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

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.

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