Archive for August, 2012

Remarks By Angela Merkel Calms Storms Over Greece And ECB Policy … The Most Toxic Of Debt Tops Out … China Leads The BRICS Lower

August 27, 2012

Financial Market Report for August 27, 2012

Gary of Between The Hedges relates that Expansion reports Spain wants to use government-guaranteed bonds to pay banks selling assets to a so-called bad bank, citing people close to negotiations between government and the European Commission. Banks could use the bonds as collateral to raise financing from the ECB, according to the report.

Noah Barkin and Paul Carrel of Reuters reports Merkel tries to calm storms over Greece, ECB policy.  Angela Merkel tried to calm a growing storm over euro zone crisis strategy on Sunday after the Bundesbank likened ECB bond-buying plans to a dangerous drug and a conservative ally of the German leader said Greece should leave the currency bloc by next year. The comments, from central bank chief Jens Weidmann and a senior figure in the Bavarian Christian Social Union (CSU), Alexander Dobrindt, point to mounting unease in Germany with the policies being used to combat the three-year old debt crisis.

“We are in a very decisive phase in combating the euro debt crisis,” Merkel told public broadcaster ARD in an interview. “My plea is that everyone weigh their words very carefully.” Dobrindt, whose party is preparing for a regional election in Bavaria and the federal vote next autumn, told top-selling German daily Bild he expected Greece to leave the euro zone in 2013. His comments drew a swift rebuke from Foreign Minister Guido Westerwelle who said “bullying” of euro members must stop.

But Weidmann, a former economic adviser to Merkel, said in a front-page interview in influential German magazine Der Spiegel that the bond buys could violate rules against the ECB providing outright financing to governments.(an action bordering on an unlawful act of debt monetization), “Such a policy is for me close to state financing via the printing press,” Weidmann told Spiegel. “In democracies, it is parliaments and not central banks that should decide on such a comprehensive pooling of risks. We should not underestimate the risk that central bank financing can become addictive like a drug,” Weidmann said. Dobrindt was more direct, saying Draghi risked passing into the history books as the “currency forger of Europe”.

The Automatic Earth writes Dear Angela, it’s time to do the right thing.

Mike Mish Shedlock, references the Melissa Eddy NY Times article which relates  “I want Greece to stay in the euro zone and that’s what I’m working for” writes, Angela Merkel is the Teflon Chancellor. Merkel achieves the impossible dream for now: Merkel got away with promising Greece citizens help while doing nothing; Merkel got away with promising German citizens there will be no fiscal union until there is a political one, while simultaneity offering explicit support for the “Currency Forger of Europe”. Merkel is very adept at talking out of both sides of her mouth simultaneously, each saying a different thing, and getting away with it. Reagan may have been the Teflon president, but Merkel is the Teflon chancellor.

Regional economic and trading blocs will rise to replace sovereign nation states as leaders announce regional framework agreements to pool sovereignty regionally as capitalism and European socialism is dying on the failure of the world central banks to stimulate global growth and corporate profitability.  Nick Beams writes Fed minutes point to a bankrupt economic order.  The latest FOMC meeting amounted to an acknowledgement that while the financial system continues to operate on a day-to-day basis, in a longer-term, historical sense it has completely broken down.

All nations worldwide are starting to lose their sovereign authority and their debt sovereignty. Rainer Buergin of Bloomberg reports Germany, France Reconnect in a Push for Crisis Solutions. Germany and France agreed to drive ahead measures on closer European integration in a renewed show of unity by the region’s two biggest economies to fix the crisis in the euro zone. German Finance Minister Wolfgang Schaeuble, speaking after talks in Berlin today with his French counterpart, Pierre Moscovici, said the two countries will create a working group to advance European Union cooperation on banking union, fiscal union and the strengthening of monetary union.

We are witnessing bible prophecy of Revelation 6:1-2, being fulfilled, as the baton of sovereignty is being passed from sovereign nation states, such as the US, the UK, Spain, Italy, and Greece, to regional sovereign bodies and leaders. The economy of God, that is the administration plan of Christ, Ephesians 1:10, is at work to establish regional economic and political governance, as foretold in Daniel 2:30-33. The Beast Regime of Neoauthoritarianism is rising from the profligate Mediterranean Sea country of Greece, and the failed industrial nation of Italy, as foretold in bible prophecy of Revelation 13:1-4. New centralized monetary authority is coming in the EU, and with it, the diktat money system, which will replace the fiat money system. Diktat will serve as both money and credit.

Angela Merkel is a precursor, that is an antecedent, of one greater, that is the Sovereign, foretold in Revelation 13:1-4, and his partner, the Seignior, Revelation, 13:11-18. Angela Merkel is much like what John the Baptist was to Jesus Christ; one who comes before to herald one more powerful. Germany will rise to be preeminent over vassal peripheral client states in a type of revived Roman Empire. John the Revelator communicates that after Financial Armageddon, that is a global credit and economic collapse, that people will be place such trust in the Beast Regime of regional governance, that it will constitute worship, Revelation 13:3.

The steepening in the 10 30 US Sovereign Debt yield curve, $TNX:$TYX, as seen in the Steepner ETF, STPP, has been rising in August 2012, serving a warning signal to investors to get out of bonds, The steepening yield curve in the U.S. Treasury market should have investors worried, PIMCO’s CEO Mohamed El-Erian says in Advisor One article. Wealth can only be preserved by investing in, and taking possession of gold, either in bullion form, or in physical form, in Internet trading vaults, such as Money Is Gold, or Bullion Vault, as the chart of gold, GLD, communicates that an investment demand for gold commenced in August 2012. In the age of devolution, despotism, and asset deflation, gold is the only form of sovereign wealth. The chart of gold mining stocks relative to gold, GDX:GLD, communicates that gold stocks, GDX, GDXJ, GLDX, and Silver Mining Stocks, SIL, SSRI, HL, are liking peaking out.

Today, the most toxic of debt rose, the Fidelity Investmentsmutual fund FAGIX, which invests in companies in troubled or uncertain financial condition, rose to an all time high of 9.27, as is seen in this ongoing Yahoo Finance chart of FAGIX, BKLN, EMB, JNK, PICB, BWX, and MUB.  One can establish and follow a portfolio of Bonds, BND, including ZROZ, EDV, and TLT, using this Finviz Screener.

The National Bank of Greece, NBG, Deutsche Bank, DB, and Banco Santander, SAN, led European financials, EUFN, and European Shares, VGK, higher. Apple, AAPL, led Nasdaq, QQQ, higher. Lender Discover Financial Services, DFS, Telecom Companies, EQIX, CALL, CBB, and Recreational Vehicle Manufacturers, PII, WGO, ACA, and Beverage Producer, BUD, led Consumer Services, IYC, higher.

Yet the financial markets are at a inflection point. Bespoke Investment Group reports  A Low Volume Bull.  Ever since the current bull market began in early 2009, the most oft-cited criticism is that volume has been weak.  Even the most casual market observer has heard the complaint that rallies on light volume are unsustainable, and in effect, don’t count.  The argument sounds good in theory, but followers of this logic would have essentially missed out on what is now the ninth strongest and longest bull market (and more) in the history of the S&P 500 … In order to illustrate the fallacy of this argument, the chart below shows the performance of the S&P 500 since the bull market began on March 9th, 2009 along with its performance if we take out all days where volume (as measured in SPY) was below its 50-day moving average.  So far during this bull market, the S&P 500 is up 108.5% (blue line).  If you back out all days (up and down) over the same period where volume was below average, however, you come up with a decline of 30.1%

All forms of fiat wealth, Bonds, BND, Stocks, ACWI, Commodities, DBC, are depreciating on competitive currency devaluation as Currencies, DBV, and CEW, are trading lower in value, on the failure of the world central banks’ monetary authority to stimulate global growth and trade, as fears of Eurozone sovereign and banking insolvency increase.

World Stocks, VT, Transports, IYT, and Industrials, IYJ, the Nasdaq 100, QTEC, the S&P, SPY, traded lower; while Nasdaq, QQQ, traded higher.

Homebuilders, ITB, turned lower, and US Infrastructure, PKB, turned lower as MIC, EXP, HD, LL, SHW, USG, GLDD, MDR, DY, MDR, FLR, MTZ, FWLT, GVA, CTAS, MHW, APOG, BECN, MDU, TREX, MAS, NX, NP, IP, OC, TBI, PX, ARG, APD, turned lower.

Metal Manufacturing, XME, turned lower as ATI, GTLS, CRS, STLD, NUE, and RS, turned lower and Chemicals, turned lower las ROC, FMC, DOW, DD, LYB, WLK, ASh , and GRA, turned lower.

Vietnam, VNM, fell strongly lower. China Infrastructure, CHXX, China Industrials, CHII, China Minerals, CHIM, China Financials, CHIX, China Consumer, CHIQ, China Small Caps, HAO, Brazil Financials, BRAF, Brazil Infrastructure, INXX, India Earnings, EPI, and India Small Caps, SCIF, led the BRICS, EEB, lower. Australia, EWA, and Argentina, ARGT, traded lower.

Commodities, DBC, and USCI, traded lower, as Major World Currencies, DBV, and Emerging Market Currencies, CEW, traded lower. The US Dollar, $USD, UUP, traded unchanged as Bloomberg reports Dollar Loses Hedge Fund Bulls as Risk Drops at G-10 Nations. Hedge funds and large speculators are abandoning bets on a stronger dollar at the fastest pace ever. Net bets that the world’s reserve currency will weaken against eight major peers increased to 131,512 contracts as of Aug. 21, data from the Commodity Futures Trading Commission show. That compares with about 311,000 contracts betting on an advance on June 5, the biggest reversal on record. (Hat Tip to Gary of Between The Hedges).

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Gold And Silver Rise As Stocks Trade Lower On Failure Of World Central Banks Monetary Authority To Sustain Growth And Corporate Profitability … Bible Prophecy Heralds The Rise Of Regional Blocs To Replace Sovereign Nation States … God Is Calling For Overcomers

August 25, 2012

Financial market report for the week ending Friday August 24, 2012; this is twentieth week of entry into the Second Great Depression.

The see saw destruction of fiat wealth is underway as Bonds, BND, traded higher and World Stocks, VT, traded lower as Euro-zone business activity continued to shrink at a steep pace in August, with a further deterioration in Germany sharpening fears that the bloc’s sovereign and banking crisis wracked economy is in recession; and as the US government reported a slight increase in unemployment benefit applications last week signaling economic contraction.

Steel, SLX, Metal Manufacturing, XME, Coal, KOL, Global Agriculture, PAGG, Retail, XRT, Banks, KRE, Nasdaq 100, QTEC, Semiconductors, XSD, Shipping, SEA, JPMorgan Alerian MLP, AMJ, and Utilities, XLU, traded strongly lower. Banco Santander, SAN, led European Financials, EUFN, lower. India Steel Stocks, led India Infrastructure, INXX, lower. Brazil Steel Stocks, led Brazil Infrastructure, BRXX, lower. Telecom, VOX, and Utilities, XLU, continued lower.

Caterpillar, CAT, traded sharply lower as Bloomberg reports Caterpillar cuts China production as Digger Slump reaches mining. Xu Biao could sit in his office waiting for orders to roll in during a Chinese building boom two years ago. Now, he’s hitting the road trying to drum up business. “Life is difficult,” said Xu, a sales manager at Maanshan Fangyuan Slewing Ring Co., which supplies parts to Sany Heavy Industry Co., XCMG Construction Machinery Co., and other equipment-makers. “Every client is cutting production.” Caterpillar which gets 25 percent of sales in Asia, Komatsu, and Sany have all slashed output in the world’s biggest construction equipment market this year as a demand slump caused by slower economic growth spreads from building to mining. Sales of large excavators, mainly used by miners, last month plunged the most since at least January 2009, contributing to the 15th straight decline in the overall market.

The currency demand curve, RZV:RZG, manifested bearish engulfing communicating that competitive currency devaluation is underway, which is confirmed in that Major World Currencies, DBV, and Emerging Market Currencies, CEW, are trading below their early August 2012 rally highs.

Gold, GLD, and Silver, SLV, popped higher, drawing up the Euro, as the US Dollar, $USD, UUP, fell lower, on the failure of the world central banks’ monetary authority. Commodities, DBC, and USCI, manifested bearish engulfing. The chart of the Steepner ETF, STPP, and the interest rate on the US Ten Year Note, ^TNX, show a rise during August 2012 to 1.67%, documenting that world central banks have lost their monetary authority. James Pethokoukis, of the American Enterprise Institute write in The Business Insider The end of US economic growth. Associated Press reports Orders fall for most durable goods in July. And Associated Press reports Weak recovery leaves laid-off US workers struggling to find new jobs; most take pay cuts.  Bonds, BND, are now trading below their August 2012 high, despite Junk Bonds, JNK, International Corporate Bonds, PICB, Emerging Market Bonds, EMB, rising to new highs, and International Treasury Bonds, BWX, rising to its May 2012 high. Charles Mead of Bloomberg reports : “Yields on corporate bonds worldwide fell to a record low. Borrowing costs for the most creditworthy to the riskiest companies fell to an unprecedented 3.76% yesterday, from 3.8% on Aug. 21. Yields on global investment-grade debt dropped to a record 2.97% .” Doug Noland reports M2 (narrow) “money” supply surged $51.6bn to a record $10.070 TN. I relate that the fiat money system is failing and will be replaced by the diktat money system, where diktat serves as both money and credit.

China Infrastructure, CHXX, and Industrials, CHII, led China, YAO, lower as Bloomberg reported China’s stocks fall, head for weekly loss. China’s stocks fell, extending weekly losses for the benchmark index, after PetroChina Co. posted a decline in profit and the Xinhua News Agency reported the government is studying further measures to strengthen its control of the property market. PetroChina, China’s biggest oil producer and the most heavily weighted stock on the Shanghai Composite Index, retreated after it reported a 6 percent drop in first-half net profit. Bank of China Ltd. paced declines for lenders after it reported the slowest increase in profit in three years. Poly Real Estate Group Co. tumbled to a four-month low. The government is “closely monitoring” changes in the real estate market and has ordered local governments not to relax property controls, the unidentified official with China’s Ministry of Housing and Urban-Rural Development was quoted as saying in the Xinhua report. And Mike Mish Shedlock writes China flash manufacturing PMI at 9-Month low, new export orders plunge at sharpest rate since March 2009.

Homebuilding Stocks, ITB, continued to a new high. The Madison Square Garden Company, MSG, jumped 4% to a new high. Biotechnology stocks, AMGN, CBST, and REGN, rise to new highs as is seen in this ongoing Yahoo Finance Chart.  Mortgage REITS, REM, such as STWD, rose to new highs. Bloomberg reports Retail gasoline in U.S. rises to record high for season. The chart of UGA shows rise to a new high. Natural Gas, UNG, trades lower on the day, week, and month.

Raw Story reports  Cardinal Dolan to give closing prayer after Romney’s nomination Clergyman Dolan has received criticism this year for his handling of sex abuse cases. Earlier this year, it was revealed that he authorized paying accused priests to leave the church while he served as the Archdiocese of Milwaukee. Dolan has also fought against proposals to ease the statute of limitations for sexual abuse cases, giving victims a chance to file lawsuits against the church despite how long ago the alleged crime occurred.

God is calling for overcomers as the world is pivoting from choice to diktat as the Milton Friedman Free to Choose, Neoliberal, Banker Regime is being replaced by the Regional Governance, Neoauthoritarian, Beast Regime.    .

In August 2012, the world entered into a new era, the age of devolution, as BBC reported Mario Draghi, said, ”he would do whatever it takes to preserve the euro”. And as Eva Kuehnen of Reuters reported Mario Draghi and the ECB Governing Council to draw up plans for further bond purchases to support price stability and will consider further non-standard monetary policy measures according to what is required to repair monetary policy transmission.  The European Central Bank will draw up a mechanism in the coming weeks to make outright purchases to stabilise stressed euro zone borrowing costs, ECB President Mario Draghi said on Thursday. “The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective.” Draghi said after the bank kept euro zone interest rates at 0.75 percent. “The Governing Council will consider further non-standard monetary policy measures according to what is required to repair monetary policy transmission. In the coming weeks we will design the appropriate modalities for such policy measures.”.

Traditional sovereign authority is being replaced by regional monetary authority and political authority; regional blocs as called for by the Club of Rome in 1974, are rising to replace sovereign nation states. Open Europe blog Open Europe research Reuters City AM Irish Times.reports German banking association backs new supervisory powers for ECB.  Germany’s BDB banking association, which represents Deutsche Bank and Commerzbank among others, has backed proposals to give the ECB broad supervisory powers, arguing that “the influence of national politics in supervision would be removed.” And Reuters reports Merkel and Hollande unite in tough message for Greece and AP reports Germany’s Merkel and France’s Hollande: Greece must keep pursuing key economic reforms and Ambrose Evans Pritchard reports Germany backs Draghi bond plan against Bundesbank.Germany’s director at the European Central Bank has thrown his weight behind mass purchases of Spanish and Italian debt to prevent the disintegration of the euro, marking a crucial turning point in the eurozone debt crisis. And Christoph Dreier, in WSWS writes German chancellor demands tougher austerity in Greece. And the WSJ reports Germany Tells Athens to Stick to Plan German Chancellor Angela Merkel said she wants to keep Greece in the euro zone through a regime of painful austerity, after Greek Prime Minister Antonis Samaras made an impassioned appeal that after six years of recession his beleaguered country needs breathing room. The two leaders were speaking at a news conference Friday after talks in the Berlin chancellery, capping a week in which Berlin and Athens exchanged verbal blows in the media over whether Greece should be allowed to slow down its efforts to overhaul its economy and cut its deficit. Mr. Samaras has argued in a series of high-profile interviews that Greece needs time to get its economy growing again. Ms. Merkel insists Greece stick to its commitments. “I want Greece to remain a part of the euro zone and that’s what I am working on,” Ms. Merkel said. “We expect from Greece that the promises that were made are implemented, that actions follow words.”

Philosopher Andre Glucksmann writes in Spiegel that Pursuing a United States Of Europe is the wrong goal. Yet the Apostle Paul communicates that administration plan of Jesus Christ, Ephesians 1:10, for the fullness of our times, is that of regional governance as foretold by Daniel in Daniel 2:30:-33. And John The Revelator, relates that there is no human action, rather Jesus is acting sovereignly to introduce his kingdom on planet earth, Revelation 2:26-28, by bringing forth the beast regime of totalitarian collectivism to destroy all existing economic and political life, Revelation 13:1-4. All of mankind’s seven human institutions and every one of the world’s ten regions will be occupied by the most vicious kind of government that the world has ever seen.

In the age of deleveraging and derisking, sovereignty will no longer come from nation states; instead sovereignty will come regional leaders in Berlin and Brussels, as well as the ECB having been granted new monetary authority through regional framework agreements.

Seigniorage, that is moneyness, will no longer come from securitization of debt, for example, in Mortgage REITS, STWD, Subprime Automobile Lenders, NICK, Junk Bonds, JNK, Senior Loans, BKLN, Sovereign Debt, ZROZ, EDV, TLT, BWX, Emerging market Bonds, EMB, or Municipal bonds,EMB; nor from extension of credit, by lenders such as DFS, MA, V, COF, AXP, as seen in this ongoing Yahoo Finance Chart; nor leveraged buyout deals, PSP; instead seigniorage will come from diktat and debt servitude.

Are you an overcomer, that is are you one keeping His Word of endurance, and not denying His Name; are you relying on hidden manna and have you received your new name?

In Revelation 12:11, those in the Philadelphia Church, that is the church of Brotherly Love, are commended for overcoming Lucifer, by the blood of the Lamb, and the word of their testimony, they love not their life even to death. One can reflect on Living Stream Ministry Hymns #1270 to #1273, #894, and #889, to become the Overcomer.

In Revelation 3:8, those in the Smyrna Church, that is the church married to the world, are told to keep, Christ’s Word (of endurance, perseverance, and long suffering), and not to deny the His Name, that is not to deny his Presence and Authority. To keep his word is bear rejection and persecution. The word keep here is Strong’s word #3083, and means to observe, not guard. One is to maintain His Word as a resource so it does not go stale or go sour. One can reflect on Hymns #816, and #817 to aid one in keeping God’s Word.

In Revelation 2:10, the Lord commands, “Be Faithful unto death and I will give you the crown of life”.
One can reflect on Hymn #161 to appreciate the Lord’s faithfulness … and Hymn #472, to instill a willingness to suffer … and Hymn #473, to understand that one possesses all in the Lord..

In Revelation 2:17, the Lord promises “To him who overcomes, I will give some of the hidden manna. I will also give him a white stone with a new name written on it, known only to him who receives it”

Hymns for becoming fully consecrate to the Lord include

Answering the Call, #470,

Acknowledging the Lord, #466- 467,

Suffering with the Lord, #472

Separated unto the Lord, #438

Abiding in the Lord, #561-567

Trusting the Lord, #568-578

Following the Lord, #460-462

Resting On The Lord, #579-581

Living In The Lord, #455-459; 588

Serving The Lord,  #460-465

Walking With The Lord, #587

Reflecting The Lord, #592.

Gold and Silver Jump Higher On Global Competitive Currency Devaluation As The Monetary Authority Of The World Central Banks Fails … The Fiat Money System Is Failing And Will Be Replaced By The Diktat Money System Where Diktat Serves As Both Money And Credit

August 22, 2012

Financial Market Report for August 20, and August 21, 2012

EuroIntelligence in its for fee newsletter writes Mario Monti says a solution of the eurozone crisis requires more integration. The Eurozone can be saved only by more integration, Mario Monti said at a meeting in Rimini, Il Corriere della Sera reports. “A year ago we thought less than we do today that we were in a crisis but I believe we were in it more,” he said. Monti noted there are many risks. “The biggest tragedy for Italy and for Europe would be to see the euro break up because of our failures, which awakens the prejudices of the north against the south, and vice-versa.” According to Monti, the northern countries should recognize latest reforms of Italy’s economy, such as labor market and pension overhauls, spending review and deregulation.

And Euro Intelligence writes Hans-Jurgen Jacobs in Sueddeutsche argues that most of eurozone’s toxic debt are hidden in bad banks, or other off-balance sheet vehicles and are outside political control. Banco Santander, SAN, led European Financials, EUFN, lower on Monday.

Gary of Between The Hedges writes There still appears to be a fairly high level of complacency among US investors regarding the deteriorating macro backdrop. It still remains unclear to me whether or not Germany will destroy its own balance sheet or allow the ECB to monetize debt in an attempt to “save” the euro even as investors have been pricing this outcome into stocks. Focus Magazine reported recently that a poll by TNS Emnid found that 52% of Germans don’t want European countries to share debt even if the EU takes control over budgets of individual countries, while 31% were in favor of this.

On Monday, Lowes, LOW, Home Depot, HD, and Lumber Liquidators, LL, lead Homebuilders, ITB, Networking Shares, IGN,US Infrastructure, PKB, such as MHK, TREX, FXB, FBHS,, APOG, MAS, USG, GLD, ADS, Retailers, XRT, such as GPS, LTD, PETM, ROST, TJX, DSW, FL, SBH, TGT, TSCO, HIBB, DKS, led World Stocks, VT, lower as Bloomberg reported Apple climbs to record topping $600 Billion market value; the chart of AAPL, shows a vertical three white soldiers rise on Monday; Apple is now the biggest company ever; market cap hits 623 Billion.Calculated Risk writes Gasoline Prices up 30 cents over last 7 weeks.  The chart of UGA, shows a strong rise since July.

The investment demand for gold continued today. The chart of Gold, GLD, shows a 0.3% rise on Monday; it has been in breakout since August 1, 2012. And the chart of Silver, SLV, shows a 2.6% rise on Monday. The ongoing Yahoo Finance chart of Silver, for the last month, shows that it has been rising more strongly than Gold: six percent vs three percent.

CNBC Reuters reports Juncker verdict on Greece Euro Exit: ‘It will not happen

Peter Schwarz in WSWS writes How German philosopher Jürgen Habermas proposes to save the EU.  In a recent article, Jürgen Habermas and his co-authors make a veiled attempt to fan German nationalism, arguing for a return of European greatness on the world stage. Ambrose Evans Pritchard writes German eurosceptics quietly hope that Finland will become the first creditor state to storm out of monetary union in disgust.  “Sweden and Denmark both held referendums on the euro, and both said no. We were never allowed to vote,” said Timo Soini, leader of the True Finns party. That was a mistake. The nation is not locked into ritual assent. Finns obeyed the rules of EU membership with scrupulous care, while others gamed the system. “Our Lutheran morality, if you will,” said foreign minister Erkki Tuomioja. They alone faced the fiscal implications of EMU for small economies out of cyclical alignment. Finland’s budget surplus was 5.3pc of GDP at the top of the boom in 2007. Greece’s was 6.5pc in deficit. There lies the full horror of what has happened. “In Finland, a handshake is final. We thought we had a deal that every country would look after its own finances, only to find the deal was broken,” said Alexander Stubb, Finland’s Europe minister. The Finns survived their own gruelling depression without foreign help in the early 1990s when the Soviet Union collapsed and exposed the fragility of the Finnish banking system. The economy shrank by 13pc. “We had the IMF knocking at our back-door. Unemployment was at 18pc. We said ‘never again’ and yet here we are in a fresh crisis because of somebody else’s fault,” said Mr Stubb. For the True Finns – with 19pc of the vote in the last election – it is an outrage. “We bailed out our own banks, and now after all the lying, dishonesty and malfeasance in Europe, we are being asked to bail out their banks. This is the last straw,” said Mr Soini. There is no doubt that Finland could go it alone. It is the last unsullied AAA state in the Euroland, with a public debt of just 51pc of GDP. The reason why Moody’s did not place the country on negative watch last month along with Germany and Holland is a lack of banking exposure to Club Med debt and “relative insulation from the euro area” in trade. More than two-thirds of Finnish exports go outside the euro bloc, chiefly to Russia, Sweden and the US. In other words, Finland lives in a different economic universe from core-EMU, and is deemed better for it by rating agencies. You could not find a more likely candidate for euro exit.

On Tuesday, August 21, 2012, in ongoing competitive currency devaluation, the US Dollar, $USD, UUP, fell strongly, as the Euro, FXE, and the Swiss Franc, FXF, blasted higher. European Financials, EUFN, Financials, Greece, GREK, and Italy, EWI, jumped higher, as did Silver Miners, SIL, such as SSRI, Gold Miners, GDX, such as EGO, and Junior Gold Miners, GDXJ, such as THM. Utility stocks, XLU, such as AEP, DTE, and NEE, Macquarie Infrastructure, MIC, and Global Water Stocks, CGW, such as AWK, Telecom Shares, VOX, IYZ, such as T, and Gas Utilities, such as TRP, CPK, LG, turned lower, turning Dividend Shares, DVY, and SDY, lower. World Stocks, VT, traded unchanged, as Agricultural Commodities, RJA, JJA, Gold, GLD, and Silver, SLV,  popped Commodities, DBC, higher. Australia, EWA, and New Zealand, ENZL, and the S&P, SPY, rose to new rally and 52 week highs.

International Treasury Bonds, BWX, rose, taking Bonds, BND, higher; but well below their recent high, from which they have fallen parabolically lower. Of note, International Corporate Bonds, PICB, jumped to a double top high; and Junk Bonds, JNK, and Senior Loans, BKLN, jumped to a new high.

As the US Dollar, $USD, UUP traded lower, Major World Currencies, DBV, traded unchanged, and Emerging Market Currencies, CEW, traded up, but well below their August 8, 2012, high. Global competitive currency devaluation is underway on the failure of neoliberal finance, that is on the failure of the monetary authority of the world central banks.

Ever since the announcement of the first Greek Bailout in May of of 2101, diktat has been rising to replace choice.

The dynamos of Banker Regime of Neoliberalism, corporate profit and global growth, are winding down crony capitalism and European socialism, on fears of Eurozone debt contagion, specifically fears of sovereign insolvency and banking insolvency. Bloomberg reports Japan Swings to Trade Deficit as Europe Drags Down Exports. Japan reported a wider-than-expected trade deficit in July as Europe’s sovereign debt crisis and a slowdown in China dragged down exports and higher oil prices boosted imports. The shortfall was 517.4 billion yen ($6.5 billion), after a revised 60.3 billion yen surplus in June, the Finance Ministry said in Tokyo today. The median forecast in a Bloomberg News survey of 28 analysts was for a 270 billion yen deficit. Exports fell 8.1 percent from a year earlier, compared with an estimated 2.9 percent decline. Imports rose 2.1 percent. Shipments to the European Union fell 25 percent in July from a year earlier, the biggest decline since October 2009, while those to China slipped 12 percent, the ministry said. Business Insider reports Producing zombie companies and they’re eating away at the economy

The dynamos of the Beast Regime of Neoauthoritarianism, specifically regional security, stability, and sustainability are winding up regional governance as part of the economy of God, that is the dispensation for the fullness of times, where Jesus Christ is carrying out his administrative plan to establish the ten toed kingdom of regional governance as foretold in Daniel 2:30-33, which will feature a Beast Regime of totalitarian collectivism rising from the profligate peripheral Mediterranean nation states of Greece, Italy and Spain, as leaders meet in summits to announce regional framework agreements and pool sovereignty regionally, as foretold in Revelation 13:1-4. Germany will be preeminent in a type of revived Roman Empire, where a shrewd leader, Daniel 9:25, will rise to power over vassal peripheral states. This powerful ruler, Revelation 13:5-10, will be accompanied by a keen banker, Revelation 13:11-18, and the word, will and way of these two will will replace constitutional and historical law.

With the US Dollar, $USD, UUP, Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading lower, the fiat money system is failing; and will be replaced by the diktat money system.  The Milton Friedman Free To Choose floating currency regime is history; it is being replaced by the diktat money system, where diktat will serve as both money and credit.

Bible prophecy of Ezekiel 38, foretells of a global Eurasia War centered in Syria, Iran, Israel, Turkey, and Lebanon. Johannes Stern, of WSWS reports Obama threatens to invade Syria. Yesterday US and NATO officials discussed plans for a US invasion of Syria to bring down Syrian President Bashar Al-Assad. Reuters reports Russia warns West over Syria after Obama threats. Russia warned the West on Tuesday against unilateral action on Syria, a day after U.S. President Barack Obama threatened “enormous consequences” if his Syrian counterpart used chemical or biological arms or even moved them in a menacing way.

Bonds Plummet And Stocks Rise This Week On The Failure Of Neoliberal Finance … Competitive Currency Devaluation Is Once Again Underway This Time On The Failure Of The World Central Banks’ Monetary Authority

August 18, 2012

Financial market report for the week ending Friday August 17, 2012; this is nineteenth week of entry into the Second Great Depression.

1) … Bonds, BND, plummeted Tuesday, Wednesday, and Thursday, manifesting a three black crows chart pattern on the failure of neoliberal finance and on competitive currency devaluation which turned Major World Currencies, DBV, and CEW, lower this week.

The global government finance Bubble has finally burst, as the world has passed through peak credit, with Bonds, BND, International Treasury Bonds, Emerging Market Bonds, EMB, trading lower, Zeroes, ZROS, US Treasuries, EDV, TLT, are now  trading lower, as sovereign bond yields rise. Even Junk Bonds, JNK, are trading marginally lower from their all time highs, confirming that the world is passing through peak credit.   Freddie Mac 30-year fixed mortgage rates rose 3 bps to 3.62%. The Interest Rate on the US Ten Year Note, ^TNX, rose to 1.82%.

The see saw destruction of fiat wealth is now underway, as the monthly chart of bonds, BND, shows a 1.0% fall lower.

Debt deflation, that is currency deflation is underway on the failure of the world central banks’ monetary authority with a perverse effect that money flowed into stocks creating a risk-on rally.

M2 Money may be turning lower. Doug Noland writes M2 (narrow) “money” supply dropped $17.8bn to $10.018 TN. “Narrow money” has expanded 6.4% annualized year-to-date and was up 6.1% from a year ago.

World Stocks, VT,  and Commodities, DBC, rose on Thursday, with the National Bank of Greece, NBG,  Banco Santander, SAN, Deutsche Bank, DB, taking European Financials, EUFN, Spain, EWP, Italy, EWI,  and Germany, EWG, strongly higher.. Risk Onn Assets, ONN, Housing, ITB, Paper Products, WOOD, Retail, XRT, and Copper Mining, COPX, rose strongly.

Weyerhaeuser WY, Flowserve, FLS, Eagle Materials, EXP, Great Lakes Dredge and Docks, GLDD, Alliance Data Systems, ADS, Ultimate Software, ULTI, Quanta Services, PWR, rose strongly taking US Infrastructure, PKB, to a new high.  Homebuilders, ITB, rose to a new high. Telecom Services, VOX, rose to a new high. Pepsi, PEP, rose 1%, taking Consumer Services, IYC, to a new high. Publishers, ENL, IHS, NYT, RUK, SSP, rose strongly taking Dynamic Media, PBS, to a new high. Exxon Mobil, XOM, rose to a new high, taking Large Cap Dividend Paying Stocks, DLN, and DVY, and SDY, and the S&P, SPY, to a high.

Venoco, VQ, rose 17%, taking Small Cap Energy, PSCE, higher. Cisco, CSCO, Red Hat, RHT, NetApp, NTAP, and FIO, rose strongly  taking Networking, IGN, and the Nasdaq 100, QTEC, higher. Oil and Gas Pipelines, such as TLLP, SXL, SEMG, MMP, APL, WES, HEP, WMB, rose strongly. General Motors, GM, and Ford, F, rose strongly. .

Associated Press reported that Apple Stock Hits High After 4-Month Dip on Friday.  Apple’s stock, AAPL, hit a new high Friday after a four-month swoon, as investors look ahead to the release of a new iPhone and possibly a smaller iPad.

Eli Steven of WSWS relates Magna International closing its Syracuse, New York auto parts plant.  Magna International is shuttering its auto parts plant in Syracuse, New York, after workers rejected a poverty wage offer. Dividend paying Magna International, MGA, seen in this ongoing Yahoo Finance chart, has risen strongly in the last three months.  And Elaine Meinel Supkis writes Abandoned factories litter US landscape.

China, PEK, CAF, FXI, and YAO, traded lower this week.  Tom Orlik of WSJ reports Investors and companies are increasingly pulling money out of China and its currency in a vote of concern over its growth prospects, a development that could hinder Beijing’s efforts to spark a turnaround. New data… showed China’s banks were net sellers of 3.8 billion yuan ($597 million) in foreign exchange in July, suggesting that China’s exporters aren’t converting their dollar earnings into yuan and some investors are taking funds out of the country. China’s banks have been sellers of dollars in five of the last 10 months, purchasing a paltry 145 billion yuan in foreign exchange over that combined period, considerably less than the 905 billion yuan that flowed into the country through the trade surplus. That is a stark contrast with much of the past decade, when confidence in China’s growth and hunger for yuan meant China’s banks were buying up not just the entire trade surplus, but also considerable inflows of speculative capital, known as hot money. In the first 10 months of 2008, China’s banks were net purchasers of 3.6 trillion yuan in foreign exchange.

Bloomberg reports Foreign direct investment in China fell to the lowest level in two years in July, fueling concern that waning confidence in the nation’s growth prospects may restrain any economic rebound. Investment declined 8.7% from a year earlier to $7.58 billion, the eighth drop in nine months and the smallest inflow since July 2010. Chinese financial institutions sold a net 3.8 billion yuan ($600 million) of foreign currency last month, indicating capital is flowing out as property curbs and weakness in exports slow growth and the yuan weakens. The nation reported a $71.4 billion capital account deficit in April-through-June, the biggest quarterly shortfall in data going back to 1998.

Oil, USO, and Commodities, DBC, rose to strong resistance on Friday.

2) … In the news

Doug Noland writes In the 15 quarters June 30, 2008 to March 31, 2012, Treasury debt increased almost $5.6 TN, or 106%, to $10.828 TN. This massive inflation of government Credit, in concert with Federal Reserve rate cuts and monetization, reflated system price levels that in 2009 had commenced a problematic downward spiral. Indeed, National Income jumped 4.5% in 2011 to a record $13.421 TN, after increasing 5.7% in 2010. After gaining 4.0% in 2010 and 3.3% in 2011, Total Compensation has also grown to record levels. Corporate profits have inflated to record levels after increasing 25% in 2010 and another 4% in 2011. As bullish analysts extrapolate corporate profit growth, U.S. stock prices appear “cheap” after doubling from 2009 lows.

The key has been that overall system Credit resumed its historic expansion. While down from 2007’s 8.4% growth rate, U.S. Non-Financial Credit still increased 5.9% in 2008, 3.1% in 2009, 4.1% in 2010 and 3.6% in 2011. It didn’t really matter that the vast majority of 2009-2011 growth originated from Treasury debt. Massive Washington stimulus was able to sustain inflated price levels throughout much of the economy – perhaps not home prices, but definitely system incomes, spending, GDP, and profits, while state & local receipts bounced back to, and in many case surpassed, pre-crisis levels.

EuroIntelligence in its for fee newsletter relates Reuters reports Greek banks turn to national central bank for liquidity. Greek lenders turned to their country’s central bank for liquidity in July after the ECB stopped accepting Greek government bonds as collateral from July 25, Bank of Greece data showed on Monday. ECB funding to Greek banks fell by €49.67bn in July from a month earlier while emergency liquidity assistance (ELA) from the Greek central bank increased by €44.37bn. Total ECB lending to Greek banks dropped to €23.99bn, and increased to a total of €106.31bn in ELA assistance from the Greek central bank at the end of July.

Open Europe relates Deutsche Bank’s Chief Economist Thomas Mayer argues in FAZ: Mayer that Italian Prime Minister Mario Monti’s record on structural reforms is disappointing, since “the liberalisation of closed professions has stalled, and labour market reforms were watered down so badly that they won’t have any positive effects on employment.”

Jean Chau of CNBC asks Merkel Comments Latest Salvo in QE Incognito?  Stock markets from U.S. to Asia got a boost after German Chancellor Angela Merkel vowed Thursday to do “everything” possible to keep the euro intact. Her comments follow similar rhetoric from European Central Bank chief Mario Draghi three weeks ago, which also stoked a rally in global equities.

Some analysts say the remarks have had an effect akin to launching a fresh round of quantitative easing,  and more importantly, injected confidence into markets. “There’s no secret out there, I call it quantitative easing incognito, but we all see the effects,” Jack Bouroudjian, CEO of fund manager Bull and Bear Partners, said on CNBC Asia’s “Squawk Box.” “Volumes are slim but, remember, the tone of what is happening now seems to be a lot different. Just a few weeks ago, we were talking about a Greek exit. Now, it’s more a question of what Europe is going to look like, in another couple of years staying together.”

Global markets have been rising ever since Mario Draghi promised on July 25 to do “whatever it takes” to protect the euro zone from collapse, and continued to gain even when no bazookas were delivered at the ECB meeting a week after. The S&P 500 (^GSPC) has gained 5.8 percent while the Stoxx 600 has climbed 8.6 percent since then.

Merkel’s pledge lent firepower to the market uptrend as she has been a key figure in resisting the introduction of common euro zone bonds which proponents see as a solution to the region’s debt crisis.

“Merkel’s comments were uplifting not only because she seemed to be aligning closer with the ECB, but also because she stressed that ‘time is of the essence‘,” said Vishnu Varathan, Market Economist with Mizuho Corporate Bank in Singapore. “So the sense is that euro zone policy-makers could begin to converge more quickly.”

Still, the effects of the rhetoric may be short-lived as nothing has fundamentally changed in Europe, warned Tony Nash, Managing Director of IHS Global Insight. He also doesn’t believe there are legs to the rally because trading volumes on markets are extremely thin. “I think they are hoping for a ‘whatever-it-takes’ rally part 2, which was kind of what happened after Mario Draghi’s comments,” Nash said.

Andrew Taylor of the AP reports Social Security, Medicaid, food stamps, veterans’ health care and federal employee pensions will be entirely exempt from the Fiscal Cliff spending cuts.

Bloomberg reports Merkel handed sub-zero yields as ECB plans gains traction.

Dietmar Henning of WSWS writes European car industry prepares mass redundancies.  Auto manufacturers who produce almost exclusively for the European market are reporting massive losses and are preparing mass layoffs, plant closures and wage cut.

Jon Moynihan, PA Consulting Group, The Decline of the West; and Open Europe’s Director Mats Persson writes in the Times that A eurozone banking union poses two main risks to the UK and the City of London, “First, companies doing business in the euro area could be required to be supervised by eurozone authorities…The second risk is that the eurozone 17 start to write banking and financial rules for all 27 EU states.” Mats concludes that Britain needs to “think creatively about new institutional arrangements”, not only to guarantee the City’s position as a global entry point to the single market but also to create a space in Europe for those countries not intent on joining the single currency, and also for those that may choose to leave it. 

Jerusalem Post reports Israel may have to destroy parts of Gaza, Lebanon.

Elaine Meinel Supkis writes  Indian elite hamstrung as the economy falters as real inflation shoots upwards, the value of their currency falls too low to stop capital flight and the great blackout has ravaged the GDP numbers.

Ben Sills of Bloomberg reports: “Spanish lenders’ net borrowings from the European Central Bank rose to a record 376 billion euros ($465bn) in July as investors shunned the country’s banks… Net average ECB borrowings climbed from 337 billion euros in June… Gross borrowing was 402 billion euros, up from 365 billion euros in June, accounting for 33% of borrowing in the euro region… ‘These banks clearly are having to borrow more from the ECB so that they can continue to buy the debt and this can only go on for so long,’ Peter Chatwell, a fixed-income strategist at Credit Agricole Corporate & Investment Bank in London, said… Spanish lenders are tapping the ECB to finance purchases of government debt as foreign investors dump the bonds binding the sovereign and the banks together.”

Chiara Vasarri of Bloomberg writes “Italian government debt reached a record 1.97 trillion euros ($2.42 trillion) at the end of June, the Bank of Italy said today in its public-finances supplement. Italy’s debt rose by 6.6 billion euros in June from the previous month

Mike Mish Shedlock writes Face-to-Face showdown sith Merkel.  Greece is bankrupt. It cannot pay the bills. A Spending Moratorium proves just that. Greece will only pay salaries and pensions. If the state owes anyone else money, they can forget about it unless the Troika sends more money. If that causes more corporate and personal bankruptcies (and it will), then tough luck .. .And Mr. Shedlock asks Does Italy or Germany Exit the Eurozone First? The difference between Italy and Greece is certainly not the direction of the economy. Rather the difference is in magnitude. Certainly, Greece has imploded at a far faster rate than Italy, but the latest ISM numbers from Italy, both services and manufacturing have been nothing short of horrendous. Moreover, there is absolutely no reason to expect economic conditions in Italy to get any better. There is one crucial difference between Italy and Greece: Italy is without a doubt too big to bail. Moreover, German citizens would not be willing to try, even if chancellor Angela Merkel was willing. That begs the question, does Italy or Germany exit the eurozone first? I suspect Italy leaves first. Although the answer is unclear, timing is very important. Indeed, the value of the euro vs. the US dollar is very likely dependent on whether Germany remains in the union.

The objective truth is that Christ is carrying out the preordained eternal administration plan, that is the economy of God, for the fullness of times, as communicated in Ephesians 3:10. Austrian economists and libertarians, are no different from libertines, who create their own rules, or socialists, who seen a common rule, in that all have subjective thinking, which comes from fiat mandate, that is from worldly edict.

Christ is the objective, all extensive, all  prevailing, all sufficient, all inclusive, and all sovereign human experience, encompassing personal, economic and political governance. A Sabbath Day rest is coming, before eternity begins. For 4,000 years, the Old Man, has lived, easting of the The Tree of Knowledge of Good and Evil. And for 2,000 years now, the New Man, Christ’s Body, The Church, has been manifesting by eating of the Tree of Life. Soon, for 1,000 years, this New Man will rule from Jerusalem, as God’s Kingdom is established on planet earth.

The fourfold nature of the Church is presented in Ephesians:
1) The Body of Christ, Ephesians 1;22-23,
2) The House of God, Ephesians, 2:19,
3) The Temple in The Lord, Ephesians 2:21-22,
4) The New Man, The Church, Ephesians 4:22-24

The elect, that is the called out ones, have the like precious faith of Jesus Christ, and grow in the wisdom of God, and spiritual understanding, and appreciation of sound bible doctrine such as,
1) The economy of God, that is the administrative plan for personal, economic, and political governance, Ephesians 1;10, where Christ unleashes the Four Horsemen of The Apocalypse, Revelation 6:1-8, and the Beast Regime of Revelation 13:1-4, to install totalitarian regional governance in the world’s ten regions, Daniel 2:30-33, upon the failure of UK and US hegemony, as a prelude to the Sovereign, Revelation 13:5-10, and the Seignior, Revelation 13:11-18, ruling from Jerusalem, Daniel 9:25, in a one world government for 42 months.
2) The prominent, all inclusive, universally extensive, all reconciling, universally cohesive, and sovereign Christ, through which one comes to know and experience God, Colossians 1:15-28,
3) Christ is the believer’s life; one is to take Him as life and live by Him, One is to live in Him daily, so that all He is and has attained and obtained will become our subjective experience. There is no natural person, nor carnal identity in the new man; that is there is no psychopath, no sovereign person, no Jew, nor debt slave in Christ, Colossians 3:1-11.
4) The vanity of philosophy and natural law, Ephesians 4:17
5) The objective reality of Christ, Ephesians 4:21

In contrast with the elect, those of the world, whether they be Libertarians, Austrian Economists, or Socialists, are not objective, as they practice arbitrary will worship. Colossians 2:8-12 warns against being spoiled through philosophy, and vain deceit, after the tradition of men, after the rudiments of the world, and not after Christ

Paul Festival Facebook posts “Peter Schiff, Lew Rockwell, Gary Johnson, Tom Woods, Adam Kokesh are Libertarians who are at the heart of the R3VOLUTION who are working for libertarian values and will be speaking at the Paul Festival; “it will be the moment we wean ourselves and become free and independent, as we continue to be active and work towards instilling the libertarian values Dr. Paul has espoused. But more than anything else one thing has become plainly obvious to us, there is no political solution to the problems that are dragging America through the dirt. The only solution is a change in how we think.”

In response to the Paul Festival Facebook post, I relate that there is a big difference between a Libertarian and a Christian. I am free and dependent, that is free in Christ and dependent upon Christ. When I was made accepted in the Beloved, and got Sonized, that is made a Son of God, I became free from the law of the sin and death, and was given freedom to become a child of God, that is I was given spiritual wisdom and insight to start down the path to manifest as God’s person in Christ Jesus. I am the elect of God, who lives in the like precious faith of Jesus Christ, and who practices the seven step additive process, of virtue, knowledge, self moderation, perseverance, godliness, brotherly kindness, and lowe, so as to bear fruit that is pleasing to God, and to make my calling and election genuine. Libertarians are natural law philosophers who believe in the sovereign person as well as human action. I am a reformed Christian who believes evangelist writers, such as Witness Lee, are restoring the principles of grace and truth to Christianity.

Israel, South Africa, South Korea, Sweden, Australia, And Shanghai Shares Lead World Stocks Lower After Japan’s Economy Grows At A Slower Than Expected Rate

August 13, 2012

Financial Report for Monday August 13, 2012

1) … World Currencies, DBV, and Emerging Market Currencies, CEW, turned World Stocks, VT, lower today. Base Metals, DBB, led Commodities, DBC, lower. Of note, the chart of Gasoline, UGA, shows a trade lower. The currency demand curve, RZV:RZG, manifested bearish harami, portending another major turn lower, since it turned massively lower in March 2012. Debt deflation, that is currency deflation will be driving stocks lower. Small cap mining shares GDXJ, CNDA, and SSRI traded lower today, suggesting a turn lower from their recent rallies. The EUR/JPY and the Euro, FXE, traded higher today, but the trend since August 7, 2012, is now down. The AUD/JPY, and the Australian Dollar, FXA, are trading down from their August 9, 2012 highs. Gary of Between the Hedges notes, The CRB Commodities Index is now down -19.3% since May 2nd of last year despite the recent surge in food/energy prices; it was at this time that Major World Currencies, DBV, turned lower on fears that a debt union had formed in the Eurozone. And this week, the second week of August 2012, marks another turn lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, as the Morgan Cyclicals Index, ^CYC, traded lower on fears of a global Eurasia war, as well as fears of diminished global growth and corporate profit opportunities.

AP reports World stock markets fell Monday after a slowdown in Japan’s growth gave investors another reason to worry about the health of the global economy.   Japan’s economy grew at a slower than expected annual rate of 1.4 percent in April-June as Europe’s debt crisis and the strong yen weighed on the country’s powerhouse export sector. That was a sharp drop from a revised 5.5 percent in the previous quarter. The news comes on top a slew of reports out of Asia that point to a region losing momentum. In mainland China, the Shanghai Composite Index fell 1.5 percent to 2,136.08. The Shenzhen Composite Index slid 2.1 percent to 887.65. Shares in agriculture-related companies led the gains while real estate and cement producers weakened.  Chinese construction shares fell. Shanghai-listed Fujian Cement Inc. dived 4.4 percent. Hong Kong-listed China National Building Material Co. lost 2.9 percent. Poly Real Estate Group fell 4.1 percent in Hong Kong.

Robert Wenzel of Economic Policy Journal relates Bank of Israel is preparing for aftermath of an Israeli dtrike on Iran.  Governor of the Bank of Israel Stanley Fischer said that the BOI has formed a special task force to deal with the economic crisis that is likely to follow an Israeli strike on Iran’s nuclear facilities, Ynetnews reports, “A strike would have dire effects; we are gearing for such a situation,” he told Channel 2 news over the weekend.

Shanghai, CAF, -2.1%
South Korea, EWY, -1.2%, with electronics exporter, LPL, trading lower and Banks, KB, WF, and SHG, trading lower.
Sweden, EWD, -1.4%
South Africa, EZA, -1.8%
Australia, EWA, -1.0%
Israel, EIS, -5.0%

Cement Manufacturers, CRH, CX, JHX, TXI, traded lower, while EXP rose on short sell covering.

Small Cap Pure Value, RZV, -0.6%, with GSA, CENT, SHFL, TBI, CATM, ELRC, trading lower.
Small Cap Energy, PSCE, -1.5%
Copper Mining, COPX, -1.9%
Steel, SLX, -1.4% with SCHN, CHOP, PKX, CLF, AKS, X, STLD, CMC, WOR, SXC, NWPX, SID, MTL, MT, GGB, trading lower.
Metal Manufacturing, XME, -2.4% with STLD, RS, NUE, CRS, ATI, trading lower.
Semiconductors, XSD, -0.6% with TSEM, TSM, FCB, TQNT, CCMP, HITT, and DIOD, trading lower.
Energy Production, XOP, -1.4%, with Chevron, CVX, and Exxon Mobil, XOM, traded lower from recent highs.
Coal, KOL, -2.0%
Rare Earth Mining, REMX, -1.3%

Electrical Equipment Manufacturers, ETN, ROK, AIMC, AMRC, BGC, traded lower,.

Automobile Parts Suppliers, CVGI, MTOR, TWI, traded lower.

Dividend Stock, 3M, MMM, moves to a new rally high outperforming the Morgan Stanley Cyclicals Index and Industrials as is seen in this ongoing Yahoo Finance Chart.

2) … We are witnessing the change of global empires, as foretold in Bible prophecy of Daniel 2:30-33, where the iron hegemony of the UK and the US, is shifting to the ten toed kingdom of iron democracy and clay democracy of regional goverance, as the dynamos of global growth and corporate profitability are winding down the Neoliberal Banker Regime of crony capitalism and European Socialism; and powering up the dynamos of regional security, stability and sustainability, powering up the Neoauthoritarian Beast Regime of totalitarian collectivism, Revelation 13:1-4; as the economy of God, Ephesians 1:10, is operating for the fullness of times, to introduce the Kingdom of Jesus Christ on Planet Earth, Revelation 2:26-28..

Germany will rise to lead a revived Roman Empire in Europe over peripheral the vassal PIIGS. Angela Merkel, is God’s appointed forerunner, a precursor, of one greater.  A diktat money system is rising to replace the fiat money system. There is waiting in the stage of Europe’s wings, the most capable of sovereigns. Soon the Sovereign Lord God, Ephesians, 1:1-23, will open the curtains, and into the limelight will step the Sovereign, the EU’s Leader, Revelation 13:5-10; he will be accompanied by the Seignior, the EU’s Finance Minister, Revelation 13:11-18. Candidates for the Sovereign include Olli Rehn, Herman van Rompuy, Jean-Claude Juncker, and Guido Westerwelle; and candidates for the Seignior include Jens Weidmann and Mario Draghi. The Telegraph reports Olli Rehn warns of ‘decisive juncture’ in eurozone as he reveals ‘economic and monetary union 2.0’. Olli Rehn, the vice-president of the European Commission, has warned that the eurozone is at a “decisive juncture” as he revealed his plans for “Economic and Monetary Union 2.0”.

Justin Raimondo of Antiwar relates The Marketing of Paul Ryan; Romney’s ‘libertarian’ running mate is anything but … The decline of imperial America.

Mike Mish Shedlock writes Europe’s Most Dangerous Politicians: Angela Merkel, Francois Hollande, David Cameron, Jean-Claude Juncker, Jose Barroso, Mario Monti, Herman Van Rompuy.  Der Spiegel has published an inane article about Europe’s 10 most dangerous politicians.  Der Spiegel is not only clueless, but dangerous, because it fans myths that the eurozone can survive intact (it cannot), and the myth the euro is worth saving in the first place (it’s not). Angela Merkel, Chancellor of Germany, deserves special mention (as one of Europe’s most dangerous politicians). Merkel is widely blamed for not doing enough to keep the eurozone crisis from spreading. However, her hands are tied by constitutional issues as well as political issues within her coalition. Yet, every step of the way Merkel caved in to demands of those desperately attempting to save the unsaveable. Nothing is more dangerous that ranking politicians on a mission to do the wrong thing, hoping to preserve their legacy. Merkel is an extremely skilled, as well as widely respected if not charismatic leader, with a seriously misguided notion there needs to be a European nannyzone super-state. Worse yet, she appears willing to sell her soul and the future of Germany to secure that outcome. As noted above, nothing is more dangerous that ranking politicians on a mission to do the wrong thing, hoping to preserve their legacy.Without a doubt, Merkel’s attributes make her the most dangerous politician in Europe.

Open Europe relates Former German Finance Minister backs eurozone debt-pooling.  In an interview with Süddeutsche published over the weekend, former German Finance Minister and one of the SPD’s most likely chancellor candidates Peer Steinbrück became the latest senior party figure to publicly back eurozone debt-pooling and closer fiscal integration, arguing that “Germany ought to make its creditworthiness and its solidarity available to weaker countries, for which it could demand something in return. There must be an EU authority which will have direct access to national financial policy making.” Steinbrück also dismissed opposition to debt-pooling as “featherbrained”. Meanwhile, SPD Chairman Sigmar Gabriel also defended the policy, arguing on Deutschlandfunk that “Mrs Merkel is [already] establishing a secret debt union. We are constantly ratifying new bailout funds for which Germany is liable.”

However, a new TNS Emnid poll published by German magazine Focus found that 52% of respondents were opposed to joint debt liability between states, with 31% in favour. FAZ’s political editor Rainer Hank warns that “Europe risks breaking up”, adding that calls for a “political union” are “nothing more than a fantasy of poets.” He writes, “It’s time to save Europe from the European saviours and put forward alternatives”, and calls for “a strengthening of national sovereignty…which is often dubbed as going backwards, if not anti-European.”
Reuters Süddeutsche Welt am Sonntag: Schuster Dow Jones Hamburger Abendblatt Welt FAZ: Hank

Zero Hedge reports taly’s latest record debt load: bigger, faster, more.

Alex Lantier of WSWS reports Egyptian President Mursi claims military junta’s dictatorial powers.  Egyptian President Mohamed Mursi sought to assume the dictatorial powers of the Supreme Council of the Armed Forces (SCAF) and force its leaders to retire.

Niall Green of WSWS reports Clinton visits Turkey to step up Syrian proxy war.  Washington is intensifying its bloody intervention to overthrow Syrian President Bashar al-Assad.

Ester Galen of WSWS reports Detroit to cut 81 percent of water and sewage jobs.  Mayor Dave Bing and the Detroit Water Board have announced support for a plan to cut 1,600 jobs.

Jean Shaoul of WSWS reports Israeli cabinet reveals draconian austerity budget.  Israel’s cabinet has approved austerity measures aimed at increasing taxes by NIS13 billion ($3.25 billion) and slashing state expenditure by NIS12 billion ($3 billion).

Calculated Risk reports that The Community’s Bank of Stamford, CT, is a troubled bank;.and the Stamford Advocate reports that it is the state’s only minority-owned bank and its loan portfolio is primarily made up of commercial loans in urban centers of Bridgeport, New Haven and Hartford. Why the banking authorities don’t shut banks like this one down is beyond me.

Global Hegemony Of The UK And The US Falters … As Political Restructuring Of Europe Nears … A Fall In US Treasuries As Well As International Treasuries Turns Bonds Turn Lower … All Forms Of Fiat Wealth Are Now Falling Lower In Value … Gold Rises In Value To Be The Only Form Of Sovereign Wealth

August 12, 2012

Financial market report for the week ending Friday August 10, 2012; this is eighteenth week of entry into the Second Great Depression.

1) … In a global economic paradigm shift, Bonds, BND, traded lower this week; the see saw destruction of fiat wealth is underway.
Stocks, VT, and Commodities, DBC, traded higher, as Bonds, BND, lower.

Doug Noland of Prudent Bear writes The Dog That’s Not Barking. “ The “go ahead, make my day,” Draghi “will do everything to save the euro” rally saw Spanish and Italian stocks jump 10.6% and 9.5%, respectively, in six sessions. The S&P500 rose 2.0%, with the Goldman Sachs “Most Short” index surging 7.4% (in six sessions). Spain’s two-year yields sank 160 bps in four sessions and Italy’s fell 100 bps. Crude, gold and commodities popped. Somewhat the dog that didn’t bark, the euro closed today at 1.2252, up little since Draghi’s comments and only about 2% above recent trading lows. Spain’s 10-year yields ended the week at a problematic 6.85%, and at 5.88% Italy’s 10-year yields were only somewhat less discouraging.
There appears to be a meaningful shift in market thinking regarding global monetary stimulus. Recent events have further (it that’s possible) emboldened those believing that policymakers will do everything to backstop global risk markets. To be sure, the “risk on, risk off” dynamic has become only more dominant. Draghi’s plan may have done little to bolster the euro, but it did incite another powerful “rip your face off” short squeeze in many risk markets. Policymakers may very well take satisfaction in wielding such extraordinary market power, although there will be a heavy price to be paid for interventions that feed increasingly unwieldy markets. And, by the way, it’s also apparent that monetary policy is having waning effect on real economies.
Actually, it’s no coincidence that policymaking takes an increasingly commanding role of global markets even as policy measures show diminished economic impact. And that’s a fundamental bullish tenet of the “risk on, risk off” speculation phenomena: The greater the economic and systemic risks, the more powerful the policy liquidity response available to stoke global risk markets. Market participants grapple with the question of how long this game will continue working so well.
Data out of China this week was unimpressive. Bank lending slowed sharply from June (to $85bn from $150bn). Weakness was apparent in industrial production, retail sales and housing transaction volumes. Most alarming was the sharp slowdown in exports. At a positive 1% year-over-year, July export growth sank from June’s 11% and was significantly below expectations of 8%. And with exports to Europe down 16%, this data point is one of the clearest indications yet of how the rapidly deteriorating European situation is hitting China. An article from Friday’s Wall Street Journal, “Trade Slowdown Squeezes Asia”, did a commendable job of describing how “the slowdown under way in China is already rippling across Asia.”

“The impotence of post-Bubble stimulus measures remains solidly on display here in the U.S. I have not been as bearish as others on near-term U.S. economic prospects. Yet it’s ominous that zero interest rates, the nationalization of mortgage Credit, massive Federal Reserve monetization and market intervention, and 8-10% annual fiscal deficits equate to such a feeble recovery.
Throughout Europe, things proceed methodically from bad to worse. Spanish and Italian economic data, in particular, continue to be depressing. Meanwhile, it is increasingly apparent that the German economic juggernaut is showing the region’s ill-effects. Market participants pay little attention to the data, though, as they now wait anxiously for the unveiling of the game-changing Draghi Plan. Many anticipate the positive impact a new liquidity push could have on securities prices, although few expect much help for the real economies.
But the cautious consensus view believes that the Draghi Plan at least protects against “tail risk.” Cleverly, the ECB bought a few weeks by assigning details of the plan to various committees. This was sufficient to run the bears, reverse risk hedges and, again, run things amuck for so-called “market neutral” strategies. And especially now that the Merkel government is seen as having capitulated, Mr. Draghi is thought to enjoy a window to pursue more open-ended Fed-like quantitative easing. Moreover, with an isolated Germany holding only one vote in a newfound, majority-rules ECB, the hope is that the Draghi ECB can finally move decisively toward assuming the role of buyer of last resort for European (for now, chiefly Spanish and Italian) debt.
The Draghi Plan could very well support European debt markets. Yet I really struggle with the notion of the ECB as savior for the euro. Desperate central banks are easily more apt to hurt rather than help their currencies. In a crisis environment, a central bank often must choose between flooding a system with liquidity to bolster debt and asset markets – or instead restraining liquidity creation in hope of stemming capital flight and stabilizing the value of its currency. Mr. Draghi would like to tough talk both securities markets and the euro higher. But confidence in European policymaking is depleted. So markets will force his hand into coming with a substantial bond-buying strategy. Such a plan risks liquidity abundance fanning problematic capital flight.”

“And this gets back to The Dog That’s Not Barking. The euro has thus far struggled to retreat from the precipice. I have speculated that there are likely huge derivative trades written to provide protection in the event of a major euro decline. It’s reasonable that significant “insurance” has been written at the 1.20, 1.15 and 1.10 (to the dollar) strikes. If correct, this analysis infers that potentially enormous selling pressure might be unleashed if the euro falls much below current levels.
European economies are spiraling downward, and I expect economic activity to remain largely impervious to monetary stimulus. I don’t believe the Draghi Plan will reverse the crisis of confidence in eurozone debt or the European banking system. And, as I mentioned above, I fear a desperate ECB may increasingly jeopardize the euro (see Mr. Issing’s comments below). Mr. Draghi invoked “convertibility risk” as justification for monetizing government borrowings. Such measures, however, will not allay market fears regarding the sustainability of the euro currency. Increasingly destabilizing capital flight remains a serious risk.

Interestingly, (former Bundesbank and ECB Chief Economist) Otmar Issing maintained a high-profile this week. He was interviewed by Dow Jones/The Wall Street Journal, and then appeared live on CNBC. He said little that markets would find comforting, although participants to this point have been dismissive of his influence. This week only added to my suspicions that Mr. Issing and some of the old guard from the Bundesbank may feel the situation has deteriorated to the point that they must become part of the debate.
From the Wall Street Journal (8/9/12 – Christian Grimm): “Mr. Issing said that from a historical perspective Germany indeed is ‘in a special position’ but 67 years after the war ended ‘Germany can’t be blackmailed with its past,’ he said. This is especially true of aid for troubled euro zone states, ‘which does not solve the problems in these states…’ Mr. Issing said it was wrong to expect the European Central Bank, tasked primarily with maintaining price stability in the euro zone, to step into the breach and buy the bonds of troubled euro zone states. ‘This does not solve the problems and is not legitimate,’ he said, adding that it violates EU treaties… Mr. Issing rejected the idea that any country could stay in the euro zone at any price. This ‘creates the possibility of blackmail. The participation in the shared currency must be permanently earned,’ he said.”
And from his upcoming book: “The less politicians address the root of the problems, the more they look with their expectations and demands to the ECB, which is not made for this. It is a central bank and not an institution to rescue governments threatened by bankruptcy. A central bank always also acts as a lender of last resort for the banking system – but it does not rescue governments.”
From CNBC (8/10/12 – Silvia Wadhwa and Catherine Boyle): “‘A break up of the euro area would be a major disaster – no doubt about that. But the alternative to that, [is] being a monetary union in which the reputation of the ECB would be undermined, or even destroyed. The euro would tumble and governments would pile up debts without any limit. I think this is a scenario – a horror scenario – which comes close to the disaster of a break up… The euro itself does not need to be saved. What has to be saved is the stability of the euro and the euro area. The question – how many countries can participate, this is the challenge with which Europe is confronted,’ Issing said… Politicians who blame German Chancellor Angela Merkel for creating turmoil in the markets by not taking further action on issues like Eurobonds should ‘shut up,’ Issing said. ‘They (politicians) always give the impression that they have the right medicine, which is more money, and markets will always ask for more. So this will be an endless game and politics will always be seen as prisoners of this process. It should be reversed. Politics should say what will not happen. This total mutualisation of debt – this is something which must not happen,’ Issing added.”

World Stocks, VT, rose 1.1%, as Spain, EWP, 3.6%, and Italy, EWI, 2.5% led, European Financials, EUFN, 1.6%, and Europe, VGK, 1.1%, higher. Norway, NORW rose, 1.9%, Sweden, EWD, 1.0%, Australia, EWA, 0.6%; but, Singapore, EWS, traded lower by 1.1%  South Korea, EWY, jumped 4.3%. Russia rose 3%, and Brazil, EWZ, 3.5%, leading the BRICS, EEB, 3.3%, higher. Stocks rising strongly included the following.
Networking, IGN 6.7%; Small Cap FIO, jumped 38%.
Semiconductors, XSD 5.3%
Steel, SLX 5.0%
Home Building, ITB 4.0%
Small Cap Pure Value, RZV 3.1%
Silver Miners, SIL 5.6%, Gold Miners, GDX 4.2%, GDXJ 4.4%
Copper Miners, COPX 4.7%, Aluminum Miniers, ALUM, 5.2%
Nasdaq 100, QTEC 3.5%
Oil and Gas Exploration, XOP 4.1%
S&P High Beta, SPHB 3.5%
Energy Service, OIH 2.6%, IEZ 2.7%
Large Cap Dividend, DLN, rose  0.3% to a new high, largely on a new weekly high in Exxon Mobil, XOM. And the Preferreds, PGF 0.7%, and PFF 0.4%, rose to new highs as well.

Commodities, DBC, rose 1.6%; Oil, USO, rose 1.2%, rose, and BNO 3.5%

This week the US Dollar, $USD, UUP, traded up, 0.1%, as the Euro, FXE, traded 0.7% lower. Emerging Market Currencies, CEW, rose, 0.2%, Russian Ruble ,FXRU,  0.25, Australian Dollar, FXA, 0.2%, British Pound Sterling, FXB, 0.3%, Japanese Yen, FXY, 0.4%, Mexico Peso, FXM, 0.4%, South Korean Won, 0.4%, Indian Rupe, ICN, 0.5%, New Zealand Dollar, BNZ, 0.7%, Swedish Krona, FXS, 0.7%, Danish Krone, 0.8%, Canadian Dollar, FXC, 1.0%, Brazilian Real, BZF, 1.0%, Norwegian Krone 1.1%. South Africa Rand, SZR, 1.8%.

The chart of AUD/JPY was 83.3 on Thursday, and traded lower to 82.8 on Friday; and the chart of EUR/JPY was at 96.6 on Thursday, and traded lower to 96.2 on Friday, portending a follow through fall lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, next week and a rise in the US Dollar, UUP.  The JYN traded up to strong resistance at 74.86, a recent high, providing additional evidence that the US Dollar, UUP, will be moving higher next week. The weekly chart of Major World Currencies, DBV, likely topped out in an Elliott Wave 2 of 2 high this week and is likely to enter an Elliott Wave 3 Down next week, as debt deflation will come to currencies on the failure of the world central banks’ monetary authority with weekly Bonds, BND, now trading lower this week and month. I believe stocks will trade lower next week; Stuart Wilde relates. Massive Jump In Short Bets On Wall Street…Like 9/11.

For the last month Petrobras, PZE, and Banks, BFR, GGAL, BMA, have been leading Argentina, ARGT, higher as is seen in this ongoing Yahoo Finance Chart. Elaine Meinel Supkis writeswe see what happens to sovereign nations that print money with no capital: Argentina imposes more restrictions on U.S. dollars | The Raw Story.
Buenos Aires has implemented drastic measures to control foreign exchange operations since the end of 2011, in a bid to preserve its monetary reserves slated to repay the country’s debt.
Argentina’s reserves shrank nearly $6 billion to $46.6 billion in a matter of months, prompting President Cristina Kirchner’s government to slap tight controls on the currency market by limiting dollar purchases.
The fight against the dollarization of the economy — all major transactions as well as savings until recently had been dollars — led to severe restrictions for banks, companies and small savers seeking to cope with inflation, which stands at 25 percent, according to independent analysts.
The government says inflation is just 10 percent.
How is the US different? We don’t have 25% inflation only because our trade rivals hoard US dollars we ship overseas in our grossly unbalanced trade. Argentina is not so lucky, they have to balance things all the time like most other nations. The US government grossly misrepresents inflation, too, for the same exact reason Argentina is doing this: so they can print more money.
Argentina has gotten on this exact same inflationary treadmill more than once in the past. Learning exactly nothing from this, they go mindlessly from one credit bubble to inflation crash to the next. This is so laughably easy to understand but politically addictive. People vote for these sorts of leaders willingly because they want more spending and don’t want to bother with capital.
We see this very much in the credit-addicted US system. Krugman of the NYT is quite popular as he calls for more money printing on top of free trade. He just cannot fathom the downside to running everything in the red every year. Nor can the conservatives (sic). There are virtually no real conservatives in the US. Nearly all of them, when in power, spend government money at a mad rate.

Argentina is most likely that these will be turning sharply lower next week as major world banks, IXG, such as BSBR, ITUB, BBD, WBK, SAN, IBN, HDB, seen in this Finviz Screener turn lower once again on the failure of neoliberal finance.  Creditors, V, COF, DFS, and NICK are now trading down from their recent highs. US Consumer Services, IYC, US Telecom, IYZ, and US Infrastructure, PKB, have likely peaked out as Great Lakes Dredge And Dock, GLDD, jumped 4.8%, Macquarie Infrastructure Company, MIC, jumped 4.2% and Eagle Materials, EXP, rose 1.1% and Cintas, CTAS, rose 0.8%.

Ms Supkis continues I didn’t post anything for two days due to sitting in various medical centers and hospitals. So, while there, I found in the shop a book written in 1778 and published in 1780 which is an old guide to Paris, France. Unwittingly, the author explored this fascinating, top imperial power right on the eve of total collapse: Louis-Sébastien Mercie (6 June 1740 – 25 April 1814)
In politics he was a moderate, and, as a member of the Convention, he voted against the death penalty for Louis XVI. During the Reign of Terror, he was imprisoned, but he was released after the fall of Robespierre, whom he termed a “Sanguinocrat” (roughly, ruler by bloodshed).
Here is one chapter of his book we can all cringe while reading: Panorama of Paris: Selections from Le Tableau De Paris – Louis-Sébastien Mercier, Jeremy D. Popkin, Helen Simpson – Google Books

As the French wryly noted in the past, the more things change, the more they remain the same. Yes, this is true. Banking in pre-revolutionary France was a total mess. This was due to government overspending coupled with the elites cutting their own taxes while needling the masses with fees and fines that were ruthlessly imposed on all sorts of private and public actions.
Then the crops failed! Instead of feeding the masses, the government let the mercenary wealthy control the flow of food goods and this caused riots in Paris which led to the overthrow of the entire elites who either died or fled. This nonsense has been repeated over and over again and the elites never learn. The minute the system is rigged up so that all the wealth flows to fewer and fewer hands, it collapses.
This is why epic greed defeats itself and why it is bad in the first place. Societies run as a whole, it is impossible to live above it all. Any despot who tried this didn’t last very long as outsiders invade due to the collapse of the overall social systems.

In a global economic paradigm shift, Bonds, BND, traded 1.7% lower for the second week in a row and  are trading lower for the month of August 2012, as World Stocks, VT, and Commodities, DBC, rallied this month. Bond vigilantes gained control of sovereign interest rates, as the US fiscal cliff nears and rallied Eurozone Stocks, particularly Spain and Italy. Bond vigilantes have driven interest rates higher, forcing a sell off of longer duration US Government Debt, ZROZ, EDV, TLT, and a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as reflected in the Steepner ETF, STPP, rising in value, and the Flattner ETF, FLAT, falling in value. Higher interest rates porten a global recession/depression is on the way.

Emerging Market Bonds, EMB, traded lower as Emerging Market Currencies, CEW, topped out.

International Treasury Bonds, BWX, traded lower as World Major Currencies, DBV, topped out.

The highest risk municipal bonds, the closed end Michigan Municipal Bonds, MIW, traded lower this week, and lower now for the second straight month. Municipal Bonds, MUB, traded lower beginning at the first of August 2012. Mortgage Backed Bonds, MBB, are traded lower this month, Freddie Mac 30-year fixed mortgage rates rose 4 bps to 3.9%, turning Real Estate, IYR, and REITS, RWR, Real Estate REITS, REZ, lower. Junk Bonds, JNK, traded lower this week.

With bonds, BND, now trading lower, a see-saw destruction of fiat wealth is underway; all forms of fiat wealth, Stocks VT, Commodities, DBC, Currencies, CEW, DBV, are falling into the pit of Financial Abandon together, as the world’s treasury debt debt regime, which is synonymous with the Banker Regime of Neoliberalism, is crumbling, as the world central banks have lost their monetary sovereignty,  with the bond vigilantes calling interest rates higher globally, especially in the Interest Rate in the US Ten Year Note, ^TNX, rising from 1.40% to 1.65%. All nations worldwide are starting to lose their debt sovereignty. We are witnessing bible prophecy of Revelation 6:1-2, being fulfilled as the baton of sovereignty is being passed from sovereign nation states, such as the US, the UK, Spain, Italy, and Greece, to regional sovereign bodies and leaders. The economy of God, that is the dispensation of Christ, Ephesians 1:10, is at work to establish regional economic and political governance, as foretold in Daniel 2:30-33 and Revelation 13:1-4. The Beast Regime of Neoauthoritarianism is rising from the profligate Mediterranean Sea country of Greece, and the failed industrial nation of Italy, as foretold in bible prophecy of Revelation 13:1-4.

The steepening in the 10 30 US Sovereign Debt yield curve is a warning signal to investors to get out of bonds, The steepening yield curve in the U.S. Treasury market should have investors worried, PIMCO’s CEO Mohamed El-Erian says in Advisor One article. Wealth can only be preserved by investing in, and taking possession of gold, either in bullion form, or in physical for, in Internet trading vaults, such as Money Is Gold, or Bullion Vault, as the chart of gold, GLD, communicates that an investment demand for gold commenced in August 2012.  In the age of devolution, despotism, and asset deflation, gold is the only form of sovereign wealth.

Doug Noland notes M2 (narrow) “money” supply increased $5.7bn to $10.036 TN.

MarketWatch reports Oil futures drop as IEA cuts demand forecast. Crude-oil futures fell Friday, after the International Energy Agency warned weak global growth could restrict demand for the commodity, while weaker-than-expected China trade data were also in focus

ABCNews reports China Trade Decelerates in Sign of Global Weakness.  China’s trade and domestic demand have weakened even faster than expected, adding to pressure on Beijing for a more aggressive stimulus to boost the world’s second-largest economy out of its worst slump since the 2008 crisis.

Ambrose Evans Pritchard reports Hard landing for China as factory prices fall and deflation looms. Factory gate prices in China fell at an accelerating rate of 2.9pc in July as the economy flirted with industrial recession, prompting calls for further stimulus to head off Japanese-style deflation.

Doug Noland of Prudent Bear relates WSJ reports: “Concerns about China’s economy intensified Friday on signs that Beijing’s attempt to kick-start growth aren’t working and fresh evidence of weakness in the crucial export sector, putting more pressure on Beijing to move aggressively to boost growth. New loans by China’s banks fell to 540.1 billion yuan ($85.1 bn) in July, down from 919.8 billion yuan in June, and the lowest level since September 2011.”

Bloomberg reports: “China’s export growth collapsed and imports and new yuan loans trailed estimates in July, adding to signs the global economy is weakening and raising the odds the government will step up measures to support expansion. Outbound shipments increased 1% from a year earlier and imports rose 4.7%.”

Bloomberg reports: “China’s home sales transaction value dropped 14.5% in July from the previous month as the government vowed to maintain curbs on the property market. The value of homes sold fell to 454.4 billion yuan ($71.5bn) from 531.3 billion yuan in June… Housing sales from January to July declined 1.1% to 2.4 trillion yuan from a year earlier, according to the data.”

Bloomberg reports: “China’s industrial-output growth unexpectedly slowed in July to a three-year low while investment and retail sales missed estimates… Factory production increased 9.2% in July from a year earlier… below all 32 analyst forecasts in a Bloomberg News survey.”

Bloomberg reports: “The weakest monsoon since 2009 is set to prevent Prime Minister Manmohan Singh from reducing the biggest budget deficit among the largest emerging markets, increasing the risk of a downgrade of India’s debt rating. All the seven economists in a Bloomberg News survey predict the government will overshoot its deficit target of 5.1% of gross domestic product in the year to March 2013.”

Bloomberg reports: “Indian industrial production slid in June for the third time in four months, with output of capital goods plunging the most on record, adding to signs of faltering growth in Asia’s third-largest economy. Production… declined 1.8% from a year earlier, after a revised 2.5% rise in May.”

Bloomberg reports: “Indian Oil Corp. posted the nation’s biggest quarterly loss of 224.5 billion rupees ($4.1bn) after the government failed to compensate it for capping fuel prices and processing margins turned negative.”

2) … News reflecting the formation of regional governance as communicated in bible prophecy of Daniel 2:30-33.
Open Europe relates WSJ: Talks over disbursement of new tranche of Greek bailout delayed until October. According to an EU official quoted by the WSJ, experts from the EU-IMF-ECB Troika will travel to Athens in early September and “stay the whole month in order to report to the October Eurogroup” – meaning that eurozone finance ministers will not discuss the disbursement of the next tranche of the Greek bailout loan until then. Meanwhile, talks between Greece’s coalition leaders on the new €11.5bn package of savings for 2013-14 are still stalling over the planned introduction of a labour reserve scheme for public sector workers, reports Kathimerini.WSJ Kathimerini

Open Europe relates Greek leaders still unable to agree on composition of latest €11.5bn cuts package; WSJ: IMF floats proposal for ECB taking losses on Greek bonds. Standard and Poor’s yesterday revised the outlook on Greece’s credit rating – already at ‘junk’ status – from stable to negative, citing the risk that Greece may fail to obtain the next instalment of loans from its EU and IMF bailout package. In an interview with German public broadcaster WDR, Eurogroup chairman Jean-Claude Juncker said that Greece’s euro exit would be “manageable”, but not “desirable”.

Yesterday’s WSJ claimed that the IMF wants to see further write-downs of Greece’s debt, including the possibility of losses for taxpayer-backed institutions, before releasing more bailout cash to Athens in a bid to bring down the country’s debt to 100% of its GDP by 2020, rather than 120% as originally planned. Discussions have included proposals for a 30% reduction in the value of Greek bonds held by the ECB and national central banks.

Tthe latest meeting between Greece’s coalition leaders yesterday failed to produce an agreement on the details of the new €11.5bn austerity package as Fotis Kouvelis, the leader of the junior coalition partner Democratic Left party, opposed to plans to revive a so-called labour reserve scheme to reduce the public sector wage bill, reports Kathimerini. Kathimerini Kathimerini 2 EUobserver Irish Times Irish Independent Welt Süddeutsche Handelsblatt FTD WSJ El País El Mundo Expansión Repubblica La Stampa Le Monde Les Echos

Open Europe relates In an interview with Die Zeit, former UK Prime Minister Tony Blair argues, “It is clear that irrespective of how [the eurozone crisis] develops, ultimately, a grand political restructuring of the EU will have to take place. And I am deeply concerned that Britain could – via a referendum – bid farewell to the whole process.” Die Zeit EUobserver

Open Europ relates Nomura: Without renegotiation British EU exit looking “increasingly likely”.  In a risk assessment issued to clients, Japanese investment bank Nomura has warned that a UK exit from the EU is looking “increasingly likely” due to a ‘perfect storm’ of fraught coalition relations, declining British influence in Europe, and moves towards closer EU integration. Analysts at the bank predicted that these risked forcing an “in or out” referendum before 2015 – causing the coalition government to fall. The report concluded that, without a repatriation of powers, it would be difficult to get Britons to vote to stay in Europe.

Open Europe Director Mats Persson is quoted on the front page of City AM as saying that the debate over Britain’s place in Europe “will be very vibrant in the City of London as it relates to the idea that London is an entry point into the European market. In order to guarantee the benefit of the single market there needs to be some change in the UK’s basic membership – renegotiation is not a threat.” City AM Mail EUobserver Telegraph Blogs: Evans-Pritchard Open Europe Research: EU Trade

Doug Noland of Prudent Bear relates Emma Charlton of Bloomberg reports: “European Central Bank President Mario Draghi’s bid to bring down Spanish and Italian yields may spur the nations to sell more short-dated notes, swelling the debt pile that needs refinancing in the coming years… The average maturity of Spanish debt is the shortest since 2004 as Spain, like Italy, hasn’t issued 15- or 30-year bonds all year. As Prime Ministers Mario Monti and Mariano Rajoy fight to avoid bailouts that may threaten the euro’s survival, the ECB’s plan risks adding to pressure on the two nations’ treasuries. ‘In a way what the ECB has done is making the situation worse,’ said Nicola Marinelli, who oversees $160 million at Glendevon King Asset Management… ‘Focusing on the short-end is very dangerous for a country because it means that every year after this they will have to roll over a much larger percentage of their debt.’”

Patrick Henry of Bloomberg reports: “Former National Bank of Belgium Governor Guy Quaden said no national central bank has a veto on European Central Bank policy decisions, Le Soir reported. ‘The Bundesbank is opposed to certain measures, an objection that is not only statutory, but also and primarily ideological,’ Quaden told the… newspaper… ‘The ECB is the only truly federal European institution,’ Quaden told Le Soir. ‘No partner, even the most important central bank, has a veto. It’s always preferable to make decisions by consensus, but when that’s not possible, and a large majority of governors think a measure is appropriate, they have to move forward.’”

Sonia Sirletti and Giovanni Salzano of Bloomberg reports “Italian banks’ purchases of the country’s sovereign debt rose to a record in June as concerns that Italy may be forced to seek a bailout discouraged foreign investors. Banks boosted their holdings of Italian government bonds by about 14 billion euros ($17 billion) in June to 316 billion euros… Italian banks ‘have been holding the fort at government debt auctions in the absence of foreign investors,’ said Nicholas Spiro managing director of Spiro Sovereign Strategy… ‘The run on the bond markets of Spain and Italy continues unabated and domestic banks have been left to pick up the slack. The question is how much longer they will be able to plug the gap if foreign investors continue to steer clear of Spanish and Italian debt.’”

Sonia Sirletti of Bloomberg reports: “Italian banks’ bad loans rose 15.8% in June from yr earlier, BOI says in report today.”

Andrew Davis of Bloomberg reports: “Fallout from the euro region’s debt crisis has led to more corporate insolvencies in Italy than in countries in northern Europe, the European Central Bank said in its monthly report. Corporate defaults increased ‘substantially’ in the second half of 2011 as the crisis intensified, compounding the effects of weakening economic growth, the… ECB said… ‘Across the larger euro-area countries, this rise was particularly pronounced for Italian firms, while it was rather subdued for Dutch and German firms,’ according to the report.”

Chiara Vasarri of Bloomberg reports “Italian industrial production declined more than forecast in June, signaling the euro region’s third-biggest economy probably contracted for a fourth quarter. Output dropped 1.4% from May… Production fell 8.2% from a year ago.”

Jonathan Stearns and Natalie Weeks of Bloomberg reports Where Greece begins, a strike looms.  “In the mountains of northern Greece lies an $800 million power plant whose future may help determine whether the country can salvage its euro status. The facility near Florina, a town known as ‘Where Greece Begins,’ is the most modern of four production units that state-controlled Public Power Corp.  SA, PPC, is scheduled to sell to competitors to meet four-year-old European Union demands that the country deregulate its energy market. The most powerful Greek union is now threatening nationwide blackouts at the height of the summer tourist season to derail the plan.”

Nicholas Comfort of Bloomberg reports: “Germany’s Zentralverband des Deutschen Handwerks, a skilled trades lobby group, said support for rescuing the euro may dwindle if the cost exceeds the benefits, Handelsblatt reported, citing… Otto Kentzler, the ZDH’s president. Stabilizing the currency union cannot be a goal in itself, wrote Kentzler, who represents about a million companies and 5 million workers.”

The Telegraph reports It starts: first Asian bank mulls British exit from the EU.

3) … The objective truth is that Christ is carrying out the preordained eternal administration plan, that is the economy of God, for the fullness of times, as communicated in Ephesians 3:10.
Austrian economists and libertarians, are no different from libertines, who create their own rules, or socialists, who seen a common rule, in that all have subjective thinking, which comes from fiat mandate, that is from worldly edict.

Mike Mish Shedlock writes Complete absurdity in Greece.  No entity is willing to stand up and say the obvious, that Greece is insolvent and cannot and will not pay back its debts.

Moreover, in spite of an ECB mandate that prohibits direct financing of governments, the ECB is doing just that. Simply put, the ECB is printing euros, to give to the Greece, so that Greece can make interest payments to the ECB on maturing bonds.

Der Spiegel notes the absurdity of this setup in The European Central Bank’s discreet help for Greece.  “There is no time to lose,” Jean-Claude Juncker warned just a few days ago. Leaders must use “all means at their disposal” to save the currency union, the head of the Euro Group said. But one thing is becoming clear: Politicians are increasingly pushing the dirty work on to the European Central Bank (ECB).

Take Greece, for example, where liquidity is becoming scarce. The government in Athens needs to repay a maturing bond worth €3 billion ($3.7 billion) to the ECB by Aug. 20. The solution to that problem seems paradoxical: The ECB itself is pumping money into Greece, so that the country can in turn repay the ECB.

It’s a controversial plan, because the central bank is prohibited from financing governments directly. As a result, no one is talking openly about the absurd flows of money. The ECB has only hinted that it will extend a helping hand to Greece.

Now, information has leaked regarding how the ECB plans to keep Greece on its feet until the next tranche of European Union-International Monetary Fund aid is paid out. The ECB has chosen a detour via the Greek central bank. It will allow it to issue additional emergency loans to the country’s banks. These in turn are supposed to use the money to buy up Greek bonds with short maturities. This will scrape together €4 billion, according to the plan.

The Greek central bank will accept the dodgy bonds as collateral, and will provide the country’s equally troubled commercial banks with freshly printed euros — which ultimately come from the ECB.

What is particularly absurd is the fact that, for the past two weeks, the ECB has no longer been accepting Greek government bonds as collateral for its refinancing operations. But the Greek central bank — which in reality is little more than the Athens branch of the ECB — is still allowed to accept them. The fact that the euro bankers are willing to go through such contortions shows just how precarious the situation is. At the moment, a Greek default is being fought off from week to week — and politicians are trying to duck responsibility.

Mike Mish Shedlock writes Problem in Europe is a arithmetic, not confidence … And why the Eurozone cannot possibly survive intact.  The key point is that it is complete silliness to think anything else but a breakup of the eurozone (coupled with genuine work rule reform) can help Spain.

The Automatic Earth writes Euro Dystopia: a future divided … Daily Paul Ron Paul on compromise and democracy … Liberty Crier Why Ron Paul and libertarian ideals are here to stay

Christ is the objective, all extensive, all  prevailing, all sufficient, and all sovereign human experience, encompassing personal, economic and political governance.

A Sabbath Day rest is coming, before eternity begins. For 4,000 years, the Old Man, has lived, easting of the The Tree of Knowledge of Good and Evil. And for 2,000 years now, the New Man, Christ’s Body, The Church, has been manifesting by eating of the Tree of Life. Soon, for 1,000 years, this New Man will rule from Jerusalem, as God’s Kingdom is established on planet earth.

The fourfold nature of the Church is presented in Ephesians:
1) The Body of Christ, Ephesians 1;22-23,
2) The House of God, Ephesians, 2:19,
3) The Temple in The lord, Ephesians 2:21-22,
4) The New Man, The Church, Ephesians 4:22-24

The elect, that is the called out ones, have the like precious faith of Jesus Christ, and grow in the wisdom of God, and spiritual understanding, and appreciation of sound bible doctrine such as,
1) The economy of God, that is the administrative plan for personal, economic, and political governance, Ephesians 1;10, where Christ unleashes the Four Horsemen of The Apocalypse, Revelation 6:1-8, and the Beast Regime of Revelation 13:1-4, to install totalitarian regional governance as a prelude to the Sovereign, Revelation 13:5-10, and the Seignior, Revelation 13:11-18, ruling from Jerusalem, Daniel 9:25, in a one world government for 42 months.
2) The prominent, all inclusive, universally extensive, all reconciling, universally cohesive, and sovereign Christ, through which one comes to know and experience God, Colossians 1:15-28,
3) Christ is the believer’s life; one is to take Him as life and live by Him, One is to live in Him daily, so that all He is and has attained and obtained will become our subjective experience. There is no natural person, nor carnal identity in the new man; that is there is no psychopath, no sovereign person, no Jew, nor debt slave in Christ, Colossians 3:1-11.
4) The vanity of philosophy and natural law, Ephesians 4:17
5) The objective reality of Christ, Ephesians 4:21

In contrast with the elect, those of the world, whether they be Libertarians, Austrian Economists, or Socialists, are not objective, as they practice arbitrary will worship. Colossians 2:8-12 warns against being spoiled through philosophy, and vain deceit, after the tradition of men, after the rudiments of the world, and not after Christ.

Reports Herald That A European Coup D’Etat Is Underway …. Germany And Italy Near Blows Over The Euro …. The Global Empire Of UK And US Hegemony Is Giving Way To The Ten Toed Kingdom Of Regional Governance …. An Inflection Point In Fiat Wealth Has Been Reached AS Bonds Trade Lower And Stocks Higher As Bond Vigilantes Gain Control Of Sovereign Interest Rates As US Fiscal Cliff Nears

August 9, 2012

Financial Market Report for Monday, August 6, 2012, and Tuesday, August 7, 2012

1) … God has ordained five dispensations to rule mankind; a shift in global empires is taking place. The five dispensations, or arrangements, are 1) Sin and Death, 2) The Law, The Prophets, And the Nation of Israel, 3) Empires presented in Nebuchadnezzar’s Dream, 4) The Millennial Kingdom, and 5)  the New Jerusalem.  News reports communicate that a Coup D’Etat is underway in the Eurozone; this as the global hegemony of the UK and US is waning; it is all part of the shift in world power, as regional blocs rise in economic and political power to replace crony capitalism and European Socialism in the current dispensation of empires.

On Monday, Open Europe relates SPD signals it could be willing to accept eurozone debt pooling.  In an interview with Berliner Zeitung, SPD Chairman Sigmar Gabriel announced that the SPD was prepared to change its eurozone policy by accepting collective debt liability in exchange for stricter budgetary oversight, claiming that the Merkel government’s current strategy – hitherto broadly supported by the SPD – had failed. Gabriel acknowledged that for such a move, the German constitution would need to be altered and put to the public in a referendum.
Separately, Reuters reports that Austrian Chancellor Werner Faymann has said that in his view, German Chancellor Angela Merkel will ultimately give up her resistance to giving the ESM a banking licence. FAZ reports that CSU MP Peter Gauweiler – who has lodged one of the complaints against the ESM treaty currently under consideration by the country’s constitutional court – has indicated that he will broaden his complaint to include the possibility of ESM obtaining a banking licence.
Berliner Zeitung FAZ: Habermas, Nida-Rümelin & Bofinger Süddeutsche Welt Irish Times Reuters FAZ

Open Europe relates Monti: Governments cannot be too tightly bound by national parliaments.  In an interview with Spiegel, Italian Prime Minister Mario Monti warned of the “psychological break-up of Europe”, saying that he was “very worried” about resentment spreading in the Italy and the Italian parliament about the EU, the euro and also Germany. Monti also warned that “If governments allow themselves to be completely bound by the decisions of their parliaments without maintaining some room for manoeuvre in international negotiations, then a break up of Europe will be more likely than closer integration.” This comment was subsequently criticised by a number of German commentators and politicians, including the SPD’s deputy faction leader Joachim Poß, who argued that “the acceptance for the euro and its rescue are enforced and not weakened through the role of national parliaments”.
Spiegel Spiegel 2 City AM Sole 24 Ore Corriere della Sera Repubblica La Stampa EUobserver El Pais El Mundo

Bloomberg reports Bank License for ESM Illegal, Germany’s Westerwelle Tells Focus. German Foreign Minister Guido Westerwelle said it would be illegal in Germany to grant a banking license to the European Stability Mechanism, the future permanent euro-area bailout fund, Focus magazine reported, citing an interview. Shared liability for public debt in Europe would burden Germany with unlimited risks, a prospect that would violate the country’s constitution, Westerwelle said. Europe needs to boost its competitiveness and the entire euro region needs effective economic policy changes, he said.

Zero Hedge relates The German Press Responds To Draghi: “Vengeance Will Be Bitter”.

CNBC reports Greece’s New Pledges Will Take Epic Battle to Implement. Greece’s latest fiscal and reform pledges may be enough to convince international lenders weary after years of broken promises to keep Athens hooked to a 130 billion euro ($161 billion) lifeline, but the battle to implement it will be epic.

Ambrose Evans Pritchard writes Germany and Italy near blows over Euro.  German politicians from across the spectrum have reacted furiously to warnings by Italy’s Mario Monti that Bundestag control over EU debt policies threatens to bring about the “disintegration” of the European project.  Bundestag president Norbert Lammert said parliament’s integrity cannot be subordinated to the ups and downs of the markets. “The tone of the debate has turned dangerous. We must be careful that Europe does not rip itself apart,” said German foreign minister, Guido Westerwelle. He himself fanned the flames over the weekend, saying he was “categorically” against further expansion of the EU rescue machinery or bond purchases by the European Central Bank. “I can’t imagine that a majority of the Bundestag will back unlimited debt liabilities,” he said. The dispute comes as relations between Germany and Italy touch the lowest ebb since the Second World War, with Il Libero publishing a front-page picture of Chancellor Angela Merkel under the headline “Fourth Reich”.

Peter Schwarz writes in WSWS The euro bailouts and the crisis of democracy in Europe.  Italian Prime Minister Mario Monti said Monday that Europe would fall apart “if governments are completely bound by the decisions of their parliaments.” Every government has “a duty to educate the parliament,” he added in an interview with the news magazine Der Spiegel.

Monti gave his interview after a week in which anti-worker austerity measures were intensified throughout Europe. The Greek government has decided on further cuts of €11.5 billion, which will deepen the suffering of already devastated workers and pensioners. The Spanish government has increased its previous deficit-reduction target by 60 percent and now aims to cut the massive sum of €102 billion from the budget, throwing the country back to the poverty of the Franco era. The European Central Bank has decided to support countries, hrough the purchase of government bonds—only if they have previously made an application to the European emergency aid fund and submitted to EU-dictated austerity measures.

Under these circumstances, Monti’s comment underscores the basic class agenda of the European bourgeoisie: to press ahead with the policies of the banks, whatever the outcome of elections or the size of street protests and strikes against austerity measures.
Monti knows well that the social counterrevolution demanded by the international financial markets is incompatible with democratic methods. He leads a government of technocrats that has no democratic legitimacy. Monti, an economics professor, advisor to Goldman Sachs and member of several conservative think tanks (Bruegel, Bilderberg Conference, Trilateral Commission), is a trusted representative of international finance capital. At its behest, he succeeded the Berlusconi government last November without the holding of an election because Berlusconi had failed to cut the budget quickly and deeply enough.
Since then, the Monti government has systematically attacked the social gains and rights won by Italian workers since the fall of the fascist dictatorship of Mussolini at the end of World War II. It has reduced pensions, increased consumption taxes and eliminated legal protections against dismissal and other social rights.
Political conclusions must be drawn from Monti’s statement that the break-up of Europe can be prevented only if governments repudiate democratic procedures. The working class cannot defend its rights and social gains within the reactionary framework of the European Union.
The views of Monti’s immediate opponents on European financial policy—German politicians who have criticized his remarks as an attempt to “weaken democratic legitimation,” in the words of Foreign Minister Guido Westerwelle—are equally hypocritical and reactionary. Berlin has consistently sought to impose devastating cuts, notably on the Greek government, in total defiance of popular opinion in Greece and other European countries. It has, moreover, led the campaign to establish a de facto EU dictatorship over the fiscal policies of euro zone governments.
This underscores that the EU, as a whole, is an instrument for the subjugation of Europe to the dictatorship of competing cliques of finance capital

Open Europe on Tuesday relates German FM: Tone of debate on Europe “is very dangerous”.      Following the widespread criticisms of Italian Prime Minister Mario Monti’s remarks on the need for eurozone governments to allow themselves some “room for manoeuvre” from national parliaments, a spokesperson for German Chancellor Angela Merkel said that “every government action also has to be democratically legitimised”. Monti yesterday clarified in a statement that he is in favour of cooperation between governments and parliaments. Separately, German Foreign Minister Guido Westerwelle warned that “the tone of the debate is very dangerous. We have to be careful that we do not denigrate Europe.”
FAZ FAZ 2 Bild Welt Welt 2 Sole 24 Ore La Stampa Telegraph Repubblica 2 Sole 24 Ore Corriere della Sera 2 WSJ Repubblica 3
An EU official said yesterday that the European Commission plans to unveil its proposal for a single eurozone banking supervisor by 11 September, reports the WSJ.
WSJ EUobserver La Tribune  
Reviewing Conservative MEP Dan Hannan’s recent book ‘A Doomed Marriage: Britain and Europe’ in the Telegraph, former editor Charles Moore argues, “The downfall of the EU, in its present form, is deserved, but it is also, unless there is something to replace it, to be feared.” Telegraph: Moore

Neoliberalism featured wildcat finance, a Doug Noland term. Neoauthoritarianism will feature wildcat governance, where only the most fierce leaders will rise to be the top dogs. The groundwork and foundation for a European Super State, has been laid by Mario Draghi, as well as by Angela Merkel, Francois Hollande and Mario Monti. These are heralds and antecedents of a greater sovereign experience, that being rule by Europe’s Sovereign, as foretold in Revelation 13:5-10, and Europe’s Seignior, Revelation 13:11-18. The all inclusive experience of totalitarian collectivism will be a unified experience of living under diktat, where the word, will, and way of these two will supercede all constitutional and historic law. The current fiat money system will be replaced by the diktat money system, where diktat serves as both money and credit.  The scope and power of the Beast Regime, that is rising out of the profligate peripheral PIGS, to replace the Banker Regime, will be recognized as unconquerable; John The Revelator, writes that people will actually worship this monster, Revelation 13:1-4.

2) … An inflection point in fiat wealth has been reached. Bonds traded lower and stocks higher on Monday and Tuesday of the first week of August 2012, as bond vigilantes gained control of sovereign interest rates as the US fiscal cliff nears and rallied Eurozone Stocks.   Bond vigilantes drove interest rates higher forcing a sell off of longer duration US Government Debt, ZROZ, EDV, TLT, forcing a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as reflected in the Steepner ETF, STPP, rising in value, and the Flattner ETF, FLAT, falling in value.

A see-saw destruction of fiat wealth is underway as Bonds, BND, and even now Junk Bonds, JNK, Emerging Market Bonds, EMB, and World Treasuries, BWX, are trading lower on currency deflation with the US Dollar, $USD, UUP, now trading lower on the month and the failure of sovereign authority in the Eurozone, and the Indian Rupe, ICN, the Brazilian Real, BZF, and the British Pound, FXB, having fallen sharply since March 2012.

The US Federal Reserve, and the world central banks have lost control of interest rates to the bond vigilantes who .have called interest rates higher globally, as reflected in the longer duration US Corporate bonds, BLV, falling sharply, and the shorter duration US Corporate bonds, LQD, trading lower. as well.

Tuesday August 7, 2012, is a day in financial infamy as the governments of the world lost debt sovereignty to the bond vigilantes as documented in International Treasury Bonds, BWX, trading flower. We are witnessing bible prophecy of Revelation 6:1-2, being fulfilled as the baton of sovereignty is being passed from sovereign nation states, such as the US, the UK, Spain, Italy, and Greece, to regional sovereign bodies and leaders. The economy of God, that is the dispensation of Christ, Ephesians 1:10, is at work to establish regional economic and political governance, as foretold in Daniel 2:30-33 and Revelation 13:1-4.

In the world stock markets, on Monday, August 6, 2012, The US Dollar, $USD, UUP, traded lower. Base Metals, DBB, Oil, USO, Timber, CUT, Gold, GLD, and Silver, SLV, rose.  Spain, EWP, Italy, EWI, Greece, GREK, and Germany, EWG, led Europe, VGK, higher. China Real Estate, TAO, led Asia, EPP, higher. Japan, EWJ, Russia, RSX, and Brazil, EWZ, rose strongly. Steel, SLX, Gold miners, GDX, and GDXJ, and Silver Miners, SIL, the Nasdaq 100, QTEC, rose strongly. Dig and dirt moving stocks, such as JOYG, TEX, ALG, CNH, MTW, rose strongly as did Oil And Gas Refineries, PSX, VLO, HFC, TSO, DK, WNR. Utilities, XLU, such as NEE, and DTE, traded lower.

On Tuesday, August 7, 2012, The US Dollar, $USD, UUP traded lower again; and with it bonds, BND, traded parabolically lower as Spain, EWP, and Italy,EWI, rallied Europe, VGK, higher. Bespoke Investment Group writes A monster rally in Europe: “Since its late July low just two weeks ago, Spain is up nearly 22%, followed by Italy with a gain of 19.1%!  Even France and Germany are both up more than 10%.” Argentina, ARGT, blasted higher. India, INDY, Brazil, EWZ, and Russia, RSX, led the BRICS, EEB, higher. Steel, SLX, continued higher. Energy Service, OIH, and IEZ, traded higher. Energy, XOP, and XLE, traded higher. China Minerals, CHIM, China Small Caps, HAO, and Japan, EWJ, led Asia, EPP, higher.Networking, IGN, Stockbrokers, AIA, and Nasdaq 100, QTEC, traded higher. With Mortgage Backed Bonds, MBB, trading lower on higher interest rates, Mortgage REITS, REM, and Estate, IYR, and its stellar performer, Residential REITS, REZ, have now turned lower.

The ongoing Yahoo five day chart of CAF, EWS, EWA, VTI, EWW, EWD, shows Monday’s and Tuesday’s stock market rally on the sale of Bonds, BND .Australia’s Westpac Banking WBK and Australia, EWA, have moved parabolically higher on a rising Australian Dollar, FXA. Hong Kong, EWH, and especially Singapore, EWS, and Sweden, EWD, have risen strongly on the sale of Bonds, BND.

Major Currencies, DBV, and Emerging Market Currencies, CEW, want to take stocks up; but the Euro, FXE, of course, has the potential to be a major drag for rising stocks. Energy Service Companies, PDS, NOV, DRQ, FTI, OII, GLF, FET, HLX, OIS, RES, NR, as well as SLB, TS, BHI, and HAL have performed quite well. Frankly, the overall picture is bearish as the rally in Railroad stocks, such as UNP, GWR, CP, KSU, CNI, NSC, and CSX,  is getting long in the tooth, and Airlines, FAA, are a drag on Transports, IYT, which are lagging Industrials, IYJ.  Market Trends Forecast relates S&P 500 has jumped to a  cyclical high as seen in the chart of SPY.

In the age regional governance, physical ownership of gold in gold bullion or in Internet trading vaults, such as Gold Is Money, or Bullion Vault, is the the only means to preserve wealth.

3) … I live in Christ, yet reside in a poneros cesspool; covenant living requires I have amity not enmity. Hebrews 8:6-13, relates God has consummated a new covenant with His regenerated people who know the law of life in Christ Jesus. The attitude, behavior and speech of the saints bears testimony to being in the new creation. When one is born again, God puts the law of life within a person, enabling one to spontaneously know God. This knowing, this experience, comes from understanding his Word, as well as experiencing Him as life. Being of the new covenant, from a little one to an older one, none have need for anyone to teach him, as he is able to know God by himself.  Those who have been saved by God’s life, have this life within as a law, providing a natural capacity for one to know God, and live through Him. This is a particular aspect of the new covenant.

Being of the new covenant, I must communicate peace to all, if faith is to genuine. I live in a multi story trailer-court. In this public housing apartment complex, most residents receive a $600 rent subsidy provided by taxpayers, in addition to a $200 food stamp allowance, as well as a $700 disability payment for a total monthly dole of $1,500; the equivalent of working a fulltime job at minimum wage. The worst of the DSM 4 antisocial individuals live here. One of my neighbors commented on the fact I carry a purse. Frankly, what I carry is none of his business; his comments were simply testing to see if he could upset me; I replied peacefully that “I find it helpful for carrying books, markers, and lights that I use when I go out walking at night.” One elderly woman, said to me, “I suppose, that it is best one say nothing harsh”. How true, if one were to say anything harsh, then one would become only a target of really mean and crazy behavior. Amity, not enmity, must characterize my life.

4) … A Global Eurasia War is coming soon; it is identified in scripture as the Ezekiel 38 War.   Chris Madsen of WSWS relates Turkey attacks Kurds, threatens military action against Syria.  On the eve of an expected offensive in Aleppo by the Syrian regime, Turkey has threatened to invade Syria.

Stocks Slide But Then Jump Higher As Merkel’s Coalition Members Signal Acceptance Of ECB Bond Buying … ..The US Dollar, Bonds, And US Treasuries Trade Lower …. The Great Sea Saw Destruction Of Fiat Wealth Has Commenced.

August 4, 2012

Financial market report for the week ending Friday August 3, 2012; this is eighteenth week of entry into the Second Great Depression.

1) … On Thursday August 2, World Stocks, VT, traded lower after the European Leaders and the ECB failed to take any decisive action for solving the region’s debt crisis and as markets were unimpressed by Draghi’s promises.  

The Risk On ETN, ONN, traded lower, indicating that risk on investing has turned to risk off investing. High Paying Dividend ETFs, such as S&P Dividend Payers, DWX, Australia Dividends, AUSE, S&P Telecom, IST, Global Real Estate, DRW, Shipping, SEA, High Yield REITS, KBWY, Alerian MLP, AMLP, US Preferred Stocks, PFF, Junk Bonds, JNK, as well as Dividend Payers, DVY, such as Exxon Mobil, XOM, and Cigarette Manufacturer, RAI, and MO, turned lower.

Last week BBC reported Mario Draghi, said ”he would do whatever it takes to preserve the euro”.

Eva Kuehnen of Reuters reported Mario Draghi and the ECB Governing Council to draw up plans for further bond purchases to support price stability and will consider further non-standard monetary policy measures according to what is required to repair monetary policy transmission.  The European Central Bank will draw up a mechanism in the coming weeks to make outright purchases to stabilise stressed euro zone borrowing costs, ECB President Mario Draghi said on Thursday. “The Governing Council, within its mandate to maintain price stability over the medium term and in observance of its independence in determining monetary policy, may undertake outright open market operations of a size adequate to reach its objective.” Draghi said after the bank kept euro zone interest rates at 0.75 percent. “The Governing Council will consider further non-standard monetary policy measures according to what is required to repair monetary policy transmission. In the coming weeks we will design the appropriate modalities for such policy measures.”

US Government Debt rose, as seen in the combined Yahoo Finance chart of ZROZ, EDV, TLT, but are trading below their recent highs. The highly margined bond ETF, BOND, is trading below its recent high of 107.39, and Total Bonds, BND, is trading below its recent high of 85.17, suggesting a the exhaustion of the world central banks’ monetary authority, even though Short to Medium Term Corporate Bonds, LQD, and Emerging Market Bonds, EMB, traded to a highs as a safe haven investment.  Junk Bonds, JNK, traded lower with stocks. The Flattner ETF, FLAT, has now turned lower in value. A steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, is reflected in the Steepner ETF, STPP, rising in value. Freddie Mac 30-year fixed mortgage rates rose 6 bps to 3.55%.

The trade lower in World Government Bonds, BWX, indicates that bond vigilantes are beginning to seize control of interest rates from the world central bankers; the global government bond bubble has finally burst; the world central banks have lost control over money and credit as sovereign nations states, Greece, GREK, Spain, EWP, and Italy, EWI, have lost their debt sovereignty and national sovereignty as well.

World Stocks, were led lower by US Stock Brokers, IAI, Emerging Market Financial Institutions, EMFN, European Financials, EUFN, World Banks, IXG, and Nasdaq Community Banks, QABA, and the Too Big To Fail Banks, RWW. Banco Santander, STD, fell 6%. Argentina’s BBVA, fell 8%.

Utility Stocks, XLU, being heavily debt laden, and thus interest rate sensitive, dropped like a rock at he  Interest Rate on the US Ten Year Note, ^TNX, has been rising from its recent low of 1.40.

Pharmaceuticals, IHE, Biotechnology, XBI, Small Cap Energy, PSCE, Energy XOP, IEO, Energy Service, OIH, IEZ, Steel, SLX, Coal, KOL, traded lower.

China Infrastructure, CHXX, India Infrastructure, INXX, and US Infrastructure, PKB, led Infrastructure Stocks, PXR, lower. Ecolab, ECL, fell 3%.

Spain, EWP, Italy, EWI, and Germany, EWG, led Europe, VGK, lower. South Korea Small Caps, SKOR, South Korea, EWY, and Indonesia, IDX, led Asia, EPP, lower. Spain’s phone company, TEF, Distrito Telef, Ronda de la Comunicación, fell 5%.

Commodities, DBC, traded lower.

2) … On Friday August 3, 2012, World Stocks, VT, reversed course and jumped nearly 3% higher, as Merkel’s coalition members signaled acceptance of ECB bond-buying and as investors sell US Treasuries. The Great Sea Saw Destruction Of Fiat Wealth Wealth has commenced.

Today, as investors sold Bonds, BND, World Stocks, VT, World Currencies, DBV, and Emerging Market Currencies, CEW, and World Treasuries, BWX, rose strongly. Robert Wenzel of Economic Policy Journal relates Merkel’s coalition members signal acceptance of ECB bond-buying.  Members of German Chancellor Angela Merkel’s coalition parties signaled they won’t stand in the way of European Central Bank chief Mario Draghi’s plan to buy government bonds, Bloomberg reports The envisaged move to purchase troubled euro states’ government bonds is “a wise middle way” to solve the region’s debt crisis, Elmar Brok, a European Parliament lawmaker and executive-committee member of Merkel’s Christian Democratic Union party, told Deutschlandfunk radio today.

Norbert Barthle, CDU budget spokesman, said that German lawmakers will have veto rights over bond purchases by the euro area’s rescue funds, which would operate in tandem with the ECB under Draghi’s proposal. The temporary fund “was created for a purpose and bond-buying is in the manual,” Barthle said yesterday by phone.

The question now becomes what is meant by “in tandem with the ECB”? Does this mean the ECB starts printing euros? The rescue funds themselves that are currently set up don’t have enough funds in them to do the job. Stay tuned, the great euro money printing may be about to begin.

This as Reuters also reports Jenz Weidmann locked in tense struggle with Mario Draghi. The powerful Bundesbank, the central bank of Europe’s largest economy, is fiercely opposed to fresh ECB bond buying on the grounds that it amounts to monetary financing of governments, contravening European law.

Doug Noland writes Think Grand Canyon Things get wackier by the week. My proposition has been that once a Credit crisis comes to afflict the “core” (gravitating from the “periphery”) the deleterious consequences tend to be irreversible. As such, with Spain now engulfed in full-fledged financial, economic, political and social crisis, the overall European debt crisis has turned interminable. Of course, desperate politicians and central bankers promise to do whatever it takes to finally resolve the crisis. “Pointless to short the euro,” Mr. Draghi warned yesterday. Their determination is surely intensified by the fact that they are fighting for the very survival of euro monetary integration.
Policymakers and market participants alike appreciate what’s at stake. With global risk markets these days enveloped in an extraordinary “risk on, risk off” speculative melee, the historic battle to “save” the euro has come to dictate global trading dynamics. The European crisis is taking an increasing toll on the global economy, though the incredible measures to combat the bursting of the European Credit Bubble fuel an escalating speculative Bubble throughout global risk markets.
Why does “core” affliction prove such a momentous crisis development? Importantly, the associated costs become enormous and, by definition, the number of parties with the wherewithal to finance a core country bailout turns quite limited. While large, initial Greek bailouts costs were manageable when spread across euro zone partners and a robust ECB. The ultimate costs of bailing out Spain’s banks, regional governments and the sovereign will be many hundreds of billions. And with “robust” a thing of the past, there are scant few places to spread huge prospective bailout expenses. Italy is on the ropes and France is increasingly vulnerable. It is today essentially left to the Germans and the ECB to shoulder the burden of bailout responsibility. And only a small and increasingly isolated minority has an issue with gambling German Creditworthiness and ECB credibility.
It’s been my thesis that there would come a time when the Germans would begin to reevaluate. There are the age old economic issues around “solvency vs. illiquidity” to contend with – along with that fateful “throwing good money after bad” predicament. There is the issue of sacrificing one’s Creditworthiness for the profligacy and misdeeds of others. These issues can be downplayed or completely disregarded – they’re just not going away. At the end of the day, I don’t expect the German people will be willing to shoulder the financial burdens of Spain and Italy. The Germans won’t bury themselves and won’t be blackmailed. And I don’t expect the Bundesbank to completely turn over the keys to the European Central Bank printing press and vault to the MIT trained Italian economist Mario Draghi. There are very deep philosophical differences. Think Grand Canyon.

Mr Noland continues, The markets’ Thursday-to-Friday depressive-manic response to Mr. Draghi was something to behold (being kind here). Capturing the much-improved Friday market mood, and the markets’ imagination, was a big statement from an ECB policymaker: “There are 23 members in the council and if there will be a vote then everyone’s vote has the same weight in the sense that some questions are solved by a majority.” Rather bold for a new member of the ECB’s rate setting committee from the Bank of Estonia to claim his bank’s vote is as powerful as that from the esteemed Bundesbank.
Especially by week’s end, markets were happy to disregard what I believe were telling comments from prominent Bundesbank officials – current and former. Mr. Otmar Issing penned a brilliant op-ed for Monday’s Financial Times, “Europe’s Political Union is Worthy of Satire.” This was followed by “the Bundesbank celebrates its 55th birthday on 1 August and continues to stand for an exceptionally strong orientation to stability,” with the Bundesbank’s website highlighting an insightful interview with current Bundesbank President Jens Weidmann and former (1991-1993) head Helmut Schlesinger. Considering the backdrop, I thought this interview was worthy of major excerpts.

Mr. Weidmann: “…Despite all our various qualifications and tasks, within the Bank, there is a shared vision and a clear commitment to monetary stability. This is unique for such an institution and has also made the Bank an attractive option for people applying to work for us. The public good of maintaining price stability and thus contributing to the common good is a major incentive for many.”
Mr Weidmann, how did you yourself see the Bundesbank, say, while you were at university?
Mr. Weidmann: “In 1987 I was studying in France. The Banque de France was not yet independent at the time. That is when I first clearly saw the differences in outlook concerning the role of, and oversight over, the central bank. I myself had pretty much ‘inhaled’ the Bundesbank’s role; my French student friends, however, could not possibly imagine a government institution performing a key sovereign task and still being outside parliamentary control. Two very different world views were colliding. They have continued to do so in all political debates – essentially, up to the present day.”
Where can you identify this?
Mr. Weidmann: “I recently gave an interview to the French daily newspaper ‘Le Monde’. Many readers responded to the substantive positioning, some positively, some negatively. However, some responded along the lines of ‘Why is he meddling in the political debate? He’s only a central bank governor, a ‘civil servant’ who actually shouldn’t be saying anything on the matter.”
In 1990, the Bundesbank wrote that the participants in economic and monetary union would be inextricably linked to one another ‘come what may’ and that such a union would be an ‘irrevocable joint and several community which, in the light of past experience, requires a more far-reaching association, in the form of a comprehensive political union, if it is to remain durable’.
Mr. Weidmann: “The assessment at that time merely reflected the Bank’s long-held position. As early as 1963, President Karl Blessing had stated that the introduction of monetary union should be conditional on political union. The Bank’s stance has not only been consistent over time but has, in fact, taken on even greater relevance in a dramatic way owing to the recent crisis in the euro area.”
Political union did not feature in the Maastricht Treaty at the end of 1991. How did the Central Bank Council react to this?
Mr. Schlesinger: “When I took office as President of the Deutsche Bundesbank in the summer of 1991, Chancellor Helmut Kohl was still in favour of political union. However, the decision to implement monetary union by no later than 1999 was taken just four months later. This was a clear defeat for us. There is no other way of putting it. We had assumed that the Treaty would be concluded with a definition of the entry criteria, but without a fixed date being set.”
Mr. Weidmann: “It is interesting that we are having a similar discussion now in connection with the banking union. Here, too, some quarters are evidently seeking a far-reaching joint solution, but without imposing stricter rules on the other policy areas that are also affected. A genuine European banking supervision can indeed form a major component of closer integration within monetary union. However, such an institutional reorganisation of banking supervision also has to be integrated – into a comprehensive reform of the supervisory regulatory framework and of the respective national scope for economic and fiscal policy. Otherwise, too great a burden will be placed on banking supervision.”
What is crucial for political union is the willingness to hand over national sovereignty. Does such a willingness actually exist within the EU?
Mr. Schlesinger: “This question always takes me back to the start of European unification. At that time, the main objective was quite a different one – namely, to ensure that there would never again be a war in Europe. The plan for a common European army was ultimately blocked by France, even though the loss of sovereignty involved would have been easy to implement. It is actually hard to envisage how a loss of monetary sovereignty could be achieved in the absence of a unified state.”
Mr. Weidmann: “Seeing how reluctant some countries are to relinquish their fiscal policy autonomy – even in return for financial assistance – it is hard to imagine political union being achieved in the foreseeable future.”
Mr Schlesinger, should the Bundesbank have fought more strongly against monetary union without a political counterweight in the 1990s?
Mr. Schlesinger: “All of our demands were fulfilled. But I think we all underestimated just how wide the gulf is in the mindset not only of the political class but also in terms of public opinion in the individual countries concerning the objectives of fiscal policy. I would like to refer you to a chapter by Rudolf Richter in the publication marking the 50th anniversary of the Deutsche Mark… He writes that the culture of stability in Germany has been able to develop only because it has had the full backing of the general public. If you look at the Maastricht Treaty, the relevant criteria are there. But you won’t find any reference to the member states having to have the same culture of stability.
Mr. Weidmann: “Political efforts to use the central bank for policy purposes exist in all countries. However, the public’s stance on this is probably the crucial factor.”
Is there a lack of political will?
Mr. Weidmann: “The founding fathers of the EU treaties evidently took a skeptical view of the political will, and it is precisely for this reason that they made the central bank independent in order to protect it from a lack of or a conflict of political will. But the central bank must use and maintain this protection. Furthermore, it should be aware that this independence also requires it to respect and not overstep its own mandate. Mr. Schlesinger’s examples show that what is politically desirable and what is economically prudent have often not matched up. Whether we’re talking about interest rates or some sort of non-standard measures, in the end it always comes down to the central bank being instrumentalised for fiscal policy objectives. However, policymakers thereby overestimate the central bank’s possibilities and expect too much of it by assuming that it can be used not only for price stability, but also for promoting growth, reducing unemployment and stabilising the banking system. This pattern occurs again and again; this time it is perhaps even more pronounced than in the past because there is increased doubt among the general public about policymakers’ ability to act, and the central bank is seen as the sole institution that is capable of doing something. In this respect, the central bank is perhaps under even more pressure than in the past – even though you, Mr. Schlesinger, are better able to judge this as you have witnessed all of these periods. Furthermore, in Europe we are faced with some quite different ways of looking at the central bank’s role – not only in politics, but also in the media and on the part of the general public. If a central bank also has to work against public opinion, things get difficult.”
Today it is even harder for the Bundesbank to assert its influence as it is just one of 17 central banks in the Eurosystem. What impact does this have on your work?
Mr. Weidmann: “Even though what you say is correct in terms of shares of voting rights, I certainly would not say that we are ‘just’ one of 17 central banks. We are the largest and most important central bank in the Eurosystem and we have a greater say than many other central banks in the Eurosystem. This means that we have a different role. We are the central bank that is most active in the public debate on the future of monetary union. This is also how some of my colleagues expect it to be.”
It is often said that Germany has benefitted from monetary union and it therefore has a duty to help.
Mr. Weidmann: “I think that argument is incorrect. First, counting up the for and against of who has benefited to what extent from monetary union is not helpful. A stable single currency benefits all member states – some perhaps more than others, but that, too, can change over time. After all, Germany was certainly not considered to be a winner during the first few years of monetary union. Second, when monetary union was established, we agreed on a legal framework which has to be respected: a single monetary policy ensures price stability and each member state is responsible for its own fiscal policy. This is precisely what is expressed in the ‘no bail-out’ clause. And third: Germany is already providing large-scale assistance for the peripheral countries, not least as an anchor of stability and as a guarantor of the rescue packages.”
Mr Weidmann, in your opinion, what are the biggest challenges that the Bundesbank is facing now and in the coming years?
Mr. Weidmann: “The crisis requires all our energies. We shall continue to use all of our resources at all levels to stand up for the positions we believe in and to ensure that the monetary union remains a stability union…”

Especially these days, I have little company when it comes to extolling the virtues of the Bundesbank or German economic thinking more generally. For me, it’s an issue of principle. Over the past 22 years I have come to deeply respect the German (including “Austrian”) view of economics, money and Credit, and monetary management. I’m partial to a sound analytical framework, discipline and the so-called “orientation of stability.” Back in 2004, in a CBB titled “Issing vs. Greenspan,” I highlighted a WSJ op-ed by then ECB Chief Economist Otmar Issing, with his prescient warning against central banks ignoring Bubbles: From Issing’s article, aptly titled “Money and Credit”: “Huge swings in asset valuations can imply significant misallocations of resources in the economy and furthermore create problems for monetary policy. Not every strong decline in asset prices causes deflation, but all major deflations in the world were related to a sudden, continuing and substantial fall in values of assets. The consequences for banks, companies and households can be tremendous… Prevention is the best way to minimize costs for society from a longer-term perspective. …it should not be overlooked that most exceptional increases in prices for stocks and real estate in history were accompanied by strong expansions of money and/or credit.”
This has been a multi-year battle for what constitutes sound analysis and economic doctrine. Mr. Issing and the Bundesbank know they have won the debate on Bubbles, money, Credit and monetary policymaking. There is reason to believe they view U.S. monetary and fiscal policymaking as an ongoing disaster. And it is ironic that markets today celebrate Mr. Draghi’s desperate move to adopt Fed-like quantitative easing. As Mr. Issing wrote this week in the FT, “Juvenal would have said: Difficile est satiram non scribere (It is difficult not to write a satire).”
I suspect the Bundesbank has commenced preparation for a difficult confrontation. I am less clear on the stance of what appears an increasingly divided Merkel government, although a decisive shift in German public sentiment has seemingly begun. According to recent polling (YouGov), only 33% of respondents now support Ms. Merkel’s handling of the euro zone crisis, down sharply over recent weeks. And, for the first time, a majority (51%) of Germans now believe they would be better off without the euro (Merkel was said to be “profoundly disturbed”). The vast majority of Germans want Greece out of the euro, and fewer each week would be content subsidizing profligate Spain and Italy. If either the Bundesbank or the Federal Constitutional Court of Germany should in coming weeks draw a harder line, they might just enjoy an outpouring of support from the German people – if not global risk markets.

Mike Mish Shedlock writes Ass-backwards Eurozone policies.  Most countries in Europe now have ass-backwards policies in place. The silver lining in this mess is those ass-backwards policies will accelerate the breakup of the eurozone, and that is a good thing.

Please consider that the economy of God is in full operation pivoting the world from evolution to devolution, from fiat asset inflation to fiat asset deflation, from democracy and socialism to regional governance, from choice to diktat, as the Kingdom of God is being introduced to planet earth, Revelation 2:26-28.

According to God’s Word, that there is neither human action nor personal sovereignty nor national sovereignty; Colossians 1:15-23, and Colossians 2:23-29; such things are arbitrary will worship. Colossians 2:8-12 warns against being spoiled through philosophy, and vain deceit, after the tradition of men, after the rudiments of the world, and not after Christ.

There is only the will of God and the economy of God, that is the administrative law of Christ working for the fullness of times, Ephesians 1:10, whereby He is terminating the global iron hegemony of UK and US rule, and introducing the ten toed kingdom of regional governance; Daniel 2:30-33, where the fiat money system will be replaced by the diktat money system, where diktat will serve as both money and credit.

When taken together bible prophecy of Revelation 6:1-2 and Revelation 13:1-4, communicate that the baton of sovereignty is being passed from sovereign nation states to regional sovereign leaders, such as Mario Draghi, and sovereign bodies such as the ECB  When Mario Draghi vowed last week “to do whatever it takes” to keep the continent’s monetary union intact, he laid the groundwork for a One Euro Government, that is a Federal European Superstate existing as a political, monetary, fiscal, and economic union. Now with the proposal that German lawmakers will have veto rights over bond purchases by the euro area’s rescue funds, which will operate in tandem with the ECB under Draghi’s proposal, Germany will emerge as the preeminent Eurozone power over vassal peripheral states in a type of revived Roman empire.

In the coming age of regional economic and governance, there will be sharp distinction between the elect and the fiat, those based in philosophy, religion or their own rules for living.

Those who have like precious faith of Jesus Christ, which is based upon the exceedingly great promises of Christ, have organic union with God, become a virtuous person, manifesting charity, bear spiritual fruit, and make their calling and election genuine, 2 Peter 1:1-12. The saints know Christ as their element and life and have the all inclusive Christ, who provides the objective and not subjective life experience.

Regardless of those who have philosophy, religion or rules, regional governance will be an all inclusive living experience, especialy for the residents of the Eurozone, living in a EU Superstate. The groundwork and foundation were laid by Mario Draghi, as well as by Angela Merkel and Francois Hollande; these are  heralds and antecedents of a greater sovereign experience, that being rule by Europe’s Sovereign, as foretold in Revelation 13:5-10, and Europe’s Seignior, Revelation 13:11-18. The all inclusive experience of totalitarian collectivism will be a unified experience of living under diktat.

Deutsche Bank rose 10%, Argentina’s BBVA, 9%, Banco Santender, STD, 7% Italy, EWI, 8%, Spain, EWP, 8%, European Financials, EUFN, 6%. World Banks, IXG, 3%, Nasdaq Community Banks, 3%, Regional Banks, KRE 3%, Brazil Financials, 7%, Financial Brokers, 5%, and The Too Big To Fail Banks, RWW 2%.

The Risk On ETN, ONN, rose 4%.  Steel, SLX, jumped 5%, and Coal, KOL, 4%. Electrical Equipment Manufacturers, ETN, ROK, AME, ENS, AIMC, AMRC, BGC, seen in this Finviz Screener, rose 4%. Textile Manufacturers, MHK, UFI, IFSIA, rose strongly.

Boston Office Properties, BXP, took Office REITS, FNIO, higher. General Growth Properties, GGP, and Simon Property Group, SPG, took Retail Reits higher. Health Care REITS, VTR, HCN and SBRA, took Residential REITS, REZ, to a new high. Mortgage REIT, Starwood Property Trust, STWD, rose to a new high, taking Mortgage REITS, REM, to a new weekly high.

General Electric, GE, American Water Works, AWW, Macquarie Infrastructure, MIC, Sanofi, SNY, AstraZeneca, AZN, Pfizer, PFE, Kimberly Clark, KMB, Johnson And Johnson, JNJ, Abbott Labs, ABT, Philip Morris, PM, Reynolds American, RAI, Exxon Mobil, XOM, Chevron, CVX, Walmart, WMT, and AT&T, T, took Large Cap Dividend, DLN, to a new high.

Mobile Telecom Company, TKC, blasted Turkey, TUR, 5% higher to a new high; Singapore, EWS, climbed 2% higher to a new high;  Malaysia, EWM, rose to multiple top high. South Africa, EZA, jumped 5% and Sweden, EWD, 4%.

Commodities, DBC, traded higher. Oil, USO, rose 4% posting its biggest gain in a month as Zero Hedge reports Russia Sends Three Warships To Syria Carrying Hundreds Of Marines.  Gasoline, UGA, continued its rally 3% higher.  Yet Natural Gas, UNG, traded 1% lower today, and 5% parabolically lower on the week.

Doug Noland relates M2 (narrow) “money” supply declined $5.5bn to $10.030 TN. “Narrow money” has expanded 7.1% annualized year-to-date and was up 7.8% from a year ago.

The Great Sea Saw Destruction Of Fiat Wealth has commenced as the US Dollar, $US, and Bonds, BND, traded lower and stocks, VT, traded higher this week.

The US Dollar $USD, UUP, traded lower, as the Euro, FXE, rose 1.6%, taking it to a weekly gain of 0.6%, the Australian Dollar, FXA, 0.9%, and the Swedish Krona, FXS, 2.0%.

Bonds, BND, turned parabolically lower. as US Government Debt fell sharply with ZROZ, EDV, and TLT,  plummeted.  The charts of  Short to Medium Term Corporate Bonds, LQD, and Emerging Market Bonds, EMB, show a topping out. Junk Bonds, JNK, traded higher with stocks. The Flattner ETF, FLAT, has now fallen strongly lower in value. A steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, is reflected in the Steepner ETF, STPP, rising in value, causing deflation in bonds. World Government Bonds, BWX, traded high on rising world currencies, DBV.

Doug Noland relates Sarika Gangar of Bloomberg reports: “Corporate bond sales globally, PICB, reached $293.5 billion last month for the busiest July on record as yields on investment-grade debt tumbled, falling below 3%. for the first time. Offerings by companies from the U.S. to Europe and Asia surpassed the previous record of $286.4 billion set in July 2009.”
Lisa Abramowicz of Bloomberg reports: “Investors are stockpiling corporate debt, BLV, rather than trading as banks retreat from bond brokering, with daily trading volumes in the U.S. slumping to the slowest July in four years even as offerings reached a record. Volumes averaged $9.97 billion last month, 8% below July 2011 and the lowest for the period since two months before Lehman Brothers Holdings Inc.’s failure ignited the credit crisis. Investment-grade sales rose 58% from the same month last year to $80.5 billion.”
Patricia Kuo of Bloomberg reports: “Companies are borrowing the most in the loan market since 2008 to finance acquisitions worldwide, betting that they can quickly replace the debt with permanent financing as yields on corporate bonds fall to records. Anheuser-Busch InBev NV obtained $14 billion in credit to buy Mexico’s Grupo Modelo SAB  pushing loans for mergers to $221 billion this year, up 34% from the same period of 2011 and the most since $276 billion four years ago.”

The see saw destruction of fiat wealth is now underway as the US Dollar, USD, UUP, is traded below its recent high and as US Treasuries have turned parabolically lower.  Competitive currency devaluation, in all currencies, is now underway, leading the world along what FA Hayek terms The Road to Serfdom. Wealth can only be preserved by dollar cost averaging into the physical possession of gold, or by investing in gold on internet trading platforms such as Gold Is Money, or Bullion Vault. Although Gold, GLD, traded lower on the week to 155; its chart pattern still shows it to be in breakout above 152.

3) … In the news

Open Europe relates Handelsblatt’s Norbert Häring argues, “Under President Mario Draghi, the ECB has come to play a completely different role…it has become the eurozone’s secret power. Politicians are no longer in charge of the crisis, it is the ECB.” A headline in today’s Bild reads, “No more German money for bankrupt euro states, Herr Draghi!

Open Europe relates According to sources quoted by Reuters, The ECB may, in its new role as the eurozone’s single banking supervisor, be given the power to order bank closures – even over the objections of national regulators.

Open Europe relates Greece’s coalition leaders yesterday agreed on the €11.5bn package of new cuts Greece is expected to make over the next two years, after Evangelos Venizelos and Fotis Kouvelis – the leaders of PASOK and Democratic left respectively – backed down from their proposal to delay part of the cuts to 2015-16. Kathimerini FT FT 2 WSJ EUobserver Les Echos La Tribune BBC Welt

Gary of Between The Hedges relates Bloomberg reports Rajoy Will Consider Bond Buying Request to Protect Spain. Spain’s Prime Minister Mariano Rajoy said he would consider asking Europe’s bailout funds to buy Spanish debt if it were for the best for the country, as he called for a crisis meeting of the region’s finance chiefs. “I will do what I always do, act in the best interest of Spaniards,” Rajoy said at a news conference in Madrid today, when asked whether he would consider making a request. He needs to see more details on what the European Central Bank is planning in terms of bond buying and non-conventional measures before taking any decision on seeking support, he said.

Doug Noland relates Rainer Buergin of Bloomberg reports: “Chancellor Angela Merkel’s coalition rejected granting the permanent euro rescue fund access to European Central Bank liquidity via a banking license… The rules of the European Stability Mechanism don’t foresee a license to allow refinancing at the ECB, the Berlin-based ministry said. France and Italy are building support for a previously floated plan to allow the permanent backstop to wield unlimited firepower courtesy of the ECB, Germany’s Sueddeutsche Zeitung newspaper reported.”

Angeline Benoit and Emma Ross-Thomas of Bloomberg reports:  “Spain’s Prime Minister Mariano Rajoy said he would consider asking Europe’s bailout funds to buy Spanish debt if it were for the best for the country, as he called for a crisis meeting of the region’s finance chiefs. ‘I will do what I always do, act in the best interest of Spaniards,’ Rajoy said Spain and Italy’s borrowing costs surged the most this year on Aug. 2 after ECB President Mario Draghi outlined a plan under which the central bank might buy debt in tandem with the euro governments’ bailout fund, while saying the details still need to be worked out over the coming weeks. Countries would have to request help and commit to strict conditions in return.”

Esteban Duarte and Angeline Benoit of Bloomberg reports: “Spain’s rescue of Catalonia and Valencia risks diverting the taxes those regions need to pay their debts, disadvantaging holders of more than $150 billion of regional debt. Spain collects income, sales, gasoline, tobacco and alcohol taxes on behalf of its regional governments, excluding the Basque country and Navarra. More than half of the 65.9 billion euros ($81bn) gathered in the first six months of the year was then assigned to local states. The government is doubling loans to 17 semi-autonomous regions to as much as 41 billion euros after the local authorities lost access to capital markets to meet debt redemptions, pay suppliers and finance their deficits. ‘The potential subordination is an element, which is implicit in the way the rescue mechanism has been designed,’ said Fernando Mayorga, an analyst at Fitch Ratings in Barcelona.”

Angeline Benoit of Bloomberg reports: “Budget Minister Cristobal Montoro will urge Spain’s regions today to deepen budget cuts as support to prevent their defaulting has worsened the central government’s finances. Representatives of Spain’s 17 semi-autonomous regional governments are scheduled to convene in Madrid.  Montoro said the central government’s budget deficit widened in the first half to about 4% from 3.41% in January through May. Prime Minister Mariano Rajoy has asked the regions to implement most of Spain’s planned budget-deficit reduction this year after they overshot last year’s target by more than 100%.”

Zeke Turner of Bloomberg reports: “The plot of Ayn Rand’s controversial 1957 novel ‘Atlas Shrugged’ couldn’t be more relevant to Germany as the European financial crisis unfolds — or so contends a young Munich executive, Kai John, who has published a new translation of the libertarian classic. In the novel, the brightest and most productive citizens (i.e. the Germans) deeply resent having to support the weaker members of society and rebel, leaving society in tatters, a fate that could befall the Continent if Angela Merkel and the German parliament refuse to bolster the European Union’s straggling economies. A series of bailouts has left John, 36, a vice president at a multinational financial services company, feeling like Rand’s hero, John Galt: ‘The time is here to make Germans aware that collectivism has its limits.’”

Anoop Agrawal and Jeanette Rodrigues of Bloomberg report: “India’s companies cut rupee bond sales by 50% in July to a nine-month low as the fastest inflation among the largest emerging-market economies drove yield premiums to the widest in three years.”

Steven Church, Dawn McCarty and Michael Bathon of Bloomberg report: “San Bernardino, California, filed for municipal bankruptcy after disclosing a $46 million shortfall in the city’s budget, the third California city to seek court protection from creditors since June 28. California cities from the Mexican border to San Francisco Bay are confronting rising pension costs as they contend with growing unemployment and declining property- and sales-tax revenue. The costs stem from decisions made when stock markets were soaring and retirement funds were running surpluses.”

Gillian White of Bloomberg reports: “California municipal funds, are garnering the most demand since 2007, helping fuel the biggest rally in the state’s debt since May and allaying concern that bankruptcies would curb the appetite of individual investors. With local yields close to the lowest since the 1960s, investors seeking tax-free income are willing to take the added risk of debt from Standard & Poor’s lowest-rated U.S. state. Bond funds focusing on California issuers have added assets for 18 straight weeks, the longest streak since 2007, according to Lipper.”  The chart of CMF, manifested massively bearish engulfing on Friday August 3, 2012.

Robert Stevens of WSWS reports Greek government agrees €11.5 billion cuts package.  The leaders of the three Greek government parties have announced their agreement on further austerity cuts amounting to €11.5 billion.

Gold Breaks Out As Bonds And Stocks Trade Lower From Their Recent Highs On The Exhaustion Of The World Central Banks’ Monetary Authority

August 2, 2012

Financial Market Report for Tuesday July 31, 2012

Junk Bonds, JNK, Emerging Market Bonds, EMB, and US Short to Medium Term Corporate Bonds, LQD, rise to new highs, causing Bonds, BND, to trade slightly higher, but below their recent highs, as stocks, VT, traded slightly lower, on news that the US Federal Reserve will wait for a decision for further easing.

The Steepner ETF, STPP, has risen from its July 11, 2012, low of 34.50, as is seen in this ongoing Yahoo Finance chart of STPP, ZROZ, EDV, TLT, and VT, as the 10 30 US Sovereign Debt Yield Curve, $TNX:TYX, has been rising from its historic low on July 24, 2012, suggesting that an exhaustion of the  world central banks’ monetary authority.

Staples, XLP, and Utility stocks, XLU, and creditors, V, MA, DFS, manifested bearish engulfing;

Biotechnology stocks, XBI, fell parabolically lower today suggesting that risk on investing has turned to risk off investing.

The Gold ETF, GLD, has been in breakout for five days now suggesting that an investment demand for gold has arisen.

Gary of Between The Hedges relates The Fed’s ZIRP is pushing institutional investors too far out on the risk spectrum, subprime auto lending is soaring.  I relate that subprime auto lender, Nicholas Financial, NICK,  pays a 3% dividend and has soared from from 2.00 to 13.40 since the beginning of the Quantative Easing.

Mike Mish Shedlock writes 51% of Germans believe Germany better off outside eurozone.  That pole hat poll, with only 29% believing the euro is a good thing, suggests that if the German constitutional court forced Merkel to put the euro to a referendum, that Germany would vote to leave the eurozone. 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. Let Voters Decide. 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.

Last week Mario Draghi, said ”he would do whatever it takes to preserve the euro”.

And today Open Europe reports Showdown looms at tomorrow’s ECB board meeting; German government rejects equipping ESM with a banking licence
The WSJ reports that tomorrow’s monthly meeting of the ECB’s governing council is set to be fractious, with Bundesbank President Jens Weidmann resisting calls by many of his colleagues for the ECB to play a more active role in the eurozone rescue efforts, for example by resuming its purchase of eurozone government bonds. The paper notes that a compromise could be struck whereby the ECB would announce its intention to buy government bonds and to take other measures, but to delay their implementation.

The German government yesterday rejected reports that the eurozone’s new permanent bailout fund, the ESM, could be equipped with a banking licence, with a Finance Ministry spokesperson saying such a move “was not necessary”. Speaking on Deutschlandfunk this morning, the FDP’s parliamentary faction leader Rainer Brüderle, described the idea as an “inflationary suicide mission”, adding that “we cannot save the euro by limitlessly printing money”. The concept was also rejected by the opposition SPD, but the Green’s financial spokesperson Gerhard Schick said the idea had some merit, adding that assistance to Spain could be made conditional on it taking measures to impose higher taxes on its wealthiest citizens.

Meanwhile, Westdeutsche Allgemeine Zeitung reports that according to a confidential Bundestag document on the ESM, Germany won’t be able to always veto capital calls in case the ESM has incurred losses and needs to restore its €80bn of paid-up capital threshold, given that its Board of Governors can make these decisions on the basis of a simple majority. WSJ FAZ Welt Handelsblatt Zeit Il Sole 24 Ore El País Tagesspiegel: Barthle Westdeutsche Allgemeine Zeitung

Talks over new budget cuts continue in Greece; Greek Deputy Finance Minister: Our cash reserves are almost zero
The leaders of Greece’s three-party coalition will today resume talks over the €11.5bn budget cuts Greece is due to make in 2013-14. Kathimerini reports that Evangelos Venizelos, the leader of the socialist PASOK party, is proposing that only €6.5bn cuts be implemented over the next two years, while the rest would be made during 2015-16. A separate article in the paper notes that Greece will be forced to issue higher amounts of treasury bills this month, after eurozone governments turned down the request for a ‘bridge loan’ to cover a €3.2bn bond – held by the ECB – which matures on 20 August.

Meanwhile, Greece’s Deputy Finance Minister Christos Staikouras told NET television, “Cash reserves are almost zero. It is risky to say until when [they will last], as it always depends on the budget execution, revenues and expenditure.” Separately, German Transport Minister Peter Ramsauer (CSU) told ARD this morning, “Of course, Greece can exit the eurozone”, but added that this would not be “the solution to all problems.” Kathimerini Kathimerini 2 EUobserver Il Sole 24 Ore

The Irish government is to begin the process of ratifying the ESM treaty after the country’s Supreme Court rejected a claim brought by independent MP Thomas Pringle that it was unconstitutional and could not be ratified without a referendum. However, the Court referred a second claim concerning the ESM’s compatibility with the EU Treaties to the European Court of Justice in Luxembourg, asking it to urgently determine the matter under its accelerated procedures. Irish Times

In an interview with Helsingin Sanomat, Italian Prime Minister Mario Monti confirmed that eurozone leaders “are thinking of a possible intervention in various combinations involving the EFSF, the ESM and the ECB.” He said Italy “doesn’t seem to need any special help at the moment”, but may need “some breathing space” in future if its borrowing costs remain high. Monti is in Helsinki to meet his Finnish counterpart Jyrki Katainen today. Reuters Italia HS: Monti HS FT Telegraph Irish Times La Stampa Le Figaro Le Monde Il Sole 24 Ore Liberation Ansa Corriere della Sera Repubblica

Figures released by the EU’s statistics office Eurostat yesterday showed that the unemployment rate in the eurozone reached a record-high 11.2% in June. Spain had the highest unemployment rate, at 24.8%, followed by Greece at 22.5%. WSJ  FT EurActiv Ansa

In an interview published in the staff magazine of the Bundesbank, the bank’s President Jens Weidmann said, “Seeing how reluctant some countries are to relinquish their fiscal policy autonomy – even in return for financial assistance – it is hard to imagine political union being achieved in the foreseeable future.” Bundesbank magazine: Weidmann

Bloomberg reports Bloomberg:Monti Says Rescue Fund Will Win Bank License to Tap ECB. Italy’s Prime Minister Mario Monti said the permanent rescue fund should have access to European Central Bank liquidity via a bank license, challenging German policy makers to back more actions to tame the euro-area crisis. “I think this would help, I think this will in due course occur,” Monti said today in Helsinki at a news conference with Finnish Prime Minister Jyrki Katainen. Monti’s assertion was a rebuff to Chancellor Angela Merkel’s Cabinet after ministers meeting in Berlin earlier today hardened their opposition to granting the planned bailout fund access to the ECB’s resources. Monti is prodding colleagues across Europe to back his fight to lower the borrowing costs that investors are imposing on Italy and Spain. In travels from Paris to Helsinki and on to Madrid tomorrow, where he’ll meet with Spanish Prime Minister Mariano Rajoy, Monti is seeking to bridge a north-south divide on crisis fighting and capitalize on a pledge by ECB President Mario Draghi to do whatever it takes to defend the euro. Monti and Katainen both declined to say what they wanted to hear from Draghi after a meeting of ECB policy makers tomorrow. The Italian premier instead urged central bankers to show equal respect for ECB independence, after Bundesbank President Jens Weidmann said the ECB shouldn’t exceed its inflation-fighting mandate and stressed Germany’s importance in setting common strategy in the 17-nation euro area, according to an interview conducted in June and posted on the Bundesbank’s website today. (Hat Tip to Gary of Between The Hedges)