed. Open Europe’s coverage of the vote was cited by the Guardian’s live blog.  Bild’s headline is “Adios Milliardos! Will we ever see our money again Mrs. Merkel?” Meanwhile, commenting on the bailouts, former East German dissident and CDU MP Vera Lengsfeld told Handelsblatt that “If MPs allow the government to withhold information but still vote with the government, even after repeated reminders, the Bundestag is abdicating its control function and increasingly resembling the ‘People’s Chamber’ of the DDR.” FT WSJ WSJ 2 IHT BBC Irish Times Irish Independent Telegraph Guardian: Live Blog Bild Welt Welt 2 Spiegel FAZ FAZ: Göbel Süddeutsche Handelsblatt

Open Europe reports Speaking in Washington yesterday, French Finance Minister Pierre Moscovici reiterated his calls for faster integration in the eurozone, first with a banking union only later moving to a political union.   WSJ WSJ Brussels Beat FT: Phelps

Euro Intelligence reports Claus Hulverscheidt says the programme is not going to work, as Spain is likely to require another programme;  In a comment in Suddeutsche Zeitung, Claus Hulverscheidt writes that market participants had misjudged the agreement of the summit, as Germany’s remains unrelenting on the notion that Spain, not the banks themselves, are responsible for the loans. He says there will be no effective relief for Spain as a result of this programme. He writes that it is possible that the Bundestag may have to re-assemble for another emergency session in August to vote on a package for the country as whole, this time much larger.

Euro Intelligence reports Angela Wefers argues that Bundestag insisted on tough conditions and controls.  Börsenzeitung’s Angela Wefers concludes that the Bundestag has sent a strong signal that liability and conditions for the government in Madrid, a reform program for the banking sector and the solution of non-viable banks with aid restrictions during their restructuring constitute clear preconditions for future aid. “The granting of direct aid for banks from the euro rescue funds will not be possible as long as there is no functioning cross border bank supervision in the Eurozone and the EU”, Wefers argues. “When this is the case, will be the Bundestag’s decision. The margin of manoeuvre of government and chancellor Angela Merkel is therefore shrinking. But this also reinforces her against all attempts to get draw Germany into a debt community without control.”

Gary of Between The Hedges relates The Citi Eurozone Economic Surprise Index is at -64.0 points, which is near the lowest since mid-Sept. of last year. Massive tax hikes and spending cuts are still yet to hit in several key eurozone countries that are already in recession. A lack of competitiveness remains unaddressed. The European debt crisis is also really beginning to bite emerging market economies now, which will further pressure exports from the region and further raise the odds of more sovereign/bank downgrades

3) …. I observe that I am a lightening rod for the poneros.

I am a steward of the Good News, and am responsible for presenting the character of God in all genuineness and gentleness. I am neither being paranoid, nor melodramatic, when I relate that I am a lightening rod for the poneros, of which for the recent past two weeks have all been women.

I was out shopping at the downtown market, and while examining the produce, a woman ame up and asked me for change. I looked at her; she had stained pants and shoes, had black fingernails, and I had the impression was that she was a woman with an antisocial disorder; I gave her two dollars. …. Then, the same day, on the way to the major grocery store, I came across another woman, with a girly girl way, on the sidewalk offering flowers, picked from neighborhood, on a donation basis; I gave her two dollars. Later in the week, I saw her sitting in a provocative way directly underneath an ATM machine. … While using the exercise machines at the fitness club, I was the only one, yet a woman came and started to work out next to me. As I started to finish, she started to stop her routine as well, and asked me, are there sanitary wipes for the exercise machines? And I pointed to a bottle and towel immediately to her left. I then used my personal towel from home to wipe down my machine and quickly left for the men’s locker room. … When visiting a church, one of the women greeters asked me where I live, and when I told her, she broke out in a rage, saying that her mother retired there, and when the Federal laws changed to provide that the property be for all low income, the mother felt frightened, and she had to move the mother out. I feel literally terrified, but cannot move out, as I have no money to do so. Inasmuch as the church greeter was completely undone emotionally, I took the bulletin and then went to the auditorium; then left the church never to return. … Finally, just yesterday, I was on the bus to the mall, and a woman came onto the bus, with headphone music playing. I wondered if she was going to turn it down. The bus started down the road, then the driver asked whoever had the music playing to turn it off; but no response; so he pulled the bus to the side of the road, and stood up and walked to the middle of the bus, and asked whoever was paying the music to turn it off; finally the music ended, and the ride resumed.

Poneros contrasts with moral goodness, which is the virtue of respect and honor, (with affection to the saints, meaning that one one lives the one another lifestyle with other sons of God), together with the pursuit of peace to all men. Moral goodness always does the right thing. But the poneros place evil for good, because they must rule over others in all unrighteousness. Joy in life comes from confronting others others and from taking charge over others within a territory, whether, that be a business, a neighborhood, an interpersonal relationship, or simply the physical area surrounding themselves  All of the women mentioned above, are poneros, including the greeter at the church.

4) … Inasmuch as Financial Armageddon, a credit bust and global financial collapse, as well as the Ezekiel 38 War, centered in Syria and iran, as well as Turkey, is imminent, I am nearing a stopping point in blogging.

AP relates Russia says it will veto extension of U.N. observer mission in Syria

Agricultural Commodities Rise Further As German Court Announces September 12, 2012 As Decision Day … Stocks Manifest A Questioning Harami At A New High After The US Fed Chairman Gives No Hint Of Easing … The Poneros Legacy of LBJ’s Grandchildren

July 17, 2012

Financial Market Report for Tuesday July 17, 2012

1) … Agricultural Commodities, RJA, JJA, and FUD jumped higher Monday July 16; taking Risk On Assets, ONN, higher, Defensive shares, such as REITS, RWR, Staples, XLP, and Pharmaceuticals, IHE, traded higher on Tuesday July 17, 2012.  The chart of Biotechnology, XBI, and Utilities, XLU both show a questioning harami on Tuesday July 17, 2012, after the US Fed Chairman Bernanke gave no hint of further easing. Mexico, EWW, rose to an all time high. Bonds, BND, such as BLV, and ZROZ are trading at or near record highs.   

2) … In today’s news

Open Europe relates
The German Constitutional Court has announced that it will announce its verdict on the constitutionality of the ESM and the fiscal treaty on 12 September
Welt Süddeutsche FAZ Spiegel
Merkel to rely on opposition to pass Spanish bailout in Bundestag
German Chancellor Angela Merkel yesterday said she was confident of obtaining a majority in the Bundestag in Thursday’s vote on ratifying the Spanish bailout, although due to dissent in the ranks of her coalition, she will need to rely on support from the opposition.
Separately, Spanish daily ABC reports that the Spanish bank bailout loans will have an interest rate of 2.5%, but fails to mention any sources for the information. Open Europe’s blog post analysing a confidential EFSF briefing laying down a proposed timeline for the Spanish bank bailout was quoted by Saturday’s Telegraph.
ABC El País El País 2 Expansión FT CityAM Euractiv Saturday’s Telegraph Open Europe blog
WSJ: ECB performs U-turn on imposing losses on senior bank bondholders
The WSJ reports that the ECB has shifted its stance on imposing losses on senior bank bondholders, with it now supporting such action in the case of bank wind downs. The new position was reportedly presented by ECB President Mario Draghi to eurozone finance ministers at their meeting on the 9 July, but was roundly rejected because it would require a complex re-negotiation of the Irish bailout. Another article in the WSJ notes that ECB lending to Spanish banks reached a record high of €365bn in June. (I relate that this news report is as of yet unconfirmed by other news services).
WSJ WSJ 2 FT CityAM YLE FT: Munchau WSJ Review & Outlook WSJ: Nixon Telegraph: Bootle

Between the Hedges relates Bloomberg news
Germany’s Stark Opposes ECB as Bank Supervisor, Wiwo Says. Former European Central Bank Executive Board member Juergen Stark said the ECB would risk the independence of its monetary policy if it became Europe’s bank regulator, Wirtschaftswoche reported, citing an interview to be published tomorrow. The euro area’s central bank would face conflicts of interest, for instance if a liquidity crisis at a major bank influenced ECB interest-rate decisions, the magazine quoted Stark as saying, in a summary of his comments e-mailed by the magazine today. While Stark backs creating a European banking regulator, he doesn’t want the ECB to take on the task, according to the report

I comment that Spain is an insolvent nation Spain Risks Market Lockout as Lifeline Yields Climb: Euro Credit. Spanish notes have delivered the world’s worst returns on securities repayable in five years or less for the past three months, jeopardizing the nation’s last line of defense against being locked out of capital markets. With every Spanish bond maturing after 2017 yielding more than 6%, the nation has relied on shorter-dated sales for more than 80% of its borrowing since June 1, compared with 60% for Germany and 66% for Italy
Also Spain Publishes Breakdown of 65 Billion Euro Budget Cuts

Zero Hedge relates
Sicily Is San Bernardino: With First Italian Region On Verge Of Default, Montius Pilate Washes His Hands. And Peugeot, Its Record High Default Probability, And A Brief Primer On Corporate Viability Under Socialism.

Kumaran Ira writes in WSWS
France’s Socialist Party government backs job cuts at automaker PSA.  France’s Socialist Party (PS) government is tacitly backing PSA Peugeot-Citroën’s plans to shut down the Aulnay auto plant and to cut 8,000 jobs across France.

3) … The legacy of LBJ’s Grandchildren is proving to be quite poneros
NBC Chicago reports Two more teens have been charged in the beating death of a 62-year-old disabled man that Chicago police said was recorded on a cell phone and posted to Facebook.

Police said a 16-year-old gang member punched Delfino Mora, father to 12 children and a grandfather to 23, last Tuesday in an alley in the 6300 block of North Artesian. Mora’s devastated family told NBC Chicago that Mora was on his regular route of collecting cans that he sells for cash when the teens confronted him.

Nicholas Ayala, 17, of the 6300 block of North Talman and Anthony Malcolm, 18, of the 5500 block of North Broadway were both charged with first-degree murder and robbery.
Malik Jones, 16, the Latin Kings member accused of striking Mora, was charged with first-degree murder and ordered held without bail Sunday by Judge Adam Bourgeois.
Police said Jones handed his friends his cell phone to start filming then demanded money from Mora and punched him in the jaw. Ayala and Malcolm are accused of taking turns filming the video which allegedly showed Mora’s head smashing into the concrete.
Mora was found unconscious and died one day later.

Police said the video was posted to Jones’ Facebook page. He was arrested after police found out about the video.

4) … Inasmuch as Financial Armageddon is imminent, I am continuing post articles only twice a week; usually for Tuesday and Friday; down from posting daily.

US Dollar Rallies To Two Year High As Failure Of Neoliberal Finance Drives Euro And Stocks Lower …. Bible Prophecy Foretells That A Revived Roman Empire Will Arise Out Of Global Credit And Financial Collapse Where A Powerful European King And Banker Will Rule Regionally And Eventually World Wide

July 16, 2012

Financial Market Report for the week ending Friday July 13, 2012; this is the fifteenth week of entry into the Second Great Depression;

1) … This week the US Dollar, $USD, UUP, rallied, and then retreated, from a two year high on Thursday July 12, as failure of Neoliberal finance drove the Euro, FXE, and stocks, VT, lower; this is the fifteenth week of entry into the Second Great Depression; the chart of the Russell 2000 shares, IWM, communicates that credit died in April 2012

The Euro, FXE, traded lower Thursday of this week to a two year low, as Bespoke Investment Group reports US Dollar Rallying to Two Year High on the failure of the world central banks’ monetary policies to stimulate growth and sustain insolvent banks.. Moody’s downgraded Italy’s sovereign debt rating two notches to not much better than junk.  Silvio Berlusconi is preparing for another run at the Italian presidency, as technocrat Mario Monti states he’s not interested.

Mike Mish Shedlock writes the ECB just cut interest on reserves to zero. The result is reduced liquidity as banks shut down money market funds rather than lose money. Please consider How Money Market Funds Were Wounded by European Interest-Rate Cuts.  The cut in the interest rate was meant to convince banks to stop parking money, to lend more, to get more money into the system and make it more stable – in Wall Street parlance, to add “liquidity.” But the backlash from banks shows that they’re willing to close money market funds rather than lose profits. The effect, ironically, is to reduce liquidity in the financial system. .

A Schulman, SHLM, Meyers Industries, MYE, Target, TGT, and Weyerhaeuser, WY, led Dividend Paying Stocks, DVY, to a new high. The Weyerhaeuser to Timber ratio, WY:CUT, has never been higher, as investors seek safe haven investments in US, VTI, US Homebuilder, ITB, Consumer Services, IYC, and US Infrastructure, PKB, such as TXI, and EXP, especially those that pay dividends. Residential REITS, REZ, led by EQR, and Utilities, XLU, seen in this Finviz Screener, led by NU, rose to new highs.

The chart of Supervalu, SVU, shows a drop of 51% this week.Reuters reports Grocery store operator Supervalu Inc suspended its dividend and took other measures to fund aggressive price cuts to try to win back customers, while also launching a reviewing strategic alternatives.

The chart of Biotechnology Stocks, XBI, seen in this Finviz Screener, suggests that they have topped out

Gold, GLD, is nearing a breakout as Agricultural Commodities, RJA, and JJA, and Natural Gas, UNG, rose strongly, taking commodities, DBC, and USCI, higher this week. .Mineweb relates   India’s Reserve bank looking to put idle household gold to better use

Bonds, BND, BOND, MBB, ZROZ, EDV, TLT, EMB, BLV, LQD, LTPZ, rose this week as Bloomberg reports Haven appeal sends bond sales above $2 trillion. Freddie Mac 30-year fixed mortgage rates declined 6 bps to a record low 3.56%. Bloomberg reports  “Companies worldwide are selling bonds at the second-fastest pace on record with investors seeing the debt as an alternative to traditional havens such as government securities that are now paying negative yields. Anheuser-Busch led sales this week of at least $65.8 billion, bringing this year’s total to $2.08 trillion. That’s second only to the $2.37 trillion issued at this point in 2009.”

Stocks trading lower included the following. KOL, 7%, ALUM, 7%, IGN, 5%, XSD, 5%, BRAF, 5%, GDX, 5%, GDXJ, 5%, FONE, 4%,, SIL, 4%, URA, 4%, REMX, 4%, XME, 4%, QTEC, 3%, COPX, 3%.
Countries trading lower included, Argentina,6%, Greece, GREK 3.0%, Brazil Small Caps, BRF 3%, China, YAO, as CNBC reports China Logs Slowest Quarterly Growth Since 2009

Euro Intelligence provides the best of Eurozone reporting and analysis, I recomend that one purchase its daily email briefing which reports Moody’s cuts Italy by two notches, as loss of market access looms large

  • Rating agency expects a further sharp increase in funding costs or even a loss of market access;
  • Moody’s is also concerned about political risks, and contagion from other eurozone economies;
  • Silvio Berlusconi will be his party’s candidate for the job of prime minister at the next election;
  • the latest polls show him in the lead, ahead of Beppe Grillo’s Five Star Movement, with the Democrats close behind in third place;
  • Spain takes further steps to centralise fiscal policy through a special fund to help, and control, the autonomous regions;
  • Klaas Knot says there is no “religious belief” that 0.75% constitutes a rate floor for the ECB;
  • the cut in the ECB’s deposit rate triggered a large fall in the amounts held in the deposit facility, but the money was merely diverted to banks’ current accounts at the ECB;
  • the SPD said it will support Merkel once again over the Spanish banking rescue;

And Euro Intelligence also reports Rajoy takes Austerianism to its logical conclusion

  • The Spanish prime minister announces €65bn in new austerity measures until end-2014;
  • El Pais says it is the most Draconian economic package since General Franco’s stabilisation plan in 1959;
  • the measures include a 3 point rise in the standard rate of VAT to 21%, and further tax increases;
  • there will be cuts to unemployment benefits, housing benefits, and other social benefits;
  • civil servants wages and holidays will also be cut;
  • Xavier Vidal-Folch says Spain’s MoU is hardly distinguishable from a normal troika operation;
  • Credit Swiss has a report showing a dramatic capital flight from Spain, with domestic savers starting to take part
  • Ignazio Visco says the ECB must do more as the threat of a eurozone breakup remains;
  • the Bank of Italy is now expanding its portfolio to include corporate bonds;

Spain’s conservative prime minister yesterday took Austerianism to its logical conclusion with a programme of €65bn in savings and higher taxes until 2014. As El Pais points out in its front page lead story, this is the most Draconian economic package during Democracy, in fact since General Franco’s stabilisation plan of 1959. The measures include:

on the revenue side:

  • a three-point rise in the standard rate of VAT to 21%,
  • a two point rise in the reduced rate from 8 to 10%
  • a 1pp reduction in social contributions in 2013 and again in 2014
  • increase in environmental taxes
  • increase in certain excise duties
  • elimination of tax credit for home purchases

on the expenditure side:

  • reductions in unemployment benefit for those who have been unemployed for over six months, a large and rising portion of the Spanish population
  • reductions in housing benefits.
  • elimination of Christmas bonus for civil servants (another way of saying a cut in salaries)
  • reductions in the number of holidays for civil servants
  • reductions in benefits for people who temporarily disabled
  • cuts in the costs of ministries
  • cuts in subsidies for political parties and social organisations
  • a review of social benefits with a view to enact further cuts
  • abolishment of recruitment bonuses

The measures will be adopted by the parliament this Friday, when they become immediately effective. Rajoy himself admitted in parliament that the measures will prolong the recession in 2013. (We assumed that this would have happened even under the previous regime. We think this plan will prolong the downturn until 2014/15. We also think that the budgetary impact will be much lower due to the strong consumption effect that results from higher consumption taxes; wage cuts, and other public expenditure cuts; Spain is likely to miss even the revised 6.4% deficit target because of this dynamics.)

Capital flight out of Spain intensifies. This is from FT Alphaville. Credit Suisse has compiled numbers on capital flight out of Spain. Since the middle of last year, capital has been flowing out, with virtually no inflows. Yiagos Alexopoulos at CS reckons outlflows are currently running at an annualised rate of 50% of GDP. Important, he says domestic investors are now joining foreign investors in moving assets abroad. And if that trend accelerates, things will get ugly.

Open Europe reports New €65bn austerity package met with violent protests in Spain; Greece set to miss privatisation target for this year
Anti-austerity protesters clashed with the police in Madrid yesterday, after Spanish Prime Minister Mariano Rajoy announced new cuts worth €65bn until the end of 2014 to meet EU-mandated deficit targets. Meanwhile, El País reports that the Spanish government will not relax the spending limits imposed on Spanish regions for this year, despite the country being given one extra year to bring its deficit below 3% of GDP.

Separately, Kathimerini reports that Greece will miss the goal of raising €3.2bn from the sale of state assets this year, which forms part of the EU-IMF bailout agreement. A Greek official said that the Hellenic Republic Asset Development Fund will only be able to complete two sales this year. FT WSJ City AM Independent Le Figaro EUobserver El País Guardian Guardian 2 Telegraph Irish Times WSJ 2 IHT El País 2 Expansión El Mundo Kathimerini Le Monde Kathimerini 2

And Open Europe also reports The Mail reports that Britain is the third most common home for people from other EU countries, behind Germany and Spain. Mail Open Europe research: Free movement

Doug Noland of Prudent Bear relates that the most meaningful of this week’s data was Friday’s report from the ECB showing that Spanish bank borrowings had reached a record 337bn euro ($411bn), up almost 50bn euros ($61bn) during June.  There’s no mystery surrounding President Rajoy’s snappy acquiescence to EU demands for additional painful deficit-cutting measures.  Spain’s banking system is suffering a run on deposits and liquidity.  The euro traded to two-year lows Friday morning, before rallying somewhat to close out another losing week.

Foreign Policy writes 5 signs of the Chinese economic Apocalypse.

Business Insider relates Here Are 4 Triggers That Could Cause A Meltdown In China’s Enormous Shadow Banking System.

Charles Hugh Smith The Global Economy: It’s All About Increasing Leverage

The University of Oxford relates Rahul Prabhakar, is a Lead Research Fellow in the Globalization and Finance Project. He is currently a doctoral student in International Relations at Oxford, where his research concerns the implications of domestic regulatory politics for global debates on financial stability. Rahul has worked in the US Department of the Treasury, Glover Park Group, and the Office of then-Senator Hillary Clinton, as well as her presidential campaign. In 2011, he was awarded the Deirdre and Paul Malone Prize in International Relations upon completion of his MPhil with Distinction at Oxford. Originally from Long Island, New York, he graduated magna cum laude from Harvard University in 2009 with a degree in Government.

2) … Current political and economic events can only be interpreted correctly through the lens of bible revelation and bible prophecy …  I relate that I am a son of God, Romans, 8:23, predestined, Ephesians 1:3, elect. Colossians 3:12, and of the like precious faith of Jesus Christ, 2 Peter 1:1 … and I write that Bible prophecy foretells that a United States Of Europe, as well as a North American Union, and eight other regions of political and economic governance will rise to rule the world, Daniel 2:30-33, and Revelation 13:1-4, … as part of the dispensation of the fullness of times, Ephesians 1:10, as the Sovereign Lord God has appointed Jesus, the Christ, Ephesians 1:17-23, to destroy all economic and political life, Revelation 2:26-28, and Revelation 6:1-2, that one might have as Witness Lee writes Christ as one’s element and life, and be an overcomer through him, Revelation 12:11. A revived Roman empire will arise out of global credit and financial collapse, Daniel 2:30-33, and Revelation 13-1-4, where a powerful European king, Revelation 13:5-10, with political authority coming from regional framework agreements, Daniel 8:23, and military might, Daniel 11:39-44, will be accompanied by a banker, Revelation 13:10-18, to rule regionally, and eventually world wide.

Alternet writes How out-of-control credit markets threaten liberty, democracy.

Financial sense writes Spain’s bank bailout – a political nightmare

Peter Schwarz of WSWS writes Fierce controversy over banking union in Germany.  Wagenknecht draws no distinction between opposition to the government and the EU from the left and from the right. Or more precisely: In spite of her anti-capitalist rhetoric, she joins with the right-wing opponents of the government, who oppose Merkel’s European course in the name of an exaggerated German nationalism. Sarah Wagenknecht’s proximity to Hans-Werner Sinn, the author of the economists’ statement, is not new. Three years ago, Die Zeit conducted a joint interview with the two. And in September 2010 Sinn appeared at a panel discussion with Wagenknecht in Frankfurt, as a guest of the Left Party. What unites the two, despite many differences of opinion, is the common commitment to the so-called ordo-liberalism, the economic teachings of Walter Eucken and Alfred Müller-Armack, on which post-war chancellors Konrad Adenauer and Ludwig Erhard (both CDU) had based their policies. This specifically German form of liberalism links the free market with a strong state, which provides a framework for the market. In her 2011 book Freedom Instead of Capitalism, Wagenknecht abandoned her former lip service to Marx and expressly supported Ludwig Erhard. If one “thinks the original market economy concept through to the end”, it leads “directly to socialism”, she writes. (See: “‘Left’ figurehead of German Left Party praises meritocracy and the market”). This earned her many supporters in the right-wing bourgeois camp.The economists’ statement and the controversy that has developed as a result are symptoms of profound political changes in Germany. While the Merkel government is driving forward the social counterrevolution in Europe in the name of “saving the euro”, her right-wing critics are developing a policy for the event of the failure of the euro and the European Union, something which looms ever nearer.Since its inception, the politics of the Federal Republic were characterised by its orientation to the West and European integration. This allowed the German economy to regain international standing without the use of military violence and maintain social peace at home. If this framework breaks down, violent social upheavals and the rise of nationalism and militarism are the inevitable result.

Robert Wenzel of Economic Policy Journal writes Along the Road to the United States of Europe.

I relate that the elect know regional economic political and economic governance is ordained of God, Daniel 2:30 and Revelation 13:1-4, and are aware it is part of the dispensation of God, Ephesians, 1:10, so as to establish the Sovereignty of Jesus The Christ, Revelation 1:1, Revelation 2:26-27 and Ephesians 1:20-23.

There soon will be no citizens, only residents of regional blocs, as regionalization replaces crony capitalism and European Socialism.

But the fiat, are now, and will soon be further disappointed, as according to God’s foreordained plan that a ten toed kingdom of regional governance, Daniel 2:30-33, as well as a Beast Regime, they will not be able to take back “their country”; Robert Wenzel of Economic Policy Journal mourns Hank Williams Jr.’s New Song “Take Back Our Country;  John the Revelator writes in Revelation 13:3-4, that people will literally worship at the altar of totalitarian collectivism.

Austrian Economists have decried the fiat money system which has been the backbone of Neoliberalism. For example Murray Rothbard wrote the book Case Against The Fed and Lew Rockwell features his article Fractional Reserve Banking.

Mike Mish Shedlock in article Notes From Steve Keen on “Lending Reserves” and “Debt Jubilees”; Mish Proposed Starting Point For Real Solution to Debt Crisis writes “A free market, not government mandated fiat money is the solution. We certainly do not have a free market now. Instead, we have fiat mandate, compounded by fraudulent fractional reserve banking. It is the fractional reserve banking system that is the very root of the credit expansion problem. By lending out more money or gold than exists, asset prices reach unsustainably high levels before they crash. Sound familiar? propose we start by addressing the root cause of the debt problem which I state is fractional reserve lending.”

Please consider that the Fed, as well and the Bank of England are the very institutions that God ordained in eternity past to develop the two iron legs of US and UK global hegemony, seen in the Statue Of Empires.seen in Nebuchadnezzar’s Dream, out of which a revived Roman empire in the Eurozone will arise.

The Blogger using the nickname London Banker relates  “We need to rethink as a society what banks are for, what exchanges are for, and what clearing houses are for. If they are for the profit of the few at the expense of the many now, that is because it is the business model we have permitted.”

Soon the Banker Regime of Neoliberalism will be replaced by the Beast Regime of regional governance as it arises from the profligate Mediterranean Nation State of Greece where Germany will rule sovereignly over periphery EU States as leaders meet in summits to waive national sovereignty and pool sovereignty regionally.

Regional framework agreements will replace constitutions and traditional law as the dynamos of regional security, stability and stability power up, and the dynamos of global growth and corporate profit wind down. After the soon coming Financial Armageddon, that is a credit breakdown and global financial collapse, Revelation 13:3-4, the diktat money system, will be the backbone of Neoauthoritarianism, and diktat will serve as both money and credit.

Disagreement Arises Over Leader’s Memo Of Understanding And ESM Crushes Euro, Stocks And Commodities

July 12, 2012

Financial Market Report for Tuesday July 10, 2012

Stocks and commodities traded lower today on a falling Euro

The Euro, FXE, traded lower as the National Bank of Greece, and Greece, GREK, led Automobiles, CARZ, Risk Assets, ONN, Energy Exploration, XOP, Small Cap Energy, PSCE, REITS, RWR, Residential REITS, REZ, US Infrastructure, PKB, Semiconductors, XSD, Home Builders, ITB, S&P High Beta Stocks, SPHB, Gold Miners, GDX, Silver Miners, SIL, Junior Gold Miners, GDXJ, Coal Miners, KOL, Uranium Miners, URA, Copper Miners, COPX, Aluminum Producers, ALUM, Nasdaq 100, QTEC, and Metal Manufacturers, XME lower, as Oil, USO, Silver, SLV, Gold, GLD, and Base Metals, DBB, led Commodities, DBC, lower.

Zero Hedge relates Negative yields tighten deflation’s grip.

Political chaos engulfs Europe as disagreement on Leaders’ Memo Of Understanding and ESM arises.

1) … Euro Intelligence provides the best of Eurozone news and analysis; and in their copyrighted and for fee daily newsletter service, which I recommend that one subscribe they relate On Spanish banks, the EU cannot agree on what they agreed.  Spanish 10-year yields rose to over 7.1%, as investors conclude that there is no such thing as an agreement on direct ESM cash for Spanish banks.

  • Eurogroup decides the outlines of the ESM loan to Spain; first tranche of €30bn to be disbursed this month;
  • Troika will come every three months and assume full power over banking supervision;
  • Spanish government must set up a bad bank;
  • Eurogroup confirms 3% deficit target for 2014, and raises 2012 target to 6.4%;
  • It forces Spain to increase tax, most likely VAT;
  • An official document warns that even the looser targets may be hard to reach, and are subject to big risks;
  • Klaus Regling is confirmed as head of the ESM, Yves Mersch at the ECB, and Juncker at the eurogroup;
  • La Stampa says Italy has only a few weeks left to avoid a catastrophic crisis;
  • Corriere says Mario Monti scored another victory at the eurogroup yesterday, as they reconfirmed the bond purchasing plan;
  • Italian yields, however, still rose on the day;
  • Politicians put pressure on constitutional court ahead of today’s ESM hearing;
  • France borrows short term at negative interest rates for the first time;

What was that agreement on Spanish banks? If you read today’s press, you got a lot of confusion of what was actually agreed at the summit in terms of Spanish bank rescue. Yesterday we reported a Reuters story according to which the ESM will not inject equity in European banks, and that the ultimate guarantee would still have to come from the member state.

There were loads of denials of that story – from Jean Claude Jucker and Olli Rehn, who said yesterday there will be no state guarantee. But there will be no equity injections either. Peter Spiegel and Joshua Chaffin had an excellent analysis in this morning’s FT in which they quoted a senior EU official as saying: “If the ESM lends to Spanish banks, it has to be structured so the first loss, which would be common equity, would be borne by the Spanish government.” That statement, if true, ultimately confirms yesterday’s story – that the pernicious link between banks and sovereign will not be broken. Olli Rehn’s spokesman, however, maintained: “There will be no need for a sovereign guarantee for banks being directly recapitalised by the ESM.” (I guess the meaning depends on what they mean by “sovereign guarantee”. If it is a first-tranche loss, then it is technically not a guarantee, but it is economically a guarantee, for this is what a first-tranche loss is all about.)

Wolfgang Schauble and others also played down expectations that there could be a quick deal on supervision. “That will take time, it’s complex, that’s not easy to create, but we will work on that.” He did not address the issues of how the loans would be turned into a direct equity injection.

To recap, it is completely uncertain whether, when and how the EU meets the conditionality that is needed to trigger direct ESM bank aid to Spain. And it is completely uncertain, and contested, what form that bank aid will take. If the Spanish government takes first loss, then we are talking about some hybrid type investment.

These doubts have contributed to yesterday’s increase in Spanish 10-year yields, which have risen further to over 7.1%, with the spreads at over 5.8%. The euro was at $1.2285 this morning.

Time is running out for Rome. Italy must be saved before August, La Stampa reports citing government sources. Huge borrowing costs, recession, lowest business climate since 1998 (according to Italian statistics office ISTAT): the crisis is not over in Italy. Several government officials warned that Italy may have just few weeks to save itself, avoiding a Greek style death spiral. The spending review decree is only one step of the reforms plan arranged by Italy with the European Commission. The risks of a political deadlock in 2013 are huge. That’s why, according to La Stampa sources, the Italian PM is mulling to stay in his role for another year. Monti’s mandate expires in spring 2013.

Corriere celebrates another European victory for Monti. Mario Monti leaves Eurogroup early but as winner, Il Corriere della Sera claims. “The agreement goes in the direction desired by Italy,” government sources told Luigi Offeddu, Brussels correspondent for Il Corriere. Monti has attended the Eurogroup as Italian Finance Minister, helped by deputy Finance Minister Vittorio Grilli. On the last European Council in Brussels, Monti was fighting for “his political survival,” Il Corriere wrote. Later he obtained, also thanks to Spanish cooperation, an agreement on his proposal about a larger role of the ECB or the EU bailout funds EFSF/ESM  for sovereign bonds purchase for those Eurozone members that are punished by higher interest rates but are showing good fiscal behaviour. Monti reiterates Italy did not intend to apply for a bailout or an access to EU bailout funds EFSF/ESM. Meanwhile, the yield of Italian 10 year government bond rose to 6.13% from 6.02%.

Politicians put pressure on constitutional court ahead of today’s ESM hearing.  As a sign of rising nervousness several politicians put pressure on the constitutional court ahead of today’s hearing on the ESM and the fiscal pact, Frankfurter Allgemeine Zeitung reports. “Some observers rightly criticize that the Karlsruhe judges do not have a complete understanding of European affairs which leads them sometimes to erroneous appeciations”, Alexander Graf Lambsdorff, a liberal deputy from the EU parliament said. Helmut Brandt, chief lawyer of the parliamentary group of the CDU and CSU in Bundestag warned against a ruling that would declare the German participation in the ESM and the fiscal pact unconstitutional. “It would be economically and politically fatal if such a ruling would be the outcome”, he said. Martin Schulz, the social democrat who is currently president of the EU parliament said the rulings where “sometimes marked by a lack of factual knowledge”. The Karlsruhe court will today start oral hearings.

France borrows short term at negative interest rates for the first time.  For the first time France yesterday borrowed short term at negative interest rates, Les Echos reports. At their weekly issue of treasury bonds the French treasury Agence France Trésor emitted bonds with a maturity of three months at -0.005% and with six months at -0.006%. According to the paper the negative interest rate shows that investors appreciate the liquidity of the French debt market which despite France’s loss of its AAA top rating they currently consider as the only safe alternative in the eurozone to the German debt market.

The German constitutional court will take more time

  • At yesterday’s hearing, the president of Germany’s constitutional court hinted that he may not run this case under the emergency procedure – and this implies that Germany won’t be able to ratify the ESM for some time yet;
  • Andreas Voßkuhle says court may need to undertake an in-depth analysis;
  • Wolfgang Schauble warns that a negative rule would have considerable implications for the financial markets;
  • plaintiffs argue that the ESM and the fiscal pact deprive the Bundestag of its effective budgetary control;
  • Jens Weidmann used the opportunity to criticise the ESM in front of the constitutional court;
  • he said the ESM challenges the autonomy of central banks;
  • we have the full list of the ESM programme agreed by Spain: a highly invasive action plan to reform the Spanish financial sector;
  • it includes provisions for the bail-in of shareholders, preferred shareholders and subordinated bondholders, i.e. including a lot of small savers;
  • also includes provision for a strengthening of the role of the Bank of Spain, and for a bad bank;
  • El Pais says that EU has taken Spain under guardianship;
  • Vitor Constancio says the ECB will not help fund bank restructuring funds and deposit insurance schemes because this was against the spirit of the treaty;
  • the Bundestag interrupts its summer break to decide on the Spanish rescue;

Weidmann criticizes ESM during the court hearing.   Jens Weidmann criticized central elements of the ESM during his hearing at the constitutional court yesterday, Frankfurter Allgemeine Zeitung reports. The Bundesbank president stressed that the ESM was in a position to change central elements of its working autonomously. Also it was not quite clear how much say the euro member states had if it proved necessary to prop up the ESM with additional means. Also Weidmann said that the ESM weakened the incentives for potential receivers of rescue aid to be responsible by themselves for solid public finances and for adapting their economies. He added that the fiscal pact did not add a sustainable framework for EMU. The Bundesbank president stressed that a rejection of the German ESM law could provoke major market turbulences but he added that unconditional transfers also contained dangers. A rapid ratification of the ESM was no guarantee against further turbulences, Weidmann cautioned.

Bild applauds the court’s in-depth-analysis of the ESM but worries about Germany overburdening itself
Mass circulation daily Bild applauded the court’s judges for their decision not to let themselves be rushed into taking a quick decision on the constitutionality of the ESM. “It is totally right that the constitutional judges take more time – after all, the question is whether Germany is overburdening itself financially. That would be a lot worse than short term turbulences on the financial markets”, the paper tells its 10m daily readers. Also Bild applauds the nomination of Klaus Regling as the ESM’s chairman. “In any case it is very good that a German occupies this important position. But it is unclear whether he will prevail in the long run against the predominance of Southern Europe”. But the article finishes with worries for the future. The Spanish bank rescue increases the liabilities for Germany, the paper notes. “Should Italy also request aid the burden would almost become unbearable”, Bild concludes.

That Spanish rescue in full.  El Pais has a carpet-bombing style news coverage of the Spanish EU programme that feels a bit like as though the country was invaded. The paper’s main headline says “EU places Spain under guardianship”. The inside headlines talks about “shock therapy”. We presented a few of the measures highlights in yesterday’s briefing. El Pais has the full list of the concrete 32 measures agreed. There can be no doubt that, once implemented, the Spanish banking sector is going to be very different – except of course that all risks remain inside the country. Note especially point number five – which will affect a lot of small savers. This is probably the most important conditions, and may have implications for other countries, including Ireland. Here is the full list, abridged of course.

1. Provide data necessary to monitor the entire banking sector, including weekly data of deposits and liquidity positions.

2. Prepare with the European Commission plans to restructure a first group of banks;
July, mid-August.

3. Finalize proposals for disclosure requirements;
late July.

4. Have consultants provide information required for stress tests , including results of the review of asset quality, by mid August 2012.

5. Introduce legislation to apportion losses to several classes of shareholders and subordinated bondholders. Late August 2012.

6. Update the bank resolution framework , ie, strengthen the powers of settlement with the FROB and the deposit insurance fund. Late August 2012.

7. Prepare plans for a bad bank. End of August.

8. Complete stress tests for all banks. Second half of September.

9. Finish proposed regulation to improve transparency of banks. End of September.

10. Banks with capital shortages to apportion losses to shareholders, preferred shareholders and holders of subordinated debt. Between October and December.

11. Banks develop recapitalization plans. Early October.

12. Plan to restructure or liquidate banks in a second group;
October 2012.

13. Improve Bank of Spain’s guidelines or binding rulings, but short of full regulatory powers. Late October 2012.

14. Internal review of processes and decision making. Late October 2012.

15. Legislation for a bad bank. Fall 2012.

16. Improvements in credit reports. End of October.

17. Develop proposals for the strengthening of non-bank financial intermediaries. Mid-November.

18. Propose measures to strengthen the governing bodies of savings banks. End of November.

19. Provide a road map for an eventual stock exchange listing of banks that have received state aid. End of November.

20. Prepare legislation to clarify the role of savings banks in their capacity as shareholders of credit institutions to reduce their holdings to levels that do not involve control.

21. Banks should provide standardized estimates of quarterly balance sheets. As of December 1

22. Present a policy paper on what to do after the expiry of the royal decrees 2/2012 and 18/2012, applying to the restructuring of the banking sector. Mid December 2012.

23. Issue Cocos for a third group of banks. End-December 2012.

24. Transferring the powers of enforcement and bank licensing from the finance ministry to the Bank of Spain. Late December.

25. Require lenders to review strategies to address impair assets. Late December.

26. Require that all Spanish credit institutions have at least 9% tier-one quality at least until late 2014. January 1, 2013.

27. To review the rules governing the FROB and deal with conflicts of interests. January 1, 2013.

28. Review the problems of credit accumulation in certain parts of the economy. Mid January 2013

29. Propose specific legislation to limit the sale by the banks of subordinated debt securities to retail customers. Late February 2013

30. Amend legislation to improve the credit registry. End of March 2013

31. Raising capital requirements for banks planning to increase equity. Late June 2013

32. Banks in the third Group with Cocos must submit restructuring plans . Late June 2013
Constancio says No ECB help for bank resolution funds and deposit insurance. EFX News reports that Vitor Constancio has ruled out any ECB help to refinance banks. He said a provision in legislative proposal now being discussed by EU governments that would allow national bank resolution funds to borrow from central banks could not be applied in the euro area. “It goes against the spirit of the treaty, with respect to the independence of central banks from the financing tasks of the government,” he said. The ECB’s vice president also said he believed there needed to be “financial backstops at the national level in place in order to avoid any doubts by the citizens on the capacity of deposit guarantee schemes to fulfill their commitments.”

Bundestag interrupts summer break to decide on Spanish bank rescue. The Bundestag will interrupt its summer break for a special session on July 19 to take a decision on the EU rescue loans for Spanish banks, Börsenzeitung reports. The parliament’s budget committee will already hold a session the day before. Since Wolfgang Schäuble and the euro crisis managers of the finance ministry were all at the constitutional court hearing in Karlsruhe the chief whips of the different parties were yesterday informed via telephone conference on the decisions taken during the eurogroup meeting the previous night.

2) … Martin Sibileau of A View From The Trenches writes More of the same. As we wrote months ago, in order to save their currency, the Euro zone destroyed its banks. And with this last measure, it will have ended its money market. For all practical purposes, the European Central bank made sure that its liabilities, the Euro, will never be able to reach a global reserve status. The damage these irresponsible central bankers are doing is immense because until now, Euro banks were not lending to each other for a genuine reason: Very high counterparty risk within a currency zone that is falling apart. They were taking heavy capital losses on the sovereign debt holdings they had been coerced to invest their funds in but, at least, they were able to earn 25bps on immobilized monies. Now, they won’t even have this “risk-free” income, a situation that actually enhances counterparty risk, as solvency is further crushed.

At the same time, if the banks cannot afford to have funds immobilized, they will discourage the growth of deposits in the Euro zone, precisely when they are most needed. The way markets welcomed this measure shows we are not alone with this view.

Lastly, in our letter of June 25th, we argued that it was now conceivable to see Germany leave the Euro zone first. We think that the latest actions, both by the central bank and the Euro Summit, make this outcome increasingly likely.

3) … Open Europe reports Spain may need to force losses on bank bondholders to gain eurozone bank bailout.  A draft version of the memorandum of understanding for the Spanish bailout was leaked yesterday. It shows that Spain must meet 32 conditions in exchange for the financial assistance. The FT notes that the conditions include forcing certain bank bond and shareholders to take losses to ease bank debt before the banks receive funding and supervision of Spanish banks being transferred from the Bank of Spain to the Commission, IMF and ECB, with this troika also providing quarterly reviews of the progress in reforming the Spanish financial system. The €30bn tranche which is due to be paid by the end of the month will be kept in reserve for emergencies until the final audit of Spanish banks is completed in September. Speaking in parliament this morning, Spanish Prime Minister Mariano Rajoy has announced new austerity measures worth a total €65bn until the end of 2014.
Expansión Expansión 2 El Mundo BBC Spanish MoU FT WSJ CityAM Telegraph Guardian Standard European Voice CityAM 2 WSJ Review & Outlook Les Echos: Almunia

4) … Phoenix Capital Research writes Germany will bail on the Euro rather than bail the Euro out.  It all boils down to Germany. I’ve been forecasting for months that the country will increasingly focus on domestic interests and that it will ultimately opt to leave the Euro rather than prop up the EU.

The former (focusing on domestic issues) is already underway as Bloomberg writes Germany plans joint Federal-State debt in Merkel fiscal deal. Chancellor Angela Merkel agreed to share borrowing costs with Germany’s states to help ease their budget squeeze, completing a deal the opposition said will help secure German ratification of the European Union’s fiscal pact.

Germany’s federal and state governments plan their first joint debt sale in 2013 to help the states meet the pact’s deficit limits, the German government’s press office said in an e-mailed statement in Berlin today.
Pressed by the Social Democrat-led opposition that could block the stricter European fiscal rules in parliament, Merkel agreed to a policy she opposes in confronting the debt crisis in the rest of the 17-nation euro area. She signaled her rejection of joint euro-area debt as recently as June 23, saying “liabilities and controls” must “go together.”

“We reached a solution that makes it clear there will be approval” of the fiscal pact in the upper house of parliament, Kurt Beck, the premier of Rhineland-Palatinate state and member of the opposition SPD, said in an ARD television interview.

http://www.bloomberg.com/news/2012-06-24/germany-plans-joint-federal-state-debt-in-merkel-fiscal-deal.html

As for the latter development (Germany leaving the Euro), I believe that this will occur once the EU Crisis spreads to France.  At that point any discussion of EU bailouts is pointless, as the very countries needing aid (France, Italy, Spain, and Greece) account for 53% of the ESM’s funding.

So far the markets have been willing to ignore the fact that Spain and Italy are meant to contribute 30% of the ESM’s funding. However, if France starts needing aid (and it will) it’s GAME OVER as any discussion of where the money will come from is moot.

By the look of things, this development is not too far away. France’s Socialist party took its lower house during the most recent elections. Already they are proposing reforms that will result in French businesses and capital leaving the country. The Economist writes France’s new Socialist government is embarking on a series of risky experiments in business. Michel Sapin, the labour minister, has promised to make it so expensive for companies to lay off workers that it will no longer be worth their while. Firms that fire people while still paying dividends may be penalised. Another planned ruse is to force companies to sell factories, presumably along with the brands manufactured there, to competitors rather than close them down.
.
Paris is full of rumours of hasty departures. PPR, a luxury-goods group which owns Gucci and Yves Saint Laurent, is reported to have plans to move its entire executive committee to offices in London as soon as this summer. Technip, a global oil-services firm, is rumoured to be about to move its official headquarters across the Channel. (PPR declined to comment, and Technip said it has no plans to move for now.) To the fury of a French member of parliament, David Cameron, Britain’s prime minister, this week promised to “roll out the red carpet” for French companies on the run from the new tax.

But the most important consequence of stratospheric taxes will be less visible, at least at first. Marc Simoncini is one of France’s best-known entrepreneurs–and one of the few business leaders to denounce the new measures publicly. Why, he recently asked, would anyone want to start a business, invest and succeed in the most taxed country in the world?

Tax is not the only threat to executive pay. Last week Pierre Moscovici, the finance minister, announced that pay for bosses of companies in which the French state holds the majority of shares will be capped at a flat rate of €450,000, or roughly 20 times the wage of the lowest-paid worker. The French experiment will no doubt be watched with interest around the rich world. In some cases it will lead to a 70% pay cut. Over time, the quality of management at these state firms, which had become more professional over the past decade, will surely suffer. Executives such as Guillaume Pepy, the boss of SNCF, the national railways, for instance, could secure a top position anywhere in his industry. Measures to limit pay at fully private firms are expected before long.

http://www.economist.com/node/21557318?fsrc=rss|bus

As one would expect, the wealthy French are fleeing the country. Spiegel writes Wealthy French take their assets to London. It began in 2010, when wealthy Greeks started coming to London and buying up expensive townhouses in upmarket neighborhoods. Amid fears that Greece might leave the euro zone, they believed their money would be safe in Britain in its splendid isolation from the euro and the Continent’s sovereign debt crisis.
Then rich Spaniards started arriving. They were following by well off Italians, who at the start of the year overtook Russians as the biggest group of foreign buyers snapping up property in London, according to a survey.

Whenever the euro crisis heats up somewhere in Europe, the demand for expensive homes increases in Western Europe’s largest city particularly among well-heeled foreigners beset by asset angst.

London real estate agents are like the canary in the coalmine for the debt crisis. They can sense early on the next country to get sucked into the vortex. So who’s up next? Apparently it’s the French.

Real estate agents have been aware of a new wave of interest for months, but it’s been especially noticeable since Feb. 28. The night before, the then Socialist candidate for French president, François Hollande, who famously said “I don’t like the rich,” announced that, if elected, he would raise the top rate of tax on incomes over €1 million to 75 percent. At home, he got much applause for the announcement. But in London, the news produced a reaction that was noticeable on the computers of the London-based property company Knight Frank.

“Since February, when Hollande announced his wealth tax, there has been a large rise in web searches from French customers,” Liam Bailey, head of residential research at Knight Frank, recently told the Daily Telegraph…

To meet the demand, the property company Douglas & Gordon has just opened an office in South Kensington, where four native French speakers will be available to help out their house-hunting compatriots. Hollande’s tax speech immediately led to a 40 percent increase in inquires from worried French citizens, says David Blanc from the London asset management firm Vestra Wealth.

http://www.spiegel.de/international/europe/wealthy-french-flee-to-london-amid-fear-of-hollande-a-833814.html

French banks are already leveraged at 25-to-1. The impact of a capital exodus by the wealthy will rapidly push leverage levels even higher. And given that French banks’ exposure to the PIIGS is equal to 30% of French GDP, it’s no surprise that French banks are posting some truly horrible charts.
I expect the EU Crisis to spread to France before autumn. At that point, it’s game over for any notion of the current EU lasting. Germany will walk.

5)… Spain imposes austerity. Ambrose Evans Pritchard writes Debt crisis: Spain bows to EU ultimatum with drastic cuts.  Spanish premier Mariano Rajoy has raised VAT sharply in a humiliating volte-face and pushed through €65bn (£51bn) of drastic austerity measures to comply with a European Union ultimatum, risking a downward spiral into full depression. Credit Writedowns writes The growing pain in Spain. NYT writes Spain plans new round of tough austerity measures. Chris Marsden of WSWS writes Europe’s austerity zone.  

6) … AP reports Wrecked cruise liner’s captain admits distraction, blames ‘destiny’

7) … The Automatic Earth Libor Was A Criminal Conspiracy From The Start

8) … Financial Sense relates Fractional reserve banking, government and moral hazard.

Risk On Rally Fails As World Banks Dump Off Most Of Their EU-Summit Gains As The Euro Tumbles To A New Low And Italian And Spanish Bond Spreads Return To Pre Summit Crisis Level

July 9, 2012

Financial Market Report for the week ending Friday July 6, 2012; this is the fourteenth week of entry into the Second Great Depression.

1) … Stocks traded lower Friday of this week.

The ETRACS Fisher-Gartman Risk On ETN, tthe “Risk On ETN ONN, traded lower on Friday, reflecting a sale of Risk On Assets. Stock ETFs such as SEA, IPU, PSP, PXR, CHXX, INXX, BRXX, WOOD, KOL, URA, XME, IEZ, OIH, PSCE, AMJ, XOP, CNDA, CHIQ, and PAGG, stalled their rally and traded lower, as the world banks, IXG, led by the Deutsche Bank, DB, and the European Financials, EUFN, dumped off most of their EU-Summit gains as the Euro, FXE, and the Swiss Franc, FXF, plummeted to a new low, and the US Dollar, $USD, rose 2.0% and UUP rose near its recent high.

When Credit died in April 2012, there was a safe haven flight of capital out of India Infrastructure stocks, INXX, and into US Infrastructures Stocks, PKB, as is seen in the chart of PKB:INXX.  Anoop Agrawal  of Bloomberg reports: “Credit risk for India’s financial institutions is climbing toward a three-year high after the central bank warned that cash shortages and rising bad loans threaten lenders in Asia’s third-largest economy.” And Anoop Agrawal and Kartik Goyal of Bloomberg report: “India is likely to face elevated inflation risks from supply bottlenecks and lingering threats to economic expansion, the Reserve Bank of India said. ‘Threats to stability are posed by the global sovereign debt problem and risk aversion, domestic fiscal position, widening current-account deficit and structural aspects of food inflation,’ the central bank said in its Financial Stability Report released in Mumbai today. While India’s financial system “remains robust,” challenges to stability have increased since the last assessment in December 2011.” Popular stocks have included USG, APOG, SHW, EXP, LPX, MON, MYE, AVD, MRC, FISV, TSS, FIS, LIOX, INWK, PRAA, LNN, NC, WPP, ACIW,

Software, IGV, Cloud Computing, SKYY, Networking, IGN, and Semiconductors, XSD, and the Nasdaq 100, QTEC, led Mid Cap Growth, JHK, Russell 2000, IWO, shares lower. Copper Miners, COPX, Silver Miners, SIL, Gold Miners GDX, GDXJ, traded lower. Truck Manufacturer, Navistar, NAV, fell 15% today. Software selling off included WMW, CTXS, RHT, TIBX, ADSK.

Silver, SLV, Gold, GLD, Oil, USO, Timber, CUT, and Base Metals, DBB, led Commodities, DBC, lower. Bespoke Investment Group writes Gold Can’t Catch a Break.  I comment that the reason gold is unable to break out is that US Treasuries, TLT, EDV, ZROZ, are rising, causing the US Dollar, $USD, UUP, to rise; and currencies, such as the South African Rand, SZR, and the Australian Dollar, FXA, to trade lower, on falling Commodity, DBC, prices. An investment demand for gold will return shortly before Financial Armageddon, that is a credit collapse and global financial breakdown, as the chart of the gold ETF, GLD, shows that it is near the edge and edge a descending triangle. Gold is both a commodity and a currency and its value traded lower from its recent high in March 2012 when credit died. The weekly chart of gold shows that it is in the middle of a Elliott Wave 3 up.      

Zero Hedge relates Crude, USO, spiked on news iran lawmakers propose Straits of Hormuz blockade for sanctions countries.

Agricultural commodities, RJA, JJA, soared as heat wave threatens the US grain, GRU, harvest; Wheat, WEAT, and Soybeans, SOYB, continued their upsurge; Corn, CORN, blasted higher. Natural Gas, UNG, rise to strong resistance and manifested bearish engulfing. Agriculture shares, MOO, and PAGG rose higher.

Municipal bonds weekly, MUB, traded lower this week and lower on the month. The chart of Municipal bonds monthly, MUB, shows they entered and Elliott Wave 3 down in June 2012, after having turned lower in March 2012, with the death of credit in March 2012, when the world passed through peak credit as world stocks, VT,  turned lower. The death of credit in March 2012 is seen in the Bespoke chart article S&P 500 Cumulative Breath Declines

The rise in Total Bonds, BND, to a new monthly high is simply attributable to a continuing demand for US Debt as a safe haven investment. Mortgage backed bonds, MBB, rose, causing Mortgage REITS, REM, such as Annaly Capital Management, NLY, to rise. Freddie Mac 30-year fixed mortgage rates declined 4 bps to a record low 3.62%.  Emerging Market Bonds, EMB, rose to a new high.  But world government bonds, BWX, traded lower. The highly margined BOND ETF, BOND, traded higher  The Zeroes, ZROZ, traded higher, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as reflected in the Flattner ETF, FLAT, rising. A flattening yield curve suggests a recession is coming. US Infrastructure Stocks, PKB, have been a limited safe haven investment as well, rising higher on a higher dollar. US Homebuilders ITB, Biotechnology, XBI, Pharmaceuticals, IHE, Dow Telecom IYZ, and US Preferreds, PFF, rose to new highs.

An inquiring mind asks are credit providers, MA, V, DFS, NNI, RCII, GCA NICK, COF, ARCC, ADS, WRLD, CATM, seen in this Finviz Screener topped out?

And an inquiring mind asks have retailers, VSI, ROST, TJX, PETM, and SSI, topped out.

And have telecom providers, PTGI, GNCMA, EQIX, SBAC, EQUI, topped out?

And have rental services URI, ELRC, AAN topped out as well?

Semiconductor Manufacturer, MLNX, has definitely topped out after having manifested a cup and handle pattern with three white soldiers and a lollipop hanging man candlestick chart pattern.

2) …. In this week’s news

Mark Grant of Out of the Box relates in Zero Hedge Seven out of the seventeen economies that belong to the European Union that need to be bailed out. This is 41% of the Euro-17 that is in trouble. The second indication of decline is the recessions in Europe. In fact virtually all of Europe is in a recession and while Germany has held its head above the water I think by the third or fourth quarter that she is also mired in an economic decline. Europe is 25% of the global economy and this is beginning to affect the United States as exemplified by the declining revenues and profits of many American corporations that have so far reported out this quarter. The axes of the financial markets are America, Europe and China and with Europe in serious decline and China also contracting the strings are vibrating so that all of the markets are likely to go down. Even without some cataclysmic shock, realization is coming. The debts of Europe are being paid off with ever more debt and the can kicking will find its walls and as the European recession deepens it will be felt in America and then adjustments will have to be made – as fact overbears fantasy.

Daily Mail UK’s borders ‘will be closed’ to refugees if eurozone collapses

Financial Sense When zero rates don’t work

Reuters reports How Stockton went broke: A 15-year spending binge

CNN Money Explaining the Libor interest rate mess

Euro Intelligence provides the best in news and analysis and in its for fee daily email Welcome Back To The Crisis relates After a disappointed reaction to the ECB’s rate cut to 0.75%, Italian and Spanish spreads have returned to the crisis levels that prevailed before the summit; The euro fell below $1.24, and Germany 10-year yields to below 1.4%. A group of pro-European German economists are launching a counter-appeal to Hans-Werner Sinn’s anti-banking union movement. Angela Merkel’s popularity rating in Germany has reached the highest in three years. The Greek finance ministry find it impossible to collect tax fines to due understaffing and outdated system. Fabrizio Goria says the ECB reached the end of the line. Merkel and Hollande want to create the post of a Super Mr. Euro, Le Figaro writes (And MIke Mish Shedlock writes Hollande and Merkel Want a “Super Mr. Euro” Position; I Nominate Max Keiser For The Job

In a direct response to the public appeal by Ifo president Hans-Werner Sinn and 170 other economists for a citizen’s revolt against last week’s summit results and the plans for banking union, a group of pro European economists is about to launch a public campaign in favour of Angela Merkel’s euro rescue policy, Spiegel Online reports. Sinn’s appeal “damaged the reputation of German economic science”, Peter Bofinger said of he is one the five so called economic wise men. The director of the Institute for Economics, a research organization close to the employer’s federation, said the appeal was “irresponsible” because it “did not have anything to do with economic arguments”. Meanwhile Bofinger and Gustav Horn, a left wing economist close the German unions prepare a public appeal in response to Sinn and in support of Merkel’s euro policy. The chancellor also reacted to Sinn’s criticism by saying the summit results increased common control and not common liabilities. Meanwhile, 54% of the Germans feel that the different euro rescue efforts do not make any sense, a poll for Spiegel Online showed.

Angela Merkel’s popularity among voters is at its highest level in three years, according to a poll published on Thursday that also confirmed strong support for her stance in the euro zone debt crisis, Reuters reports. But the Infratest-ARD survey suggested Merkel’s FDP coalition partner would fail to get elected to Bundestag after next year’s election, complicating her hopes of securing a third term. The poll, conducted after an EU summit widely seen by German media as a setback for Merkel’s tough euro zone policies, showed 66% of Germans were satisfied with her performance, an increase of eight percentage points from a month before and the highest reading since 2009 when she won a second term. Her nearest rival, Frank-Walter Steinmeier, parliamentary leader of the SPD, had an approval rating of 61%. He was level pegging with Wolfgang Schäuble. Some 58% of Germans believe Merkel’s stance in the euro crisis is correct and decisive, although 85% of those polled also expect the crisis to get worse.

Writing in Linkiesta, Fabrizio Goria says one of the reasons for the disappointment is that the ECB reached the end of the line. With the deposit rate now at 0%, and two LTROs, the inter-banking market remains frozen. He quoted ICAP as saying that the ECB is working overtime to keep the banks afloat, just as they did between August and December 2011. And he said hedge funds may yet test the most recent decision by the European Council, and that this may lead to even higher yields. He said confidence in Italy in particular might falter upon a disappointing reaction to the spending review, which the Monti government is currently considering. He says Italy is unlikely to accept the European Commission’s recommendations to eliminate the provinces as a fiscal entity, and that the confidence Rome has benefitted from in the last few weeks may well vanish quickly.

According to Le Figaro Angela Merkel and Francois Hollande agree to upgrade the eurogroup chairman post to a “Super Mr. Euro” who would be eye to eye with Mario Draghi and Christine Lagarde. The post should be more visible than it has been since the current holder Jean-Claude Juncker took it over in 2005. The aim would be to have someone who would represent the eurozone politically at international meetings like the G20. The chancellor will talk with the president about the idea this Sunday when both will meet in Reims. According to the paper, which says it drew on high ranking German and French sources, both would want Juncker to continue on an interim basis until the end of the year when Herman Van Rompuy will present the detailed proposals how to strengthen EMU. There appears to no agreement yet about who should be this “Super Mr. Euro” afterwards. According to Le Figaro Wolfgang Schäuble still is interested while the French also consider that a Frenchman should occupy one of the high profile euro posts.

Another setback on the tax collection front in Greece.  As Kathimerini reports, the finance Ministry has been unable to collect court-ordered tax fines of €12.6bn, 6.2% of GDP, according to data posted on ministry’s website. This is due partly to understaffing, the voluntary exit programme, and early retirement schemes for civil servants, as an absence of electronic procedures. They only managed to collect €630m. In addition, there are 180,000 outstanding tax cases in the Greek courts with no sign that this number will shrink significantly any time soon. As a result, the paper write,  it is hardly surprising that net revenues are showing a 1.5% decline from the same period in 2011.

Open Europe reports 160 German economists issue public appeal against eurozone banking union;  Citi: Taxpayers and MPs “misled” over extent to which ESM loans are senior to other claims.  160 German economists, including the head of the IFO institute, Hans-Werner Sinn, have today published an open letter to their fellow citizens criticising the decisions taken at last week’s EU summit, warning that “we view with great concern the step towards a banking union, which will result in the collective guarantee of the debts of the banks in the eurosystem. These debts are almost three times as large as the government debt and in the five crisis-affected countries they lie within the range of several trillion euros… Banks must be allowed to fail. If the debtors cannot pay, there is only one group who can and should bear the burden: the creditors themselves.”

In an interview with Der Spiegel, the SPD’s budgetary expert Carsten Schneider warns that, without strict conditions, Angela Merkel cannot count on his party’s support in the Bundestag for approving direct support to Spanish banks via the eurozone’s bailout funds. In the last four votes on the eurozone rescue, Merkel failed to gain a so-called ‘Chancellor’s majority’, i.e. an absolute majority based only on MPs from her own coalition.

Deutsche Wirtschafts Nachrichten reports that an internal Citigroup evaluation of the eurozone’s new permanent bailout fund, the ESM, suggests that taxpayers and parliamentarians have been misled over the level of seniority which ESM loans enjoy. This is because the clauses suggesting that ESM loans would be senior, and therefore likely to avoid losses under a debt restructuring, are only ‘noted’ and are not actually legally enforceable. This interpretation of the treaty was also confirmed by UK lawyers consulted by the newspaper. However, the article does note that this type of seniority is also held by the IMF and other supranational institutions.
Spiegel Handelsblatt Welt FAZ FAZ: Economists’ Letter Spiegel 2 Spiegel: Schneider DWN

Open Europe reports Spanish government set for showdown with regions over new budget cuts; Le Figaro: Hollande and Merkel want to create new “Super Mr Euro”.

According to sources quoted by Reuters, the Spanish government is finalising a new austerity package worth up to €30bn to make sure that Spain meets EU-mandated deficit reduction targets. The package would run over several years, and some measures may be announced as early as next week. However, El País notes that many Spanish regions have said they have no margin for further budget cuts this year. In an auction this morning, Spain had to pay a 6.43% interest rate on its ten-year bonds – the highest since last November. Meanwhile, Spain’s former finance minister and IMF director Rodrigo Rato is to face trial for alleged fraud following the collapse of Bankia.

Le Figaro reports that France and Germany want to increase the powers of the eurozone President from next year and create a new “Super Mr Euro”. German government spokesman Steffen Seibert told Bloomberg the report was “fabricated”.

Separately, during his joint press conference with German Chancellor Angela Merkel yesterday, Italian Prime Minister Mario Monti said that Italy’s public deficit will be 2% of GDP at the end of the year – well above the previous estimate of 1.3%. The Italian government is due to adopt plans to cut public spending tomorrow.
Bloomberg Reuters El País El País 2 Cinco Días FT CityAM WSJ Telegraph WSJ 2 Dow Jones Le Figaro 3 FT 2 FT 3 FT: Editorial Telegraph 2 IHT Le Figaro Il Sole 24 Ore Il Sole 24 Ore 2 Irish Times Telegraph RTE

Open Europe reports Bundesbank President criticises constant mutualising of risks and weakening of agreed rules; Row over letter by German economists warning against banking union grows.

Yesterday’s open letter warning against setting up a eurozone banking union, now signed by 172 German economists, received partial backing from Bundesbank President Jens Weidmann reports FAZ. Weidmann argued that “This is not some short-term instrument that will solve the existing problems but an ambitious project whose complexity matches that of the monetary union and the common monetary policy”. He also criticised the government over the decisions taken at last week’s EU summit, warning that the eurozone was “constantly mutualising risks and weakening the agreed rules”, adding that “Fiscal aid should be the last resort of crisis management [but] this position has by now been recognisably weakened.”

The German political establishment has reacted angrily to the letter, with German Finance Minister Wolfgang Schäuble claiming it was “outrageous” that the economists were “confusing the public”. The letter was also criticised by the FDP, while the opposition SPD’s budgetary expert Carsten Schneider described it as “hysterical”. Chancellor Angela Merkel denied that Germany would be taking on any additional liabilities, claiming that “Liabilities for banks are banned under the current rules just like liabilities for state debts”.

According to a new Infratest Dimap poll for German public broadcaster ARD and Die Welt, 60% of Germans are satisfied with Merkel’s handling of the eurozone crisis. Open Europe’s blog post looking at the economists’ letter was cited by National Review Online.
FT Handelsblatt FAZ Süddeutsche Handelsblatt 2 Süddeutsche 2 Welt La Tribune National Review Online

Bloomberg reports on the death of European Socialism. Spain Rescue Seen Worse Than Cure as Hospitals Make Cuts. Patients and hospitals across Spain are wrestling with the same dilemma. Even as old debts get paid off — the country’s 17 regions ran up some 12 billion euros in unpaid health bills through last year — new ones are piling up. As a result, the need to break the cycle with spending cuts threatens to redefine the very notion of Europe’s tradition of socialized medicine: how best to treat patients, not how to make ends meet. “As long as it is state-funded, the health system will always run a deficit,” said Miguel Llorens, financial director for Hospital Provincial de Castellon (Hat Tip to Gary of Between The Hedges)

Bloomberg reports Made-in-London Scandals Risk City’s Reputation as Finance Center. London risks losing its status as the world’s top financial center as the $360 trillion interest-rate fixing probe follows a series of market abuses by banks that eroded trust in a city already shrinking faster than rivals. JPMorgan Chase & Co. (JPM)’s trading loss of at least $2 billion, the alleged $2.3 billion fraud at UBS AG (UBSN) and the investigation of at least a dozen banks including Barclays Plc (BARC) for rigging global interest rates all happened in London in the last year. The effect is taking a toll on the capital of a country enduring its first double-dip recession since the 1970s, which fired more financial-services workers than any other country in 2011 and again this year. (Hat Tip to Gary of Between The Hedges)

Bloomberg reports Barclays Corrupts Libor and Maybe a Lot More. If Barclays Plc (BARC) would lie about its borrowing costs, what else would it lie about? That question gets to the heart of the damage Barclays did to itself by submitting false numbers for years to the British Bankers’ Association as part of the surveys used to set the London interbank offered rate, the benchmark for $360 trillion of financial instruments globally. The most important asset any bank has is trust — especially when it comes to the figures on its own financial statements. Whatever credibility Barclays had, it’s been poured down the drain like last night’s suds. (Hat Tip to Gary of Between The Hedges)

The WSJ reports Rate Scandal Set to Spread. Former Barclays CEO Lambasted in Parliament as Other Banks Brace for Fallout. A day after abruptly resigning amid a mushrooming scandal over interest-rate manipulation, former Barclays PLC chief Robert Diamond on Wednesday was assailed by British lawmakers for the bank’s actions, in a preview of the scrutiny likely to lie ahead for other big lenders that are under investigation. Barclays last week agreed to pay $453 million to settle U.S. and British authorities’ allegations that the British bank tried to manipulate the London interbank offered rate, or Libor, which is the benchmark for interest rates on trillions of dollars of loans to individuals and businesses around the world. (Hat Tip to Gary of Between The Hedges)

CNBC reports China’s Fleet of ‘Ghost’ Ships Signals Worsening Slowdown. China’s huge fleet of coastal ships, usually confined to plying the Chinese seaboard, has sailed out of the shadows to seek international business in yet another sign that China’s economy is slowing. The fleet, previously unnoticed by the global market, is suffering from a slowdown in China’s coastal trade amid weaker domestic demand from utilities and steel mills and a growing glut in Chinese coal and iron ore stockpiles. The vessels are now being forced to seek new business such as in the Indonesian coal trade, dealing a further blow to the depressed global dry bulk shipping market. “There are many more ships lying idle at Chinese ports now – the environment for making money is not so good,” said a source at one of the big five coastal shippers, who asked not to be identified (Hat Tip to Gary of Between The Hedges)  (Hat Tip to Gary of Between The Hedges)

Nature economist Elaine Meinel Supkis writes in Culture of Life News writes Huge Anti-nuclear Demonstration In Tokyo Shut Down By Noda. Facing reality is hard.  The confusion of modern technology, a population crisis coupled with a financial disaster created by too much credit, WWII becoming the Cold War morphing into many religious wars coupled with the CO2 crisis, the nuclear messes and the overall sense of ‘End of Times’ means we are in a crisis, of course.

This feeling of doom is strong.  And growing.  England and Southeast Asia has been having floods while the US is hot and dry.  Normally, when the weather goes to an extreme (and it does this regularly like a pendulum for at least the last 2.5 million years) people become scared for good reason

The government of Japan has deliberately scheduled athletic events in highly radioactive districts.  Recently, they had a marathon race there for young women, the very last people that should be breathing in the radioactive dust while running hard.  Now it is soccer girls in peril:  #Radioactive Japan: Canada-Japan Women’s Soccer Friendly Match to be Held in Fukushima City | EXSKF.

Sucking down air while breathing very deeply and hard is very dangerous:  20,201 Bq/Kg from vacuum cleaner in Chiba | Fukushima Diary.  The government isn’t measuring this dust, private groups are doing this.  The nature of humans is to ignore reality when it suits us so governments are very good at doing this.

1,000 US High School Students to Do Volunteer Cleanup, Tree-Planting in #Fukushima, Miyagi, Iwate, Ibaraki and Observe Japan’s Recovery | EXSKF is another attempt by the Japanese ruling elites to trick eager US kids to come to Japan and be Chernobyl guinea pigs.  I remember when the US government lied nonstop about nuclear dangers of bomb testing.

They would go out of their way to deliberately expose CHILDREN to this noxious stuff to prove it didn’t kill.  Young soldiers were repeatedly exposed to high levels of nuclear pollution by being force marched into dusty deserts that were nuked minutes earlier!  Since no one died instantly, the government claimed there was no danger.

This is a blatant lie and worse, government scientists knew this and went to greater and greater lengths to prevent their own children from being exposed to this dangerous dust.  This cultural exchange is being enabled by our own government because they want to expand nuclear power plants here, too, and are most anxious to make things look ‘normal’.

So the poor students, blissfully unaware of the life-long negative outcomes they are being exposed to, will travel there to have an exciting time visiting the Japanese culture and talking about anime and gaming with young Japanese kids who are being kept inside all the time to avoid the things these US students will be exposed to.

Note that the US guinea pigs will be asked to DIG holes and plant and WATER trees!  So they will have maximum exposure.  Then the nuclear power pushers in the US and Japan will grandly announce that all is well and anyone complaining about high radiation are stupid.  If these poor students undergo a lifetime of cancer treatments due to this won’t make the news and will happen ten or twenty years from now.

Japan’s government is determined to resume nuclear energy production.  The anti-nuclear demonstrations are growing bigger each week so these are now being forcibly suppressed as rightwingers work hard to take over the system on behalf of the rich.  The government is tricking athletes to perform in high radiation areas as a scheme to normalize radiation effects which are long term.  Also, the income of the Japanese masses has fallen to 1988 levels and is dropping.

Everything in Japan is getting much worse.  The loss of the right to petition this very stagnant government is being curbed while the media has decided to ignore this fact.  I looked all over the media for news about the biggest anti-nuclear demonstration yet and saw very little online.

There are many excellent pictures here:[Live] Organizer stopped protest, police shut down the exists of subway. | Fukushima Diary and here:  [Live] Police blocked official residence | Fukushima Diary.  The picture I posted above is from Fukushima Diary and this massive demonstration happened in the rain.

It is most unusual to have huge demonstrations at night, in the rain.  So this shows the clear determination of the demonstrators to make their voices heard.  Alas, the world’s media has chosen to ignore them and so this is as if nothing has happened.  Media blackouts are a common tool used collectively by the elites, many of whom are Bilderberg conspirators, to hide the truth.

Facing reality is hard.  The confusion of modern technology, a population crisis coupled with a financial disaster created by too much credit, WWII becoming the Cold War morphing into many religious wars coupled with the CO2 crisis, the nuclear messes and the overall sense of ‘End of Times’ means we are in a crisis, of course.

This feeling of doom is strong.  And growing.  England and Southeast Asia has been having floods while the US is hot and dry.  Normally, when the weather goes to an extreme (and it does this regularly like a pendulum for at least the last 2.5 million years) people become scared for good reason.

Nothing is a happy steady state and in particular, human numbers are not steady.  Despite dropping in Japan, it is increasing at a very high pace in say, India and certainly much of Africa.

The government of Japan has deliberately scheduled athletic events in highly radioactive districts.  Recently, they had a marathon race there for young women, the very last people that should be breathing in the radioactive dust while running hard.  Now it is soccer girls in peril:  #Radioactive Japan: Canada-Japan Women’s Soccer Friendly Match to be Held in Fukushima City | EXSKF.

Sucking down air while breathing very deeply and hard is very dangerous:  20,201 Bq/Kg from vacuum cleaner in Chiba | Fukushima Diary.  The government isn’t measuring this dust, private groups are doing this.  The nature of humans is to ignore reality when it suits us so governments are very good at doing this.

1,000 US High School Students to Do Volunteer Cleanup, Tree-Planting in #Fukushima, Miyagi, Iwate, Ibaraki and Observe Japan’s Recovery | EXSKF is another attempt by the Japanese ruling elites to trick eager US kids to come to Japan and be Chernobyl guinea pigs.  I remember when the US government lied nonstop about nuclear dangers of bomb testing.

They would go out of their way to deliberately expose CHILDREN to this noxious stuff to prove it didn’t kill.  Young soldiers were repeatedly exposed to high levels of nuclear pollution by being force marched into dusty deserts that were nuked minutes earlier!  Since no one died instantly, the government claimed there was no danger.

This is a blatant lie and worse, government scientists knew this and went to greater and greater lengths to prevent their own children from being exposed to this dangerous dust.  This cultural exchange is being enabled by our own government because they want to expand nuclear power plants here, too, and are most anxious to make things look ‘normal’.

So the poor students, blissfully unaware of the life-long negative outcomes they are being exposed to, will travel there to have an exciting time visiting the Japanese culture and talking about anime and gaming with young Japanese kids who are being kept inside all the time to avoid the things these US students will be exposed to.

Note that the US guinea pigs will be asked to DIG holes and plant and WATER trees!  So they will have maximum exposure.  Then the nuclear power pushers in the US and Japan will grandly announce that all is well and anyone complaining about high radiation are stupid.  If these poor students undergo a lifetime of cancer treatments due to this won’t make the news and will happen ten or twenty years from now.

So what, if they all die before age 65?  No one is going to be keeping records of them or the children of Fukushima province.  They will be ignored by the elites.

Average income of Japan households in 2010 down to 1988 level)  The figure represents a drop of 1,262,000 yen from the record 6,642,000 yen marked in 1994…The report also said an all-time high of 61.5 percent of households replied that they were struggling to make a living.

This is a depression for the Japanese people.  It has lasted nearly 20 years.  It has no end in sight at all.  The ZIRP solution imposed after 1994 has been a failure.  Jobs are leaving Japan faster than they are being created.  During the entire crisis, the Japanese rich have gotten richer and the poor are dying off.

CNS News reports 8,733,461: workers on federal ‘disability’ exceed population of New York City

RT writes Eurozone exit: $390,000 prize for winning escape plan

Doug Noland writes of The paradigm shift from credit expansion to credit contraction  I continue to fear that the confluence of complacency, policy impotence, and endemic global market speculative excess creates unappreciated systemic fragilities.

Extraordinarily divergent macro views have solidified.  Some see the makings for a new secular bull market.  I instead see an increasingly susceptible global Credit Bubble and attendant historic financial mania.  A critical facet of this thesis remains that policymakers will go to incredible lengths to sustain Credit, financial and economic booms.  And while this guarantees difficulty in assessing the timing of when catastrophe might strike – it seemingly ensures such an outcome.  With unsettled markets only adding to confusion, I thought it appropriate this week to touch upon Credit theory to try to bring a little clarity to the muddled macro backdrop – Trying to Stay Focused on the Big Picture.

During the halcyon upside of the Credit cycle, ever increasing quantities of Credit disburse purchasing power throughout financial and economic systems.  The Credit-induced increase in spending supports income growth, consumption, corporate profits, investment, government receipts/expenditures and economic output.  Asset inflation is seen as fundamentally driven and, furthermore, as confirmation of the bullish viewpoint.  One can say that Credit growth is self-reinforcing – or “recursive.”  Importantly, the upside of Credit booms ensures seemingly positive “fundamentals” that validate the system’s financial asset price structures and, more generally, the expansive Credit and financial infrastructure.

The Credit boom ensures notions of economic “miracles,” “New Eras,” and “New Paradigms.”  Policymakers are generally seen as astute; economic doctrine as advanced and enlightened.  The inflationary bias associated with the Credit cycle’s upside provides policymakers great flexibility – and seemingly ensures policy effectiveness.  And especially after a few episodes where policy responses free the system from the jaws of crisis, players throughout the markets and economy (not to mention the general public) come to believe in the capacity of policymakers to avoid trouble and sustain the boom.  The social mood is one of general optimism, cooperation and cohesion.  The pie is perceived to be getting bigger, and most are for the most part satisfied that they’re enjoying their fair share.  And, of course, “bull markets create genius.”

The unavoidable may be avoided for years, yet the brutality of a Credit cycle’s downside in the end will be commensurate with the duration and scope of boom-time excesses.  And the changed Credit environment changes so many things.  The maladjusted economic structure will eventually give way, ushering in a cycle of deteriorating fundamentals – including stagnant household incomes, faltering profits and deteriorating government finances.  The pie will not only be shrinking, but most will come to see a fortunate few unfairly taking an ever increasing share to the detriment of everyone else.  The system will be viewed as inequitable, unjust and flat out broken.  The social mood turns sour, as most incomes stagnate (or worse) and perceived financial wealth withers.  Faith in institutions will wane.  Post-Bubble policymakers will invariably be viewed as inept.  Optimism is supplanted by pessimism.  As always, wrenching bear markets create disdain and hostility.

Credit’s downside, along with accompanying bear markets, over time instills wreaking ball havoc upon the Credit structure.  In the final analysis, Credit is everything and always about confidence.  During the Credit expansion, constructive fundamentals and general optimism bolster the perception that Credit is sound and that most Credit instruments will be vehicles of wealth generation.  As a Credit bust ensues and the economic and asset price backdrop deteriorates, ever-increasing swaths of Credit instruments are viewed as impaired or even dubious.  The entire Credit and financial structure, having grown to incredible stature during the boom, turns brittle and unstable – with trouble generally starting out on the “periphery” before eventually rotting away at the “core.”

Grant Williams in Zero  Hedge writes More on the LIBOR Scandal and explains why it would be impossible for Barclay’s to rig the LIBOR rate on its own. The idea is that top British banks conspired together to “rig” the price of LIBOR. But the entire financial industry is rigged from beginning to end, starting with the price and volume of money. Central banking is the predominant theme of the monetary world – of the global economy, actually. All around the world, small groups of men under the supervision of the BIS meet regularly to determine (or “fix”) the price and volume of money. Yet we are to believe that the paltry price shaving performed by LIBOR banks is an expression of ultimate criminality while central bank price-fixing on a day-to-day and sometimes hour-to-hour basis is beneficial?

Christopher Mardsen writes in WSWS Allegations of government collusion in Libor fixing raised in UK Parliament The declaration by chairman Andrew Tyrie that some of what Barclays chief executive Bob Diamond said in testimony to the parliamentary Treasury Committee seemed “implausible” ranks as a masterpiece of understatement.

Holman W Jenkins Jr, writes in WSJ, Lies, damn lies and LIBOR. Call it one more improvisation in ‘too big to fail’ crisis management. Libor was flawed by the assumption that the banks setting it would always be seen as top-drawer credit risks. The Basel capital-adequacy rules were flawed because they incentivized banks to overproduce “safe” assets, like Greek bonds and U.S. mortgages. The ratings process was flawed eight ways from Sunday, including the fact that many fiduciaries, under law, were required to invest in securities blessed by the rating agencies.

Some Barclays emails imply that traders, even before the crisis, sought to influence the bank’s Libor submissions for profit-seeking reasons. This is puzzling and may amount to empty chest thumping. Barclays’s “submitters” wouldn’t seem in a position to move Libor in ways of great use to traders. Sixteen banks are polled to set Libor and any outlying results are thrown out. Plus each bank’s name and submission are published daily. But let’s ask: Instead of trying to manipulate Libor in a crisis, what would have been a more straightforward way of dealing with its exposed flaws, considering the many trillions in outstanding credit tied to Libor?

The answer is obvious: The Bank of England might have stepped forward with a statement: “All banks are potentially insolvent. Therefore, Libor is no longer an effective proxy for credit availability to top-notch borrowers. Therefore the government is instituting price controls over Libor and the benchmark will be set by administrative fiat until further notice.”

This would have been an aboveboard solution. It would also have drawn back the curtain on the wizard in a way perhaps not helpful to central-bank efforts to contain an incipient financial panic. In a budding panic, the wizard act of monetary authorities is all we’ve got. You haven’t understood the Libor scandal until you understand this part too.

Tyler Durden writes in Zero Hedge The sole driver of risk in the past 3 years has been nothing but continued pumping of liquidity into markets by central banks: aka the Global Central Bank Put. How does this look visually? The below summary charts showing global balance sheet expansions should blow everyone’s minds.

3) …Bible prophecy is the only correct lens through which to view economics and politics

There are many austrian economics authors who have written critically of Neoliberal finance and the Neoliberal regime, that is the Milton Friedman, Free To Choose, floating regime, also known as the Banker Regime. For example, Mario Rizzo is an economic professor at the New York University writes on Ethics and Economics, Law and Economics, Psychology and Economics, Foundations of Economic Theory, Moral and Economic Paternalism, and Classical Liberalism.

Professor Rizzo has edited what is now an extensive series of Austrian Economics books called “The Foundations of the Market Economy” published by Routledge in London and New York. He is also a series editor of the research annual, Advances in Austrian Economics, as well as a co editor of a series, “The Political Economy of the Austrian School”, published by NYU Press.

He authored Economic Policy Journal article Richard Posner Turns Keynesian where he relates … “as an author of The Economics of Time and Ignorance, I am fully on board about incorporating some of the valuable insights Keynes had in my own largely Austrian perspective. I have even blogged in Think Markets about the similarities between Keynes’s view of the method of economics and that of Hayek. They both were strong proponents of “subjectivism” and opponents of excessive formalization. On the other hand, I can understand the dismissive attitude toward Keynes exhibited by Ludwig von Mises. Mises thought that Keynes was an enemy of the economic way of thinking. He entitled a critique of Keynesianism, “Stones into Bread: The Keynesian Miracle.”…”.

I relate that since the early 1950s and especially in 1971 with the abandonment of the gold standard by Nixon to engage in the Vietnam war and greatly expand US hegemony globally, neoliberalism has seen a throwing off of rational choice to engage in a global debt trade which has stimulated inflationism and caused crony capitalism and European Socialism to rise as the dominant economic and political paradigms.

According to the dispensation of the fullness of times, or what Witness Lee calls, The Economy of God, paperback available from Amazon, seen in Ephesians 1:10, the Sovereign God, Ephesians 1:14-21, is acting to replace Neoliberalism with Neoauthoritarianism, as seen in the rise of the Beast Regime of Revelation 13:1-4, which is also regional known as global governance as foretold in Daniel 2:30-33, as the new dominant economic and political paradigm. This ten toed kingdom, will be comprised of the iron of diktat and the clay of democracy, and being unsustainable, will collapse; out of which mankind’s final kingdom — a one world government will arise.

Neoauthoritarianism, after the soon coming Financial Armageddon, seen in Revelation 13:3-4, will see a shackling on of debt servitude, beginning in the Eurozone, as the First Horseman of The Apocalypse, Revelation 6:1-2, transfers the baton of sovereignty from sovereign nation states, to sovereign leaders and sovereign bodies such as the ECB.

Future EU Leader’s framework agreements will serve as the constitution for the New Europe, where Leaders meet in summits and waive national sovereignty, and pool sovereignty regionally. Soon a New Charlemagne will rise out of Financial Armageddon, Revelation 13:3, to rule the Euro zone, where Germany will be preeminent, as a type of revived Roman Empire that governs the European continent. Euroland’s future leaders is today, one of seemingly little authority, and appropriately is termed the Little Horn, Daniel 7:7-8. Last Days Org provides a list of this leader’s characteristics. And A Thousand Points Of Resistance provides a list of this leader’s characteristics as well.

Wolfgang Weber, writes in WSWS President Gauck demands more support for Germany’s army.    President Gauck’s recent speech to the federal armed forces lays bare the ideological foundations of the drive for the militarization of Germany’s foreign policy.

Europe’s soon coming Sovereign, Revelation 13:5-10, will come with Germany’s military might, to rule globally, Daniel 11:39-44, and will establish his headquarters  in Jerusalem, Daniel 9:27; Matthew 24:15, for mankind’s last 3 and ½ years, Daniel 7:25 and Revelation 13:7. Perhaps the EU’s king will be Olli Rehn, or Herman van Rompuy, or Jean-Claude Juncker, or Guido Westerwelle; he will be accompanied by a banker, Revelation 13:11-18,  perhaps Jens Weidmann, or Mario Draghi; their word, will and way, will be the law of the Eurozone, replacing all constitutional and historic law. Their diktat money system will replace today’s fiat money system where diktat will serve both as money and credit. People will actually come to worship the Beast System and its rulers, Revelation 13:3-4.

Leaders’ Memorandum Of Understanding Of Spain Bank Bailout Begins Regionalization Of The EU …. …. Financial And Growth Stocks Soar On EU Plans To Lend Bailout Funds Directly To Struggling Banks

July 3, 2012

Financial Report for the week ending June 29, 2012; this is the thirteenth week of entry into the Second Great Depression.

1) …. Financial and growth stocks soared on EU plans to lend bailout funds directly to struggling banks

Breakout relates Stocks soar on EU plans but relief rally could be short-lived. Stocks are flying early Friday on the news that euro zone officials have agreed to lend bailout funds directly to struggling banks. But should you trust this “relief rally?”

In article EU leaders ease debt-crisis rules for Spain as Merkel retreats. Tony Czuczka and Josiane Kremer of Bloomberg report news of a Spanish bank bailout memorandum of understanding orchestrated by Herman van Rompuy. The leaders dropped the requirement that taxpayers, get preferred creditor status on crisis loans to Spain’s blighted banks, the European Union President Rompuy said. Banks will recapitalized directly by bailout funds rather than going through governments, once Europe sets up a single banking supervisor, he added. Euro governments were granted access to rescue loans without having to relinquish control of their economies. “We agreed on short-term measures that should apply to Spain and Italy,” said Luxembourg Prime Minister Jean-Claude Juncker, who heads the group of euro finance ministers.  Finance ministers will aim to enact the agreement at a meeting on July 9, European Union President Herman Van Rompuy said, calling the accord a “breakthrough.”

Germany had previously balked at changing the order of seniority on as much as 100 billion euros in emergency loans to Spanish banks and at committing to direct sovereign-debt buying through the euro-area bailout funds, saying on June 21 that such a move is “not up for debate.”

At the summit, euro-area leaders agreed to use the rescue funds “in a flexible and efficient manner in order to stabilize markets for member states” that respect rules including budget deficit limits and sign a memorandum of understanding, according to an EU statement issued in Brussels. Even so, the EU’s two rescue funds may only amount to about 20 percent of the outstanding debt of Italy and Spain, limiting the ability to lower the nations’ borrowing costs. The rescue mechanisms, the European Financial Stability Facility, EFSF, and the yet-to-start ESM, may have 500 billion euros available for purchases. Italy and Spain have about 2.4 trillion euros combined of outstanding bonds, bills and loans, according to data compiled by Bloomberg

Pooling of euro-area debt, a tool sought by Spain and Italy that Merkel called, wrong and  counterproductive, in a speech to German lawmakers a day before the summit, wasn’t mentioned in the statement. Merkel will explain the deal to the German parliament upon her return to Berlin today before a vote on new EU budget rules and authorization of the ESM. A German official briefing reporters on the condition of anonymity noted that the Parliament in Berlin gets to approve changes in the ESM’s setup, such as allowing direct bank recapitalizations.

Relief may not be quick as joint EU banking supervision, seen as a way to make oversight more independent of national regulators, will take time. The EU will consider proposals “by the end of 2012,” according to the statement.

The US Dollar, $USD, UUP, plummeted and the Japanese Yen, FXY, traded lower, as world currencies, DBV, and emerging market currencies, CEW, seen in this Finiz Screener, blasted higher.

Bonds, BND, traded slightly lower; the highly margined Bond ETF, BOND, fell parabolically lower. Emerging Market Bonds, EMB, rose to a new high. Junk Bonds, JNK, rose to its previous hagh.
 
European Financials, EUFN, The Too Big To Fail Banks, RWW, World Financials, IXG, India Earnings, EPI, Small Cap Revenue, RWJ, and Growth Shares, RZG, IWO, JKH, JKE, rose strongly.

Metal Recycling, SMS, Steel, SLX, WOR, Automobiles, CARZ, Software, IGV, CDNS, Smartfone, FONE, Cloud Computing, SKYY, VMW, TIBX, Nasdaq 100, QTEC, Small Cap Energy, PSCE, Energy Service, IEZ, OIH, Copper Miners, COPX, Aluminum Miners, ALUM, Coal Miners, KOL,  Homebuilders, ITB, and US Infrastructure, PKB, rose strongly led by Cement Manufacturers, EXP, TXI, JHX,   

Automobile part manufacturers seen in this Finviz Screener rose as Ford, F, and General Motors, GM, traded lower.  

Electrical Equipment Manufacturers, such as ETN, seen in this Finviz Screener rose strongly.

Small Cap Consumer Discretionary, PSCD, rose strongly.

Small Cap Industrial Shares, PSCI, led by CIR, HEES, SNHY, rose strongly. .  

Industrial Aerospace companies such as Boeing, BA, and Honeywell, HON, rose strongly.

Paper Manufacturers, WOOD, rose strongly.

Electric Utility, Next Era Energy, NEE, rose to a new high and Utilities, XLU, jumped back up to its previous high.   

Dow Jones Telecom, IYZ, rose strongly to its previous high.

World Banks, IXG, led by the National Bank of Greece, NBG, seen in this Finviz Screener rose strongly; but Barclays, BCS, traded 5.0% lower..

Pharmaceuticals, IHE, and XPH, ose to a new high and Health Care Providers, IHF, rose 0.35%.

Beverage stocks such as BUD, SAM, KO, KOF, FMX, PEP, DPS, blasted higher.

Greece, GREK, rose 9..3%, Italy, EWI, 8.4%, Spain, EWP, 7.3%, France, EWQ, 5.9%, Germany 5.7%.

India Infrastructure, INXX, India Earnings, EPI, India Small Caps, SCIF, and Brazil Small Caps, BRF, led the Brics, EEB, 4.7%, higher; with India, INP, 6.7%, Brazil, EWZ, 5..4%, Russia, RSX, 5.5%, China, YAO, 3.7%.

South Korea, EWY, 4.0%.

Turkey, TUR, Philippines, EPHE, and Mexico, EWW, continued their upward trend, moving parabolically higher,

Emerging Markets, EEM, 4.4%. World Small Cap Stocks, VSS, 3.3%, World Stocks, VT, 3.1%. US Stocks VTI, 2.6.%

Trade based Japan, EWJ, gained 2.1%, United Kingdom, EWU, 2.2%, commodity based Australia, EWA, 3.8%, currency based Poland, EPOL, 5.0%, and Euro led Sweden, EWD 6.0%, all to the middle of a broadening top patterns.  

Commodities, DBC, jumped 4.3%, as Oil, USO, jumped 7.8%. Silver, SLV, jumped 4.0%, and Gold, GLD, jumped 2.7%, from a double bottom to the edge of a descending triangle. Copper, JJC, jumped 4.8%, taking Base Metals, DBB, 4.5% higher to strong resistance. Timber, CUT, jumped 4.1%. Corn, CORN, jumps as CNBC relates Corn Crop Withers Away.

The Yahoo Finance chart of Volatility, TVIX, shows it 10.4% drop today.

Bullion Vault relates  Euro news is “a shot in the arm” for gold prices. And Casey Research relates A ‘Lehman moment’ will ensure gold and silver will soar again

2) … The June 2012 Leaders’ Memorandum Of Understanding begins the regionalization of the EU. The Leaders’ Memorandum of Understanding, presented in PDF on Consillium Europa, for a bailout of Spain’s banks by the ESM and creation of EU banking oversight, pools sovereignty and is the first step into a Eurozone Political Union as foretold in both Revelation 13:1-4, as well as in Daniel 2;30-33.

Dr. Worden writes Incremental changes toward EU Integration. The decisions of the European Council to allow federal bailout funds to go directly to state banks and to approve the creation of a federal supervisory body for banks a par for the course for the E.U. in respect to its history. Integration, which is code for transfers of governmental sovereignty from the states to the federal level, has proceeded in incrementally in fits and stops since the Shuman plan in the early 1950s

Mike Mish Shedlock writes Headline in Spain: Government ‘sacrificed’ Bank of Spain in Exchange for Financial Sector Bailout; ESM Agreement Raises More Questions Than Answers

Zero Hedge relates Farage in video on EU Summit ‘Breakthrough’: “It’s not credible; nobody believes you”. He states ESM is doomed before it starts. Legal challenges are coming in Ireland and Germany
Estonia Justice Says it will not fit their constitution. Link if video does not play: Nigel Farage on Euro Breakdown.

Wolfgang Munchau in FT Nothing has changed in Europe, and Merkel is still winning relates three points 1. A mandate to inject equity into the banks will be conditional on a political agreement for joint banking supervision. This is where Ms Merkel can still exact her revenge. Do not expect this to proceed easily. A joint system of banking would be a very big deal, and I doubt that a sensible agreement can be agreed by October.
2. Direct bank recapitalisations may require a change in the ESM treaty. I know this point is disputed. EU officials say they can do it by diktat. But I cannot see how one can conceivably let the ESM inject equity into banks directly when the treaty says specifically that the ESM lends money to member states for that purpose. Would the treaty not have mentioned this important detail? The head of the Bundestag’s budget committee also seems to think that a treaty change is now needed.
3. The new facility is still constrained by the same overall funding limits of the ESM as the bond purchases. I believe the Spanish banks will ultimately need a lot more than the €100bn earmarked for this programme once you take into account the effects of both the housing crash and the depression. The ESM is seriously overloaded.

Mike Mish writes EU Summit Winner Was Merkel  The most important event last week was probably not the agreement at the summit anyway, but the statement by Ms Merkel that there will be no eurozone bonds “for as long as I live”. If Ms Merkel is right and there are no eurozone bonds in her lifetime, the eurozone will not survive. Without eurozone bonds or a change in ECB policy, Italy’s and Spain’s debt – and eurozone membership – is not sustainable. That was as true on Wednesday as it is today. What is not debatable is Münchau and others keep ignoring real constraints on Merkel, expecting – sometimes demanding – she do something she cannot do. Regardless, except for a single misguided sentence, Münchau made a sterling case for who really won in Brussels.Let’s see what the bond market looks like a month from now, and six months from now before jumping to conclusions. Meanwhile, Merkel took a soft blow to her reputation at home. Eventually these blows will matter, but this blow was the bare minimum anyone could have expected. The blow only looks significant because of purposeful media-manipulating statements ahead of the summit. The real battles are still ahead because the summit solved virtually nothing.

Simone Foxman in the Business Insider Willem Buiter relates There’s one big problem with dreams of a European banking union the lack of accountability in the ECB will render any European banking authority unreliable. As regards formal accountability, the ECB as interest rate setter, liquidity and credit manager, lender of last resort and market maker of last resort, displays less formal accountability than any other leading central bank. The best technocratic solution can come to nought if it cannot be made acceptable to a sufficient plurality of the people in the EA.

Christoph Drier of WSWS writes German parliament votes for European fiscal pact.  The fiscal pact and the European Stability Mechanism are instruments for intensifying the assault on jobs, living standards and social programs throughout Europe, modeled on the austerity measures imposed in Greece.

Economic Policy Journal relates European Financials Institutions are highly leveraged Here’s a Plumer chart showing country by country eurozone bank liabilities as a % of GDP versus the U.S. and Canada. Note well that even “fiscally conservative” Germany’s bank liabilities are 3x those of the U.S. bank liabilities relative to GDP.

Irishcentral writes Ireland’s economic collapse worst global crash since the Great Depression: Country still in the grip of the banking crisis

Economic Policy Journal relates David Gordon reviews the book American Empire: A Debate  By Christopher Layne and Bradley A. Thayer

Open Europe relates Cameron seek to distance the UK from EU oversight  I will consider EU referendum but priority is renegotiation of membership terms, Cameron says
Writing in the Sunday Telegraph, David Cameron stated that “what I want – and what I believe the vast majority of the British people want – is to make changes to our relationship” with the EU. “Whole swathes of legislation covering social issues, working time and home affairs should, in my view, be scrapped,” he added, concluding, “As we get closer to the end point, we will need to consider how best to get the full-hearted support of the British people whether it is in a general election or in a referendum. As I have said, for me the two words ‘Europe’ and ‘referendum’ can go together, particularly if we really are proposing a change in how our country is governed, but let us get the peopl e a real choice first.”

Former Defence Secretary Liam Fox has today called for urgent renegotiation with the EU. Writing in the Sunday Telegraph, he argued, “I would like to see Britain negotiate a new relationship on the basis that, if we achieved it and our future relationship was economic rather than political, we would advocate acceptance in a referendum of this new dynamic. If, on the other hand, others would not accede to our requests for a rebalancing in the light of the response to the euro crisis, then we would recommend rejection and potential departure from the EU.” He concluded, “For my own part, life outside the EU holds no terror.”

The Times reports that Cameron will make a major speech in the autumn calling for powers to be returned from the EU. The Telegraph’s leader argues, “Mr Cameron needs to be clear about what he thinks is realistically attainable and to spell out how he proposes to go about achieving it.” Several backbench Conservative MPs have urged Cameron to make a commitment to a referendum before 2015. Meanwhile, Vince Cable, the Liberal Democrat Business Secretary, has called the idea “horribly irrelevant” at the present time.

Open Europe’s Director Mats Persson was quoted in Saturday’s Times discussing the impact of a eurozone banking union on the UK economy. He said, “A eurozone banking union is probably necessary in the long term, but is also a potential minefield for the UK. First, will it create barriers to UK financial firms doing business in the eurozone, in turn fragmenting the single market? Secondly, will supervision spill over to regulation, with the eurozone effectively writing the rules for all 27 countries? David Cameron could come under a lot of pressure to seek new safeguards.”

Mats also appeared on LBC this morning discussing the prospect of an EU referendum in the UK. Separately, Open Europe’s recent briefing outlining the potential alternatives to EU membership if the UK decided to the leave the EU altogether is cited by Austrian daily Die Presse.
Open Europe research Saturday’s Times Die Presse Sunday Telegraph: Cameron Sunday Telegraph: Fox Times Mail Mail: Editorial FT FT 2 City AM WSJ Sun Express Sunday Telegraph Sunday Times Guardian Sunday Telegraph 2 Sunday Telegraph: Leader Guardian: Leader Comment is Free: Alexander Times: Montgomerie Conservative Home: Montgomerie Independent on Sunday: Rentoul Express: Carswell BBC Radio 4: World this weekend Independent Mirror EUobserver BBC Irish Independent Irish Times Telegraph FT 3 Telegraph: Editorial

Open Europe relates Six legal challenges lodged with Germany’s Constitutional Court after Bundestag approves ESM and fiscal treaty …  Schäuble and Westerwelle at odds over longer term introduction of Eurobonds
In a vote held on Friday evening, the Bundestag approved both the ESM and the fiscal treaty, with both passing the two-thirds majority necessary due to their constitutional implications. Over the weekend, six separate complaints against either or both the ESM and fiscal treaty were lodged at Germany’s Constitutional Court on the grounds they limit the Bundestag’s ability to enforce democratic oversight and also its sovereign budgetary powers.  
Sigmar Gabriel, the leader of the SPD group in the Bundestag, has said that his party would vote against changes to the ESM treaty allowing the fund to lend money to banks directly, if the necessary amendments were put to a vote in the Bundestag. However, EUobserver notes that the European Council’s legal services believe that the changes could be made without needing another round of parliamentary approvals.
German magazine Focus reports that the German government plans to make aid for banks conditional on the introduction of a financial transactions tax in the concerned countries. Open Europe’s Raoul Ruparel was quoted in Saturday’s Telegraph discussing the changes to the eurozone’s bailout funds agreed at last week’s EU summit.
FAZ reports that German Finance Minister Wolfgang Schäuble (CDU) and Foreign Minister Guido Westerwelle (FDP) are at odds over the possibility of eurobonds being introduced in the longer term, after Schäuble hinted that this could be a possibility given the fulfilment of certain fiscal conditions. However, Westerwelle responded, “This is not a question of timing but a stance that is wrong in principle and we reject it.”
Writing in City AM, Open Europe’s Pawel Swidlicki argues, “With each successive summit, Merkel is running out of room for manoeuvre across a range of fronts. Economically, the German economy is resilient but it cannot remain immune to the worsening crisis forever. Politically, her latest concessions are only likely to feed the restless mood of many of her backbenchers and natural allies in the German business community. Finally, on the legal front, the limits of the current constitution have been stretched almost to the limit, and any full debt-pooling…would require a referendum. This latest episode has left Germany seriously frustrated and with a feeling of an ever-increasing weight on its shoulders. This may only harden German resistance to putting even more of its money on the table.”
Saturday’s Telegraph EurActiv EUobserver EUobserver 2 FAZ Focus Focus 2 Focus 3 ARD MA City AM: Swidlicki
Open Europe relates Greece to ask for cost of bank recapitalisation to be removed from government debt levels
The EU/IMF/ECB troika will return to Athens today to begin its re-evaluation of the Greek bailout programme following significant delays due to the elections. Kathimerini reports that the Greek government may request that the newly agreed powers to allow the eurozone bailout funds to lend directly to banks be applied retrospectively to the second Greek bailout – this would allow around €50bn to be removed from Greece’s debt level. Meanwhile, Independent Greeks leader Panos Kammenos has called for a parliamentary inquiry into Greece’s original bailout request following suggestions that Greek economic statistics were altered to make a bailout look necessary.
Kathimerini Kathimerini 2 Kathimerini 3 Les Echos EUobserver

Euro Intelligence provides the best of European News reporting and analysis. In its daily for fee newsletter it relates Mark Schieritz makes the point that the change of seniority rules is not important, as the public sector will always find a way to impose itself over the private sector;

Simon Black of Sovereign Man writes It’s time to connect the dots. hat we can see from this week’s events is:
– European governments are insolvent
– European banks are insolvent
– US governments are heading in that direction
– Even the best US banks are not as strong as believed
– Foreigners are abandoning the US dollar and seeking alternatives
– Gold is money
These events are all connected, and the trend is becoming so clear that even the most casual observers are starting to wake up. When you connect the dots, the next steps lead to what may soon be regarded as an obvious conclusion: the system, as it exists right now, is crumbling. No amount of self-delusion can make this go away. Rational thinking and measured action, on the other hand, can make the consequences go away… turning people from victims into spectators of the greatest bubble burst in modern times.

I relate that during June 2012, the Steepner ETF, STPP rose 0.71%, as the chart of the Interest Rate on the 10 Year US Government Note, ^TNX, shows a rise from 1.47% to 1.66, as the chart fg the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened. A steepening yield means stocks will be falling in the future.   

3) … In today’s news

Patrick Chovanec, An American Perspective From China, writes in Business Insider A shadow lending system based upon real estate property in Zhejiang China poses a challenge to financial stability, as a line of domino lending falls. A bank in Hangzhou started calling in loans to other firms guaranteed by Tianyu,” said the owner of a company tied to the network. “That had a ripple effect and affected a number of other companies.” The reciprocal nature of the guarantee network stripped real bank loan guarantees of any value, argued another banker. The system has made all its participants mutually vulnerable to an economic downturn, he said. Now that property development can no longer guarantee profits, the banker said, borrowers and guarantors are in trouble together. Cash flow at some enterprises has fallen to dangerously low levels, said a bank loan officer, so that they’ve been forced to survive on credit. Many ran out of cash after pouring money into speculative property investments, he said, which flopped after the central government imposed real estate development restrictions in 2010. In other words, a lot of these firms are actually insolvent and are just borrowing from Peter to pay Paul, in order to postpone the day of reckoning.

Rolling Stone relates A huge break in the LIBOR banking investigation and Another domino, the RBS falls in the Libor Scandal.

Telegraph relates RBS and Lloyds drawn into rate-rigging scandal. Royal Bank of Scotland and Lloyds have been accused of systematically rigging financial markets in a growing international scandal which wiped billions off the value of shares in Britain’s biggest banks.

Reuters Barlcays plunges leading European shares Lower. European shares ended lower on Thursday, led by banks, with investors primed for disappointment from the latest European Union summit to tackle the debt crisis, but not expecting a further steep market selloff. A 2.5 percent decline in banking shares, led by a 15.6 percent slump in Barclays following investigations that found it tried to manipulate key market interest rates, also weighed on the choppy market that witnessed sharp swings on contrasting comments from European policymakers and leaders.

Telegraph relates Libor rigging ‘was institutionalised at major UK bank’. Interest rate rigging was institutionalised at one of Britain’s biggest banks, an insider has claimed, with market manipulation openly discussed between managers, staff and customers.

Ian Frazer The global scam that may prove terminal for Barclays, Lloyds and RBS

Zero Hedge relates “Everyone knew, and everyone was doing it”

The Telegraph relates Bank of England dragged into rate-rigging row

CNBC relates Bank risk is distorting our democracy, Stiglitz says

George Washington Blog Local governments which entered into interest rate swaps got scalped. Sometimes the big banks manipulated the Libor rates up, and sometimes down.  Different groups of people got hurt depending which way the rates were gamed. Bloomberg’s Darrell Preston explained last year how cities and other local governments got scalped when rates were manipulated downward:

CNBC relates Here comes Financial Armageddon,Jim Rogers says

MarketWatch relates oil futures rally more than 5% after EU bank plan

MarketWatch relates Euro jumps most since October on EU moves

Bloomberg relates European banks bolster capital with shunned bonds

Bloomberg relates Japan’s industrial output falls most since 2011 quake. Japan’s industrial output fell the most since the March 2011 earthquake and tsunami as weakness in European demand limited automobile output. Production declined 3.1 percent in May from April, the Trade Ministry said in Tokyo today. That compared with the median estimate in a Bloomberg News survey for a 2.8 percent drop. The slide was 0.2 percent the previous month.

Daily Ticker relates Here Are the New Taxes You’re Going to Pay for Obamacare.

Bloomberg relates Chinese industrial companies profits drop for second month. Chinese industrial companies’ profits fell for a second month in May, a government report showed today, as slowing economic growth hurt corporate earnings. Income dropped 5.3 percent from a year earlier to 390.9 billion yuan ($61 billion), the National Bureau of Statistics said on its website today. That compares with a 2.2 percent decline in April and 4.5 percent gain in March. The deterioration adds to signs that government measures to stimulate the world’s second-biggest economy have yet to reverse a slowdown that may deepen for a sixth quarter

The WSJ relates Medicaid decision looms for states. The Supreme Court’s decision to let states opt out of the health overhaul’s Medicaid expansion without losing current funding for the program lifts a budget mandate from states could mean fewer Americans gain insurance coverage under the law.

Reuters relates NYC public hospitals see big financial hit from healthcare law. The New York City Health and Hospital Corporation expects to lose $2.3 billion over eight years from the Medicaid cuts included in President Barack Obama’s new healthcare law. The U.S. Supreme Court on Thursday upheld Obama’s signature healthcare overhaul requiring that most Americans get insurance by 2014 or pay a financial penalty. Alan Aviles, the HHC chief executive officer, said on Thursday that although more people will have insurance, this will not make up for the loss of Medicaid funds. HHC is the nation’s biggest public hospital system and it serves 1.3 million New Yorkers every year. Aviles did not yet know how much the city’s public hospitals would save by treating more insured patients. But “It is highly unlikely that it will come remotely close to $2.3 billion,” he said.

Telegraph relates Moody’s sees Affordable Care Act pressuring hospitals.

4) … Offshore investing news courtesy of Dollar Collapse

Former U.S. citizen face visa discrimination returning to the USA – Nestmann

Three mountain retreats in Ecuador – International Living

Cpital controls are the biggest danger to your savings – SFGate

Choosing an overseas bank – International Man

Ron Holland on moving offshore – Daily Bell

Argentina proposes new taxes on Pan American Silver mine – Yahoo! Finance

5) … Future reports on this blog are likely to be on a weekly not daily basis.