Archive for December, 2012

A Global Economic Paradigm Shift Is Occurring … Inflationism Is Transitioning To Destructionism … Resulting In Liberalism Is Transitioning To Authoritarianism

December 29, 2012

Financial Market report for the week ending December 28, 2012

1) … Stocks traded lower for the fifth day in a row on the exhaustion of trust in credit and on the turn lower in currencies world wide, this as stock traders are the most bullishly positioned in six year.
Doug Noland reported that on Friday December 28, 2012, Global central bank International Reserve Assets (excluding gold), as tallied by Bloomberg, were up $623bn y-o-y, or 6.1%, to $10.847 TN. Over two years, reserves were $1.823 TN higher, for 20% growth.

Liberalism’s finance, rallied the Morgan Stanley Cyclical Index, ^CYC, to an all time high of 1052, on December 20, 2102, which is traded by the the Global Producer ETF, FXR. which has turned sharply lower from its high of 19.69.   Peak Global Production came via Liberalism’s seigniorage, that is moneyness, of Aggregate Credit, AGG, which topped out on December 5, 2012 at 111.54.

Peak Credit, can also be seen in the chart of Total Bonds, BND, which was established on December 5, 2012, at 84.97 coming through debt deflation, that is competitive currency devaluation, with the Yen, FXY, leading the Major World Currencies, DBV, lower from December 17, 2012 at 26.12, and the emerging market currencies, CEW, likely peaking on December 28, 2012 at 21.04.

Yahoo Finance Daily FX reports that the EUR/USD closed at 1.3328; and that the Euro, FXE peaked on December 20, 2012 at 131.46.  The Brazilian Real, BZF, rose as Reuters reports Brazilian Central Bank sells US dollars, taking it to the middle of a broadening top pattern in its monthly chart.

The currency demand curve, which is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Pure Growth Shares, RZV:RZG, has been rising from June 2012, to a climax on December 20, 2012, when it topped out and turned lower.

Now, the world’s major currencies, DBV, have turned lower; and the Emerging Market Currencies, CEW, are peaking out;  causing investors to deleverage out of Commodities, DBC, and derisk out of Stocks, ACWI. The Age of Deleveraging has commenced.

The end of the Zero Interest Rate Regime, that is ZIRP, and the end Milton Friedman Floating Currency Regime, commencing on Friday December 28, 2012, after forty one years, since its inception by Milton Friedman in 1971, when the US abandoned the gold standard for the value of its currency, which has topped out strong rallying Global Real Estate, DRW, and Global Water Resources, CGW.

The WSJ report Global currency tensions rise.  Japan’s incoming prime minister fired a volley into increasingly tense global currency markets, saying the country must defend itself against attempts by other governments to devalue their currencies by ensuring the yen weakens as well. Shinzo Abe’s call comes as others including Bank of England Gov. Mervyn King warn that the world’s economic-policy makers risk becoming embroiled in currency spats that could heighten tensions among countries.
Mr. Abe on Sunday called on Japan’s central bank to resist what he described as moves by the U.S. and Europe to cheapen their currencies and noted that a yen level of around 90 yen to the dollar, it was at 84.38 in early Asian trading Monday, down from 84.26 yen late Friday, would support the profit of Japanese exporters.
“Central banks around the world are printing money, supporting their economies and increasing exports. America is the prime example,” said Mr. Abe, referring to the Federal Reserve’s policy of flooding the market with dollars by purchasing massive amounts of Treasury bonds and other assets.
“If it goes on like this, the yen will inevitably strengthen. It’s vital to resist this,” he said.
Global central bank foreign-exchange reserves expanded to $10.5 trillion by mid-2012 from $6.7 trillion in 2007, according to the International Monetary Fund, a 57% rise in less than five years and a sign of how aggressively world central banks are stockpiling other currencies in an attempt to prevent their own currencies from getting too strong in the wake of the 2008 financial crisis.
The largest increase has been in Switzerland.
It is “completely different” for Japanese companies if the dollar is in the 80-yen range, as it is now, as opposed to the 90s yen, Mr. Abe said. If the dollar “is above 85 yen, companies that haven’t been paying taxes until now [because they don’t have profit]. . .can pay taxes.”
The U.S. hasn’t explicitly sought a weaker dollar. But the effect of its policies has been to suppress its value. Most notably, the Federal Reserve’s quantitative easing programs — in which the central bank prints dollars to purchase government bonds — have the side effect of holding down the international value of the currency by increasing its supply in global markets.

Trade wars, in which countries restrict imports from other countries, were an important feature of Depression-era policies in the 1930s which crimped global economic growth. Mr. Truman said he had grown concerned that cooperation between countries on currency decisions had diminished in recent years. If it continues, he said, then “you go from a world in which there is a broad level of cooperation on monetary measures to one in which it is every man for himself,” he said.

Ambrose Evans Pritchard writes Washington has issued a blistering attack on China for persistent breaches of world trade rules and abuse of industrial secrets, accusing Beijing of failing to abide by treaty obligations.

John Rubino writes Welcome to the Currency War, Part 6: Japan gets explicit. The crucial sentence in the above article is: If the dollar “is above 85 yen, companies that haven’t been paying taxes until now [because they don’t have profit]. . .can pay taxes.”
There, in a nutshell, is why currency wars happen. Heavily-indebted governments are desperate for tax revenue, and an export sector that can’t compete because of a strong currency produces very little taxable profit. But before you write in to say that a strong currency is no barrier to profitable exports for well-run countries, note that “well-run” doesn’t apply to today’s developed world. Currency wars generally happen when corrupt, over-indebted countries can’t cover their interest expense and start looking for a way to shift the burden of their stupidity onto their trading partners. A weaker currency is only a short-term fix, but when an election approaches (and one is always approaching), short-term fixes are good enough.
For a sense of the panic that’s gripping Japan, consider what’s happening to its big electronics exporters like Sony and Sharp.
2013 is shaping up as a pivotal year, not necessarily because inflation is set to accelerate, but because virtually everyone who matters has decided to try, explicitly, to make it accelerate. This might take a while, because the ongoing contraction in Europe and failed US states like California and Illinois is profoundly deflationary. But with a few years’ hindsight we might look back on December of 2012 as the beginning of the chaotic, parabolic stage of the process

Agent P comments For the U.S., it really boils down to other countries (slowly, but surely) trading in currencies other than the dollar. No, it doesn’t happen overnight, but it can take place far more rapidly than many care to think – owing not necessarily to economic issues, but foreign policy blunders and increasing animosity among nations who are subject to our foreign policy adventures, while at the same time also forced to utilize the $USD for trading purposes. While we can threaten a handful of ‘patsy’ countries at any given time with a hint or show of carrier-group force, we cannot stop other nations from following a regional leader like China, the Soviets, Malaysia and South America, into trade agreements that circumvent $dollar hegemony.

As Inflationism transitions into Destructionism, the paradigm of global economics is transitioning into the paradigm of regional economics. Liberalism’s Crony Capitalism and European Socialism are being replaced with Authoritarianism’s Regionalism and Totalitarian Collectivism.

Credit Liquidity under Liberalism provided prosperity for many. But as moral hazard has come of age, all of humanity will be booked into Authoritarianisms’ California Hotel of austerity and debt servitude by country leaders, as they meet in summits to announce regional framework agreements, which renounce national sovereignty and pool sovereign regionally for structural reforms, wage reductions, and the establishment of public private partnerships to manage regional economics, as well as to appoint both a regional political leader, and a regional banking, fiscal and monetary pope.  As US Dollar hegemony comes to an end, a Ten Toed Kingdom of Regional Governance will rise to govern mankind’s economic transactions.

Mike Mish Shedlock provides a permissions clipping from the Michael Pettis For Fee Newsletter Ponzi schemes in wealth management. It is clear that these illicit capital flow numbers are pretty significant in relation to the trade numbers. China’s trade surplus in 2010 was reported to be $183 billion, but GFI claims that Chinese illicit capital flows (I assume that most if not all represents outflows, or even net outflows) for the year were $420 billion, most of which may have been recorded as higher exports or lower imports.

Even if these numbers are way off, they still suggest that China’s real trade surplus may have been substantially higher than reported, with much if not most of the money parked offshore for safekeeping. Among other things these numbers also suggest that the sluggish import growth of the past year, which smart people like Andy Xie insist are among the many numbers that are not compatible with the high official growth rates claimed by the government, may be even lower than reported.

Obviously I am not the first person to complain about the opacity of Chinese economic data and the difficulties we often have in reconciling one set of numbers with another, but I think it is important to note that while opacity may not be a terrible problem during the optimistic up-cycle (in fact hazy data give us more leeway to daydream pleasant things), it can suddenly become a huge problem during the pessimistic down-cycle, when they don’t even constrain our nightmares. What is worse, an increase in opacity, which we are clearly seeing in the financial system, is usually a herald of bad tidings. When the economy starts to get bad, often the first impulse for many is to massage or hide the data.

I don’t think this is the end of this story. The market hasn’t yet priced in the amount of rebalancing China has yet to go through, and so it has also not priced in either the full reduction in hard commodity demand or the extent of rebalancing on China’s export competitiveness. I expect a lot more of the same story in 2013 and 2014.

Michael Pettis is one of six speakers in the Wine Country Economic Conference that he is hosting on April 5, 2013, in Sonoma, California. Mr. Pettis as one of the world’s leading experts on China and on global trade issues.

Under the table, hot money flows have driven up the Kiwi, that is the New Zealand Dollar, from 0.60 to 0.75, pushing New Zealand Shares, ENZL, to its recent evening star chart pattern, rally high.  I live in Bellingham, WA, and experience hot money flow benefits coming out of the shadow Asian banking system.  Carry trade investors, from all over Asia, have flocked to the pleasant marine climate of Vancouver, BC, driving up condo prices until the Canadian Dollar, FXC, became a global competitive currency loss leader along with the Japanese Yen, FXY.  These economic immigrants come to Bellingham, WA, to buy cheaply priced apparel and footwear at the General Growth Properties’ Bellis Fair Mall, food products at Bakerview Fred Meyer, and gasoline at Bellingham Costco  Not only has it been money printing by the US Fed, but it has also been a flood of Asian money driving Bellingham’s economy. The Bellingham Herald reports Whatcom County’s unemployment rate drops to 6.4 percent; its lowest level in nearly four years, with the private sector adding 2,400 jobs in the past 12 month

Northwest Washington’s economic activity is going to see a sharp decline, as it is based to a large extent on massive stockpiles of collateral, specifically copper in warehouses, around the world which has been used to support Asians living outside of their country of origin. The chart of copper, JJC, closed at 45.29, which is just above 45, which is the middle of a broadening top pattern seen in its monthly chart; it is as Street Authority relates, When you see the broadening top, the market will eventually drop. Copper will be dropping like a rock, and when it does, the economic immigrants will be diving for cover into their Vancouver BC condominium towers.
Zero Hedge reports Stock traders are the most bullishly positioned in six year. And Reuters reports Japan retail investors pour $2.3 billion into fund investing in North America.  Japanese retail investors poured about $2.3 billion in a mutual fund that mainly invests in U.S., Mexican and Canadian shares, the biggest subscription since October 20066.  I comment that the two causes of Great Depression I, were high levels of municipal debt and secondly massively speculative trading positions.

CNBC writes Investors are showing enthusiasm levels near the highs for the year – just in time for the economy to go marching off the “fiscal cliff.”

The prospect of higher taxes and tighter government spending seems not to be bothering many market participants, who in December shifted allocation from bonds into stocks.
Whether the bulls will regret their position is a matter for 2013 to decide, but the evidence for the moment shows that the luster finally may be coming off fixed income. (Read More: Vanguard CIO: Beware Bond Bubble)
“What we’ve done for four years is climb the wall of worry,” said Jim Paulsen, chief market strategist at Wells Capital Management and believer that investors fund flows “will reverse” in the time ahead.
“Next year is going to be more of a confidence-driven run, not just climbing despite concerns but really climbing because of rising confidence,” he added.
December indeed has shown investors preparing to change asset allocations.
Flows into stock-based mutual and exchange-traded funds have totaled about $8 billion so far, while bonds have taken in less than $1 billion, according to Lipper.
That reverses course from a year in which bonds have taken in about $250 billion and equities have lost more than $130 billion.
Paulsen believes that the change will continue based on two factors: Bond returns will turn negative, and investors will grow more confidence in stocks after the Standard & Poor’s 500 passes its historic high of 1,565.
“That will end the lost-decade conversation,” Paulsen said. “At the same time, bond players are not just getting a low return but taking a hit. That could be a serious change in that fund flow.”
Enthusiasm, in fact, is everywhere on Wall Street despite the hand-wringing over the “fiscal cliff” stalemate that economists think could plunge the U.S. into recession. (Read More: Market’s Solid Year Could Soon Fall Off a ‘Cliff’)
Bullish sentiment on the American Association of Independent Investors survey last week hit a 10-month high of 46.4 percent.

Investors wary of the U.S. simply have pivoted into multinational investments, with global funds taking in $9.3 billion in December as they continue to outperform domestic offerings, according to market data firm TrimTabs.
Rather than focus on the immediate danger of the Washington impasse, more seem to be taking the longer view that bonds finally are running out of steam and the Federal Reserve’s money printing is forcing cash into riskier assets. (Read More: Central Banks: How They Are Ruling the Financial World)
“One of today’s greatest market inefficiencies may stem from the scarcity of capital devoted toward long-term investing,” Savita Subrmanian, equity and quant strategist at Bank of America Merrill Lynch, said in an analysis.
“Investors overly focused on the lack of near-term macro visibility may be failing to take advantage of today’s depressed valuations and bearish sentiment, which are laying the groundwork for the next secular bull market in equities,” she added.
Subramanian also expects a change in fund flows due to the bond market reversing course.
Along with a 1,600 price target for the S&P 500 in 2013, she expects the 10-year Treasury yield to hit 2 percent.
The higher yield would come about because of a decline in bond prices, a phenomenon that could chase investors who believe the mild coupon won’t compensate for the price decline.
At the same time, investment pros continue to tout the stocks-are-cheap theory, reasoning that the current average price of 13 times forward earnings is still well below average.
“While there’s no guarantee that history will repeat itself, it does add confidence to our Investment Policy Committee’s forecast of a near-10 percent advance in the coming year to the 1550 level,” said Sam Stovall, chief equity strategist at S&P.
Of course, the biggest worry when sentiment runs this high is that it will get overdone quickly and investors hopping aboard will do so after the best gains have been realized.
Add in the unpredictability of the fiscal cliff talks, which have kept stocks in a trading range, and it’s causing optimistic investors like Paulsen to add at least a note of caution.
“If you go over (the cliff) at the end of the year those bullish numbers could go away,” he said. “Short terms is negative right now. Still, the markets are holding up.”

On Monday December 24, 2012, World Stocks, VT, traded decisively lower from their December 20, 2012 high, on the exhaustion of the world central banks’ monetary authority.

All forms of fiat wealth, stocks, bonds, commodities and currencies, traded lower on Monday December 24, 2012; while Gold, GLD, rose slightly in value; the age of the investment demand for gold has started. Fiat wealth began to die on December 20, 2012, and thus it can be said the fiat money system began to die as well. Money as it has been known is starting to die. The diktat money system is starting to rise in Europe to replace the fiat money system; diktat will serve as currency, credit and wealth.

On Wednesday, December 26, 2012, Inverse Volatility, ZIV, traded lower; and Volatility, ^VIX, traded by UVXY, and VXX, seen in this combined Finance chart continued their rise higher from December 19, 2012 as World Stocks, VT, traded lower again.

The Business Super Cycle has transitioned into Kondratieff Winter, and now it is prime time for short selling.

The AP reports It’s the worst shopping season since 2008, worried shoppers let down retailers this holiday season. Sales of electronics, clothing, jewelry and home goods in the 2 months before Christmas increased only 0.7% compared with last year, the worst year-over-year performance since 2008.

Retail stocks, XRT, traded lower; these went ex-dividend, December 21, 2012, and are a group represents an excellent short selling opportunity; the industry leaders, seen in this Finviz Portfolio, such as ROST, have been selling off strongly for since September 14, 2012.  The Yahoo Finance Industry Center reports the Footwear and Apparrel Sector, traded down strongly with KORS, SSI,  COH, RUE, ANN, JNY, SHOO, and ANF, falling strongly. And Internet Retailing, FDN, traded lower with Internet Amazon, AMZN, Blue Nile, NILE, and Priceline, PCLN, down sharply.

Both Small Cap Consumer Discretionary, PSCD,  and Consumer Services, IYC, traded lower. Toy Manufacturer, Mattel, MAT, was a market loss leader, trading lower.  For the last six months, it had been a Consumer Discretionary, VCR, leader as is seen in this Yahoo Finance chart.

The failure of Liberalism’s finance is also seen in Large Cap Growth Companies, JKE, trading  lower; this includes companies from sectors such as Energy, XLE, Energy Service, OIH, Steel, SLX, Semiconductors, XSD, and Biotechnology, XBI and Corporate Spin Offs, CSD, trading lower.

This week, Transport Stocks, IYT, are now leading Industrial Stocks, IYJ, lower, with Airlines, FAA, traded lower. With both Transports and Industrials trading lower, Dow Theory communicates that a bear, not a bull market, is underway. Confirmation of the start of a global bear market comes from Consumer Staples Stocks, KXI, seen in this Finviz Screener trading lower.

The US 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, beginning in early December 2012, as is seen in the chart of the Steepner ETF, STPP, steepening, as bond vigilantes gained control of the Ten Year US Government Interest Rate, ^TNX, calling it higher from 1.6% to its current rate of 1.7%, with the result that the 10 Year US Government Notes, TLT, have fallen 0.8%, and the 30 Year US Government Bonds, EDV, have fallen 1.2%, in December 2012.

A higher 10 Year US Government Note Interest Rate, ^TNX, is highly destructive to dividend paying stocks across the board. The JPMorgan Alerian MLP Index ETN, AMJ, traded lower, which includes the mammoth Kinder Morgan Energy Partnership, KMP, which traded lower. High dividend paying energy pipelines cannot resist the shift out of Inflationism and into Deflationism.  US Preferred Stocks, PFF, another high dividend payer, is topping ou,t as is PowerShares KBW Premium Yield Equity REIT, KBWY.  Emerging Market Bond, EMB, is moving along an ascending wedge to what is likely to be a soon coming top. The interest rate sensitive Utilities, XLU,  traded 0.9%, lower. And Vanguard Dividend Appreciation, VIG, traded lower for the fifth consecutive day.  Not only are the world central banks’ monetary policies unable to sustain global growth and corporate profitability; they are terribly destructive to dividend paying stocks.

Bond vigilantes, have called interest rates on World Treasury Bonds, BWX, higher, as the world central banks’ monetary policies of credit liquidity, amount to unlimited quantitative easing, turning “money good” sour, which have thus spoiled profitable stock investing.

The fifteen banks seen in this Finviz Screener, pose Global Systemic Risk, and are likely to be faster fallers than the National Bank of Greece; these include BAC, C, BCS, LYG, RBS, WBK, SAN, DB, IBN, HDB, IBN , MTU, SMFG, MFG and NMR. They make for excellent short selling opportunities, especially, NMR, and BAC.

The US Dollar, $USD, DXY, UUP, traded unchanged; but the Yen, FXY, plummeted again to a two year low. FT reports Japan signals rise in borrowing. Japan’s new finance minister has signalled that the government will borrow to boost the struggling economy, as Prime Minister Shinzo Abe unveiled a “crisis beating” cabinet on Wednesday.  At a press conference following his appointment as finance chief, Taro Aso announced he would issue bonds and lift a cap on new debt for the 2012 fiscal year.  “We will not stick to the debt cap of Y44tn ($514bn) [for the year through to March],” Mr Aso said. The debt limitation was introduced by the previous Democratic party administration, which was defeated in a landslide by Mr Abe’s Liberal Democratic party two weeks ago.
Mr Abe on Wednesday unveiled a cabinet of close allies and policy experts to push his agenda of economic recovery, just hours after being formally appointed as the country’s seventh prime minister in six years.
He has vowed to create a “crisis beating government” to tackle the deflation that has dogged Japan for more than a decade and also the strong yen. Mr Abe said he had instructed his cabinet to do their utmost to achieve economic recovery and reconstruction after last year’s devestating earthquake, and to ensure national security …  “I will direct the energies of my entire cabinet towards implementing bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investment, and I aim to achieve results with these three pillars,” Mr Abe said.
He has pledged to reflate the economy through fiscal stimulus and monetary easing. He has also called on the Bank of Japan to carry out “unlimited easing” and warned that the central bank risks losing its independence – through legislative changes – if it does not introduce a 2 per cent inflation target

Mike Mish Shedlock writes The nature and origin of Japan’s crisis.  Japan’s crisis is not deflation as the economic illiterates suggest. Rather, Japan’s problem is a debt-to-GDP ratio of 230%, caused by economic illiterates attempting to defeat deflation. It’s a mad, mad world with monetarist fools in complete control of the Fed, the Bank of England, and the ECB. If prime minister Shinzo Abe gets his way (and I suggest he will), Japan will lead the way with fiscal lunacy and the Bank of Japan will follow suit with massive monetary recklessness.

On Thursday December 27, 2012, Breakout reports Investors, consumers, even Starbucks urge Washington to make a deal.  Volatility is creeping higher and stocks are lagging today as the “fiscal cliff” drama weighs on confidence. Reuters reports US poised to go off ‘fiscal cliff’ – Senator Reid says.

Automobiles, CARZ, rose strongly on rising General Motors, GM, as World Shares, VT, traded up slightly, but nevertheless, down now four days from its December 20, 2012, ex-dividend high of 49.61

The Yen, FXY, continued lower today. Small Cap Value Shares, RZV, lost strongly and Small Cap Pure Value Shares, RZG, lost moderately,  thus the Currency Demand Curve, the ratio of the two, communicates a lessening of demand for currencies: carry trade investing in the World Major Currencies, DBV, and Emerging Market Currencies, CEW, are starting to unwind, and the US Dollar, $USD, UUP, is trading up. The world is passing through the Age of Prosperity into the Age of Deflation, and as a consequence Democracy is giving way to Regional Governance, as Choice gives way to Diktat.

On Friday December 28, 2012, World Stocks, VT, fell for the fifth straight day, finishing the week 0.8% lower, with World Banks, IXG, trading 0.8% lower as well.

Dow Theory presents that a global bear market is underway, as both Transportation Shares, IYT, and Industrials, IYJ, traded lower together from recent market tops as is seen in their combined chart.

Inverse Volatility, ZIV, traded lower. Volatility,^VIX, rose higher, taking UVXY, and VXX, higher.

Briefing.com reported that Bankia fell strongly following an announcement that the troubled bank, which is scheduled to receive EUR18 billion in bailout funds, has a negative value of EUR4.2 billion due to worse than expected losses on toxic real estate investments. Bankia, Banco Santender, SAN, and the National Bank of Greece, NBG, led European Financials, EUFN, Spain, EWP, Italy, Greece, GREK, Italy, EWI, and Europe, VGK, as well Austria, EWO, Poland, EPOL, Netherlands, EWN, and Sweden, EWD, lower, as is seen in this ongoing Yahoo Finance chart.  European Shares, VGK, ended the week 1.1% lower.

Deutsche Bank, DB, led Germany, EWG, lower.
Swiss Banks, UBS, CS, led Switzerland, EWL, lower.
UK Banks, LYG, BCS, HBC, RBS, led the UK, EWU, lower.
Canadian Banks, BNS, RY, BMO, led Canada, EWC, lower.
Argentina Banks, BFR, BMA, GGAL, BBVA, led Argentina, ARGT, lower.

The US Dollar, $USD, UUP, traded unchanged. Currencies falling included the Yen, FXY, 2.0, the Mexico Peso, FXM, 0.8, the Canadian Dollar, FXC, 0.4, the New Zealand Dollar, BNZ,, 0.4, the Australian Dollar, FXA, 0.2. Currencies rising included, the Brazilian Real, BZF, 1.3, the Indian Rupe, ICN, 0.8, the Swedish Krona, FXS, 0.6, the South Korean Won, SKW, 0.4, the Euro, FXE, 0.2, and the Swiss Franc, 0.2.

Total Bonds, BND, fell 0.5%, wiping out all gains made since early July 2012,  Spin Offs, CSD, 1.7%, Leveraged Buyouts, PSP, 0.9%, Junk Bonds, JNK, 0.3%.  The global debt bubble is just now starting to burst as is seen in the ongoing Yahoo Finance chart of  Distressed Investments, FAGIX, like those taken by the US Federal Reserve under QE!, and .JNK, PSP, CSD, MUB, EDV, TLT  The global credit system is going to experience a destabilizing bout of derisking and deleveraging

Bespoke Investment Group relates US Investors Get A Lump Of Coal. The US, SPY, is one of just three country ETFs trading below their 50-day moving averages. I relate that Liberalism’s final bout of easing  gave strong moneyness not only to Europe, VGK, and Asia, EPP, but also to Emerging Market Leaders such as Mexico, EWW, the Phillippines, EPHE, Turkey, TUR, and Thailand, THD.  And I say that the weekly chart of the S&P 500, SPY, shows that it entered into an Elliott Wave 3 Down, closing at 140.03, after having made an Elliott Wave 5 Double Top High in September 2012.
US stocks, VTI, slid lower on the diminishing likelihood of a budget compromise before the year-end. During the day news reports flew that President Obama would propose a scaled-back budget package later in the day as he planned to meet with House GOP members after the markets closed.

Too Big To Fail Banks, RWW, fell 2.1, Regional Banks, KRE, 1.8, leading US Shares, VTI, 2.0%, Dow, DIA, 2.0%, Nasdaq 100, QTEC, 2.0%, Russell 2000, IWM, 2.0%, S&P 500, SPY, 1.9%,
Energy, XLE 3.1, PSCE 2.9, OIH 2.6, IEZ 2.6
Airlines, FAA, 2.4, Retail, XRT, 2.2, Consumer Services, IYC, 2.0, Global Producers, FXR, 2.0
Technology, SKYY 2.3, IGV 2.0, IGN 1.6, XSD, 2.0
Biotechnology, XBI 2.2, IBB 2.1
Metal Manufacturing, XME 1.8
Homebuilding, ITB, 1.8
Printed Circuit Board Manufacturers JBL, FLEX, traded lower
Chemical Manufacturers, seen in this Finviz Screener, traded lower
Dividend Payers, XLU 2.4, XPH 2.3, IHE, 2.0, IYZ 1.9, IST 1.6, and VIG, 1.9

Small Cap Pure Value, RZV 2.2, Small Cap Pure Growth, RZG, 1.2; the former falling more than the latter suggests that global debt deflation, that is global currency deflation is underway. Large Cap Growth, JKE, 2.1, Large Cap Value, VTV, 2.0  Closed end Equity, CSQ, traded 1.5% lower; and Closed End Debt, PFL, traded 0.8% lower. establishing that stocks are unable to leverage over debt.

2) … The real estate market is finally seeing an upturn due to the huge increase in the M2 money supply and ongoing low mortgage interest rates.  
Doug Noland reported that on Friday December 28, 2012, the M2 narrow money supply jumped  another $36.3bn to a record $10.391 TN. Narrow money has expanded 8.0% ($755bn) over the past year. I relate that the increase of M2 Money Supply and lower interest rates have finally turned around the real estate market.

Evidence of a turnaround in the housing market comes from Reuters reporting It’s the ninth straight month for rising home prices, S&P reports.  Single family home prices rose in October for nine months in a row.  And Eric Pryne of The Seattle Times reports Seattle area sees surge in new homes.  After a long, recession-induced hiatus, Seattle-area builders are starting to build houses again. It’s another facet of the local real-estate market’s modest recovery in 2012. Sales volume is up, in part because of record-low interest rates. Prices have bounced back from last winter’s post-bust lows. Experts generally anticipate more of the same for 2013.  New home construction is on a pace this year for its best showing since 2007. Builders and analysts expect that surge, too, will continue into the new year. “I don’t know what’s driving it, pent-up demand, or job growth, or something else, but the market is strong. Land prices are climbing,” says Bill Hurme of Kirkland new-home marketing firm TeamBuilder JLS. Through October, local governments in King County had issued about 3,300 building permits for new houses, the U.S. Census Bureau estimates. That’s up 36 percent from 2011, and up a whopping 99 percent from 2009, when new construction hit bottom. It’s still nowhere near the heated pace of the pre bust years, local governments issued more than 4,600 single-family permits during the first 10 months of every year from 2002 through 2007. But builders aren’t complaining. Observers attribute the resurgence in home building to several factors, including at least two that are particular to this recovery. While overall home sales are up, the number of houses listed for sale, old and new, has hit its lowest level since at least 1999. That’s partly because many homeowners and potential sellers still owe lenders more than their houses are worth. “The builders can sense what everyone else can sense, that there’s not a lot of inventory out there,” relates Seattlebubble.com.

Jody Shenn of Bloomberg reports Sales of U.S. backed mortgage bonds, MBB, soared to a three-year high as steps by the Federal Reserve and Obama administration to make homeownership more affordable propelled a 34% jump in refinancing. Issuance of securities guaranteed by government supported Fannie Mae and Freddie Mac or U.S.-owned Ginnie Mae has climbed to $1.72 trillion, compared with $1.22 trillion last year and $1.73 trillion in 200.9 With weekly rates on 30-year home loans falling to record lows eight times since July, the first increase since 2009 in refinancing has driven total lending to almost $1.8 trillion this year, double a forecast from the Mortgage Bankers Association in October 2011. The Fed, the biggest buyer in the $5.2 trillion market, has purchased about $500 billion of the debt in 2012”

3) … Finviz Portfolios for one’s short selling consideration
AP reports Fund Managers: 2013 stock outlook remains positive. In today’s uncertain environment, stock mutual fund managers acknowledge there’s reason for investors to be cautious. But they remain optimistic that there will be significant rewards for staying invested in stocks.

But I recommend that the investor dollar cost average into the physical possession of gold bullion and possession of gol at Bullion Vault and Gold Is Money, and that institutional investors start short selling immediately.
a) … Fast Falling ETFs, …  PSP, IGN, IBB, KBWY, RZV, QQQX, FAA, CARZ, BJK, CSD, TAN, FXR, TAO, DRW, URTY, SPHB, XRT, COPX, PSCI, VIG, WOOD, IYC, ZIV
b) … Fast Falling Countries, …  EIRL, EPHE, EPOL, EWO, EWW, SCIN, THD, TUR, HAO, ENZL, EWY, EWT
c) … Fast Falling Banks, … BAC, C, BCS, LYG, RBS, WBK, SAN, DB, IBN, HDB, NMR, MTU, SMFG, MFG
d) … Fast Rising 200% Proshare Bear Market ETFs, … EEV, BIS, FXP, SKF, SQQQ, REW, SSG, SRS, SRTY, EFU, SMK, SCC, TBT
e) … Fast Rising 300% Direxion Bear Market ETFs, …  DPK, EDZ, TZA, TECS, YANG, SOXS, FAZ  … combined chart
f) … Slow and steadily rising precious metal ETFs, … FSG, UGL, AGQ, NUGT … combined chart

All of these, can be seen here on my Stockcharts.com ETFs To Short Sell And Bear Market ETFs To Invest In; a list which I will keep active to 2-1-2013.

4) … Best news and commentary of the Web
Postings from Dollar Collapse
The structural endgame of the fiscal cliff – Peak Prosperity
The echo housing bubble across the United States – Dr. Housing Bubble
Home prices rose for ninth straight month: S&P – Yahoo! News
Behind the “housing recovery” – Agora Financial
Unsound Money Jeopardizes Constitutional Rights  – Macro Analytics
Consumers Love ‘Imaginary’ Money! – HoweStreet.com
Doug Casey on the Morality of Money – Casey Research
Uncovering The Federal Reserve – Liberty Crier
Currency Cartel: Counterfeiting Risk-Free – Gordon T. Long
2012 Calm Before the Storm – Gordon T. Long
Egon von Greyerz Interview – King World News
Gerald Celente Interview – King World News

Postings from Economic Policy Journal
Christmas in Rhamaland.  –  Robert Wenzel  Chicago is a city with some of the toughest gun laws in the country. CBS Chicago reports One person was killed and 13 wounded in gun violence over the Christmas holiday, including an 11-year-old boy grazed by a bullet and a man who was shot to death during a dispute in the Englewood neighborhood.

Postings from The Guardian
Portugal to hold fire-sale of state assets  –  Giles Tremlett  State broadcaster could be privatised in move seen as attempt by Lisbon government to impress lenders

Postings from Reuters
General Dynamics, Huntington Ingalls win huge U.S. submarine orders   The U.S. Navy last week awarded submarine contracts worth up to $4.5 billion to General Dynamics, GD, and Huntington Ingalls Industries, HII, securing the funds from automatic budget cuts if Congress cannot reach agreement on other ways to reduce U.S. deficits. The Navy awarded General Dynamics a five-year contract valued at up to $1.99 billion if all options are exercised, for research and development work on a new submarine to replace the current Ohio-class vessels, which carry nuclear weapons. It awarded a separate contract worth nearly $2.5 billion for construction of two smaller Virginia-class submarines, work that will be split between General Dynamics’ Electric Boat division, based in Groton, Connecticut, and Huntington Ingalls’ Newport News shipyard. Connecticut Representative Joe Courtney welcomed the contract news, saying it would help stabilize the local workforce and ensure continued production of submarines, which he described as “a key component of our national security.”

Brazil proposes looser fiscal rules to spur growth.

French jobless claims hit nearly 15-year high in November and France 24 Outlook bleak as Hollande hails 2013 Battle for Jobs

Auto sales expected to end the year strong. U.S. auto sales are expected to show a rise of 9 percent for December, capping off the best year for the industry since 2007, fueled by easier access to credit, rising home prices and pent-up demand. But when major automakers report December sales next Thursday, a strong end to the year could be overshadowed by concerns that consumers will curb spending in January due to the “fiscal cliff.” U.S. consumer confidence fell to a four-month low in December on worries over the $600 billion in automatic spending cuts and tax increases that take effect unless Congress acts to stop them. Overall, 2012 sales are expected to finish at 14.5 million vehicles, more than 13 percent higher than the previous year. This marks the third straight year that the industry has posted a double-digit sales gain.

Lockheed gets up to $4.9 billion in further F-35 funding … and … Boeing, Textron win $1.4 billion deal for 21 V-22 Ospreys

Postings from The California Beach Pundit
The Vix Index is a good proxy for the market’s level of fear and uncertainty, and the 10-yr Treasury yields is a good barometer of the market’s expectation for future economic growth. The Vix is elevated today, at just over 20, while the 10-yr Treasury yield is extremely depressed, at 1.7%. As the ratio of the two, shown in the chart above, moves up, the market is become more nervous and unsure about how weak the economy is going to be in the years to come. The outlook today isn’t as bad as at over times of crisis (e.g., the three Eurozone sovereign debt crises, and the Lehman Bros. collapse), but it ranks pretty high compared to other crises in the past. There’s little doubt that the market is very troubled and not at all confident that the economy is going to be growing much in the future.

Postings from The Worden Report

Dr. Worden writes Pot in Colorado A pretzel in American Federalism. Moving beyond the “federal-state” twist in the pretzel, it is also the case that the prohibition on the growth or sale (but not possession and use!) of pot in Douglas county conflicts with the result of the referendum, which was Colorado-wide. Jack Hilbert, chair of the Board of Commissioners in Douglas, said, “Our county has never passed or supported anything regarding the legalization of marijuana. We tend to be very conservative.” However, the legalization proposition received 46%–nearly a majority!—in Douglas. Moreover, is not Douglas part of Colorado and therefore bound to the will of the majority? Whereas Colorado is a semi-sovereign republic within the U.S., Douglas County is itself a legal creature, or subdivision, of Colorado. To view Douglas in Colorado as akin to Colorado in the U.S. would be to commit a category mistake. This is not to say that this must be so.

Drawing on the federal theory of Althusius, a German political theorist and lawyer whose Political Digest was published (in Latin) in 1604, we can extend American federalism to down to the county and even the city level. Althusius theorized that individuals could be members of guilds and villages, and the latter two, as federations of the individuals, could in turn be members of province or regional federations. These federations in turn could be the members of kingdom-level federations, which in turn could be the members of an imperial federation. Althusius had the Holy Roman Empire in mind as a practical example of an imperial federation. The important point about this theory is that every level of socio-political association is isomorphic (i.e., having the same form, namely federal).

In the case of Colorado (and the other American republics that are members of the U.S.), applying Althusius’ theory would mean that Douglas, as a county/province/region, would be in modern terms “a state” within Colorado, just as Colorado is a state within the United States. To get the framework down, Douglas corresponds to Althusius’ province level, while Colorado is kingdom-level and the U.S. is imperial in scale and political type (i.e., consisting of kingdom-level polities). It is important to note that the kingdom-level being referred to here is in the early-modern rather than medieval sense. Hence, I am referring, for example, to polities such as Britain rather than England, and the Netherlands rather than Holland. The American republics were crafted out of that mold (i.e., early-modern kingdom-level), and the U.S. itself was viewed as an empire. Hence, the enumerated powers of the U.S. Government came from the imperial powers of the British monarch in the British Empire, rather than the legislative powers of the House of Commons in the host kingdom.

Applying Althusius’ federal theory, Douglas would be a semi-sovereign federation of towns and cities within Colorado. Douglas would thus be able to counter Colorado’s law within the confines of the county. In diverse large states like California, Illinois, Florida and New York, extending federalism down to the county level would enable a better tailoring or fit of law to the preferences of the people. In Illinois, for example, ideological preferences in Chicago in the north are quite distinct from those in Carbondale in the south. The same can be said of those in New York City and Buffalo, and Miami and Jacksonville.

In short, American federalism can be both straightened out by having everyone “draw inside the lines assigned” and extended by states becoming federal systems themselves. The county executives could sit in the state senates, which would then be distinct from the lower houses, which represent the people. Similarly, the governors could sit in the U.S. Senate (which would resemble the European Council), while the U.S. House represents the people directly. Better and more federalism would match or allow for the inherent diversity that exists especially between states but also within at least some states. In philosophical parlance, it could be “turtles all the way down” in terms of “isomorphic federalism” (trying this expression out at a dinner party would not exactly get you more invites). Put another way, as of the end of 2012, we should have been seeing much more legislative diversity—a bricollage or quilt of sorts—across the continent, and even within our various fifty United States. The sheer strangeness of this expression—a rather common one in the early U.S.—may point to pent-up demand for various positions on ideological-related issues like pot, abortion, and gay marriage within the empire.

In other words, we should have been seeing much more legislative activity on significant issues at the state level even though two states had legalized pot and five had legalized gay marriage. Why, for example, had pot not been legalized in Oregon, or at least in northern California? Why had not more blue states, such as Illinois, legalized gay marriage? Just as prices have a habit of being “sticky” in going down while quite easily going up, the one-size-fits-all nature of American “federalism” had come to eclipse or even snuff out diversity expressed legislatively on the state level.

Please consider that Douglas County, CO, is a Creative Zone, similar to Broomfield-Boulder, CO, and San Jose, CA, where highly creative people come to work and live. Its major employers include Information Handling Services, Liberty Media, Dish Network, TW Communications, CH2M Hill, and Western Union.

Douglas County, Colorado, exemplifies the very zenith of prosperity that has come from Liberalism. It is a wealth county, a conservative county, and a Republican county; it has been a dynamic expression of Liberalism’s seigniorage awarding meritocracy. This in contrast to Greece, which is now a technocratic government expression of Authoritarianism’s seigniorage aid, which has come to a nation that The Economist Magazine relates in article Greece’s agony, what have we become, is characterized by socialist pork and patronage.

Wikipedia relates Douglas county is located midway between Colorado’s two largest cities: Denver and Colorado Springs. The United States Census Bureau that the county population was 285,465 in 2010 census, a 62.4% increase since the 2000 census, making Douglas County one of the fastest growing counties in the United States.  Most residents commute to workplaces elsewhere in the metropolitan area outside of the county. It is comprised of wealthy census-designated places, CDP, as well as towns  Castle Rock, Parker, Stonegate, Lone Tree, Larkspur, Castle Pine North, and Highlands Ranch.  The median income for a household in the county was $82,929. Douglas County had the highest median household income of any Colorado county or statistical equivalent in 2000.  SchoolDigger.com ranked Douglas County School District No.1 in the Denver Metropolitan Area and No.12 in Colorado based on 2009 test scores. (School district rankings were determined by averaging the rankings of individual schools within each of the 122 districts evaluated). Source: National Center for Education Statistics, U.S. Dept of Education, and Colorado Department of Education. The county is 92% white and there were 60,924 households out of which 47.2% had children under the age of 18 living with them, 73.8% were married couples living together, 5.7% had a female householder with no husband present, and 18.2% were non-families.

We are witnessing the fulfillment of bible prophecy of Daniel 2:30-45 and Revelation 13:1-4, where the Sovereign Lord God, communicates his Sovereign Will for the termination of human political and economic experience, by appointing His Son, Jesus Christ, as Sovereign Administrator, for various dispensations, that is epochs or eras of time, Ephesians 1:10.

Daniel 2:30-45 provides the Statue of Empires. There has been, and will continue to be a succession of beastly world empires or kingdoms. These have included Babylonian, Medo Persian, Greek, and Roman. Beginning in the late 1700s, through Federalism, 50 individual states in North America coalesced into a Federal State, and exercised US Dollar hegemony throughout the world; this as the British Empire declined from global dominance. A Ten Toed Kingdom of Regional Governance is now forming out of the prolificacy of the Mediterranean countries of Portugal, Italy, Greece and Spain, that is out of the PIGS. This monster is the Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, that is rising in power, replacing Liberalism, as foretold in Revelation 13:1-4.

As the world processes through Peak Credit, Inflationism is transitioning to Destructionism. Socialists would love to see the right of personal property done away with and an egalitarian state established; and Libertarians would love to see a sound commodity money system established, accompanied by the right to use private property uninhibited by the state.

Yet there is no human action, providing either of those alternatives, as there is only fate operating to bring in a new totalitarian and fascist order that will manifest regionally. Destiny, Revelation 1:1, is effecting a global economic and political coup d’etat to transfer the baton of sovereignty from nation states to regional authorities, such as the Troika and the ECB, Revelation 6:1-2. These regional sovereigns will provide the seigniorage of diktat, that is the moneyness of diktat.  Under the soon coming diktat money system, diktat serves as money, credit and power.

Sovereignty begets seigniorage. Under Liberalism, sovereign nation states served as the bedrock for the seigniorage of central bankers, such as Alan Greenspan and Ben Bernanke, as well as Investment Banking’s unsung champion James Dimon, CEO of JPMorgan, JPM.  Under Authoritarianism, regional governance will serve as the foundation for the seigniorage of monetary popes, such as Mario Draghi.

Awareness finally set into the psyche of Liberalism on Friday December 27, 2012, that insolvent European sovereigns, and their insolvent banks cannot support ongoing economic activity.

The strong fall lower in Bankia following an announcement that the troubled bank, which is scheduled to receive EUR18 billion in bailout funds, has a negative value of EUR4.2 billion due to worse than expected losses on toxic real estate investments, reported by Briefing.com, together with Bank Of America, BAC, and JPMorgan, JPM, trading lower on the failure of Cliff Talks, served as the pivotal event in terminating Liberalism, and serve as one of many key events quickening Authoritarianism. The dynamos of corporate profit and global growth, that have been operating so strongly under the Milton Friedman Free To Choose Floating Currency, and Liberalism Regime, are winding down. And now, the dynamos of regional security, stability and sustainability, are winding up the Mario Draghi Regionalism, Totalitarian Collectivism, and Authoritarianism Regime.

Liberalism was based upon investment schemes such as the repeal of the Glass Steagall Act, and unlimited quantitative easing. Authoritarianism is based upon totalitarian and fascist schemes such as Greece Bailout I, II, and III, and technocratic government featuring austerity and debt servitude.

Insolvent sovereigns and their insolvent banks have neither sovereign authority, nor monetary authority; all the PIGS, use proxy sovereign and monetary authority, they use that of Mario Draghi to obtain seignorage for their fiscal needs; and in so doing, these have brought about the end Liberalism, through the peaking out of debt, AGG, currency, DBV, and fiat investments, VT.

Greece is no longer a sovereign nation state, rather it is a client state that exists in a region of economic governance overseen by the Troika and the ECB.  A European Super State is forming where the ECB is sovereign over all in Euroland. Soon, every one of the PIGS, will be satellite peripheral appendages to Sovereigns in Brussels and Berlin.

Greeks cannot be Germans. There is an ethnic, cultural and historic divide between Nordic and Latin Europe, yet the Greeks and the Germans will be one, all living together in austerity and debt servitude,  under true European economic governance.

The choice of investments is being replaced with the diktat of authoritarians.  Liberalism provided wildcat finance, a Doug Noland term; but Authoritarianism provides wildcat governance where leaders bite, rip and tear one another, and only the most fierce rise to be the top dogs. When full blown, Authoritarianism will feature three beasts to rule mankind, a beast system, Revelation 13: 1-4, a beast ruler, Revelation 13:5-10, and a beast banker, Revelation 13:11-18,  all providing the seigniorage, that is the moneyness, of diktat.

Peak Credit was a four month process that began with of the topping out of the Canadian Dollar, FXC, a Commodity Currency, CCX, in late December 2012, on the strong sell off of the Junior Gold Mining Stocks, GJDX, and selected shares within the North American Basic Material Stocks, IYM.  And it was the sell off of the natural resource Small Cap Canadian Shares, EWC, that caused debt deflation and loss of confidence in the Canadian Dollar, FXC. The age of putting money at risk to develop industrial metals, energy reserves, and precious metals is over and done. Liberalism’s Seignior of Money, Milton Friedman, and his banker and floating currency regime, is history; his call to Free To Choose, is the epitaph on the tombstone of Liberalism. Authoritarianism’s Seignior of Diktat, Mario Draghi, and his beast and diktat regime is the future; his call to Austerity and Debt Servitude is the model that will be replicated in all of the world’s ten regions and in all of mankind’s seven institutions.

Stephen Fidler writes in the WSJ, July 26, 2012 marked the most important development of 2012.  Mario Draghi, president of the European Central Bank, makes a promise. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough,” he told an audience in London. The elaboration on September 6 of this pledge, the Outright Monetary Transactions, OMT, program of government bond buying, was viewed as convincing enough to lift doubts, about whether the financing troubles of Spain and Italy would force them out of the euro zone.

The global risk on momentum debt trade drove up Aggregate Credit, AGG, from 1971 to December 20, 2012.  Now, investors are selling out of the risk intensive basic material country stocks, such as Canada, EWC, and the Small Cap Energy Shares, PSCE, and as result the Canadian Dollar, FXC, is falling in value. Canadian Shares, EWC, have lost their seigniorage, that is the seigniorage of investor’s choice.

The seigniorage, that is the moneyness of the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, is ebbing away. And the Emerging Market Mining Shares, EMMT, and the Emerging Market Financial Shares, EMFN, are topping out. and will soon be losing their seigniorage, that is their moneyness, causing the leading Emerging Market Small Cap Stocks, EWX, to lead Emerging Markets, EEM, lower.  Banks, BFR, BMA, GGAL, BBVA, in emerging market Argentina, ARGT, that were run up in value in Liberalism’s final risk on rally, are going to suffer a massive and quick loss of value.

The seigniorage of diktat is rising, as the diktat money system is coming on line to replace the fiat money system.

At the Peak Fiat Wealth of Liberalism, the national sovereignty of countries and their central banks gave seigniorage, that is moneyness, to all kinds of financial instruments with Energy Partnerships, AMJ, Small Cap Industrials, PSCI, Small Cap Consumer Discretionary, PSCD, and especially Small Cap Pure Value, RZV, winning carry trade investments from investors worldwide.

Doug Noland relates in 2012 In Review, A critical facet of the “right tail” scenario unfolded before our eyes: the historic Bubble strengthened and broadened, global risk market prices inflated and risk premiums deflated – even as the economic backdrop turned increasingly problematic. The U.S. economy and corporate profits disappointed in 2012, while stock prices posted the strongest gains since the policy-induced rally of 2009. The German economy disappointed, although slightly positive GDP equated with a 29% gain in the DAX equities index. The French economy badly disappointed, so the CAC40 was limited to just a 14.6% advance. The Italian economy faltered, yet stocks were up almost 8%. Spain was a near disaster; stocks fell a mere 5%. The big divergence between fundamentals and stock prices was not limited to the U.S. and Europe. India’s growth slowed sharply, while the Sensex Index gained about 26%.

He also remarks of the shadow credit bubble, Some analysts have estimated annual growth as high as 50% for China’s Bubbling Credit emanating outside of normal banking channels. According to Barclay’s, the Chinese “‘shadow banking’ industry has nearly doubled in the past two years to $4.11 trillion, or more than a third of total lending.”

And he continues, Various recent headlines support my “right tail” analysis: “Record-setting Year for Corporate Debt;” “Record Year for Junk Bonds;” “Mortgage Bonds Soar on Fed’s Refinance Push;” “[Corporate] Sales Approaching $4 Trillion in Stimulus Repast; “A Banner Year For Riskiest Debt;” “Fourth-Quarter M&A Surge Spurs Optimism..;” “Leveraged Loan Volume: $456bn in 2012, Thanks to Torrid Fourth-Quarter Market.”

According to Bloomberg, global corporate bond sales this year just surpassed 2009’s record $3.89 TN. “Companies from the neediest to the most creditworthy took advantage of borrowing costs that fell to a record-low 3.27% this week as central banks held down interest rates to prop up the economy… Investors also funneled $475.3 billion into bond funds as global growth, which slowed to an estimated 2.2% this year from 2.91% in 2011, prompted them to seek alternatives to equities.” The first, third and fourth quarters all posted record issuance for their respective periods. “The yield on bonds worldwide fell 1.56 percentage points this year… Borrowing costs have tumbled from an all-time high of 9.05% in October 2008… Issuance in the U.S. reached a record, climbing 31% to $1.47 trillion, exceeding the previous all-time high of $1.24 trillion in 2009… Sales of high-yield bonds… reached $354 billion. That’s 23% above the previous record of $288 billion set in 2010.” According to Forbes’ Steve Miller, U.S. leveraged loans jumped 24% from 2011 to $465bn, with lending volumes below only 2006 and 2007.

Instead of de-risking/de-leveraging, Credit instruments enjoyed unprecedented demand. It is worth noting that 2012’s record $475bn of positive bond fund flows compares to 2011’s $99bn. A virtual buyers’ panic saw double-digit returns to corporate debt investors. And the riskier the paper, the higher the 2012 return.

When Total U.S. Mortgage Credit expanded $1.4 TN in 2005, there was no doubt that the Mortgage Finance Bubble had inflated to dangerous extremes. Yet that certainly did not stop a fateful $1.0 TN of subprime mortgage CDO (collateralized Debt Obligations) issuance in 2006. In 2012, global central banks and governments gave the great global Credit Bubble a new lease on life. Markets responded, not uncharacteristically, with only greater speculative excess. Speculative markets responded by only diverging further from fragile fundamentals.

Those market operators most adept at betting on policymaking enjoyed yet another year of stellar returns – along with more incredible growth in AUM (assets under management). The cautious fell only further (and further) behind. The hedge fund community lived to play another day, although with each passing year it seems to become more a story of the giants growing more gigantic. There were notable prosecutions of insider trading, although never in history has inside knowledge of policymaker intentions provided such opportunities for riches. At the Federal Reserve, policies accomplished the objective of spurring the lowly saver into risky securities. Overall, central banks succeeded in bolstering vulnerable global securities markets.

I conclude that fiat market investments are now starting to selling off, and will see a massive disinvestment, as investors derisk and deleverage out of carry trade loans.  With the world major currencies, DBV, and Emerging Market Currencies, CEW, turning lower, there will be an accompanying rise in the US Dollar, $USD, UUP,  for a while, before it too falls into the Pit of Financial Abandon.

A global economic paradigm shift is occurring. Inflationism is transitioning to Destructionism. The result being Liberalism is transitioning to Authoritarianism.

The end of Liberalism arrived December 28, 2012 as investors lost confidence in the monetary authority of the world central banks to stimulate global growth and corporate profitability, as a result, Bonds, BND, traded lower, and investors derisked out of stocks, VT, and delveraged out of the world major currencies, DBV.  Authoritarianism will be mankind’s experience beginning in 2013. As people increasingly come to lose trust in credit, they will come to rely upon dikat. Liberalism’s fiat money system is on the way out. Authoritarianism’s diktat money system will come to govern economics in the world’s ten regions and in mankind’s seven institutions.

Great Depression I, came through the stress of a large amount of Municipal Debt, and Wall Street Speculation. Great Depression II, will come through a global load of debt, AGG, and the global speculative investing led by the world’s 50 leading banks, IXG, seen in this Finviz Screener.

Signs of the Times relates NASA video captures 2012 Geminid meteor shower fireball. The Geminid Meteor Shower and Fireball, which streams from a point called “the radiant” in the constellation Gemini, occurred on December 13 2012 and December 14, 2012, and coincided with a New Moon; thus giving a cosmos marking, communicating the end of “the dispensation of prosperity”, and confirming the beginning of “the  age of austerity”.

Thanks to all who have come to read my writings. I relate that I have no financial assets; I live in poverty. I go walking about in Bellingham, with destination being its many wonderful parks, where I gather my thoughts for blogging in a notebook, and at the end of the day use the Bellingham Public Library to communicate that Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, pivoting the world from Liberalism into Authoritarianism. While in Fairhaven Park recently, I was gazing into the sky, and Morpheus, the God of Dreams, appeared. He was not black like in the movie The Matrix, but Jewish looking, with while long hair, and fiery red eyes. He came with no Morpheus Proposal, rather he said, “Be faithful unto death and I will give you the crown of life.”

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Fiat Wealth Dies As World Stocks, Bonds, And Currencies All Trade Lower As The US Ten Year Interest Rate Rises

December 25, 2012

Fiat Wealth Dies As World Stocks, Bonds, And Currencies All Trade Lower As The US Ten Year Interest Rate Rises

Financial market report for Monday December 24, 29012

1)  … Fiat wealth dies as world stocks, bonds and currencies all trade lower as the US Ten Year Interest Rate, rises.
On Monday December 24, 2012, Bloomberg reported The Yen declines after Abes says he may change BOJ law to purse unlimited easing.  The Yen, FXY, declined after incoming Japanese prime minister Shinzo Abe said he will consider changing the law on the central bank unless it boosts its inflation target to 2 percent next month. Abe said on Japan’s Fuji Television yesterday that he will consider revising the law governing the Bank of Japan if it fails to increase its inflation target from 1 percent at its January meeting. He is poised to become prime minister after his Liberal Democratic Party’s coalition secured a majority in elections on December 16, 2012. Abe has called on the BOJ to pursue “unlimited easing” to help end deflation and revive growth. BOJ Governor Masaaki Shirakawa and his board last week refrained from doubling the central bank’s 1 percent inflation target, while expanding its asset purchase program by 10 trillion yen ($118 billion) to 76 trillion yen. And  Bloomberg also reports BOJ holdings of JGBs exceed 100 Trillion Yen for first time. And also, Bloomberg Chart shows a steepening of the 10 30 Japanese Yield Curve in the last month; the 10 Year Japanese Government Bond Rate rose from 0.700% on December 10, to 0.766% today December 24, 2012.

World Stocks, VT, traded lower on the exhaustion of the world central banks’ monetary authority on Monday December 24, 2012.

A global bear market, the worst bear market that humanity will ever know, has commenced as the world has entered into Kondratieff Winter with Dow Theory confirmation coming from Transportation Stocks, IYT, and Industrial Stock, IYJ, both turning lower.

Liberal finance has turned toxic as investors no longer trust the world central banks capability to stimulate global growth and corporate profitability. Seigniorage, that is the moneyness, of the world’s sovereign nations is starting to fail. World stocks, ACWI, are no longer able to leverage higher on Aggregate Credit, AGG, as is seen in their ongoing Yahoo Finance chart.

The risk on momentum rally that came through a Global Zero Rate Interest Rate Program, ZIRP, is history, as is seen in the following sectors trading lower on today, Solar, TAN, Global Real Estate, DRW, Gaming, BJK, Steel, SLX, Global Water, CGG, and Chinese Real Estate, TAO. Country stocks trading lower included Egypt, EGPT, Russia, RSX, and Israel, EIS.

Mexico, EWW, Promotora y Operadora de Infraestructura SAB de CV, PINFRA.MX, is one of the Emerging Market Carry Trade, EWX, leaders, that has benefited from a North American Infrastructure, PKB, safe haven rally away from the European Sovereign Debt Crisis, EUFN, having risen 50%, on a Mexico Peso, MXN/USD, rising 8% over the last year.

Total Bonds, BND, traded strongly lower as well as Long Duration Corporate Bonds, BLV, Build America Bonds, BABS, International Corporate Bonds, PICB, Leverage Buyouts, PSP, and Junk Bonds, JNK traded lower. Thirty Year US Government Bonds, EDV, and Ten Year US Government Notes, TLT, have already traded lower, as have Municipal Bonds, MUB, High Yield Municipal Bonds, HYMB, and Mortgage Backed Bonds, MBB, on a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the Steepner ETF, STPP, rising beginning in early December 2012..

Competitive currency devaluation is underway on debt deflation as the global debt bubble, that is the global debt trade is history. The US Dollar, $USD, UUP, DYX, is trading higher from its December 20, 2012 low.  The World Major Currencies, DBV, Japanese Yen, FXY, Australian Dollar, FXA, Indian Rupe, ICN, Canadian Dollar, FXC, Euro, FXE, Swiss Franc, FXF, Brazilian Real, BZF, and the Swedish Krona, FXS, as well as the Emerging Market Currencies CEW, are trading lower.

Monetary easing by the world central banks’ is tantamount to money printing, and finally financial moral hazard has come of age; through unlimited quantiative easing debt deflation is the order of the day, as bond vigilantes have called the Interest Rate on the US Debt, ^TNX, higher from its early December 2012 value of 1.61%, with the result that there is no more money good. Monetary inflation has made money bad.

The Currency Demand Curve, that is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Growth Shares, RZG, RZV:RZG, has turned lower, as is seen in their ongoing Yahoo Finance Chart and in their ongoing MSN Chart, communicates that investors are no longer using carry trade loans to buy revenue shares such as the Small Cap Consumer Discretionary, PSCD, the Discretionary, IYC, and the Small Cap Revenue Shares, RWJ, over the Small Cap Growth Shares, RZG, as is seen in their ongoing Yahoo Finance Chart. Investors are selling the world’s currencies and buying the US Dollar.

Liberalism is being replaced by Authoritarianism as Inflationism is turning to Destructionism, as the  Milton Friedman paradigm of floating currencies, introduced in 1971, is failing.  Regionalism and Totalitarian Collectivism is the new paradigm providing diktat as money.

Clearly the fiat money system is declining and the diktat money system is rising, as leaders meet in summits and announce technocratic regional governance, where diktat serves as money, credit, and weath.

The iron hegemony of Crony Capitalism and European Socialism, is crumbling, and it its place a Ten Toed Kingdom of Regionalism is rising, as the dynamos of global growth and corporate profit are winding down, and the dynamos of regional security, stability and sustainability are powering up.

Liberalism featured sovereign nation states. Authoritarianism features regional sovereign bodies, such as the ECB, and regional sovereign leaders such as Mario Draghi.

There is no human action, nor are there any sovereign individuals, as perceived by Libertarians. There is only fate, that is destiny, operating sovereignly, to replace the Banker Regime of Liberalism, with result that the Beast Regime of Authoritarianism, is rising up out of the profligate Mediterranean PIGS banking and sovereign debt crisis, which will metastasize, with the result that EU leaders will meet in even more summits, to waive national sovereignty and pool sovereignty regionally, to provide a Eurozone Super State, where leaders in Brussels and Berlin, manage the European economy through public private partnerships, consisting of leaders from industry and government.

Now, over the last four trading sessions, all of the Proshares 200% Inverse ETFs, EEV, BIS, FXP, SKF, SQQQ, REW, SSG, SRS, SRTY, EFU, SMK, are in positive territory, as are the Direxion 300% Inverse ETFs, DPK, EDZ, TZA, TECS, YANG, SOXS, FAZ, while the Metals Based ETFS,  FSG, UGL, AGQ, NUGT, are rising.

2) … Commentary
Despite a rise in employment and a drop in unemployment according to official BLS data, after Detroit, I consider Toledo, OH, the second most miserable American city to live in. The Toledo Free Press reported in February 2011, that Forbes ranked Toledo, OH, number 12 of 20 U.S. cities on its “America’s Most Miserable Cities” list.  And then in February 2012, the Toledo Blade reported Toledo is the eighth most miserable city in the nation, according to a new ranking by Forbes; the Glass City moved up four spots from 12th on the previous ranking.  The reason for such a misery ranking being that its real estate is terrifically depressed, Kiplinger Magazine relates, One-year change in home prices: -2.7%; Median home price: $65,000; Change in price since peak: -55.9%. Toledo’s Attic reports Confidence was the city’s spirit in the 1920s. The automobile industry boomed and Toledo became known as “Little Detroit” for its increasing dependence on the sale of cars. Real estate developers mapped out enough lots to house a population of several million. Toledo banks competed for the prestige of building the highest edifice, Toledo Trust, succeeded in claiming second tallest in Ohio for a time-and-half a dozen large hotels opened for business downtown.  Of course, all this changed quite suddenly between the spring of 1929 and the summer of 1931. First Willys Overland laid off thousands. Then real estate prices cooled and the building of subdivisions ended. The real shock came in the summer of 1931 when all major banks in Toledo shut their doors, freezing the savings of tens of thousands of people and pushing hundreds of businesses into bankruptcy. Soon the city itself was bankrupt and began paying public employees in I.O.U.’s, which local merchants honored at a fraction of their face value. The Toledo Blade reported in February 2011, The concentration of poor people living in Toledo’s poorest neighborhoods grew by more than 15 percent in the past decade, giving the metropolitan area the unenviable distinction of No. 1 among America’s largest metro areas. More than 46,000 people reside in neighborhoods with poverty rates of 40 percent or higher in the metro area, which includes Lucas, Fulton, Ottawa, and Wood countie, with all but one of the 22 poor neighborhoods located within the borders of Toledo, according to a Brookings Institution study of the 100 largest metropolitan areas in the country. Zip Atlas relates Toledo’s City Center, Zip Code 43604, has a poverty rate of 37.45%. Toledo is covered in my blog entry A comprehensive listing of the most miserable cities in America

Nature Economist Elaine Meinel Supkis writes The infantile inability to talk about money honestly isn’t accidental. It is most deliberate. People have discussed ‘what is money’ and ‘what is wealth’ for eons. Since ancient times, this topic has gone from quite sophisticated to varying levels of barbaric indifference to reality. We had intelligent discussions of gold, silver and capital back in 1890 but not today. Today, we have tons of wishful thinking from the top, middle and bottom while ignoring economic realities that are now hammering us. Thanks to the floating fiat currency scam, we simply print more money at zero interest rate and have zero capital financing in a deeply in debt culture and pretend this won’t have a bad ending.

First, the US cut the gold standard and instituted the infamous ‘floating currency’ regime. Since the US dollar was the coin of international trade, we began printing money like crazy. This caused real capital to vanish. The dollar has lost 90% of its pre-Nixon gold severance value. The penny today costs two pennies to mint which shows the inflationary destruction of capital quite clearly. Capital was replaced by derivatives. This way, banks could lend money with near zero capital. Which they merrily did until they crashed their own system! The entire derivatives contract market is fraud. It should be terminated, not protected. AIG was a capital-less con operation set up to act as if they had money to give to losers in the derivatives scheme games only they had nothing except other derivative paper entities, no ‘money’. Meanwhile, both Germany and especially China and incidentally, our ‘ally’ Japan built up huge capital holdings in their FOREX funds and buying bonds and have the greatest sovereign wealth whereas the US collectively has the least sovereign wealth which is actually a deficit, we have zero sovereign wealth while our trade partners have trillions in sovereign wealth. The loss of this capital for our entire nation is most dangerous and virtually no one talks about sovereign wealth. This is delusional.

Japan is collapsing, too. So the people there go from one inept party to another corrupt party. The Washington Post reports Abe’s election in Japan will affect America’s Asian pivo. The LDP victory was more a rebuke of the DPJ than a resounding endorsement of the LDP. Although voters see the LDP as more experienced and disciplined than the DPJ, they perceive that it has done little to reform itself since its defeat in 2009. For instance, all five contenders for the party presidency in October (Abe, Yoshimasa Hayashi, Shigeru Ishiba, Nobuteru Ishihara and Nobutaka Machimura) are the sons of LDP politicians, despite widespread criticism of the LDP’s perpetuation of inbred political dynasties. For the Obama administration, the good news is that Abe is staunchly pro-American and wants to strengthen the U.S.-Japan security relationship. The bad news is that his revisionist views of history and controversial views of Asia could lead him to speak and act in ways that exacerbate tensions with neighboring countries, especially China and South Korea. And it seems that all these people are determined to prevent us from understanding what money is and how it works as capital. I say, the US is running an ANTI-capitalist system and this is a very bad thing.

The Age of Deflation has commenced. Global GDP will be falling. The Morgan Stanley Index, ^CYC, is the market value of Global Economic Producers, and trades like the ETF, FXR; which declined in value; both of these are exemplified by global GDP producers in this Finviz Screener, which includes the following :
Transportation, R, UPS, FDX, JBHT, UNP, WAB,
Energy Service, SLB,
Energy Production, XOM,
Communications Equipment, NOK, ERIC, MSI,
Beverages, FMX,
Paper Production, IP,
Biotechnology, REGN, BIIB,
Mining, BHP, AA, SCCO,
Diversified Machinery, GE, PHG, IR, MTW, FLS,
Software, SAP,
Military Equipment, HON,
Tools,  ITW, MKTAY
Scientific Equipment, ROP,
Appliances, LII, WHR,
Farm Equipment, DE
Homebuilding, ITB,
Construction  Equipment, CAT, KUB
Aerospace, BA,
Inudstial Electrical Equipment, ETN,
Cement, EXP,
Agriacultural and Specialty Chemicals, LYB, POT, SYT
Industrial Gasses, ARG,
Entertainment, DIS,
Metal Manufacturing, WOR,
Electronics LPL,
Electrical Utilities HNP,
Semiconductors, TSM,
Automobiles TTM,
Chemicals, EMN,
Industrial Textiles, MHK,

3) … Soon an investment demand for gold, will arise, and take gold higher.
Wealth can only be preserved by investing in and taking possession of physical gold in the form of gold bullion or by possession in Internet trading vaults, such as Bullion Vault. Support for gold, GLD, is lower at 157.50, which translates into a spot price of gold, $GOLD, of $1,620.

4) … Terms and Symbols
Floating Currency Regime, Age of Deflation, Fiat Wealth, ZIRP, Monetary Inflation, Moral Hazard, Regionalism, Authoritarianism, Diktat, Fiat Money System, Diktat Money System, Money Good, Money Bad, Inflationism, Destructionism, Mario Draghi, Beast Regime, Seigniorage, Debt Trade, Money Printing, Sovereign Authority, Monetary Authority, Competivive Currency Devaluation, Regional Governance, Monetary Inflation, Debt Deflation, Money Good, Money Bad, Kondratieff Winter, Liberalism, Seigniorage, Monetary Easing, European Superstate, Ten Toed Kingdom,

EEV, BIS, FXP, SKF, SQQQ, REW, SSG, SRS, SRTY, EFU, SMK, DPK, EDZ, TZA, TECS, YANG, SOXS, FAZ, FSG, UGL, AGQ, NUGT, FXY, IYT, IYJ, AGG, DRW, TLT, DBV, CEW, VT, UUP, RV, FXR,

Republics Of Carry Trade Investing Fall Lower From Seven Month Banking, Debt, And Currency Carry Trade Rally, Introducing The Age Of Regionalism, Authoritarianism And Totalitarian Collectivism

December 23, 2012

Financial Market Report for the week ending December 21, 2012

1) … Introduction
Of apocalyptic note, the fiat money system died, as the age of the Milton Friedman free to choose floating currency regime  and liberalism came to an end December 21, 2012, as republics of carry trade investing fell lower from a seven month banking, debt and currency carry trade rally, introducing the diktat money system and the regime of regionalism and authoritarianism.

Country leaders over the last month have been EIRL, EPHE, EPOL, EWO, EWW, SCIN, THD, TUR, HAO, ENZL, and EWY, seen in this Finviz Screener.  And ETF leaders over the last six months have been PSP, IGN, CUT, IBB, KBWY, RZV, QQQX, FAA, CARZ, BJK, CSD, TAN, FXR, TAO, DRW, URTY, SPHB, XRT, COPX, PSCI, VIG, WOOD, ZIV, seen in this Finviz Screener. These leaders make for excellent short selling opportunities.

Doug Noland reports M2 (narrow) “money” supply jumped $54.8bn to a record $10.356 TN. “Narrow money” has expanded 7.8% annualized year-to-date and was up 7.6% from a year ago. I believe that this will turn out to be Peak Money; that is the zenith of M2 Money. A new money is on the way, it is coming via the Beast Regime of Regime of Regionalism, Authoritarianism, and Totalitarian Collectivism, it is called Diktat.

2) … World stocks turned lower on the exhaustion of the world central banks’ monetary authority
VSS 1.2
EEM 1.1
VT 1.0
VTI 1.0
VGK 1.0
EPP 1.0

CAF 2.0
CHIX 1,8
CHIM 1.6
HAO 1.5
CHXX 1.2
FXI 1.3

ENZL 1.7
KROO 1.3
EWT 1.2
EWY 1.0
EWA 1.0
JSC 1.0
EPHE 0.5
THD 0.5

INXX 3.3
SCIN 2.7
INP 2.1

TUR 1.5

EIRL 1.5
EWO 0.7

EWU 1.1

EWZS  1.2
EWZ 1.1

ARGT 2.2
EPOL 1.8
EWW 1.6

RSX 1.4
ERUS 1.1

Sectors trading lower included
PICK 2.9
TAN 2.8
FXR 2.6, this is a proxy for the Morgan Stanley Cyclical Index, ^CYC.
IGN 2.6
RZV 2.4
PSP 2.4
PSCI 2.1
XRT 1.8
COPX 1.7
SPHB 1.6
URTY 1.3
KRE 1.6
SLX 1.6
PKB 1.6
XSD 1.6
ITB 1.5
XME 1.5
IXG 1.1
BJK 1.1, trades similar to VICEX,t.
CARZ 1.1
IYC 1.1
DRW 1.1 In the last six months Global Real Estate Excluding The US, was given strong seigniorage by QE4 anticipation; this coming in large part from Liberalism’s Zero Interest Rate Platform, ZIRP, and the sell off precious metals, such as Silver, SLV, which closed at support at 29, and Gold, GLD, which closed at 160.33, and whose support is lower at 157.75.
TAO 1.1
RWR 1.0
IHI 0.9
XBI 0.8 PBH, PRXL,
CSD 0.8 TVL, VAC, FAF, LMCA, HHC, MSG
VIG 0.7
WOOD 0.7
QQQX 0.3
CGW 0.4 CGW, CDZI, SJW, AWR, AWK
FAA 0.2
KBWY +0.2

OIH 1.8 SLB
IEZ 1.5
XLE 1.5 XOM

3) … Conclusion
Kondratieff Winter, the global bear market of all time, will prove to be far worse than the Great Depression, has commenced, as both the Industrial Stocks, IYJ, -0.7%, and Transportation Stocks, IYT, -0.3%, have turned lower together from their peak rally highs.

Inverse Volatility, ZIV traded lower and Volatility, UVXY, and VXX, traded higher

Anticipation of QE 4 quicked Inflationism in the last seven months, driving the World Banks, IXG, higher, which supported a risk on momentum trade in World Stocks, VT, VSS, VTI, EEM, VGK, EPP, as is seen in their combined Yahoo Finance Chart.  Bank leaders over the last six months have been UBS, HDB, IBN, DB, SAN, WBK, RBS, LYG, BCS, C, BAC, as is seen in their combined Yahoo Finance Chart.

It is reasonable to expect that Argentina, ARGT, Banks, GGAL, BFR, BMA, and BBVA, will sell off quickly from their recent rally, as well as Puerto Rico Bank, BPOP, causing as sharp drop in the Emerging Market Financials, EMFN. And it is reasonable to expect that the Japanese Banks NMR, MTU, SMFG, and MFG, will sell off quickly from this week’s rally. One can follow them via this Finviz Screener. The rise in the Japanese Banks, came as Toru Fujioka and Masahiro Hidaka of Bloomberg report, The Bank of Japan expanded its asset-purchase program for the third time in four months, and will reconsider its objectives for inflation as incoming Prime Minister Shinzo Abe urges more action to end price declines. The central bank increased the asset-purchase fund to 76 trillion yen ($906bn) from 66 trillion yen. Abe, whose party swept to victory in this week’s election, will have a chance to reshape the BOJ early next year when the terms of Governor Masaaki Shirakawa and his two deputies expire. He’s pressing for a 2% inflation target, compared with an existing 1% goal.

The WSJ reports Greece’s four largest banks need a capital boost of €27.4 billion ($36.29) to overcome the impact of the country’s sovereign debt write-down as they battle to stem growing losses in the rapidly shrinking domestic economy. A mammoth €200 billion debt restructuring completed by the country earlier this year wiped out the capital base of Greece’s top lenders—National Bank of Greece, Eurobank Ergasias, Alpha Bank and Piraeus Bank — forcing them to appeal to the government for help. On Friday, NBG said it requires a capital boost of €9.7 billion while Alpha needs a capital injection of €4.6 billion. This comes after Eurobank and Piraeus Bank said Thursday they need €5.8 billion and €7.3 billion respectively. “The total number seems to be at the high end of expectations,” said Panagiotis Kladis, an analyst at investment services company National P+K. “This is a lot of money and investor interest in these banks will be determined by economic conditions prevailing in coming months and the economy’s broader outlook.”

The National Bank of Greece, NBG, rose 2.2%, on December 21, 2012, while the 50 Major World Banks, IXG, seen in this Finviz Screener, traded 1.1% lower. The fifteen banks seen in this Finviz Screener, pose Global Systemic Risk, and are likely to be faster fallers than the National Bank of Greece, these include BAC, C, BCS, LYG, RBS, WBK, SAN, DB, IBN, HDB ,IBN ,NMR, MTU, SMFG, MFG; they make for excellent short selling opportunities.

Destructionism is underway as the dynamos of corporate profit and global growth that supported the Milton Friedman Banker Regime are winding down on the exhaustion of the world central banks monetary authority.

Doug Noland communicates in article Recalling John Law, that Destructionism is the outcome of the fiat money system by providing these quotes:
“There are good reasons to think that the nature of money is not yet rightly understood.” John Law, 1720, with the collapse of the Mississippi Bubble.
“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” John Maynard Keynes, 1920.
“Since the time when President Richard Nixon broke the final tenuous link between the dollar and gold in 1971, no major currency, for the first time in history, has any connection to a commodity. Every currency is now a fiat currency.” Milton Friedman, 1991.

Chris Rossini write in Economic Policy Journal, 50 Reasons For The Separation of Money & State. Money must be completely severed from State control. Our economic lives literally depend on it.

Nature Economist Elaine Meinel Supkis writes Our Banking System Destroys Itself. Way back over a decade ago, I issued regular warnings about the historic dangers of asset and banking bubbles. History is utterly clear in this matter. Century after century, the same warnings are issued and the same stupid bubbles appear over and over again, too. They all pop. Nothing goes to infinity. Seeking ever more dangerous skiing leads to being killed. Infinity always zeroes out in death. And this, in a nutshell, is why we keep having screwed up economies due to reckless asset bubbles. They love doing this even though it can cause a century of agony afterwards or even the annihilation of the economic entity and the bankruptcy of their home state nations.

The dynamos of regional prosperity, security and sustainability, will be working to establish regional  monetary authority of the Mario Draghi Beast Regime, beginning first in Europe, and then in all of the world’s ten regions.  Europa rides the beast. The 2 Euro coin in Greece has a woman riding a beast on one side of it, this is prophetic economically ,as the ECB and its soon coming companion, a European Superstate, will be the leading economic model for the world wide Beast Regime of Regionalism, Authoritarianism, and Totalitarian Collectivism. It’s as Sweettina2 writes Guten Morgen Europa. There is a statue right outside EU headquarters in Brussels, Belgium; it is a statue of the pagan goddess Europa riding a bull. Most of the important decisions for the citizens of Europe will now be made by a small group of European elitists, many of them totally unelected. But for the global elite, the consolidation of the EU is just one step towards a larger goal. You see, the ultimate desire of these elitists is to merge regional alliances such as the EU into a world government. In fact, in symbols used on official European coins, posters and artwork, the elite have sent us a message telling us exactly what they are planning to do to all of humanity, if anyone out there is willing to listen.

One person who is totally disconnected from the growing reality of European Federalism is Catalan President Artur Mas as Emma Ross-Thomas of Bloomberg, writes Catalan President Artur Mas pledged to create the institutions needed for an independent state next year as he prepares for a referendum on secession from Spain. Catalonia’s government will create a tax agency and a public bank while transforming the regional police corps into a full force as part of preparations for the referendum, which he has pledged to be ready to hold as early as 2014. It will also draw up plans for social security, energy and justice, Mas told the regional parliament.

Crony Capitalism, European Socialism and Greek Socialism, provided the Seigniorage of Choice. The  Ten Toed Kingdom of Regional Governance, forming as regional governments in all of the world’s ten regions, will provide the Seigniorage of Diktat, where Diktat serves as credit, money and wealth.

The global debt bubble, BND, has burst. Monetization of debt by the US Central Bank has started debt deflation in US Government Bonds, as is seen in the Municipal Bonds, MUB, the High Yield Municipal Bonds, HYMB, the Mortgage Backed Bonds, MBB, the US Ten Year Notes, TLT, the 30 Year US Government Bonds, EDV, the Long Duration Tips, LTPZ, and the Build America Bond, BABZ, trading lower in value in December 2012, as is seen in thiir combined Yahoo Finance Chart, as the bond vigilantes have called the Interest Rate on the US Government Note, ^TNX, higher from 1.7% on December 14, 2012.  Under Liberalism the world central banks and carry traded investing have been the funding agents for global economic growth and for corporate profit, to a large extent even by leasing out their gold reserves. Their monetary easing, translated money printing, through Ben Bernanke’s QEs, and Mario Draghi’s LTROs, and OMT, have now turned money good investments into money bad black holes. As the world transitions from Liberalism into Authoritarianism, the only money good will be diktat and possession of gold, in gold bullion or in Internet Trading Vaults such as Bullion Vault.

Competivive Currency Devaluation is under way in the Worlds Major Currencies, DBV, the Commodity Currencies, CCX such as the Australian Dollar, FXA, and the Canadian Dollar, and the Euro, FXE, as well as in the Emerging Market Currencies, CEW, turning Aggregate Credit, AGG, lower.  The U.S. dollar, $USD, closed at 79.62, down 0.7% y-t-d.  I expect the US Dollar, traded by the ETF, UUP, to rise for a period of time as falling currencies, cause ongoing derisking out of Stocks, ACWI, as well as Commodities, DBC, especially base metals, DBB, which should cause a fast fall in Dig and Dirt Moving Stocks, such as MTW, which is particularly debt heavy. I expect Timber, CUT, to be a fast faller, stimulating a fast fall in debt ridden International Paper, IP.

The paradigm of global economics is transitioning into the new paradigm of regional economics. Credit Liquidity under Liberalism provided prosperity for many. But as moral hazard has come of age, all of humanity will be booked into Authoritarianisms’ California Hotel of austerity and debt servitude by country leaders, as they meet in summits to announce regional framework agreements, which provide sovereign authority for structural reforms, wage reductions, and the establishment of public private partnerships to manage regional economics, as well as to appoint both a regional political leader, and a regional banking, fiscal and monetary pope.

The Great Depression came through speculative investing and huge amounts of municipal debt. This time around, there is even a larger amount of Aggregate Debt, AGG, especially that which has come through Sovereign Debt, BWX, Spin Offs, CSD, Junk Bonds, JNK, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, Emerging Market Debt, PCY, and of the debt taken in under TARP, and other QE1 facilities, which are like the Distressed Investments traded by the Fidelity Mutual Fund FAGIX.

These taken as a whole, both Sovereign Debt, BWX, up 6% y-t-d, and the most toxic of debt, especially the Emerging Market Debt, PCY, up 20% y-t-d, have been the credit basis of Liberalism’s QE 4 Rally, whose most dramatic leverage came in this last of the seven months.

As is seen in their combined Yahoo Finance chart, the global debt bubble served to leverage up the most speculative of stocks, such as the vice stocks held in the Fidelity Mutual Fund VICEX, as well as Banks, such as BAC, Investment Bankers such as JPM, and Small Cap Value Shares, RZV, as is seen in their combined Yahoo Finance Chart.  Of note, the level of Corporate Debt, LQD, International Corporate Debt, PICB, and Long Duration Corporate Debt, stands near an all time high as is seen in their combined Yahoo Finance Chart.

Sarika Gangar of Bloomberg writes Corporate bond sales from the U.S to Europe and Asia surpassed 2009’s record to reach $3.89 trillion this year as borrowing costs plunged to the lowest ever. Global issuance is up from $3.29 trillion last year and $3.23 trillion in 2010.  With central banks holding down benchmark interest rates to prop up the global economy, investors funneled an unprecedented $455.7 billion into bond funds this year, according to EPFR.  Companies from the riskiest to the most creditworthy took advantage of yields that fell to 3.33% this month to lock in lower borrowing costs… The extra yield that investors demand to own corporate bonds rather than government debt is at 223 basis points, narrowing from 351 at the end of last year, according to Bank of America Merrill Lynch’s Global Corporate & High Yield index.  Global issuance nudged ahead of 2009’s all-time high, when sales were stoked by government guarantees intended to rebuild confidence.  Yields have declined to 3.34%, from 4.83% on Dec. 31 and after touching an unprecedented 3.33% on Dec. 6,2012.  Corporate bonds handed investors 11.5% this year, the most since they returned 20.5% in 2009 and following a 4.86% gain in 2011. In the U.S., issuance also reached a record, climbing to $1.45 trillion from $1.13 trillion in 2011 and exceeding the previous all-time high of $1.24 trillion in 2009

A tremendous beneficiary, not only of global ZRIP, but also a rising Chinese Yuan, CYB, has been Chinese Electric Utility HNP rising 79% y-t-d.

The coming Second Great Depression, will be a most difficult experience, not only because of its great deleveraging, but also because those with skill and experience will find decreasing rewards and a growing lack of meritocracy.

4) … In the News 
I use to live in Denver, CO. It has always had a strong and resilient housing market, because of the diversity of types of businesses, and because it is at the intersection of two major Interstate Highways, with one running north-south, and the other east-west, with the so called Mousetrap Intersection a nightmare. The Denver Post reports Denver has year-over-year home value increase of 10.8 percent. National home values continued an upward march in November with Denver showing a year-over-year home value increase of 10.8 percent, according to the November Zillow Real Estate Marketing Report released Wednesday. Denver experienced a monthly home value gain between October and November of 0.7 percent, according to the report. Home values in Denver were listed at $225,900. Zillow said November marks the 13th straight month of home value increases, the largest annual gain since 2006. Home values were up nationally 5.2 percent compared with last November, the largest gain since August 2006, when home values rose six percent year over year. Home values nationally stood at $156,200 in November 2012. The last time values stood at the level was May 2004, according to the data. Only nine cities showed home values higher than Denver, CO; these were San Francisco, CA; San Jose, CA; Los Angeles, CA; New York, NY; Washington, DC; Boston, MA; Seattle, WA; Portland, OR; and San Diego, CA.

Reuters reports CE’s NYSE swoop creates derivatives giant.  IntercontinentalExchange agreed as part of its $8.2 billion takeover of NYSE Euronext to pay the New York Stock Exchange operator a termination fee of $750 million if it fails to gain antitrust clearances.

Dallas Morning News Texas unemployment rate of 6.2% is lowest in four years.  The Texas unemployment rate fell to 6.2 percent in November from 6.6 percent in October, even as the state added fewer jobs. It was the state’s lowest jobless rate since December 2008 and well below the US.

24/7 Wall Street reports Only 3,300 people were unemployed in Odessa’s labor force of 83,500, amounting to an unemployment rate of just 3.9%, or just over half of the national rate of 7.9% for October. The region’s largest sector by headcount, mining, logging and construction, grew by 5.4%. The second largest sector, trade, transportation, and utilities, grew by 6.3%. Odessa has significantly benefited from a strong oil industry given its location near the Permian Basin. And no metropolitan area in the country experienced worse job loss in the past year than Norwich New London, RI.  The unemployment rate of 9% in October was up from 8.2% at the same time last year. In recent months, such companies as AT&T and Pfizer cut jobs in the area, as did smaller companies. The government sector, which employs the most people in the area, declined by 4% over the year. Both New London’s municipal government and school district cut headcount in recent months.

World Stocks Top Out As Competitive Currency Devaluation Commences On The Exhaustion Of The World Central Banks’ Monetary Authority

December 21, 2012

Financial Market report for Thursday December 20, 2012

1)  … Liberalism has reached its zenith as monetary inflation finally turns toxic, topping off world stock values as debt deflation, that is on currency deflation, gets underway.
Hans-Hermann Hoppe communicates that Hayek and Mises, were each in their own way, proponents of Liberalism. He is an Austrian School economist and anarcho capitalist philosopher, is professor emeritus of economics at UNLV, a distinguished fellow with the Ludwig von Mises Institute, and founder and president of The Property and Freedom Society and wrote Why Mises (and not Hayek)?  on the Mises website which was reproduced in Economic Policy Journal.

Inasmuch as December 21, 2012, approaches Jennifer Leigh Parker writes in timely fashion Notorious Doomsday Prophets and Cults.  I ask, might we see a reappearance of the Nephilim, the offspring of the aliens and women, who were a race of giants, men of renown, that once stalked the land?

Jesus Christ is at the helm of the economy of God, Ephesians 1:10, pivoting the world from Liberalism to Authoritarianism.  Liberalism arose with LBJ’s Great Society Programs, developed firmly with the advent of the Milton Friedman Free To Choose Floating Currency Regime, then accelerated with the introduction of the Euro Currency, took on a mature form with the repeal of the Glass Steagall Act whereby we all became bankers, then became the global economic and political paradigm with the rise of the price of gold and the quest for energy development worldwide in 2001, which inflated the value of oil companies such as Exxon Mobil, XOM, and energy service companies such as Schlumberger, SLB, higher, and which confirmed Crony Capitalism, European Socialism and Greek Socialism as mankind’s economic experience.

The Apostle John relates his prophetic vision of our times in The Revelation of Jesus Christ. The word revelation is Greek word apokalupsis, and means an uncovering or revealing.  In Revelation 13:1-4, he reveals that Authoritarianism will rise as a Beast Regime, replacing today’s Banker Regime, from the European Banking and Debt Crisis, EUFN, of the Mediterranean nations of Greece, GREK, Italy, EWI, and Spain, EWP, and will feature collective action, specifically Totalitarian Collectivism and Regional Governance, which will replace Liberalism, becoming mankind’s economic experience in every one of the world’s ten regions, and in all of mankind’s seven institutions.  He goes on to relate that the Beast Regime will be led by a Beast Ruler, Revelation 13:5-10, and a Beast Banker, Revelation 13:11-18.  Three Beasts are coming to rule mankind.  Eventually, according to the prophet Daniel, the Sovereign will establish a one world government in Jerusalem, Daniel 9:25, where he will provide global seigniorage, that is world wide moneyness, via the Charagma, or Mark of the Beast, Revelation 13:18.

Today, Thursday December 20, 2012, World Stocks, VT, World Small Cap Stocks, VSS, US Stocks, VTI, topped out on the exhaustion of the words central bank’s monetary authority. And Emerging Markets, EEM, and the Russell 2000, IWM, traded to new market highs as well; the latter coming from seigniorage of US Regional Banks, KRE, rising in value, and from a rising, and culminating Currency Demand Curve, RZV:RZG, that is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Pure Growth Shares, RZG.  Currencies have been in all out demand, forcing the value of the US Dollar, $USD, down to 79.27; and forcing down the price of real assets, such as Gold, GLD, and Silver, SLV.  Copper, JJC, is a speculative asset, held in great abundance warehouses as collateral for a shadow banking system in China; and today it plummeted 1.9% in value. Carolyn Cui wrote the September 10, 2012 WSJ article Copper surplus presents puzzle just before copper led the way higher in Liberalism’s final debt and currency based risk on momentum rally. The ongoing Yahoo Finance chart of Distressed Investments, like those taken in by the US Fed in QE1, FAGIX, together with Senior Bank Loans, BKLN, Junk Bonds, JNK, Leveraged Buyouts, PSP, and Spin Offs, CSD, communicates that it has been the riskiest of debt that has supported the global currency rally that has driven up stocks.  Ben Bernanke took in the worst of debts, at the encouragement of JP Morgan, JPM, and traded out “money good” US Treasuries to spur a recovery. Beginning in December 2012, the US Treasuries, TLT, and EDV, started trading lower, as bond vigilantes have seized control of the Ten Year US Government Note Interest Rate, ^TNX.

The biggest risk humanity face as a result of the Fed’s QE4, and the ECB’s OMT unprecedented experiment in quantitative easing, that has produced investor confidence and the decline of risk aversion, with World Stocks, VT, rising 12%, and World Small Cap Stocks, VSS, rising 15%, in a risk-on Major World Currency, DBV, and Emerging Market Currency, CEW, momentum rally, over the last seven months, is that monetary easing has crossed the rubicon of debt monetization, and that the world has passed through Peak Credit, with Bonds, BND, trading lower on the exhaustion of the world central banks’ monetary authority. It can be said “The Fed’s policies ceased to work beginning in December 2012”, inasmuch as its monetary policies are now causing debt deflation, specifically deflation in bonds. Through a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TX, seen in the Steepner ETF, STPP, rising, deflation started in Aggregate Credit, AGG, in December 2012 as follows:
Closed End Michigan Bonds, MIW, -10.2
Closed End Pennsylvania Bonds, EIP, -7.4
California Municipal Bonds, CMF, -2.9%
High Yield Municipal Bond, HYMB, -2.2%
Municipal Bonds, MUB, -2.6%
The Zeroes, ZROZ, -4.6%,
30 Year US Government Bonds, EDV, -8.9%, the chart shows a strong fall through channel support
10 Year US Government Notes, TLT, -2.9%, the standard bearer of debt broke down 12-18-2012.
Build America Bonds, BABS, -1.4%
Long Duration Tips, LTPZ, -1.0%
Long Duration Corporate Bonds, BLV, -1.8%
Corporate Bonds, LQD, -0.6%
Total Bonds, BND, -0.4%

A see-saw destruction of fiat wealth is underway as the Steepner ETF, STPP, broke out on a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which drove Total Bonds, BND, sharply lower, while Junk Bonds, JNK, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, Spin Offs, CSD, as well as Distressed Investments like those taken in under QE1, and traded by Fidelity Mutual Fund, FAGIX, have risen to new highs.  Of note, the WSJ reports, U.S To Sell Bulk of TARP Banks.  The Yahoo Finance Industry Center reports Closed End Debt Funds, traded lower for the fifth day, with the Closed End Municipal Debt Funds, such as Michigan Municipal Bonds, MIW, and Pennsylvania Municipal Bonds, EIP, traded strongly lower.

Bespoke Investment Group reports 10-Year Yield Crosses Above 200-Day Moving Average.  The rise of the benchmark Ten Year Interest Rate, ^TNX, to 1.80% means that the bond vigilantes have gained a nascent control of the bond market.  Ben Bernanke and Mario Draghi’s monetary policies have turned the springs of credit toxic, whereby US Treasury Notes are falling lower in value, and stocks are only marginally or selectively increasing in value.  Charts show that the highest degree of loss of trust has come in global debt is centered in US Debt as reported above.

US Government Debt began falling in value in December 2012. US Treasuries have now entered their third week of falling, with 10 Year US Government Notes, TLT, -2.9%, and the 30 Year US Government Bonds, EDV, -8.9%, so far this month.

Credit liquidity under Liberalism, has produced Peak Seigniorage, that is peak moneyness, coming to World Stocks, VT.  Debt monetization by the world central banks is starting to turn “money bad”, as is seen in the trade lower in the World Major Currencies, DBV.  With currencies trading lower in value, the fiat money system is dying; it will be replaced by the diktat money system, where diktat serves as credit, money and wealth.  Leaders will react to a soon coming  global debt crisis, that is a global banking and financial implosion, termed Financial Apocalypse, brought on by competitive currency devaluation, by meeting in summits, and waiving national sovereignty, pooling sovereignty regionally, and announcing regional framework agreements for regional security, stability and sustainability.  In this manner, the Milton Friedman Banker Regime will be replaced by the Mario Draghi Beast Regime of Regionalism and Totalitarian Collectivism, which will come to rule in the world’s ten regions and in all of mankind’s seven institutions.  Soon the only “money good” will be diktat, and physical ownership of gold bullion and possession of gold in Internet trading vaults such as Bullion Vault.

Inasmuch as Total Bonds, BND, and Aggregate Credit, AGG, have turned lower, the world has passed through Peak Credit. Peak Wealth was achieved December 20, 2019, when World Stocks, VT, topped out. With the Major World Currencies, DBV, trading lower, Liberalism collapsed December 20, 2012.

Bespoke Investment Group write The world is overbought. While some are expecting the world to end tomorrow, the stock market certainly doesn’t seem to think it’s going to happen.  Of the dozens of country and regional ETFs that we track, nearly all of them are in overbought territory. I relate that I perceive the most overvalued countries to be ARGT, EIRL, EIS, EPHE, EPOL, ECNS, EWO, EWW, EWY, EWG, GREK, SCIN, THD, TUR EWA, EWN, NORW, and EWT, which are seen, in this Finviz Screener.  These republics of carry trade investing are a product of the now defunct Milton Friedman Free To Choose Floating Currency Regime, and will be relegated to the dustbin of history, as the Mario Draghi Regionalism And Totalitarian Collectivism Regime, comes to be the economic model in the world’s ten regions.

The Business Cycle, that is the Debt Super Cycle, transitioned into Kondratieff Winter, as debt deflation, that is currency deflation commenced today, December 20, 2012, on the exhaustion of the world central banks’ monetary authority, with the Major World Currencies, DBV, trading significantly lower from their recent high, and Emerging Market Currencies, CEW, trading up to a new high.  The Swiss Franc, FXF, and the Euro, FXE, continued their rally higher.  Commodity Currencies, CCX, bounced at their market top, as the Australian Dollar, FXA, and the Canadian Dollar, FXC, traded strongly lower.  The competitive currency devaluation loss leaders is the Japanese Yen, FXY, which traded lower again today to close at 116.17. The 200% US Dollar ETF, UUP, traded to a firm base at its September 14, 2012, value of 21.65, and the US Dollar, $USD, closed at 79.27.

Total Bonds, BND, traded slightly higher, but below their from their early December 2012 high. And Commodities, DBC, continued trading below their early December 2012 high.

The Euro, FXE, closed higher at 131.46, as Sky News report S&P lifts Greece’s sovereign debt rating, inducing Greece, GREK, Ireland, EIRL, Spain, EWP, Italy, EWI, and Germany, EWG, GERJ, higher, and taking European Shares, VGK, to a new rally high.  Poland, EPOL, Austria, EWO, Norway, NORW, Netherlands, EWN, Sweden, EWD, Switzerland, EWL, continued their rally.

The Nikkei, NKY, and Japanese Small Caps, JSC, traded strongly higher.  China, FXI, ECNS, CAF, EWH, Egypt, EGPT, Brazil, EWZ, EWZS, The UK, EWU, EWUS, Thailand, THD, Russia, RSX, ERUS, South Korea, EWY, rose slightly to new highs. Taiwan, EWT, and Turkey, TUR, traded lower. Sectors trading higher over the last few days include Solar Energy, TAN, Airlines, FAA, Automobiles, CARZ, Global Real Estate, DRW, Gaming, BJK, Networking, IGN, US Infrastructure, PKB, Consumer Discretionary, IYC, Small Cap Industrials, PSCI, and Small Cap Pure Value, RZV.

World Banks, IXG, seen in this Finviz Screener, continued higher, producing Liberalism’s Peak Prosperity. These were led by Japanese Banks, MTU, NMR, SMFG, MFG,  Brazil Banks, ITUB, BBD, BSBR,  UK Banks, LYG, HBC, BCS, RBS,  Argentina Banks, BBVA, GGAL,  India Bank, IBN,  Canadian Banks, RY, BNS, CM, TD, BMO, Chinese Banks, CHIX,  Swiss Banks, UBS, CS,  and the Too Big To Fail Banks, RWW, BAC, BK, C. Bank of America has risen 106% YTD.

The Telegraph reports Libor scandal threatens to create a banking crisis to rival 2008. It comes to something when one of the world’s major banks admits to fraud, but that’s what UBS did On Wednesday in agreeing to pay $1.5bn (£940m) in fines for rigging inter-bank interest rates. Yahoo Finance chart shows that UBS has been one of Liberalism’s final risk on momentum rally leaders, for the last seven months, having risen 37%.

European Financials, EUFN, led by NBG, SAN, DB, blasted higher. Emerging Market Banks, EMFN, continued higher led by Peru’s BAP, Chile’s BCH, and Puerto Rico’s FBP.

Liberalism’s seigniorage, that is moneyness, is failing on the exhaustion of the world central banks’ monetary authority. The Calamos Total Return Fund, a closed end equity fund, CSQ, and the Eaton Vance Tax Advantaged Fund, EXG, a foreign closed end equity fund, both traded lower from their recent highs.  Yahoo Finance chart shows that the closed end equity funds are unable to leverage higher on the closed end debt funds, such as Pimco’s PFL, communicating a failure of Liberalism’s seigniorage.

Liberalism commenced with the abandonment of the gold standard in 1971, when President Nixon, and the financial world decided to go with the Milton Friedman Free To Choose Floating Currency Regime. The sound money commodity money system was abandoned for today’s fiat money system, which is failing, as the Major World Currencies, DBV, are now trading lower, and the Emerging Market Currencies, CEW, have topped out, which are now following Bonds, BND, that is Aggregate Credit, AGG, trading lower from their early December 2012 highs. Failing  Major World Currencies, DBV, topped out World Stocks, VT, today, December 20, 2012.

The dynamos of global growth and corporate profit, that powered Liberalism, are winding down. The dynamos of regional security, stability and sustainability that power Authoritarianism, are winding up.

Liberalism’s fiat money system is dying; and is being replaced with Authoritarianism’s diktat money system, where diktat serves as credit, money and wealth.

Soon an investment demand for gold, will arise, and take gold, GLD, higher. Wealth can only be preserved by investing in and taking possession of physical gold in the form of gold bullion or by possession in Internet trading vaults, such as Bullion Vault. Support for gold is lower at 157.50, which translates into a spot price of gold, $GOLD, of $1,620

Since early June 2012, the Industrials, IYJ, have soared above the Transports, IYT as is seen in this ongoing Yahoo Finance Chart, but in the last month, the Transports, IYT, have exceeded the Industrials, IYJ, as in seen in this ongoing Yahoo Finance Chart.

The ETFs seen in this Finviz Screener will be fast fallers as competitive currency devaluation picks up steam. Investors will be rapidly derisking out of PSP, IGN, CUT, IBB, KBWY, RZV, QQQX, FAA, CARZ, BJK, CSD, TAN, FXR, TAO, DRW, URTY, SPHB, CAF, XRT, and ZIV.

The Morgan Stanley Cyclicals Index, ^CYC, which is traded by FXR, has rallied with, and outperformed World Stocks, VT, for the last seven months, traded higher to 1052, as investors took US Banks, RWW, BAC, BK, C, Miners, PICK, AA, FCX, VALE, BHP, RIO, SCCO, WLT, MCP, HW, BTU, WLB, Steel Manufacturers, SLX,  MT, ROCK, NUE, MUSA, HSC, CHOP, Metal Manufacturers, XME, WOR, STLD, SMS, SCHN, HAYN, ATI, CRS, VMI, PCP, RS, GHM, GTLS, Building Materials, BECN, AOS, APOG, OC, MAS, USG, Paper Producers, WOOD, WY, IP, UFS, KS, BLL, MWV, PCL, PKG, SEE, LPX, DEL, Farm and Equipment Manufacturers, BGG, DRC, CAT, DE, TEX, MTX, Industrial Electrical Equipment Manufacturers, ROK, AME, ETN, DAKT, Industrial Gasses, ARG, Appliance Manufacturer, WHR, Global Conglomerates, UTX, GE, MMM, Railroads, UNP, CNI, CSX, Cement Manufacturers, TXI, EXP, Chemical Manufacturers, DD, DOW, EMN, HUN, ASH, FMC, ASH, SHLM, RTK, Communication Providers, S, RIMM, SKM, VIP, IDCC, TU, SKM, RCI, Aerospace Manufactuers, BA, HON, MOG-A, LLL, LMT, GD, RTN, Scientific Instrument Manufacturers, ROP, A, GRMN, TRMB, Medical Device Manufacturers, IHI, MDT, ISRG, RMD, ZMH, WAT, HOLX, Toy Manufacturer, MAT, Entertainment Providers, GCI, NFLX, DISH, DTV, DISCA, VMED, VIAB, TWC,  LBTYA, CMCSA, SATS, SIRI, AMCX, SJR, NSR, Rubber Manufacturers, GT, CSL, CTB, ROG, Houseware Manufactuers, NWL, CLX, LBY, Cleaning Products Manufacturer, ECL, Home Builders, ITB, LL, SHW, HD, LOW, PHM, MHO, RYL, SPF, Automobile Manufacturers, CARZ, MGA, F, PCAR, SUP, DORM, TSLA, TRW, DAN, FSS, WBC, TEN, and Tool Manufacturer, ITW, higher.

The Morgan Stanley Cyclicals Index, is a measure, that is a metric, of global growth. It’s peaking out on December 20, 2012, highlights the zenith of Liberalism and the dawn of Authoritarianism.

The Milton Friedman Free To Choose Floating Currency Regime was established for two purposes. First to provide floating currencies, based upon debt, that is sovereign debt, BWX, Emerging Market Debt, PCQ, Corporate Debt, PICB, Mortgage Backed Bonds, MBB, Municipal Bonds, MUB, Leveraged Buyouts, PSP, and Junk Bonds, JNK. And secondly to establish the US as a global empire, by unshackling it from the restraints of the existing sound money system, where through monetization of debt, it could grow and expand its military world wide. Through US Dollar hegemony, the US became one of two great iron empires, the first being the United Kingdom, and the second the US.

With Peak Seigniorage having been achieved, on December 20, 2012, and with competitive currency devaluation underway with the trade lower in World Major Currencies, CEW, and Emering Market Currencies, CEW, peaking out, the two iron legs of world power, that is the UK and the US, are dissolving into ten toes of iron diktat and clay democracy, forming the ten toed kingdom of regional governance, as foretold in bible prophecy of Daniel 2:30-33.  These ten toes will be the ten regional blocs that the Beast Regime of Totalitarian Collectivism and Regional Governance comes to rule within, as presented in Revelation 13:1-4; all of mankind’s seven institutions will be occupied by this monster.

The Milton Friedman Free To Choose Floating Currency Regime was very effective at creating the extractive and manufacturing products to produce global growth. Now excess extractive and building capacity exists as Bloomberg reports Diggers pile up unsold after Caterpillar adds to China capacity. Caterpillar, CAT,  Komatsu, 6301,  and other construction-equipment makers have built enough capacity in China to satisfy global demand twice over while sales in the country are falling, according to a research company. Manufacturing capacity in China is almost 600,000 excavators a year while the worldwide market is about 300,000, according to London-based Off-Highway Research. Inventories of crawler excavators in China are about 100,000, almost equal to projected 2012 domestic sales, the firm’s Managing Director David CA Phillips said. The supply glut is a blow to Peoria, Illinois-based Caterpillar and its competitors who built factories and bought local companies to grab a share of the biggest construction equipment market. Now, with government property controls slowing construction, those companies are cutting output and trying to export unsold equipment. “It’s all very scary,” Phillips, who visited China in November, said in an interview.

2) … In conclusion, a paradigm shift is underway from Libealism to Authoritarianism.
World Stocks, ACWI, have topped out, on falling World Major Currencies, DBV.

Inverse Volatility, ZIV,  is trading lower; and Volatility, UVXY, VXX, VIXY, TVIX seen in this Finviz Screener, is rising. Stocks will be falling lower, on falling world currency values.

Bond vigilantes gained control of the Interest Rate on the US Government Ten Year Note, ^TNX, on December 14, 2012, calling the rate higher from 1.7%, and were successful in causing the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, to steepen, as is seen in the Steepner ETF, STPP, steepening.  And currency traders were successful at that time in selling the world major currencies, DBV, specifically the Australian Dollar, FXA, and the Canadian Dollar, FXC, causing competitive currency devaluation which caused a topping out of World Stocks, VT, on December 20, 2012.

The world central banks’ monetary authority is exhausting and is no longer able to provide stimulus to global growth and corporate profit. Out of soon coming credit, and currency crises, regional governors and regional finance ministers, will be rising to authoritarian power through regional framework agreements to provide regional security, stability, and sustainable economic activity through public private partnerships, as leaders from commerce and industry work with government officials to manage regional economies.

Mike Mish Shedlock communicates that Liberalism has created a Make Believe World. Inasmuch as the world is passing through Peak Credit, Peak Currency, Peak Wealth, and Peak Seigniorage, humanity is experiencing a paradigm shift out of Liberalism and into Authoritarianism.

Full monetary easing has brought moral hazard to the forefront of economic reality. The debts of Liberalism, that is Total Bonds, BND, which is also called Aggregate Credit, AGG, are so massive and so toxic that they cannot be repaid. The debts of Liberalism will be applied to every man, woman and child on planet earth, beginning first in the Eurozone, as out of political and economic chaos, the Beast Regime of Totalitarian Collectivism and Regionalism, rises from the profligacy of the Mediterranean Nation Countries, that is the PIGS, Portugal, Italy, Greece and Spain.

Milton Friedman’s Free To Choose Floating Currency Regime, which created credit based prosperity,  provided the now dying fiat money system. In its place the Mario Draghi Regionalism and Diktat Regime, and its diktat money system, are rising to provide austerity and debt servitude for all.  In the diktat money system, diktat serves as currency, credit and wealth.

3) … In the News
Bespoke Investment Group relates Bullish sentiment rises to highest levels since February.

Bloomberg asks Are We Facing a Decade of Financial Repression? Bloomberg

AP reports Obama demands action on gun control. Days after the horror in Newtown, the president creates a task force to reduce gun violence.
Ansuya Harjani of CNBC asks Are India stocks out of whack? I relate that it has been India Bank, IBN, that has been taking India Stocks, INXX, INP, SCIN, higher, as is seen in their ongoing Yahoo Finance chart.

Reuters reports Fiscal cliff talks turn sour, Obama threatens veto.

Social Europe reports The Eurozone’s delayed reckoning.

Reuters reports Peak farmland is here, food crop area to fall, study reveals.

Reuters reports Intercontinental Exchange in talks to buy NYSE. Shares of ICE rose slightly and shares of NYX rose slightly.

LA Times reports Treasury to sell GM stake over 15 months. More than four years after the U.S. began pouring money into ailing banks and automakers, the Obama administration is moving more quickly to shut down the controversial $700-billion bailout fund; GM, rose strongly taking Automobiles, CARZ, higher.

Talk Digital Network Interviews with John Rubino and David Morgan

The World Attains Peak Fiat Wealth As Stocks Led By The World Banks Trade Higher, But Bonds Trade Lower On The Exhaustion Of The World Central Banks’ Monetary Authority

December 19, 2012

1) … Financial market report for Tuesday December 18, 2012

On Monday December 17, 2012, the AP reported Stocks End Near Session Highs on Cliff Optimism. AP Stocks rose on Wall Street as investors were encouraged by signs of progress in budget talks in Washington. Just two weeks remain before tax increases and government spending cuts take effect if no deal is made. And the NYT reports President Delivers a New Offer on the Fiscal Crisis to Boehner. President Obama delivered Speaker John A. Boehner a new offer on Monday to resolve the pending fiscal crisis, and what may be close to a final deal, which would raise revenues by $1.2 trillion over the next decade but keep in place the

World Stocks, VT, rose to a new seven month high rally high on hopes of a deal to avoid the Fiscal Cliff, with Shanghai Shares, traded by CAF, jumping vertically higher for the second day, rising 4.3%. World Banks, IXG, blasted higher; while the National Bank of Greece, NBG, traded lower.

The biggest risk humanity face as a result of the Fed’s QE4, and the ECB’s OMT unprecedented experiment in quantitative easing, that has produced investor confidence and the decline of risk aversion, with World Stocks, VT, rising 12%, and World Small Cap Stocks, VSS, rising 15%, in a risk-on Major World Currency, DBV, and Emerging Market Currency, CEW, momentum rally, over the last seven months, is that monetary easing has crossed the rubicon of debt monetization, and that the world has passed through Peak Credit, with Bonds, BND, trading lower on the exhaustion of the world central banks’ monetary authority. It can be said “The Fed ceased to work December 18, 2012”, inasmuch as its monetary policies are now causing debt deflation, specifically deflation in bonds. Through a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TX, deflation started in Aggregate Credit, AGG, in December 2012 as follows:
Closed End Michigan Bonds, MIW, -8.6%
Closed End Pennsylvania Bonds, EIP, -8.1%
California Municipal Bonds, CMF, -2.9%
High Yield Municipal Bond, HYMB, -2.7%
Municipal Bonds, MUB, -2.6%
The Zeroes, ZROZ, -7.5%, the chart shows a severe breakdown of value
30 Year US Government Bonds, EDV, -6.7%, the chart shows a strong fall through channel support
10 Year US Government Notes, TLT, -4.5%, the standard bearer of debt broke down 12-18-2012.
Build America Bonds, BABS, -1.9%
Long Duration Tips, LTPZ, -1.7%
Long Duration Corporate Bonds, BLV, -2.9%
Corporate Bonds, LQD, -0.7%
Total Bonds, BND, -0.7%

A see-saw destruction of fiat wealth is underway when the Steepner ETF, STPP, broke out on a steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which drove Total Bonds,, BND, sharply lower today, while Junk Bonds, JNK, Leveraged Buyouts, PSP, and Senior Bank Loans, BKLN, as well as Distressed Investments like those taken in under QE1, and traded by Fidelity Mutual Fund, FAGIX, rose to new highs.  Of note, the WSJ reports, U.S To Sell Bulk of TARP Banks.  The Yahoo Finance Industry Center reports Closed End Debt Funds, traded lower for the fourth day, with the Closed End Municipal Debt Funds, such as Michigan Municipal Bonds, MIW, and Pennsylvania Municipal Bonds, EIP, traded strongly lower.

Bespoke Investment Group reports 10-Year Yield Crosses Above 200-Day Moving Average.  The rise of the benchmark Ten Year Interest Rate, ^TNX, to 1.83% means that the bond vigilantes have gained control of the bond market.  Ben Bernanke and Mario Draghi’s monetary policies have turned the springs of credit toxic, whereby bond are falling lower in value, and stocks are only marginally or selectively increasing in value.  Charts show that the highest degree of loss of trust has come in global debt is centered in US Debt as reported above.

US Government Debt began falling in value in December 2012. US Treasuries have now entered their third week of falling, with 10 Year US Government Notes, TLT, -4.5%, and the 30 Year US Government Bonds, EDV, -6.7%, so far this month.

Reports herald that Japan also plans unprecedented monetary expansion.
Bloomberg reports LDP landslide win clears pipes for Japan fiscal spigo
Bloomberg asks Two-party Japan democracy undone in 39 months as DPJ falls
Mike Mish Shedlock writes Spotlight on Japan: return of ‘Abenomics.
Bloomberg reports Two-party Japan democracy undone in 39 months as DPJ crumbles. It took 54 years for Japan’s politics to produce a viable opposition party, and 39 months for it to self-destruct after winning power, splintering prospects for an enduring policy-driven two-party system. Stocks climbed in the weeks leading up to the election as investors bet that Abe will follow through on speeches calling for the central bank to step up monetary stimulus. The Nikkei, NKY, advanced seven percent in the past month. Yet Abe will inherit a recessionary economy, with electronics champions from Sharp to Sony. struggling to cope with the yen’s climb in the past half decade and intensified Korean competition. Public debt has grown by about a fifth since his last term in office, cut short by intestinal illness.
Ambrose Evans Pritchard reports Abe prepares to print money for the whole world.  Japan’s incoming leader vows to ram through full-blown reflation policies.
John Rubino writes in Japan would be governable if only … The point of this series on Why we are ungovernable is that once a country’s debt exceeds a certain level the required interest payments become a headwind that makes growth impossible. Since growth is the key to political stability, excessive debt makes a society ungovernable. So for Japan, internal party politics or disagreements about US military bases are just symptoms of the underlying problem, which is its willingness to borrow insane amounts of money. In the aftermath of the stock/real estate bubble of the 1990s, Japan chose to prop up its failing banks and construction companies instead of letting them fail. It borrowed money for bailouts and public works programs that succeeded in staving off a collapse, but at the cost of ever-higher public debt. Today, no other major country’s government debt/GDP ratio is even close to Japan’s 200%. Now the problem is being compounded by the retirement of the baby boom generation, which will push government spending up to levels that even a debt-free country would have trouble managing. No political party can fix this, so whoever is in charge will fail and be blamed for the failure. New people will be voted in, who will then see their high initial approval ratings evaporate. And so on, till the whole system implodes.  So the question isn’t whether the next government will fix things. It can’t because there is no fix. The question is whether the next government will preside over more low-level turmoil or the final implosion of a non-viable system. This of course brings us back the US, which has chosen almost exactly the same path. Instead of liquidating three decades of malinvestment when we had the chance, we followed Japan’s lead by propping up the banking/real estate/local government sectors with borrowed money. Where Japan recently chose to increase stimulus spending and pay for it with newly-created yen and a doubled sales tax, we are increasing government spending and paying for it with newly-created dollars and higher income taxes. Yet for some reason we expect a different result.

Yahoo Finance chart shows that the investment benefit of world central bank monetary expansion has been Inflationism. World Stocks, VT, have through many vigorous stimulus initiatives have grown 2% in the last two years, and Bonds, BND, 5%. It has been the purchase of Distressed Investments, like those traded in Fidelity Mutual Fund FAGIX, and that were exchanged in QE1 for money good US Treasuries, such as US Ten Year Notes, TLT, which were for the most part returned to the Fed and now reside in Excess Reserves.

Chris Rossini in Economic Policy Journal relates Murray Rothbard also spoke frequently on the idea (of monetary inflation) “It is clear that prolonging the boom by ever larger doses of credit expansion will have only one result: to make the inevitably ensuing depression longer and more grueling. The way to prevent a depression, then, is simple: avoid starting a boom.”

In 1971, Milton Friedman, suggested the Banker Regime of floating currencies, which President Nixon embraced. The world abandoned a sound money system based upon the gold standard, carry trade loans were embraced, a global housing, sovereign and corporate debt trade emerged, America became a global economic and military empire, corporate profits soared, and global trade blossomed as fiat assets inflated in price on a global debt bubble. The NYT reports In Sign of Normalization, Pentagon to Reimburse Pakistan $688 Million. The Pentagon quietly notified Congress this month that it would reimburse Pakistan nearly $700 million for the cost of stationing 140,000 troops on the border with Afghanistan, an effort to normalize support for the Pakistani military after nearly two years of crises and mutual retaliation.

But economic lightning struck in May of 2010, with the emergence of the Greek Debt Crisis, and now in  December 2012, with the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, is  steepening, as evidenced by the Steepner ETF, STPP, rising, with the result that the global debt bubble seen in the ETFs, BND, and AGG, trading lower, has burst.

Inflationism is turning to Destructionism; and with that there is a change in economic paradigms.

The Beast Regime of Regionalism and Totalitarian Collectivism is rising up out of Mediterranean PIGS nations, as the world is passing through Peak Credit, Peak Capital, Peak Money, and Peak Wealth. With the exception of Junk Bonds, JNK, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, and Distressed Investments, FAGIX, Bonds, BND, have lost their seigniorage, that is their moneyness.  Aggregate Credit, AGG, has been destroyed by excessive world central bank liberalism.

The Major World Currencies, DBV, turned lower this week, trading 0.08% lower, while Commodity Currencies, CCX, such as the Euro, FXE, and the Australian Dollar, FXA, and the Emerging Market Currencies, CEW, are topping out.  Soon all currencies, like the Japanese Yen, FXY, will no longer be continuing to rise in value, but sinking in value, while the US Dollar, $USD, UUP, may actually rise for a brief period of time, before all currencies fall lower in value on competitive currency devaluation. The chart of the EUR/USD shows a close at 1.32.

Investors will be deleveraging out of Stocks, VT, VSS, as the world pivots from the Age of Fiat Asset Appreciation into the Age of Deflation.  Bonds, BND, Currencies, DBV, CEW, and Stocks, VT, VSS, will be losing their seigniorage, that is their moneyness, on the exhaustion of the world central banks’ monetary authority. And investors will be deleveraging out of commodities, DBC, such as Base Metals, DBB. Bloomberg reports Copper, JJC, fell to a one-week low in New York as a jump in stockpiles monitored by the London Metal Exchange.

The Law of Diminishing Returns is at work. Steve Matthews of Bloomberg reports Federal Reserve Bank of Richmond President Jeffrey Lacker predicted the economy will grow 2 percent next year and said The Fed’s Stepped Up Purchases Of Bonds Won’t Do Much To Spur Recovery. “It’s not clear that monetary policy, by itself, can bring about any material improvement in economic growth,” Lacker said today in a speech in Charlotte, North Carolina. “The supply of bank reserves is already large enough to support the economic recovery, and the benefits of further asset purchases are unlikely to be sizeable.” And Zero Hedge relates GE’s Jeff Immelt: We’ve Definitely Seen A Slowdown In The Fourth Quarter”.  The ongoing Yahoo Finance chart of Large Cap Stocks, JKE, and General Electric, GE, illustrates that a rally in Major World Currencies, DBV, and Emerging Market Currencies, and the Chinese Yuan, CYB, took World Stocks, VT, Asian Stocks, EPP, such as South Korea, EWY, but not the Growth Socks, JKE, higher since September 14, 2012,  US Infrastructure Stocks, PKB, which had been seen as a safe haven, rose strongly to a new rally high on optimistic Fiscal Cliff talks.

The Milton Friedman’s Banker Regime provided increasing prosperity for many based upon the choice of investments and use of credit.  But the Mario Draghi’s Beast Regime provides austerity and debt servitude for all of mankind based upon diktat. The WSJ writes ECB Chief Defends Austerity Measures.

The bill for the Alan Greenspan, Ben Bernake and Mario Draghi financial moral hazard, that came through monetary inflationism is coming due. The WSJ relates  Greek Debt Unsustainable Without Official Sector Losses, Moody’s Says.

The fiat money is dying on the exhaustion of neoliberal finance; and the diktat money system is rising based upon the mandates of regional leaders.

The word, will and way of regional sovereigns, who will rise to power based upon regional framework agreements, will provide seigniorage, that is moneyness.

The diktat money system features the diktat of authoritarians as credit, money, and wealth. Agence France Presse writes Italian President Giorgio Napolitano Urges Austerity As Election Looms.
TheEconomist relates Europe’s Worries About Italy.  Italy’s latest mess has shocked European leaders. But their problems run even deeper.

The chart of Italy, EWI, shows a number of ups and downs, since September 14, 2012, when World Stocks, VT, traded lower, only to recover with the anticipation of QE4; Italy, unlike European Shares, VGK, has not been unable to rise to a new seven month rally high, that began in June of 2012.

The only money good will be the word of sovereign leaders and monetary popes, as well as the physical possession of gold either in bullion or in Internet trading vaults like Bullion Vault.  The Street writes Gold A Long Term Winner As Currencies Collapse.

As fiat money starts to perish, diktat will increase in the world’s ten regions. A ten toed kingdom of regional governance will rise worldwide where diktat serves as credit, money and wealth. America is one of the two remaining iron kingdoms that has ruled the world since the late 1700s, the other was the UK. But soon, through Financial Armageddon, that is Financial Apocalypse, the global hegemony of the US will be greatly diminished.

Out of the soon coming economic and political chaos, a European Super State ruled by a Sovereign and a Seignior, will rise to great world power, and be the example of Totalitarian Collectivism and Regional Governance world wide as the Beast Regime of Diktat comes to replace the Banker Regime of Choice, and occupies all of the world’s ten zones, and seven institutions. Here is an interesting report, The NYT reports In Sign of Normalization, Pentagon to Reimburse Pakistan $688 Million. The Pentagon quietly notified Congress this month that it would reimburse Pakistan nearly $700 million for the cost of stationing 140,000 troops on the border with Afghanistan, an effort to normalize support for the Pakistani military after nearly two years of crises and mutual retaliation. (Hat Tip to Gary of Between The Hedges).

On Tuesday, World Stocks, VT, climbed yet higher as investors gained confidence in ‘fiscal cliff’ talks. Reuters reports Wall Street Rallies On Cliff Optimism. And Reuters reports World shares hit 17-month highs and the euro surged on Wednesday December 18, 2012, on hopes that U.S. politicians will reach a budget deal and that further monetary stimulus will come from Japan. Shares rising included:
Energy Shares, XOP, XLE, PSCE, OIH, and IEZ, on a rising price of Oil, USO.

Industrial Shares, CARZ, SLX. PICK, WOOD, and PSCI.

Technology Shares, MTK, FONE, IGN, IGV, and XSD.

Homebuilding, ITB, and US Infrastructure, PKB.

Gaming, BJK, Retail, XRT, and Consumer Discretionary, IYC.

Small Cap Value, RZV,

Transportation, IYT, and Airlines, FAA.

Leveraged Buyouts, PSP, Spin Offs, CSD; but Junk Bonds, JNK, trade unchanged.

S&P High Beta Stocks, SPHB.

Real Estate, IYR, and Asset Managers, such as Blackrock, BLK

Countries rising strongly included CAF, ARGT, EWO, EWD, NKY, IWM, RSX, VGK, EWL and EWW.

World Banks, IXG, blasted higher. The Too Big To Fail Banks, RWW, rose strongly on rising BAC, C, BK, and JPM. Regional Banks, KRE, Investment Bankers, KCE, and Stockbrokers, IAI, rose strongly, taking the Russell 2000, IWM, higher. taking Vanguard Dividend Appreciating, VIG, higher.

Japanese Banks rising strongly included NMR, MTU, SMFG, MFG

Argentina Banks rising strongly included BMA, BBVA, GGAL

UK Banks rising strongly included RBS, BCS, LYG

Swiss Banks UBS, CS rose strongly

Germany’s DB, Spain’s SAN, and Ireland’s IRE, led European Financial, EUFN, higher.

BAP, BCH, and BPOP, led the Emerging Market Financials EMFN higher

India’s IBN, rose strongly.

Mining Stocks, PICK, rose parabolically higher.

Gold Mining, GDX, Silver Mining, SIL, Copper Mining, COPX, and Solar Energy, TAN, traded lower.

Asia Shares, EPP, fell parabolically lower as EWA, ENZL, EWT, THD, EPHE, and EWY, traded lower.

Commodities, DBC, traded unchanged as Timber, CUT, and Oil, USO, rose; but, Silver, SLV, and Gold, GLD, traded lower. Bullion Vault relates Gold Prices Fail To hold $1700

Volatility ETFs UVXY, VXX, VIXY, VIXM seen in this Finviz Screener traded lower.

The world has attained peak fiat wealth as evidenced by the trade lower in Preferred Financial Shares, PGF, and by closed end equity funds, such as CSQ, unable to leverage higher on closed end debt funds, such as PFL, as is seen in their combined Yahoo Finance chart, since September 14, 2012. Milton Friedman was the seignior of the age of debt based, currency carry trade global investing.  With the exhaustion of the world central banks monetary authority, the world is pivoting from Inflationism to Destructionism. Mario Draghi is the seignior of the age of diktat based regional governance.

Since 1971, when the world went on the Milton Friedman Free To Choose Floating Currency Regime, until December 18, 2012, investors have prospered from investing in republics of carry trade investing, which were sustained by trust in a global debt trade; these include ARGT, EIRL, EIS, EPI, EPHE, EPOL, ECNS, EWO, EWW, EWY, EWG, GREK, SCIN, THD, TUR, EWA, EWN, NORW ,EWT, seen in this Finviz Screener.  But with the arrival of Peak Credit, Peak Wealth, that comes from the World Major Currencies, DBV, and Emerging Market Currencies, CEW, and Commodity Currencies, CCX, topping out and trading lower, humanity will forced into austerity in the Mario Draghi Regime. in ten regional zones of totalitarian collectivism and debt servitude.  This as the dynamos of Liberalism, that is corporate profit and global growth are winding down; and the dynamos of Authoritarianism, that is regional security, stability, and sustainability are winding up.

Neoliberalism was based upon legislation featuring credit liberalization, such as the repeal of the Glass Steagall Act. Neoauthoritarianism is based upon regional framework agreements featuring debt servitude, such as the Greek Bailout I, II, and III.

Under Capitalism and European Socialism, economic activity was driven by financial workers in the world’s 50 major world banks, IXG, seen in this Finviz Screener, where speculative credit ruled.  But under Regionalism and Totalitarian Collectivism, economic activity is driven by regional overlords and  monetary popes working in conjunction with business executives in public private partnerships, where diktat rules.

Since June 2012, that is for seven months, a risk on global carry trade rally has been sustained by anticipation of Ben Bernanke’s QE4 and by Mario Draghi’s LTRO 1, 2, and OMT, that produced stunning investment returns in twenty sectors PSP, IGN, CUT, IBB, KBWY, RZV, QQQX ,FAA, CARZ, BJK, CSD, TAN ,INCO, TAO, DRW, URTY, SPHB, CAF, XRT, ZIV seen in this Finviz Screener, and in twenty countries, ARGT, EIRL, EIS, EPI, EPHE, EPOL, ECNS, EWO, EWW, EWY, EWG, GREK, SCIN, THD, TUR, EWA, EWN, NORW, EWT, RZV, seen in this Finviz Screener.

Neoliberalism’s final risk on risk on momentum rally, which was a currency carry trade rally, as evidenced in the rise of the currency demand curve, that is the ratio of the Pure Small Cap Value Shares, RZV, to the Small Cap Pure Growth Shares, RZV:RZG, ran parallel with a rise in the Morgan Stanley Cyclical Index, ^CYC, as is seen in its Yahoo Finance chart together with the World Shares. Neoauthoritarianism’s first austerity imposition is just now occuring in Europe. Petar Pismestrovic of GreekCrisis relates two WSJ articles, Struggling Greeks Face Harsh Winter; and Aid to Ease Greece’s Strain, but Hard Year Looms.

Inasmuch as Peak Seigniorage was achieved on December 18, 2012, the Age of Deleveraging will see fast derisking out of the above forty investments; and will see a rise in these 200% inverse ETFs, EEV, BIS, FXP, SKF, SQQQ, REW, SSG, SRS, SRTY, EFU, SMK. seen in this Finviz Screener; as well as in these 300% inverse ETFs, DPK, EDZ, TZA, TECS, YANG, SOXS, FAZ, seen in this Finviz Screener,  as well as a rise in these derivative ETFs, FSG, UGL, AGQ, NUGT seen in this Finviz Screener.

The Financial Sector, XLF, was key to the Age of Investing. But as the fiat money system is replaced by the diktat money system, the Banking and Finance will be relegated to the dustbin of history.

Inasmuch as the Business Cycle is moving into Kondratieff Winter, wealth cannot be sustained by investing in fiat assets; wealth can only be preserved by investing in and taking possession of physical gold, such as bullion coins, or by owning gold in an Internet Trading Vault such as BullionVault.

2) … In the news
Yahoo Finance Center reports that Dairy Products traded lower as AP reports NYC milk distributor closes, 150 jobs lost. One of New York City’s largest dairy distributors has closed its doors after losing its main milk distribution contract.

Huntington News relates Foreclosures starts drop 28% from a year ago to 71-month low

Bloomberg reports Bank deposits surge $2 trillion more than loans.

Macro Analytics writes Why things are falling apart.

Merk Funds relates Hidden Treasury risks?

NASDAQ reports The 11 nations with higher sovereign debt ratios than Greece

Mike Mish Shedlock relates Calpers seeks exemption from bankruptcy laws

AP reports Homebuilder Confidence At 6 1/2-Year High

AP reports Petraeus Mistress Won’t Face Charges. The Justice Dept. drops its probe into whether Paula Broadwell stalked a romantic rival online

BART relates Totalitarian Collectivism

The WSJ reports Aid to Ease Greece’s Strain, But Hard Year Looms.  Greece is due to receive about €34 billion ($45 billion) in bailout aid this week that will ease strains on an economy that many pundits forecast would be forced out of the euro-zone this year, but a European Union report warned Monday that the country’s economic struggles are far from over. Finance ministers from the 17-nation currency bloc backed the aid payment at a meeting last week, their governments hoping that the move would lift the air of crisis that has surrounded the government’s finances almost continuously since its debt problems emerged three years ago. For Germany, Greece’s biggest government creditor, keeping a lid on the Greek crisis next year is critical to ensuring a turmoil-free run-up to elections next fall. But the report on Monday made clear that Greece will continue to battle under the burden of heavy debts, a tough economic-reform agenda and an economy, in recession since 2008, that will continue to shrink in 2013. A senior EU official who briefed reporters on the contents of the review of Greece’s economic performance said the economy could contract by more than the 4.2% officially forecast for 2013. Cuts in public spending have already resulted in shortages in basic medical supplies at public hospitals. More than half of those under the age of 24 seeking work can’t find any, and one-quarter of the entire workforce is jobless.

3) … A review of Broadband2go
Virgin Mobile offers Broadband2go, a no contract mobile internet service.

4) … The tiny URL for this document is http://tinyurl.com/cxb95hd

5) … Symbols and terms
VT, IXG, CAF, NKY, VSS, DBV, CEW, FXE, BND, AGG, MIW, EiP, CMF, HYMB, MUB, ZROZ, EDV, TLT, BABS, LTPZ, Blv, LQD, BND, RWW, STPP, PGP, JJJC, EPP, EWY, VGK, RZV, SPHB, EWO,

Mario Draghi, Beast Regime, Diktat Money System, Fiat mMoney System, Money Good, Peak Credit, Peak Fiat Wealth, Pek Seigniorage, Monetary Authority, Quantitative Easing Debt Monetization, Inflationism, Destructionism, Monetary Inflation, Beast Regime, European Super State, Carry Trade Investing, Business Cycle, Liberalism, Seigniorage, Age of Deleveraging, Diktat, Debt Servitjde, Regional Framework Agreements, Ten Toed Kingdom Regional Governance, Totalitarian Collectivism, Financial Armageddon, Financial Apocalypse.

Stocks Top Out As Bonds Trade Lower On The Exhaustion Of The US Central Banks’ Monetary Authority And As The Emergence Of A EU Banking Supervisor Heralds A European Super State

December 17, 2012

Financial Market report for the week ending December 14, 2012

Introduction
The Automatic Earth writes in Business Insider The main deflationary event is underway; now, financial moral hazard has come of age.

1) … Tuesday, December 11, 2012, Bloomberg reported economists foresee QE 4.  Fed seen pumping up assets to $4 Trillion in new buying. The Federal Reserve will amplify record accommodation tomorrow by announcing $45 billion in monthly Treasury buying that will push its balance sheet almost to $4 trillion, according to a Bloomberg survey of economists.

The news of more global credit liquidity, rallied World Stocks, VT,  near their September 14, 2012 high, with the World Banks, IXG, trading to a new rally high, as the National Bank of Greece, NBG, Australia Bank, WBK, Korea Banks, WF, SHG, KB, Bank of America, BAC, and the Too Big To Fail Banks, RWW, India Bank, IBN, trading higher on the day. The World Small Cap Stocks, VSS, traded to a new rally high.  Doug Noland reports Westpac Banking issued $2.0 billion in bonds this week.

Greece, GREK, rose to strong resistance near its previous high, pushing carry trade invested Poland, EPOL, Netherlands, EWN, Switzerland, EWL, and the European Shares, VGK, to new rally highs.

Asia Shares, EPPseen in this Finviz Screener,  were led higher by Thailand, THD, Phillippines, EHPE, South Korea, EWY, Taiwan, EWT, Australia, EWA, and others.

Anticipation of US Central Bank Monetary easing pushed Turkey, TUR, Mexico, EWW, and the UK, EWU, Russia, RSX, and Brazil, EWZ, higher. Argentina, ARGT, rose parabolically higher.

The S&P, SPY, rose to strong resistance well below its September 14, 2012 high, having been stopped out by REM, IYR, KRE, IHE, XRT, OIH, and XLE as is seen in this ongoing Yahoo Finance Chart.

The Nasdaq 100, QTEC, Semiconductors, XSD, Networking, IGN, Software, IGV, Cloud Computing, SKYY, Steel, SLX,  Biotechnology, XBI, rose higher higher.

Mining Stocks, MXI, rising included Rare Earth Manufacturer, MCP, Industrial Metal Producers, ZINC, HW, GSM, Iron Ore Producer, CLF, and Aluminum Producer, KALU.

Industrial Electrical Stocks rising included ETN, and AME. Metal Manufacturing, XME, rising included STLD, GHM, NUE, RS, WOR, but AZZ has turned lowe.

The S&P Dividend Stocks, SDY, and the Dow Dividend Stocks, DYY, which had sold off, have failed to rally back near their September 14, 2012 highs as is seen in this ongoing Yahoo Finance chart.

The rise in Major World Currencies, DBV, and the Emerging Market Currencies, CEW, and the Commodity Currencies, CCX, shot the Small Cap Pure Value Shares, RZV, to a new rally high; but the Small Cap Pure Value, RZG, failed to sustain a rally. The credit sensitive US Small Caps, IWM, topped out. The currency demand curve, that is the ratio of RZV:RZG, rallied to a new high, continuing its 27 week rally since June 1, 2012.  The higher currencies drove both Global Water, CGW, and Global Real Estate, DRW, to new rally highs, and rallied Global Agriculture, PAGG, Farm Equipment Manufacturers, MTW, CNH and Agricultural Chemicals and Specialty Chemical Manufacturers seen in this Finviz Screener higher.  It was rising Major World Currencies, DBV, Emerging Market currencies, and Commodity currencies, CCX, that sparked a risk on momentum rally beginning in early June 2012, as is seen in the ongoing Yahoo Finance Chart of the Risk On ETN, ONN, the Risk Off ETN, OFF, and the currency ETFs, DBV, CEW, CCX. The chart of ONN shows a consolidation triangle forming, prices usually fall from such patterns; evidencing an end to Neoliberalism’s final currency carry trade rally, and an end to the Milton Friedman Free To Choose Floating Currency Regime as all currencies will be falling into the pit of financial abandon, causing debt deflation, derisking out of stocks, and deleveraging out of commodities.

Technology Stocks, MTK, rose on higher Networking Shares, IGN, Application Software, IGV, and Cloud Computing, SKYY, with Salesforce, CRM, rising to a new high.

Commodities, DBC, and USCI, traded lower; but Timber, CUT, continued higher, taking Paper Products, WOOD, higher.

Total Bonds, BND, traded lower, on US Government Treasuries, ZROZ, BABS, EDV, TLT, as Junk Bonds, JNK, Senior Bank Loans, BKLN, and Leveraged Buyouts, PSP, rose to new rally highs.  It is the Distressed Investments, like those taken in by the US Federal Reserve under QE 1, and traded by the Fidelity FAGIX Mutual Fund, FAGIX, that have underwritten, high beta Stocks, such as BAC, and highly debt leveraged stocks such as IP, and JPM, in an ongoing global debt trade as is seen in the ongoing Yahoo Finance chart of FAGIX, and JNK, BKLN, PSP, JPM, BAC, IXG, IP.

The US Dollar, USD, UUP, traded lower, as the major world currencies, DBV, of which the US Dollar is a component, traded to a new rally high, being led so by the Australian Dollar, FXA. Emerging Market Currencies, CEW, popped to a new rally high above its September 14, 2012 high.

The stock markets are at an inflection point; stock values cannot be sustained as full monetary expansion has been achieved on the exhaustion of the world central banks monetary authority.

The dynamos of corporate profitability and global traded that power Capitalism, European Socialism, and Greek Socialism, are powering down. And the dynamos of regional security, stability and sustainability are powering up Regionalism And Totalitarian Collectivism.

Neoliberalism’s Free To Choose Floating Currency is failing, and in its place Neoauthoritarianism’s Beast Regime of Diktat is rising in its place.  The fiat money system is dying and is being replace by the diktat money system, where diktat will serve as wealth, currency, and credit.  Neoliberalism saw bankers waiving magic wands of credit in a global arena of wildcat finance, a Doug Noland term; but now, Neoauthoritarianism will see authoritarians waiving clubs of austerity and debt servitude, in regional blocs of wildcat governance, where only the most aggressive of leaders rise to be the top dogs.

Neoliberalism saw the rise of public sector unions in the US, UK and the EU, and national wage laws throughout Europe.  Neoauthoritarianism will see the rise of right to work laws, as Shannon Jones of WSWS reports Michigan legislators pass right-to-work bill as police attack protesters. And other WSWS authors write Michigan’s right to work law.  Liz Goodwin of The Ticket reports How right-to-work law passed in Michigan. Some credit a rookie Republican legislator for helping push the law through in a union-friendly state.

The age of leverage, produced the global debt trade; but it can no longer be supported, as is seen in Mortgage Reits, REM, Real Estate, IYR, and Regional Banks, KRE, are trading lower. The age of deleveraging will force debt servitude on all, beginning in the Eurozone.  Germans cannot be Greeks, but all will be one living in a region of true European regional economic governance, where leaders will meet in summits, waive national sovereignty, and pool sovereignty regionally, to announce regional framework agreements, which provide for unified banking, regional fiscal budgeting, and public private partnerships governing the factors of production, to complement existing Eurozone monetary authority. The word will and way of a Sovereign, and his Seignior, meaning top dog banker who takes a cut, will be the law of the region, replacing traditional constitutional and national law.

CNBC reports Euro zone crisis is back as Italy loses its ‘savior’. And Peter Schwarz of WSWS reports Italian Prime Minister Monti resigns.  Monti resigned for tactical reasons. He is attempting to secure a long-term and stable parliamentary majority for his increasingly unpopular austerity measures. And Reuters reports Berlusconi move could undermine Monti agenda in Italy.

Nick Beams of WSWS reports The political economy of the Spanish bank bailout.  The initial measures are widely regarded as the prelude to a full-scale bailout of the Spanish state and the establishment of a financial dictatorship of the kind now in place in Greece.

The Orange County register reports Analysis of October’s construction spending patterns by the Associated General Contractors of America found ongoing building expenditures running at a $872 billion annual rate; that’s up 9.6 percent in a year and the highest level of activity in 37 months. Residential efforts ran especially strong: New single-family construction hit its highest mark since November 2008; multifamily construction hit a three-year high; and home improvements ran at a five-year high. (Hat tip to Robert Wenzel of Economic Policy Journal)  This came through ever increasing M2 Money supply.

2) … Wednesday, December 12, 2012, Reuters reports Fed ramps up stimulus in new approach to support growth.  The US Federal Reserve ramped up its stimulus to the economy, and said it will likely keep official rates near zero for as long as unemployment remains above 6.5 percent.

Martin Crutsinger of the AP reports Fed sends clearer signal on keeping rates low. The Federal Reserve sent its clearest signal to date Wednesday that it will keep interest rates super-low to boost the U.S. economy even after the job market has improved significantly.
The Fed says it plans to keep its key short-term rate near zero until the unemployment rate reaches 6.5 percent or less, as long as expected inflation is tame. Unemployment is now 7.7 percent.
That plan adds detail to what the Fed had said before: that it expects to keep the rate low until at least mid-2015. For the first time, the Fed is making clear to investors and consumers that it will link its actions to specific economic markers.
“This approach is superior” to setting a timetable for a possible rate increase, Chairman Ben Bernanke said at a news conference. “It is more transparent and will allow the markets to respond quickly and promptly to changes” in the Fed’s economic outlook. Bernanke made clear that even after unemployment falls below 6.5 percent, the Fed might decide that it needs to keep stimulating the economy. Other economic factors will also shape its policy decisions, he said.
In a statement after its final policy meeting of the year, the Fed said it will also keep spending $85 billion a month on bond purchases to drive down long-term borrowing costs and stimulate economic growth. The Fed will spend $45 billion a month on long-term Treasury purchases to replace a previous bond-purchase program of an equal size. And it will keep buying $40 billion a month in mortgage bonds.
“The Fed has become more explicit and more transparent,” said Steven Wood, chief economist at Insight Economics. “This should provide the markets with much more clarity around monetary policy action in the upcoming year.” With its new purchases of long-term Treasurys, the Fed’s investment portfolio, which is nearly $3 trillion, would swell to nearly $4 trillion by the end of 2013 if its bond purchase programs remain in place. The policies are intended to help an economy that the Fed says is growing only modestly. And
ZeroHedge reports QE4EVA expands Fed eligible treasury purchases to all risky paper.

World Stocks, VT, rose near their September 14, 2012 high. World Small Cap Stocks, VSS, rose even more strongly to surpass their March 2012 high, with ERUS, and KROO, moving higher.  Europe, VGK, Asia, EPP, the Emerging Markets, EEM, traded higher to new highs; while the Russell 2000, IWM, was weighed down by lower Nasdaq Community Banks, QABA, Regional Banks, KRE and Mortgage REITS, REM.  The world is Peak Prosperity, Peak Capital, Peak Mortgage Investing And Peak Banking.

Premium REITS, KBWY, and Mortgage REITS, REM, traded lower. And the chart of REITS, RWR, shows a trade lower.  The announcement of QE4, means the end of profitable investing in REITS, as interest rates are going higher, as the US Federal Reserve has passed the rubicon of debt monetization, by printing too much money to buy debt. The exhaustion of the US Federal Reserve’s monetary authority is seen in the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepening, and the Steepner ETF, STPP,  broke out higher, and the Flattner, FLAT, fell through support.  Higher interest rates are the tiger that destroys REIT investing; particularly the high dividend paying Mortgage REITS, such Annaly Capital Management, NLY.  Also, higher interest rates, coming through a steepening yield curve, destroys real estate investing in general; Real Estate, IYR, has turned lower.

World Banks, IXG, rose to a new rally high as the Too Big To Fail Banks, RWW, Swiss Banks, CS, UBS, Argentina Banks, BFR, BMA, GAAL, BBVA, Japanese Banks, NMR, SMFG, MTU, Korea Banks, SHG, WF, and UK Banks, BCS, RBS, LYG, rose higher. Banco Santander, SAN, and Ireland Bank, IRE, took European Financials, EUFN, to a new rally high.

Stocks rising included ITB, COPX, FAA, PKB, WOOD, KOL, XME, and SLX. The Paper Producers, WOOD, seen in this Finviz Screener, are at great risk for fast falling when investors deleverage out of Timber, CUT; cases in point include, IP, and FBR.  Iron Ore Manufacturer, BHP, is at risk of falling strongly as investors delever out of the Australian Dollar, FXA. Copper Producer, SCCO, is at risk for a strong fall as investors become aware of the stockpiles of commodity metals that exist in the shadow banking system in China where these are used as collateral. Large Cap Agricultural Chemical Producer, POT, is headed for a big fall on global competitive currency devaluation. Coal Producers BTU and WLT are going lower very soon as the basic materials risk on rally is now over.

Major Countries rising included EWG, RSX, EWI, EWP, GREK, EWA, EWN, NORW, EWY, EWT, and EWW; their Yahoo Finance Chart shows that EWW, and EWA are high beta ETFs.  Emerging Market Countries rising included, TUR, EPOL, EWO, THD, and ARGT; while EPHE, and ENZL, traded slightly lower; their ongoing Yahoo Finance Chart shows that TUR and EPHE have been the investor’s darlings.
The age of carry trade investing, envisioned by Milton Friedman, is coming to an end as currencies peak.

The ongoing trade lower in Mortgage Backed Bonds, MBB, since September 14, 2012, as well as the trade lower in Mortgage REITS, REM, and US Banking, KRE, since November 1, 2012, documents the failure of the US Central Bank’s monetary authority.  We are witnessing a turning point in history as the sovereignty of the US is failing to produce seigniorage, that is moneyness, to both bonds, as well as to stocks.  Technology Stocks, MTK, such as those seen in this Finviz Screener, and Biotechnology Stocks, XBI, such as those seen in this Finviz Screener, and Retail Stocks, XRT, such as those seen in this Finviz Screener, and Real Estate, IYR, seen in this Finviz Screener traded lower on the Fed’s announcement, giving additional evidence of the failure of neoliberal finance; of note eight Real Estate investments, NRF, RWT, SFI, BKD, MTGE, HR, CBL, IVR, seen in this combined ongoing Yahoo Finance chart, fell sharply. Investopedia relates One downside for investors is that as a high-yield investment, an REIT can be expected to exhibit sensitivity to interest rate changes.

Peak Seigniorage, that is peak moneyness, of the Milton Friedman Free To Choose Floating Currency and Banker Regime, was attained with World Stocks, ACWI, trading higher, but unable to attain their September 14, 2012, high, and Aggregate Credit, AGG, turning lower.  The failure of the sovereignty of nations and their central banks, to provide ongoing seigniorage, is seen in the chart of World Stocks relative to Aggregate Credit, ACWI:AGG.  Peak Fiat Wealth occurred September 14, 2012.

A most profound economic paradigm shift is occurring. The dynamos of corporate profitability and global growth are winding down Crony Capitalism, European Socialism and European Socialism. The dynamos of regional stability, security, and stability, are winding up the Beast Regime of Regional Governance and Totalitarian Collectivism. Years ago The Nobel Peace Prize was given to Milton Friedman for his insights in global economics. Now, The Prize, is awarded to the Eurozone, for its thrust into regional governance.

Its only a matter of both crisis and time before regional sovereignty will emerge, as leaders meet in summits to renounce national sovereignty and pool sovereignty regionally, as suggested by Herman van Rompuy, and announce regional framework agreements, which establish regional sovereign bodies and public private partnerships, which provide the seigniorage of diktat, where seigniorage, that is moneyness, comes from mandates of leaders. In Regionalism, diktat will serve as credit, currency and wealth.

In neoliberalism, people put credit and trust, in fiat financial instruments, and in central bankers, such as Ben Bernanke. In neoauthoritarianism, people will place their trust in regional leaders and their governance, such as Mario Draghi, and the Eurozone ruler who is to come.  He will step into the limelight of Europe’s political stage,to establish order out of chaos.  Today, he is one of seemingly little authority. He will rise to power through, not through traditional political means such as elections, or through finance, commerce and trade schemes, but rather through regional framework schemes, that is through regional framework agreements.

The US Infrastructure Shares, PKB, have been a safe haven investment, having been an outstanding hedge against the European Sovereign Debt and Banking Crisis; but this ETF is topping out.

Automobile Retailers, KMX, CPRT, PAG, GPI, APG, LAD, and SAH, traded lower as is seen in their combined chart.  Lithia Motors, LAD, had been an outstanding automobile dealership, having risen 150% in the last two years; its chart shows the way is now down in automobile dealerships; and the chart of automobile manufacturers, CARZ, shows a topping out.

Industrials, IYJ, traded higher, while Transports, IYT, traded lower; the spread between the two has become extreme; portending a trade lower in both, with the former falling more quickly than the latter.

The ongoing Yahoo Finance Chart shows that in the last six months, the Small Cap Industrials, PSCI, have outperformed the Industrial, IYJ, on the inflation in World Major Currencies, DBV, Emerging Market Currencies, and Commodity Currencies, CCX.

The ongoing Yahoo Finance Chart shows that in the last six months, the Small Cap Industrials, PSCI, have outperformed their peers, the PSCD, PSCT, PSCE, with ongoing chart showing the greatest difference existing in the Small Cap Technology shares such as FONE, SKYY, IGN, and IGV, especially the North American Software Shares, IGV.

PSCT and Business Service Leaders can be seen in this Finviz Screener which include DDD, CVLT,  and FEIC.  PSCI and PSCD leaders can be seen in this Finviz Screener which includes ARG, GEO, and SNA.

Manufacturing Housing, CVCO, traded strongly lower. And Chemical Stocks trading lower include Cleaning Products, ECL, Synthetics Manufacturer, MTX, Specialty Chemical Manufacturer, POL, Agricultural Chemical Manufacturer, AVD,

Commodities, DBC, and USCI, traded lower after the Fed announcement of QE 4, with Silver, SLV, and Gold, GLD, Agricultural Commodities, RJA, and Base Metals, DBB, trading lower; while Timber, CUT, rose.

The US Dollar, $USD, UUP, traded lower, near strong support, as the Euro, FXE, rose near its previous rally high. The Australian Dollar, FXA, rose strongly taking the World Major Currencies, DBV, to a new rally high. Emerging Market Currencies, CEW, rose to a new rally high. The Japanese Yen, FXY, traded strongly lower. The currency traders who have gone long the Australian Dollar, FXA, and short the Japanese Yen, FXY, have made a killing in their FX trade account. The world is at Peak Currency, and is going fall into competitive currency devaluation.

The World is passing through Peak Credit. Total Bonds, BND, traded lower, being led so by High Yield Municipal Bonds, HYMB, Municipal Bonds, MUB, California Municipal Bonds, CMF, Long Duration TIPS, LTPZ, Build America Bonds, BABS, US Treasuries, such as the Zeroes, ZROS, 30 Year US Government Bonds, EDV, and 10 Year US Government Notes, TLT.  Junk Bonds, JNK, and Leverage Buyouts, PSP, traded higher. With the trade lower in Total Bonds, BND, the world is passing through Peak Credit.  Kristen Haunss of Bloomberg reports, The biggest year for debt backed by leveraged loans since the peak in 2007 will be eclipsed in 2013 as firms from Bank of America Corp. to JPMorgan Chase & Co. predict rising demand from investors seeking alternatives to record-low corporate bond yields. Sales of collateralized loan obligations total $49.2 billion this year, a more than fourfold increase from 2011. Bank of America expects $75 billion of CLOs created next year, while JPMorgan predicts as much as $70 billion and Morgan Stanley forecasts $60 billion. The market for CLOs, which has helped finance some of the biggest leveraged buyouts in history, is expanding at a faster rate than U.S. corporate bonds, where issuance has grown around 24% this year.

The Steepner ETF, STPP, rose strongly reflecting a rise in the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which caused the Long Duration Tips, LTPZ, to trade strongly lower, and both  the Longer Duration Corporation Bonds, BLV, and the Corporate Bonds, LQD, to fall from their support channels. A steeping yield curve, communicates this is not the time to invest in bonds, as one is assured of loss of principal.

The rise of the Steepner ETF, STPP, and the fall lower in the Flattner ETF, FLAT, means that the Age of Prosperity, that came through a global debt trade and rising currencies is history, on the exhaustion of the world central banks’ monetary authority. A steeping yield curve will destroy fiat wealth.

Inverse Volatility, XIV, and ZIV, trading lower at the top of an ascending wedge that began June 1, 2012; and 200 Volatility, TVIX, rose, as Volatility, ^XIV, rose, after having fallen since June 1, 2012.  A steepening 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, is the prick that has caused the global debt bubble to burst. The Age of Deleveraging will see competitive currency devaluation, which will Produce the Age of Austerity and the Age of Debt Servitude. Excessive central bank easing and liquidity has to use a FA Hayek term, paved the Road To Serfdom.

The end of traditional credit is seen in debt collector, PRAA, falling from an enduring two month multiple top high, as well as credit service companies, AGM, SLM, PHH, FCFS, V, MA, and DFS, trading lower.

ZeroHedge reports Baltic Dry Index plunges by over 8% overnight, most since 2008 as is seen in this Stockcharts.com chart of $BDI.

3) … Thursday, December 13, 2012, it became very clear that the foundation for a Eurozone Super State is forming, as Reuters reports Banking deal boosts EU leaders in fighting crisis The European Union reached a landmark deal on Thursday to make the European Central Bank the bloc’s top banking supervisor, giving EU leaders greater confidence that they are gaining the upper hand over the debt crisis.

CNBC reports Europe deepens union with ECB as chief bank watchdog. Europe clinched a deal on Thursday to give the European Central Bank new powers to supervise euro zone banks, embarking on the first step in a new phase of closer integration to help underpin the euro. After more than 14 hours of talks and following months of tortuous negotiations, finance ministers from the European Union’s 27 countries agreed to hand the ECB the authority to directly police the euro zone’s biggest banks and intervene in smaller banks at the first sign of trouble.

The WSJ reports EU reaches deal on bank supervisor.  European Union finance ministers reached a landmark deal early Thursday that would bring many of the continent’s banks under a single supervisor, in what governments hope will be a major step toward resolving their three-year-old debt crisis. Ministers said the European Central Bank would start policing the most important and vulnerable banks in the euro zone and other countries that choose to join the new supervisory regime next year. Once it takes over, the ECB will be able to force banks to raise their capital buffers and even shut down unsafe lenders. German Finance Minister Wolfgang Schäuble said national parliaments will be able to ratify the new supervisor by the end of February and “we should have the supervisor in place by the first of March.” The EU’s Internal Markets Commissioner Michel Barnier, in a tweet, called the agreement “historic.” “Taking these decisions on the supervisor was a night well spent,” he added. With the deal, which still needs to be signed off by the European Parliament, the currency union has cleared the first real hurdle on the road to a “banking union,” designed to cut the debilitating link between weak banks and their governments.

Reuters reports Merkel hails EU bank deal, says German goals met.  And The Telegraph reports Cameron to support plans for eurozone super-state.

Today, Thursday December 13, 2012, the day after the US Federal Reserve announced QE 4, both Bonds, BND, and World Stocks, VT, traded lower; fiat wealth is dying.  Of note, the US 30 Year US Government Bonds, EDV, traded lower in November, 2012, and now in December 2012.

Aggregate Credit, AGG, Commodities, DBC, are trading lower, and World Stocks, VT,  are topping out as Inflationism has turned to Destructionism, on the exhaustion of the worlds central banks’ monetary authority, with the world major currencies, DBV,  and the Emerging Market Currencies, CEW, are peaking out.  For the last six months. the trade higher in these ETF traded currencies, CYB, FXA, FXE, FXF, ICN, FXB, FXS, FXC, seen in this comparative ongoing Yahoo Finance Chart, document the dynamo of rising currencies that have taken the 20 sectors seen in this Finviz Screener, higher and the 20 countries seen in this Finviz Screener, to their rally highs in the last month.

Institutional Investors and day traders may want to consider investing in these Proshares 200% bear market ETFs, EEV, BIS, FXP, SKF, SQQQ, REW, SSG, SRS, SRTY, EFU, SMK, UGL, AGQ, seen in this Finviz Screener or consider investing in these Direxion 300% bear market ETFs, DPK, RUSS, EDZ, TZA, TECS, YANG, SOXS, FAZ, seen in this Finviz Screener.

AP reports Rate on U.S. 30-Year Mortgage dips to 3.32%; this as Mortgage Backed Bonds, MBB, traded lower again today, and Mortgage REITS, REM, traded lower as well, documenting an exhaustion of the US Fed’s monetary authority. The FED can no longer provide seigniorage to stocks.

Stacy Curtin of The Daily Ticker relates The Fed has no exit strategy, Mauldin says.  John Mauldin predicts it will take much longer than 2015 for unemployment to hit the Fed’s unemployment rate target.

After the announcement of QE4, with the December 13, 2012, the trade lower in  Energy Service, IEZ, OIH, Small Cap Energy, PSCE, Energy Production, XOP, XLE, Large Cap Growth, JKE, Pharmaceuticals, IHE, the world central banks are no longer able to provide seigniorage, that is moneyness, to world stocks, VT.

Inflationism is turning to Destructionism. The world is pivoting from Capitalism, European Socialism, and Greek Socialism, to Regionalism and Totalitarian Collectivism, as Investment Choice funded by trust in debt and rising currencies, gives way to Diktat by regional leaders, such as Mario Draghi, and regional bodies, such as The Troika.

A New Europe, a Federal Europe, will rise out of the financial insolvency and banking insolvency of the PIIGS, and will serve as a model for the entire world. The Beast Regime of Regionalism and Totalitarian Collectivism will eventually rise to power in all of the world ten regions, and come to occupy in all of mankind’s seven institutions, in what is termed the ten toed kingdom of regional governance, as Regionalism replaces Globalism. Germany will rise to be preeminent over vassal peripheral PIIGS, as Ulrich Rippert of WSWS reports SPD leader Peer Steinbrück calls for a strong German state. And Wolfgang Weber of WSWS reports Leading German newspaper’s conference hears call for dismantling democracy.  Europe will be a monster super state where the Sovereign, and his banking partner, the Seignior, will rule in a type of authoritarian revived Roman Empire; their word, will and way, will govern all of Europe.

Neouthoritarianism is rising to replace Liberalism. Under Neoliberalism, bankers waived magic wands of debt creation, that established prosperity for many; it was an era that saw wildcat finance, a Doug Noland term. Under Neouthoritarianism, tyrants wave clubs of debt servitude, that establish austerity for all; it will be an era of wildcat governance, where only the most shrewd, rise to power through regional framework agreements, to be the top dog leaders and the top dog bankers and money lords.

Choice is being replaced by Diktat. The fiat money system is now just an epitaph on the tombstone of a bygone era of credit liquidity. The diktat money system is the standard bearer of the Age of Deflation and the Age of Regional Governance, where diktat will serve as currency, credit, and wealth. People will come to trust in diktat, just as they currently trust in money. As for freedom, it is simply a mirage on the Neoauthoritarian Desert of the Real. As for liberty, it is simply an empty pipe dream in the minds of those of the Austrian Economist persuasion. There is no human action, rather there is only fate, that is destiny, bringing about a global economic and political coup d etat, establishing regional governance out of the debt crisis in the Eurozone.

December 13, 2012, is Inauguration Day of Neoauthoritarianism, as Greece, GREK, led by the National Bank of Greece, NBG, which was the country loss leader of the day, falling 2.3%.  India, INXX, INDY, SCIF, China, CHXX, CHIX, HAO, CHIM, YAO, Phillippines, EPHE, New Zealand, ENZL, Vietnam, VNM, Turkey, TUR, Israel, EIS, Egypt, EGPT, Sweden, EWD, Norway, NORW, Mexico, EWW, traded lower, as currencies topped out, and the debt trade, BND, exhausted.

Charts suggest that Peak Credit, AGG, came in on December 6, 2012, at 111.77; and Peak Fiat Wealth, ACWI, came in on December 12, 2012, a  48.02, matching its September 14, 2012 high. International Treasury Bond, PICB, rose to a new high on higher Major World Currencies, DBV, and higher Emerging Market Currencies, CEW.  Standard & Poor’s reports Global corporate new bond issuance had another strong month in November. Strong investor demand pushes global corporate new bond issuance To $2.8 Trillion through November 2012. Diane Vazza, head of Global Fixed Income Research relates, By year-end 2012, the full-year total will likely be the second highest on record, since the start of our data series in 1970, following the $3.3 trillion issued in 2009 when strong government incentives spurred corporate new issuance.

The world is passing through Peak Fiat Wealth. The combined ongoing Yahoo Finance chart of the closed end stock fund, CSQ, and the closed end debt fund, PFL, communicates Peak Seigniorage, that is peak leverage of stocks over existing debt.

Of note, Emerging Markets, EEM, topped out today; it was the Asia Shares, EPP, and the European Shares, VGK, that drew the emerging markets strongly up as is seen in the ongoing Yahoo Finance chart of EPP, VGK, VTI, VT. The Emerging Market Shares, EEM, fell more than the Asia Shares, EPP, and the European Shares, VGK, today, as Emerging Market Materials, EMMT fell 1.4% and Emerging Market Financials, EMFN fell 1.7%.  Small Cap Pure Growth, RZG, with a 1.4% loss, was the style loss leader of the day.

Global debt deflation is underway as the world central banks’ monetary authority has exhausted.  The US Federal Reserves’ and the ECB’s monetary policies have provided too much credit. Debt monetization has finally pivoted global economics and world trade from Inflationism to Destructionism.

The ECB’s OMT rally and the Fed’s QE 4 rallies are over, and the dynamos of corporate profit and global trade are winding down Crony Capitalism and European Socialism and Chinese Growth. The dynamos or regional security, stability and sustainability, are winding up Regionalism. The strong upburst in Networking, IGN, Semiconductors, XSD, and Small Cap Value, RZV, was part of a debt based rally, seen in the rise of Distressed Investments, FAGIX, like those taken in by the US Fed, under QE1, and a currency based rally, seen in the rise of BZF, ICN, FXA, FXS, FXB, FXE, FXF, that began September 14, 2012, and ended December 13, 2012.

The Dow Dividends, DVY, and the S&P Dividends, SDY, seen in their ongoing Yahoo Finance Chart, are turning lower, on the failure of neoliberal finance.  Regional banks, KRE, have seen the least seigniorage of all the recent World Bank, IXG, trade, and will be trading lower very quickly, forcing the US Small Caps, the Russell 2000, IWM, lower.

Under the Milton Friedman Free To Choose Floating Currency and Banker Regime, sovereign nation states and their central banks, supported the trade in International Treasury Bond, BWX, and Emerging Market Bonds, PCY, which underwrote the global debt trade, AGG. But now these debt instruments are trading lower in value as is seen in the combined ongoing Yahoo Finance chart of PCY and BWX.

The Beast Regime of Regional Governance and Totalitarian Collectivism, is rising from the debt and banking crisis of the PIIIGS, that is Portugal, Italy, EWI, Ireland, EIRL, Greece, GREK, and Spain, EWP. And as a result, investors are deleveraging out of commodities, DBC, and derisking out of both stocks, ACWI, and Bonds, BND.  The US Dollar, $USD, UUP, will be  rising as investors are selling currencies such as the Brazilian Real, BZF, the Indian Rupe, ICN, the Australian Dollar, FXA, the Japanese Yen, FXY, the Swedish Krona, FXS, and the British Pound Sterling, FXB, as well as the Emerging Market Currencies, CEW, and even the Chinese Yuan, CYB.  The EUR/USD rallied up near its September 14, 2012 high to close at 130.61, which gave strong rally to Germany, EWG, Austria, EWO, Netherlands, EWN, and Switzerland, EWL.  Shanghai Shares, $SSEC, surged 4%.

Formerly, nation states were sovereign, and they provided seigniorage, that is moneyness, to all kinds of stocks and bonds, but today December 13, 2012, it is evident that their seigniorage has failed.

Regional bodies, such as the ECB, are rising to be sovereign regionally. Regionalism is replacing Crony Capitalism, European Socialism, and Greek Socialism. Since 1913, banks provided neoliberal finance through investment choice. Beginning December 13, 2012, sovereign regional bodies, provide seigniorage, that is moneyness, through diktat. The result being that the fiat money system is dying, and the diktat money system is rising to govern economics; the mandate of leaders will serve as money, currency, credit, wealth and economic power. Under Liberalism, investors made the economic calls. But now, under Diktat, the word, will and way of regional leaders, makes the economic calls.

With the trade lower in both Aggregate Credit, AGG, and the topping out of World Stocks, ACWI, December 13, 2012, the day after the announcement of QE 4,  inaugurated Neouthoritarianism, the rise of the Beast Regime of Regional Governance and Totalitarianism, the Age of Deflation, the Age of Ditak, and the Diktat Money System.

4) … Friday, December 14, 2012
ETF gainers of the week included
TAN, 14%
FAA, 5%
URA, 5%
SLX, 5%
XME, 4%
KOL, 4%
BJK, 3%
DWX, 3%
CSD, 3%
REMX, 3%
XTL, 3%
BJK, 3%
CARZ, 2%
SKYY, 2%
IGV, 2%
IGN, 2%

CHIX, 3%
CHXX, 1%
CHIM, 4%
CHII, 1%
CAF, 1%

ARGT, 6%
GREK, 6%
EPOL, 5%
GERJ, 4%
ICLN, 3%
EWSS, 3%
EWO, 3%
EWG, 3%
SKOR, 3%
KROO 2%

ETF losers for the week included
REM, 2%,
MUB, 2%, wiped out ten weeks of gains,
HYMB, 3.5%  wiped out ten weeks of gains

Commodity ETF gainers for the week included
CUT 1.0%

Commodity ETF losers for the week included
UNG -7.0%

Noteable stock losers for the week included SPX, -9.8%.

The only stock I would consider going long is Gran Tierra Energy, GTE,with a forward PE of 8. This independent energy company, engages in the acquisition, exploration, development, and production of oil and gas properties in Colombia, Argentina, Peru, and Brazil. As of December 31, 2011, the company’s acreage included 3.5 million gross acres covering 21 exploration and production contracts in Colombia; 1.4 million gross acres covering 12 exploration and production contracts in Argentina; 6.4 million gross acres covering 5 exploration licenses in Peru; and 0.8 million gross acres covering 6 exploration blocks in Brazil. It also had estimated proved reserves of 30.9 million barrels of oil and natural gas liquids; and 18.3 billion cubic feet of gas. The company was founded in 2005 and is headquartered in Calgary, Canada.

Merk Investments asks Is gold the ultimate currency?  Now is the time to invest in and take physical possession of gold, either in gold bullion or at BullionVault

The ongoing Yahoo Finance chart of the World Stocks, VT, South Korea, EWY, the Philippines, EPHE, New Zealand, ENZL, Israel, EIS, Mexico EWW, and the Emerging Markets, EEM, illustrates how the seigniorage of the ECB’s OMT, a rising Yuan, CYB, and anticipation of the Fed’s QE 4, have carry trade funded the resurgence of world stocks, VT, and world Banks, IXG.

The world is passing through Peak Fiat Wealth The ongoing Yahoo Finance chart of the closed end stock fund, CSQ, and the closed end debt fund, PFL, communicates Peak Seigniorage, that is peak leverage of stocks over existing debt.

Federal Reserve data shows that Peak M2 Money likely came in this week, ending December 14, 2012 at 10.300 TN. Peak Monetary Expansion has driven the Morgan Stanley Cyclical Index, CYC, up to match its September 14, 2012 high. The Yahoo chart of the ^CYC, when combined the Major World Currencies, DBV, Emerging Market Currencies, CEW, and World Stocks, VT, and World Small Cap Stocks, VSS, together with Distressed Investments, like those taken in by the Fed under QE1, shows that it that it has been trust in the US Federal Reserve, plus trust in Mario Monti to underwrite the Euro, FXE, with LTRO 1 and 2, as well as OMT that has given seigniorage to the Morgan Stanley Cyclical Stocks.

Confirmation of the zenith of the global debt trade, comes from the rise of the currency sensitive, Small Cap Pure Value Shares, RZV, and the tremendous rise in the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, as well as the rise in Junk Bonds, JNK.  All of the following ETFs, EWY, EPHE, ENZL, EIS, THD, EWW, EWA, EEM, especially Mexico, EWW, are high beta ETFs, meaning that they have rallied quickly and will fall quickly.

The global debt trade failed with the announcement of QE4, as the Vanguard Dividend Appreciation ETF, VIG, turned lower; the world is passing through Peak Fiat Wealth, as the Major World Currencies, DBV,  the Emerging Market Currencies, CEW, and the Commodity Currencies, CCX, are topping out. Debt Deflation is under way, taking Bonds, BND, lower; the World Major Stocks, VT, and the World Small Cap Stocks, VSS, will be falling lower very soon.

The world has reached the very zenith of credit, that is the very apex, of a global debt trade, that began with Milton Friedman, the Free To Choose Evangelist, and continued with Alan Greenspan, the purveyor of credit liquidity, Ben Bernanke, the master of Fed Easing, a rising Yuan, and Mario Draghi,  the genius of OMT. The world is pivoting from Inflationism to Destructionism on the exhaustion of the world central banks’ monetary authority. A Financial Armageddon, that is a Financial Apocalypse, consisting of a credit breakdown and global financial bust is imminent.

5) … In The News
The Seattle Times reports Britain has already jumped off the fiscal clifff; How bad is it?.  Robert Stevens of WSWS relates UK local authorities plan more than a billion pounds in cuts.  Local authority councils throughout the UK are planning more than a billion pounds in further cuts to be imposed next year and years beyond.  Julie Hyland of WSWS addsSocial catastrophe faces UK working poor.  A new study examines the disastrous impact of current government policy, especially regarding welfare reform.

Reuters reports French bear brunt of Europe’s deepening auto slump.

Reuters reports SEC has examined Bank of America mortgage repurchases. Securities regulators have made inquiries into the mortgage repurchase practices at Bank of America Corp’s Countrywide unit, according to a transcript filed in a lawsuit against the bank by insurer MBIA. I relate that the chart of BAC, shows a topping out having risen 18% for the month and a 100% gain YTD.

Reuters reports China lets foreign sovereigns, central banks exceed $1 billion investment.

Reuters reports United Continental pilots ratify new contract.  I relate that the daily chart of Airlines, FAA, displays a parabolic rise, and what is likely to be a blow off evening star pattern haven risen 5% for the week; and the weekly chart, FAA, shows a year long cup and handle pattern for a 30% YTD gain.

CNBC reports Only 15 states opt to run Obamacare exchanges. Only 15 states have told the federal government they plan to operate health insurance exchanges under President Barack Obama’s reform law, leaving Washington with the daunting task of creating online marketplaces for two-thirds of the country.

Morgan Korn of The Daily Ticker relates Mobile devices are the future of eCommerce: Gilt’s CEO and Found Kevin Ryan says.  Even as many Americans struggle to find jobs and pay bills, the online commerce sector of the economy has been resilient in today’s weak economic environment,

MSN Money reports Seattle is the fourth richest city in the US. The median household income was $61,000 last year in Seattle, where the largest industry is education. The University of Washington stands as the city’s top individual employer. But the health care, information technology and aerospace industries (Boeing has a long-standing presence within the region) also figure prominently in keeping incomes high. And Detroit is the poorest city in the US. Detroit has the lowest median household income among the country’s 25 most populous cities, according to the U.S. Census Bureau. Last year, household income was about $25,000, half the national average.

Liberalism featured Interventionism which begat Inflationism.  Jon Hilsenrath of the WSJ writes The Massachusetts Institute of Technology in the 1970s and 1980s was the center of a generational shift in economic thinking that ascribed substantial influence to central banks for managing economic turbulence. MIT, in Cambridge, Mass., became home to many ‘New Keynesians,’ economists immersed in the real-world complexities of markets and sympathetic to government intervention. They helped modernize the work of Depression-era economist John Maynard Keynes, whose views had come under attack for advocating a strong government hand. Their activist and pragmatic approach became ‘dominant among the central bankers today,’ said Stanley Fischer, head of the Bank of Israel, and a former MIT professor.

We are witnessing Peak Liberalism.  Linda Shaw of The Seattle Times reports Southend Seattle schools win race for $40 million. Seven school districts in King County, which banded together three years ago to raise the number of students who graduate from college, have won a four-year, $40 million grant from the U.S. Department of Education to help them achieve that goal.  Rainier Valley Post reported in October 2011 Five Seattle public schools, including two in the southend, have been recognized for outstanding academic improvements in math and reading that put them in the top 5% of the highest-improving schools in the state. Mercer Middle on Beacon Hill and Orca K-8 in Columbia City have won the award three years in a row, from 2009-2011. The other schools are Alki Elementary, Hamilton International Middle and Madison Middle. All five Seattle Public Schools named will receive their awards during a regional ceremony to be announced at a later date. “We are proud to have five schools recognized with this prestigious award,” said Dr. Susan Enfield, interim superintendent of Seattle Public Schools. “It reflects the academic gains our students are making in math and reading, thanks to strong teaching and instructional leadership.” The SPS schools were among 99 statewide that met the Schools of Distinction performance criteria for the 20010-11 school year.

Twenty Washington DC schools to be closed.  Suzanne Kennedy provides in WJLA News 7 List of 20 Washington DC Schools to be closed.  The list includes eight elementary schools, four middle schools and one high school. Two education and three special education campuses are also on the list. In 2008, the system shuttered 23 public schools. Several DC Council members have been briefed on the plan. Here is the list of schools to be shuttered. For a PDF list of where students at the soon-to-be-closed schools will go after doors are closed, click here. Schools closing include the following:
Francis-Stevens Education Campus
Garrison Elementary School
MacFarland Middle School
Sharpe Health School
Mamie D. Lee School
C.H.O.I.C.E. Academy Middle/High School
Marshall Elementary School
Prospect Learning Campus
Shaw Middle School at Garnet-Patterson
Davis Elementary School
Kenilworth Elementary School
Ron Brown Middle School
Smothers Elementary School
Winston Education Campus
Ferebee-Hope Elementary SChool
Johnson Middle School
Malcolm X Elementary School
M.C. Terrell/McGogney Elementary School
Spingarn STAY High School and Spingarn High School located at 2500 Benning Rd NE, Washington, DC 20002. Redfin relates that the school has an overall rating of 3 out of 5 stars. Wikipedia relates that this school is in Ward 5; an area of concentrated poverty, as Zip Atlas relates that Zip Code 20002 has a 26% poverty rate. The Kids Count center relates that Ward 5 has a high child poverty rate. The Kaiser Family Foundation relates in PDF Document that Washington DC Wards 1 through 8 have the highes rate of AIDS infection per 100,000 people in the USA, the majority reside in Wards 5 through 8, with a epidemic raging in Wards 7 and 8.  HuffPost DC related on May 13, 2102, Ward 5 voters head to polls Tuesday to fill Harry Thomas Jr.’s  vacant D.C. council seat. in a special election to fill the vacant D.C. Council seat formerly held by Harry Thomas Jr, who pleaded guilty in January to stealing more than $350,000 in city funds. The election will be a bookend to a scandalous saga that saw the downfall of the son of the late Harry Thomas Sr., who represented the ward for three terms. It will also be the first time a Thomas won’t be on the ballot since 1986. Ward 5 is in NE Washington DC and includes neighborhoods like Eckington, Brentwood, Brookland, Michigan Park and North Michigan Park. In an update Wikipedia relates that  Kenyan McDuffie won the special election with more than 44 percent of the vote. DC Centric reports About 18,000 D.C. residents live in food deserts, where there are also high concentrations of children. In one such food desert, 39 percent of residents are children. DC’s deserts have higher concentrations of children. In fact, only two food desert Census tracts in all of Maryland and Virginia have higher concentrations of children than any of  DC’s food deserts: Norfolk, VA. and Anne Arundel, MD.  And Eatocracy reports The Capital’s food deserts.  The restaurants and grocery stores in the District of Columbia provide residents, workers and visitors with ample access to healthy, seasonal foods; as a result, it’s hard for many people to imagine the stark contrast to many of DC’s poorest neighborhoods, which have little or no daily access to fresh food. Also, GreaterGreaterWashinton reports It comes as no surprise that, based on that definition, Wards 5, 6, 7, and 8 are the hardest hit with limited access to affordable and nutritious food.

6) … Bible Commentary
The Guardian reports Latest eurozone summit ends in stalemate. A two-day summit was supposed to lay out a grand plan and timetable for reforming and stabilising the euro regime. And Business Times Reports EU meet dashes hope of eurozone overhaul. And Mike Mish Shedlock writes EU Punts on Creating Timetable for Fiscal and Banking Union.  Those looking for a step in the right direction today can find it in the Financial Times Live Blog which announces “EU drops timetable for creating eurozone fiscal and banking union“. “These issues will take more time and will require in-depth consultations with the Member States.” Even though José Manuel Barroso, the European Commission president, has vowed to introduce plans for an embryonic eurozone budget sometime next year, Van Rompuy’s draft suggests it won’t be taken up until “after the election of a new European Parliament and the appointment of a new Commission”, which will not happen until the end of 2014. Mr Shedlock comments, This is a step in the right direction, but only a baby step. What’s really needed is a plan and timetable to dismantle the eurozone. Don’t count on that any time soon. In fact don’t count on it ever. Regardless, a eurozone breakup is in the cards anyway. This baby step, although it will not lead to plans to do what is necessary, is nonetheless symbolic of the insurmountable problems to get agreements from all the players. The structural problems and unemployment are so bad now, that even if the key players agree, some politician will eventually stand up, proclaim debts and the treaty null and void, and be elected

Please consider that objective reality is found in Christ, Ephesians 4:17-21.  All things cohere in Him, Colossians 1:17, as He is sovereign over all.  His word provides the basis of truth, Ephesians 1:13.  Human philosophy, such as Austrian Economics, Socialism, or religion, such as Christian Zionism, is simply worship of one’s own will, Colossians 2:23.  Any experience outside of Christ is subjective, as Christ is the objective and all inclusive life experience, Colossians 3:11.  Christ has been given universal sovereignty, and is at the helm of the economy of God, Ephesians 1:10, pivoting the world from the fullness of prosperity, to the fullness of austerity.

Christ is transitioning the world from one based upon global economics to regional economics, as is seen in the fact that once the Nobel Peace Prize once went to Milton Friedman for his concept of Free To Choose, which ran the world from 1971 to the Fed Announcement of QE 4 on December 12, 2012. Now the Peace Prize goes to the Eurozone, which is emerging as a European Superstate, based upon the concepts of Mario Draghi, Christine Lagarde, Olli Rehn, Jenz Weidman, and Wolfgang Schäuble, who are establishing Regionalism as the global standard bearer in economics.

Bible prophecy of Daniel 7:7 foretells that Germany will be the last in line of succession of global empires, the formers being Babylon, Medo Persian, Greek, and Roman.  And now Germany will be rising to become an authoritarian revived Roman Empire, and be preeminent over vassal peripheral PIIGS. Ulrich Rippert of WSWS reports SPD leader Peer Steinbeck calls for a strong German state. And Wolfgang Weber of WSWS reports Leading German newspaper’s conference hears call for dismantling democracy.

An inquiring mind asks, could economic an political failure in Italy, EWI, be the straw that breaks the world’s financial back? The NY Times relates Mr. Berlusconi’s shameless return. Reuters reports Berlusconi move could undermine Monti agenda in Italy.  The Globe and Mail of Toronto relates With Monti pushed out, Italy returns to forefront of debt crisis. And Reuters reports Italy industry output dives, dashing recovery hopes.

Chiara Vasarri of Bloomberg reports Italy’s debt load, the second biggest in the euro area, rose in October to a record 2.015 trillion euros, $2.6 TN, from 1.995 trillion euros last month, the Bank of Italy reported. The debt is set to reach 126.5% of gross domestic product this year, second only to Greece, and peak at 127.6% next year, the European Commission forecast. To service that debt and cover the deficit, the Treasury needs to sell at least 400 billion euros in bonds and bills next year, averaging more than 1 billion euros a day. And Chiara Vasarri writes Italian industrial output declined more than forecast in October, as the country’s fourth recession since 2001 extended into a second year. Output fell 1.1% from September, when it dropped a revised 1.3%. Consumer confidence declined in November to the lowest since records began in 1996 amid rising pessimism among households on the outlook for growth and jobs.

Lorenzo Totaro of Bloomberg reports Italy’s economy shrank for a fifth quarter in the three months through September as slumping household spending pushed the country’s recession into its second year. Gross domestic product contracted 0.2% from the previous three months. From a year earlier, economic activity contracted 2.4%. In the three months through September, household spending decreased 1.0% from the previous quarter and 4.8 percent from a year earlier.

Out of the debt and banking crisis of the Mediterranean countries of Greece, Italy, and Spain, the  Europe will coalesce to become a singular totalitarian superstate, Revelation 13:1-4, where the Sovereign, Revelation 13:5-10, and his banking partner, the Seignior, Revelation 13:11-18, will rise to  rule the continent, as finance and country leaders meet in summits, announce regional framework agreements, to waive national sovereignty and pool sovereignty regionally.

An inquiring mind asks, Could Mario Draghi, be the Great Prophet of Neoauthoritarianism presented in Revelation 13:11-18? Financial Times heralds FT Person of the Year: Mario Draghi. On the eve of the 2012 Olympic Games, Mario Draghi found himself in the august setting of Lancaster House in the heart of London’s royal district. He was a panellist at an official event intended to drum up foreign investment to the UK, but the president of the European Central Bank had weightier matters on his mind.  Europe’s single currency was disintegrating amid soaring borrowing costs in Greece, Spain and Mr Draghi’s native Italy. Speculation that the eurozone was heading for a break-up, with incalculable financial and political consequences, was rampant. It was time to draw a line in the crisis. “Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Mr Draghi said, pausing for effect. “And believe me, it will be enough.”  Mr Draghi’s advisers had been forewarned that he was preparing to make a forthright statement, but none had been apprised of the precise wording. In retrospect, the July declaration, which in effect dared financial markets to challenge the ECB’s unlimited firepower, may well be seen as a turning point in the three-year-old crisis. “What I thought was that the markets should know what our stance was,” Mr Draghi, 65, recalls in an interview with the Financial Times in his office on the 35th floor of the ECB’s Frankfurt headquarters. Asked if he had rehearsed his pause, he laughs. “No, I’m not really that theatrical.”

The seigniorage of the Milton Friedman Banker Regime was based upon a global debt trade, that came from the  dollar hegemony of the national sovereignty of the US and The Fed, its Central Bank, which  supported global growth and developed corporate profitability.  The seigniorage of Mario Draghi Beast Regime will come from regional sovereign leaders and regional sovereign bodies such as the ECB acting with both monetary and banking powers, which will direct regional economic activity through public private partnerships.

It is Christ, acting as Morpheus, the God of Dreams, who gave dream to King Nebuchadnezzar for Regional Governance, Daniel 2:30-33; and it is Christ who gave vision to John The Revelator for Regional Governance and Totalitarian Collectivism, Revelation 13:1-4.  To accomplish His sovereign aims of world wid rule, Christ has unleashed the First Horseman of the Apocalypse, Revelation 6:1-2, to effect a global  coup d’etat, with the aim of destroying all existing political and economic life, before he ushers in his Millennial Rule from Jerusalem, where he will oversee global prosperity that few have ever envisioned, for God has said, “See, I will extend prosperity to her like a river”, Isaiah 48:18.

ONN, UUP, BND, AGG, EEM, VT, VSS, ACWI, DBV, CEW, CCX, DBC, STPP, FLAT, IXG, JNK, VGK, EPP, REM, RZV, FXY, CYB, FXA, FXE, FXF, ICN, FXB, FXS, FXC, EWI, GREK, OFF, TVIX,  DRW, REM, RWR, MBB, ZIV,  QE4, Diktat Money System, Diktat, Fiat Money, Fiat Money System, Peak Credit, Beast Regime, Regionalism, Seigniorage, Sovereignty, Regional Governance, Regional Sovereignty, Road To Serfdom, Mario Draghi, Financial Apocalypse, Monetary Authority, Milton Friedman, Debt Servitude, Peak Money, European Super State, Inflationism, Destructionism, Liberalism, Debt MOnetization, Peak Prosperity, Peak Fiat Wealth, Risk On Rally, Risk On Momentum Investing, Global Debt Trade, Age Of Deleveraging, Carry Trade Investing, Road To Serfdom, Moral Hazard, Debt Deflation, Competitive Currency Devaluation, Credit Liquidity, Neoliberal Finance, Monetary Easing, Peak Wealth, The End Of Credit, Public Private Partnerships,

The Diktat Money System Commences As The Euro Trades Lower On Turmoil Over Italian Technocratic Government And Exhaustion Of The ECB’s Monetary Authority

December 10, 2012

Financial Market Report for the week ending December 7, 2012

1) … Introduction
The world passes through peak currency and peak credit as the Euro currency and the copper commodity trade lower introducing the diktat money system, as the Troika’s technocratic government in Italy waivers on Berlusconi withdrawing support. A major selloff in stocks and junk bonds is imminent.

2) … This week in financial trading
On Monday December 3, 2012, World Stocks, VT, were led lower by the sectors, Gold Mining, GDX, GDXJ, Silver Mining, SIL, Coal Mining, KOL, Metal Manufacturing, XME. Styles trading lower were Large Cap Value, RPV, -0.5% lower; Small Cap Pure Value, RZV, rose 0.2% in short sell covering.  China, YAO, was led lower by China Financials, CHIX, leading country stocks, ACWX, lower. US Infrastructure, PKB, traded lower from its rally high.  The Morgan Stanley Cyclical Index, $CYC, traded lower from its rally high, being led lower by Eaton, ETN, Ingersoll Rand, IR, Masco, MAS, PPG Industries, PPG, and Whirlpool WHR, trading lower from their recent highs.  Sin Stocks VICEX, and Gaming Stocks, BJK, such as MCRI, VAC, ASCA, PNK, traded lower, no longer being supported by the neoliberal finance.

On Tuesday December 4, Asian Shares, EPP, slipped from their three and one-half month high ending a rally that has run contrary to World Stocks, VT, which turned lower on September 14, 2012; yet the Phillippines, EPHE, Thailand, THD, and Australia, EWA, traded to new highs.  Turkey, TUR, which has seen hot money flows from Iran traded to a new rally high.  Israel, EIS, traded to a new high.  Switzerland, EWL, rose to a new high.  European Shares, VGK, traded to a new rally high.  Country shares NORW, EWO, EWD,  EPOL, EWN, EWG, EWQ, EWI, EWP, GREK, traded higher, on today’s higher Euro, FXE, at 129.99, which took European Financials, EUFN, to a new rally high. Global Real Estate Outside Of The US, DRW, traded to a new high, being supported by International Corporate Bonds, PICB, which also drove China’s Electric Utility, HNP, and Japan’s Heavy Equipment Manufacturer, KUB, parabolically higher.  Regional Banks, KRE traded lower.  Retail, XRT, traded lower.   US Infrastructure, PKB, traded lower from its rally high.  The global based Paper Products, WOOD, traded to a new high on higher Timber, CUT, prices.

On Wednesday December 5, 2012, Asia Shares, EPP, rose strongly to yet another new three and one-half month high, taking World Stocks, VT, higher. Investors poured money into South Korea, EWY,  and Taiwan, EWT, taking them to a new rally high as China, YAO, was led higher by China Infrastructure, CHXX, China Small Caps, HAO, Financials, CHIX, and Singapore, CAF, all rising to new rally highs on a higher Chinese Yuan Currency, CYB, which has moved steadily higher.  China Real Estate, TAO, led World Real Estate, DRW, to a new high. The rise in China Shares, YAO, drew Russia, RSX, Brazil, EWZ, India Small Caps, SCIF, and India, INP, higher. Australia, EWA, rose as Westpac Banking, WBK, rose.

World Banks, IXG, rose past its September 14, 2012 high, to make a new high, as Swiss Banks, UBS, and CS, Chinese Financials, CHIX, and India Earnings, EPI, rose parabolically, and Irelands, IRE, and Germany’s DB, took European Financials, EUFN to a new rally high, and as Bank of America,  BAC, and Citigroup, C, rose strongly, taking the Too Big To Fail Banks, RWW, higher.

On Thursday December 6, 2012, World Stocks, VT, traded higher as Mexico, EWW, New Zealand, ENZL, Australia, EWA, India infrastructure, INXX, India, INP, India Small Caps, SCIF, the Phillippines, EPHE, Thailand, THD, and South Korea, EWY, rose to new rally highs. The rally in Semiconductors, XSD, continued, taking the Nasdaq 100, QTEC, higher.

On Friday December 7, 2012, World Stocks, VT, traded higher as Italy, EWI, and Spain, EWP, led European Shares, VGK, lower, while China Infrastructure, CHXX, led Asia Shares, EPP, higher, as Bloomberg reports Monti clings to power as Berlusconi seeks early vote. Italian Prime Minister Mario Monti said he plans to keep his government intact as his biggest parliamentary supporter, billionaire media magnate Silvio Berlusconi, threatens to withdraw his backing.

3) … The world passed through peak currency and peak credit the week ending December 7, 2012, as the Euro Currency, FXE, and the Copper Commodity, JJC, traded lower. The systemic risk factors of excessive world central bank credit and a technocratic government breakdown in Italy, portends a major selloff in World Stocks, ACWI, and Junk Bonds, JNK.

After a three week rally, the twin spigots of credit liquidity are no longer providing economic health; they are running toxic, on the exhaustion of the world central banks’ monetary authority. The first spigot of credit is Bonds, BND, and the second is bank Banks, IXG, which is comprised of European Financial Institutions, EUFN, Investment Bankers, KCE, the Too Big To Fail Banks, RWW, Regional Banks, KRE, and Small Cap Revenue, RWJ; these peaked out the week ending December 7, 2012. Of note, the UK bank, RBS, and India bank, HDB, have risen dramatically this year and have topped out.

The trade lower in closed end stock fund, CSQ, and closed end debt fund, PFL, as is seen in their combined chart, confirms that trust has evaporated from the world financial markets that the global central bankers will be able to provide stimulus to continue global growth and corporate profitability. The word, will and way, of ECB’s Mario Draghi has provided seigniorage, that is moneyness, with the exception of US Banks, KRE, as is seen in the combined chart of XLF, EUFN, IXG, KCE, RWW, KRE, RWJ.

Peak Seigniorage, that is peak moneyness, of both the ECB and the Chinese Central Bank, has been achieved. The seigniorage, that is the moneyness, of the US Federal Reserve has failed as Mortgage REITS, REM, have traded significantly lower, on lower Mortgage Backed Bonds, MBB; and the US Federal Reserve is unable to stimulate Regional Banks, KRE, and US Real Estate IYR higher. The failure of the world central banks monetary authority as a whole, is seen in the trade lower in the combined chart of XLF, JKE, IYR, XLE, OIH, MTK, SLX, XSD, GDX, IYZ, and IHE, trading lower since September 14, 2012; it was at this time that the world pivoted through Peak Fiat Wealth.

Of note, the Shanghai Shares, $SSEC, traded by CAF, which had been performing very poorly ever since QE1 was introduce, rose 4.1% this week

MarketWatch reports Toll Brothers profits and revenues rise. Homebuilder Toll Brothers, TOL, reported fiscal fourth-quarter profit of $411 million, or $2.35 a share, compared to $15 million, or 9 cents a share a year ago, yet the stock is trading below its September 14, 2012 high, suggesting that the rally in home building stocks, ITB, is over.

This week, Commodities, DBC, and USCI, traded lower, as Precious Metals, JJP, traded lower, as Gold, GLD, fell through a consolidation triangle, and Silver, SLV, traded sharply lower.  Spot gold, $GOLD, traded lower to $1,705; support is lower at $1,680 and $1665; support for GLD is 162.  Oil, USO, traded lower; and Unleaded Gas, UGA, fell sharply lower.  Bespoke Investment Group reports Gasoline inventories soar by most in more than 10 years.  Base Metals, DBB, traded lower. Timber, CUT, traded to a new high. Copper, JJC, a measure of the Shadow Banking System in China, traded parabolically lower.

Total Bonds, BND, traded up to a new high of 84.99, before closing lower this week at 84.81.  Distressed Investments, FAGIX, Junk Bonds, JNK, Senior Bank Loans, BKLN, and Leverage Buyouts, PSP, traded to new highs  International Corporate Bonds, PICB, traded to a new high. Mortgage Backed Bonds, MBB, and Municipal Bonds, MUB, traded lower. The 30 Year US Treasury Bond, EDV, and the US Ten Year Note, TLT, have been rising to strong  resistance, yet could trade higher if stocks quickly sell off.

The Steepner ETF, STPP, fell lower, to its lowest value yet at 33.73, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as the 30 Year Rate fell more than the 10 Year Rate on the US Treasury Debt.  Soon the 10 30 US Sovereign Debt Yield Curve will rise as bond vigilantes gain control of US Treasury interest rates. The Interest Rate on the 10 Year US Note, $TNX, is forming a bottom at 1.57%; and the Interest Rate on the 30 Year US, $TYX, is forming a bottom at 2.72%. The combined chart of US Treasuries will be soon be showing that both the 10 Year US Note and the 30 Year US Government Bond, will be falling lower, with the latter falling faster than the former.

The ongoing Yahoo finance chart of the Flattner ETF, FLAT, together with Tips, TIP, Long Durations Tips, LTPZ, US Ten Year Notes, TLT, 30 Year US Government Bonds, EDV, Asian Shares, EPP, European Shares, VGK, and World Stocks, VT, TIP, LTPZ, TLT, EDV, EPP, VGK, and VT, communicates the strong seigniorage given to stocks by the combination of the US Fed and the ECB which took the Euro, FXE, up over and then just below 130.

The Dollar, $USD, UUP, has traded lower over the years since its peak in 2002, on US Central Bank credit liquidity and easing, until it recently rose from $79.00 on September 14, 2012, and is now trading at its 50 day moving average, at $80.42, as the Euro, FXE, rose to a new rally high of 129.99, pushing the Swiss Franc, FXF, to a triple top high of 106.24, before the Euro, traded lower to 128.26. The chart of the world major currencies, DBV, shows that they jumped to a new high of 26.02, and the chart of emerging market currencies, CEW, shows they are approaching their Sept. 14, 2012, high.

The world has passed through Peak Monetization. Generally speaking individual currencies globally are failing to rise higher on debt monetization, that is currency debauchery of the world central banks neoliberal finance.  The world is passing through Peak Monetization, meaning that the world central banks are unable to stimulate further global growth and corporate profitability.  Debt monetization is no longer able to leverage World Stocks, VT, higher.

The Euro currency, FXE, has peaked out. Monetizing of debt is one of two factors that caused the Euro, FXE, to peak out and trade lower this week; and as result Italy, EWI, and Spain, EWP, traded lower from their rally high and both the European Financials, EUFN, and the European Shares, VGK, manifested bearish harami candlesticks, at the top of  ascending wedges, suggesting that the rally in these shares is now complete. The other factor for that caused the Euro to peak out and trade lower, is an ongoing political leadership crisis in both Italy, and in Europe as a whole.

The ongoing Yahoo Finance combined chart of DBC, CEW, VT, VSS, and DBC, communicates that the Age of Deleveraging commenced on September 14, 2012, with World Stocks, VT, and Commodities, DBC, trading lower on the exhaustion of the world central bank’s monetary authority.

The global bear market that commenced September 14, 2012, is definitely underway again as Transports Weekly, ITY, are making lower highs, while the Industrials Weekly IYJ, are pushing up to strong resistance. Chemical Giants, DOW, and DD, as well as by Industrial Gasses, ARG, PX, and APD, manifest very weak trading patterns. Bespoke Investment Group relates Apple, AAPL, suffered its biggest decline since December 17th, 2008 with a fall of 6.43%, establishing it as a technology, MTK, loss leader. The bearish trading pattern in technology, MTK, and Steel, SLX, evidences the inability of the inability of the world central banks to stimulate global growth and ongoing corporate profit.

This week’s rally and fall in the Euro, FXE, stimulated Peak Currency and Peak Credit.  Of note, Peak Stock Wealth, occurred September 14, 2012 as world stocks, VT, topped out.  The Pure Small Cap Value Shares, RZV, have outperformed the Small Cap Growth Shares, RZG, as is seen in their combined chart, that is the currency demand curve, that is RZV:RZG, rising to a new rally high.  And the Pure Small Cap Value Shares, RZV, have outperformed the Pure Large Cap Value Shares, RPV, as is seen in their combine chart, that is the credit demand curve, that is RZV:RPG, on the rise in the Euro, FXE, to its rally high of 129.99, before it turned parabolically lower to close at 128.36.

Although the Small Cap Pure Value Shares, RZV, have been given strong currency seigniorage, the Small Cap Pure Growth Shares, RZG, have risen strongly as well; these include Aircraft Rehabilitator, BEAV, Electrical Equipment Manufacturer, AIMC, AME, Irrigation Equipment Manufacturer, VMI, Specialty Chemical Manufacturers, ODC, RPM, Chemical Manufacturer, SHLM, Business Services, TISI, VVI, FLT, MMS, Synthetics, MTX, CSGP, Dig And Dirt Moving, MTW, Networking, JDSU, FNSR, ARUN, EPIQ, Diversified Electronics, GLW, MOLX, Technical Software, MENT, ACIW, Cloud Computing, CRM, N, RAX, Application Software, CVLT, PDFS, NTWK, CEDR, PLUS, Business Software, PERI, SLH, Biotechnology, CLSN,  CRMD, INFI, DYAX, AFFY, NPSP, Diversified Communication Services, NSR, Building Products, TREX, Diversified Machinery, NDSN, LII, FLS, MIDD, CFX, ITW, BGG, IEX, Diversified Electronics, SPA, Consumer Services, ZIP, and Information Technology, CTXG, CSC.

Restaurants, DIN, BKW, DPZ, BK, and Entertainment Stocks, TIVO, DISH, VMED, SJR, LMCA, DISCA, TWX have likely topped out. Manufactured Housing Manufacturer, CVCO, is the weather vane of market direction and it traded strongly lower this week from its November 30, 2012 high of 51.50 as is seen in its Yahoo Finance Chart, which is provided with comparison to the Small Cap Pure Value Shares.

The major world currencies, DBV, the emerging market currencies, CEW, are peaking out as is seen in their combined chart, producing Peak Currency. And Peak Credit is seen in both Total Bonds, BND, and Aggregate Credit, AGG, topping out, as well as the Credit Providers seen in this Finviz Screener, such as AXP, COF, MA, V, and DFS, trading lower in December 2012.  Debt deflation is underway on falling currency values.  Federal Reserve data shows that Peak M2 Money occurred in early November 2012, specifically on  11-05-12 with a value of 10292T; current M2 Money stands at 10264T.   And Zero Hedge provides this troubling credit report Margin debt rises to 18 month high as net free credit plunges to -44 billion.

Investment trading is starting to heat up. On both Monday and Tuesday, Volatility, VIX, traded higher and Inverse Volatility, XIV, is trading lower from its recent high; and 200% Volatility, VIIX, is trading higher from its recent low, suggesting that a change in market direction is at hand.

The Milton Friedman Free to Choose Floating Currency Regime, that has supported global economics since 1971, was based upon investment opportunities in sovereign nation states, is now failing as investors are derisking and deleveraging out of fiat financial instruments. The Beast Regime of Totalitarian Collectivism and Regional Governance is rising out of the Mediterranean Sea countries of Greece, italy and Spain to rule in all of the world’s ten regions and all of mankind’s seven institutions as foretold in bible prophecy of Revelation 13:1-4, and will be based upon regional sovereign bodies, such as the ECB, and regional sovereign leaders, such as Herman Van Rompuy, as current country leaders will meet in summits to waive national sovereignty and pool sovereignty regionally; and to announce regional framework agreements which will replace national constitutions as the basis for power and authority. Public private partnerships between corporations and governing officials will direct the factors of production regionally. The announcement on Azom by Alcoa that it has signed a long-term power contract with Bonneville Power Administration, BPA, for its Ferndale, Wa, based Intalco Works aluminum smelter, exemplifies the type of process that will manage economies regionally.

We are witnessing the fulfillment of bible prophecy of the Statue of Empires seen in Daniel 2:30-33, where the two iron legs of UK and US Global Hegemony, that have ruled the world since 1776, are flowing into ten regions, than is ten blocs of regional power, specifically iron diktat and clay democracy. Dr Worden writes in China or USA: Which Will Rule Trade? As the twenty-first century was coming into its own, two major economic powers in the world were contending not only for economic dominance, but political hegemony as well. Would it be another American century, or would power follow economic growth over to Asia? The “control battle” itself ostensibly about ordering trade alliances could be an indication that power was about to shift on a massive scale in terms of which economic power would become the definitive superpower. The Association of Southeast Asian Nations (ASEAN) announced at its meeting in November 2012 that it would host negotiations among its members on “a sweeping trade pact that,” according to the New York Times, “would include China.” The trade agreement would include not only the ten countries that are in the association, but also six other countries that have free-trade agreements with the association. In addition to China, those countries include Australia, India, Japan, New Zealand and South Korea. Half of the world’s population would be included in the pact. Notably absent is the United States. This is no accident, as the Obama administration’s own proposal for an eleven-nation Trans-Pacific Partnership excludes China. In other words, the contending proposals may be more about a “control battle” between two contending empires—the United States and China—than anything else. Moreover, which proposal succeeds could say something about whether China succeeds the United States as the hegemonic superpower of the twenty-first century.

Regionalism is rising to replace Crony Capitalism European Socialism and Greek Socialism as The Express UK quotes Steen Jakobsen, chief economist at investment bank Saxo, “The magnitude of this debt crisis is far larger than the market realises, so big there is no real solution as imagined by either side of the north-south divide.” … “There is only one solution: the system must fail and both the Euro and the Eurozone need to be redefined.”

The EU faces political crisis on a country, by country level; and it faces a political crisis on an EU wide basis.  Guy Dinmore of Financial Times reports Berlusconi’s show of power piles pressure on Monti.  Silvio Berlusconi’s centre-right party has abruptly withdrawn its support from Mario Monti’s technocrat government in parliament for the first time in over a year, plunging Italian politics deeper into confusion and raising the possibility of snap elections.  And the Wall Street Journal reports EU Officials set cautious vision of integration. In a long-awaited report that aims to map out future efforts to bind euro-zone economies more closely, Herman Van Rompuy, the president of the European Council, proposed some important piecemeal steps toward integration but seemed to bow to pressure from Berlin to limit initiatives that would force German taxpayers to stand behind their European counterparts. There was no proposal to adopt a common euro-zone bank-deposit guarantee, and an initiative to create a centralized fund to help countries absorb economic shocks was pushed off until after 2014. Mr. Van Rompuy called for immediate action in setting up a single bank supervisor, to be fully operational by the start of 2014, and said the euro-zone bailout fund should develop the ability to directly recapitalize member-state banks by 2013. The pooling of funds and sharing risk on debt issuance among eurozone members, as diverse as robust Germany and debt-stricken Greece, is possibly the single most politically controversial issue in the currency bloc.

Soon, the prince who is to come, will step into the limelight of Europe’s political stage, Daniel 9:26, to establish order out of chaos. In bible prophecy, he is described as the Little Horn, meaning one currently of seemingly little authority, Daniel 7:8.  He will rise to power through, not through traditional political means, but rather through regional framework schemes, Daniel 8:23, that is through regional framework agreements.  He is the one who stands up at the current end of the reign of four kingdoms, specifically a succession of global powers, these being Babylonian, Medo Persian, Grecian, and Roman, Daniel 8:22.  His rise to power will continue the way of the fourth beast, and will establish a revived Roman Empire, which in its final form will be a one world government with power transferred from Europe to Jerusalem, Daniel 9:25-27.  This individual is the Sovereign of Revelation 13:5-10, and will be accompanied in power by the Seignior, that is the top dog banker who takes a cut, Revelation 13:11-18.

A Federal European Super State is coming out of the Greek, Italian and Spanish banking, economic and governmental crises. This Beast Eurozone government will be come as a progression of the four kingdoms of Daniel’s prophecies.  And it will have a Beast Leader and a Beast Banker; yes three Beasts are coming to rule the EU, and eventually the world, a Beast System, a Beast Ruler, and a Beast Banker for all.

4) … In financial news
Bloomberg reports Republicans counter Obama olan with entitlement cuts.  U.S. House Speaker John Boehner proposed $2.2 trillion of spending cuts and new revenue that lack what President Barack Obama calls essential for a fiscal agreement: higher tax rates for top-earning Americans. The leaders delivered the offer to the White House on Monday with a three-page letter signed by Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), and four other senior Republicans, including Rep. Paul Ryan (R-Wis.).  According tothe Speaker of the House, in PDF document, the Republicans propose to increase tax revenue through pro-growth tax reform that closes special interest loopholes and deductions while lowering rates.

AP reports Obama: No deal without higher rates.  AP President Barack Obama says there will be no deal to avert the “fiscal cliff” unless Republicans drop their opposition to raising tax rates on the wealthiest Americans.

Bespoke Investment Group reports ISM Manufacturing surprises to the downside. The  ISM Manufacturing report for the month of November came in lower than expected (49.5 vs. 51.4), and it was the indicator’s worst monthly reading since July 2009. While readings below 50 are indicative of economic contraction, the weak report may be due in part to some residual impact from Sandy.

Ambrose Evans Pritchard writes Pritchard French economy buckles as car sales collapse. Industrial woes deepened last month as car sales crashed 19pc.

Reuters reports Top US firms are cash rich abroad but poor at home The WSJ reports At a time when American companies hold near record amounts of cash, many are surprisingly cash poor at home.

Reuters reports Spain makes formal request for EU bank aid

Reuters reports that Transparency.Org reports Greece has scored the worst ranking of all 27 European Union nations in a global league table of perceived official corruption, falling below ex-communist Bulgaria as public anger about graft soars during the country’s crisis.

Markus Salzmann of WSWS reports Austrian billionaire Stronach launches new right-wing party. Given the increasing economic and social tensions in Austria, Frank Stronach stridently represents the interests of the financial elite and receives the support of business circles.

Vicky Short, and Alejandro Lopez of WSWS report Spanish government prepares repressive measures against social opposition.  Mariano Rajoy’s Popular Party government is preparing to impose €90 billion in budget cuts over the next two years.

Marianne Arens of WSWS reports Italian steel workers fight for jobs.  Employees of the Ilva steel group carried out demonstrations throughout Italy last week to protest against the closure of the company’s main plant in Taranto.

Reuters reports Military halts clashes as political crisis grips Egypt.

Alex Lanier of WSWS reports Spanish bank bailout paves way for new attacks on working class. Euro  zone finance ministers approved a bailout requested for Spain’s banking sector.

Patrick Jenkins of the Financial Times reports “The risk facing Japanese banks from their vast holdings of government bonds has been underlined by the chief executive of the country’s largest bank who said it would struggle to reduce its exposure. Nobuyuki Hirano, chief executive of Bank of Tokyo-Mitsubishi, admitted that the bank’s Y40tn ($485bn) holdings of Japanese government bonds were a major risk but said he was powerless to do much about it. ‘This is analysts’ main concern… A default of Japanese government bonds would have a severe impact on us. But we need to be responsible to keep that market in order.’ According… the Bank for International Settlements… the holdings of JGBs by Japan’s banks equate to 900% of their tier one capital, compared with about 25% for UK banks’ exposure to gilts and 100% for US banks’ exposure to US Treasuries.”

5) … A cultural calamity calamity in education, morals and virtues has arisen out of Liberalism. Liberalism gave rise to LBJ’s Great Society which has produced a decadent US society and will be a leading factor in the loss of America’s sovereignty as a regional government forms in the North American Continent, which some call the North American Union, and which I call CanMexAmerica, the amalgamation of what will be three formerly sovereign nation states into one of ten zones of regional governance whose regional authority comes from past North American Perimeter Security Talks between the US and Canada.

Robert Wenzel writes Number of young adults not in school and not working hits 50 year high.   LBJ’s great society plan is really working out well. Nearly 6.5 million U.S. teens and young adults are neither in school nor working, according to a new report from the Annie E. Casey Foundation.

The most recent “Kids Count” report, one of the most widely cited surveys of how youth fare in the United States, found that young people aged 16 to 24 are facing serious barriers to successful careers as youth unemployment has reached its highest level since World War II. Only about half of young people in that age group held jobs in 2011, according to the study, HoffPo reports.

The employment rate for teens between the ages of 16 and 19 has fallen 42 percent over the last decade: 2.2 million teens and 4.3 million young adults aged 20 to 24 are neither working nor in school. Of those without school or work, 21 percent — or 1.4 million — are young parents.

North Dakota, Nebraska and Minnesota had the highest rates of employment among 20- to 24-year-olds. Laura Speer, one report’s authors, told Minnesota Public Radio.

Attempting to get these kids back in school, given the poor quality of public school education, is not the answer. The only solution is to eliminate the minimum wage so that they can be hired at a wage that is below their limited hourly productivity and second to eliminate LBJ launched government handouts, which provide incentive for these youth to not work and have children of their own.

LBJ Great Society Programs launched in the 1960s failed to raise the education attainment and functional skills of youth, and created massive numbers of inner city housing projects where multi-generational families reside, as LBJ’s grandchildren are now having children out of wedlock.

There exists barriers to successful careers for youth. These are a transition to a post industrial society where employers are willing to hire only adults with either experience or with education; and most jobs are in new industries where there is a cultural threshold and mind set barrier that minority males cannot meet; for example have you ever met a minority male dental hygienist or a minority male LPN; and the new jobs are not located in the the inner city or in the Rust Belt. Minority males simply are not moving out into the suburbs where the jobs are located and are not using transportation to go where the jobs are. Minority males have gone off to war in Iraq and Afghanistan; and when they come back, no private employer will hire these killers, as they have been emotionally crippled by war.

LBJ’s Great Society cleared the way for Values Clarification, where there are now absolute moral and ethical standards, as all values are equal and subjective, the result being that there is no objective reality, Immigration to the US, the Milton Friedman Free to Choose Floating Currency Regime which commenced in 1971, Interventionism by the US Federal Reserve, and the passage of liberal financial reforms such as the Glass Steagall Act.

The lasting results of the push for LBJ’s Great Society are Universities and Colleges, Planned Parenthood, Mass Transit, Head Start, TANF, Obamacare, Food Stamps, The Minimum Wage, Public Housing Projects and Section 8 Housing Vouchers.

Economist Thomas Sowell, related in War on Poverty Revisited, August 17, 2004, that the Great Society programs only contributed to the destruction of African American families, saying “the black family, which had survived centuries of slavery and discrimination, began rapidly disintegrating in the liberal welfare state that subsidized unwed pregnancy and changed welfare from an emergency rescue to a way of life.”

Further barriers to employment are cultural. Education is failing, as values clarification is the educational direction in schools, which communicates that all values, that is activities (hobbies), morals (virtues), and ethics (relationship rules with others,) are subjective, and that there is no objective truth, and thus there is no objective reality; furthermore, America is an alcohol obsessed society, and a drug obsessed society; and schools produce antisocial males, who see confrontation as good ethic, which cripples minority males from going into any workplace.

I believe society has the responsibility to provide a basic education through the sixth grade, with the objective of teaching hygiene, reading, writing and math, as well as critical thinking skills; but after that, it is the family’s responsibility to provide activity education, moral literacy, and  ethical responsibility.  Unfortunately, today we have education unions and tax subsidized public schools which promote and perpetuate mass dysfunction.  Rhodes Scholarships, as well as liberal and collegiate education have promoted liberalism, which have produced liberal radio programs and liberal radio personalities such as Rachel Maddow, a graduate of Oxford University.

We are at the fullness of Liberalism, which commenced when Obama got a $814 billion stimulus spending program passed through Congress in 2009, which when coupled with QE1, gave Inflationism an entirely new thrust, and now the US economy to a large degree has recovered from the 2008 decline  with automobile sales being a metric of recovery. The Detroit Advertizer relates Superstorm Sandy gave an extra boost to U.S. auto sales, making November the best month for car makers in nearly five years.  Falling US unemployment is another metric of recovery. The Seattle Times relates Unemployment rates declined last month in more than half of the 372 largest U.S. cities. And in another metric of recovery, CNBC reports Toll Brothers profit rises, and orders jump.

As revealed in Ephesians 1:10, Jesus Christ is at the helm of Global Economics, and on September 14, 2012, he pivoted the world from Inflationism to Deflationism. Investment choice is failing, as the dynamos of corporate profit and global trade are winding down Crony Capitalism, European Socialism and Greek Socialism, as the ongoing Yahoo Finance combined chart of DBC, CEW, VT, VSS, and DBC, communicates that the Age of Deleveraging commenced on September 14, 2012, with World Stocks, VT, and Commodities, DBC, trading lower on the exhaustion of the world central bank’s monetary authority, communicating that Peak Fiat Wealth has been achieved. Now the dynamos of regional security, stability, and sustainability are winding up Regionalism and Totalitarian Collectivism, where diktat is rising to establish Regional Governance. The fiat money system was replaced with the diktat money system, where diktat serves as currency, credit and wealth, during the week ending December 7, 2012, as the Euro, FXE,  peaked at 128.99 and traded lower to 128.36.

In Europe, labor unions, both public and private, provided jobs for many baby boomers; and work rules provided increasing prosperity. Implode-O-Meter reports Young and educated in across Europe find employment elusive. When the Euro, FXE, was introduced in 1998, it underwrote falling sovereign sovereign interest rates, which sent World Treasury Bonds, BWX, soaring. Then came the European Sovereign Debt Crisis in 2009, which was addressed with a Greek Debt Bailout by Herman Van Rompuy in May 2010; and more recently addressed by the Troika with Technocratic Government in Italy and Greece, and Mario Draghi providing credit liquidity through  LTRO 1 and 2, and OMT, which had rallied the Euro, FXE, to 129.99 before it fell parabolically lower, and which has taken European Shares, VGK, to a new rally high.  The charts of both the Euro, FXE, and European Shares, VGK, communicates that the Eurozone has attained peak monetary expansion.

In deflationary news Catherine Boyle of CNBC reports UK braces for attack on welfare state. And Reuters reports Britain to miss key debt goal and growth targets. And WSWS authors relate UK Autumn budget: Austerity without end for workers.  Chancellor George Osborne has added a further £5 billion cuts targeting welfare to the Conservative-Liberal Democrat coalition’s austerity package of £155 billion.

Liberalism is intertwined with Zionism. David Remnick of The New Yorker reported Hillary Clinton is running for President. The Israeli political class is a full-blown train wreck. These are two conclusions, for whatever they are worth, based on a three-day conference I attended this weekend at the annual Haim Saban Forum, in Washington, D.C. A word about the scene: Haim Saban, an Israeli-American media and entertainment mogul, has for the past nine years been hosting a conference, sometimes in Jerusalem, more often in Washington, focussed on the Middle East. The attendees are mainly government officials, present and former; business people; institute-niks; a few reporters. There are very few Arabs; this year the most notable exception was Salam Fayyad, the Prime Minister of the Palestinian Authority, though he didn’t stick around long, since the Palestinian Authority, thanks in large measure to Israel, is in grave peril, losing ground all the time to Hamas. Except for a few events, Chatham House rules obtain: meaning that the official events are off the record. The presumption is that the incidental meetings are more important than the panels and speeches. Friday night, however, was on the record, and surprisingly revealing. Hillary Clinton was the main speaker.

6) … Summary … The fiat money system has broken down on the failure of the monetary authority of the world central banks; it has been replaced by the diktat money system, where mandates from regional leaders serves as currency, credit and wealth.
Neoliberalism’s final global debt rally, seen in World Treasury Bonds, BWX, and Emerging Market Bonds, EMB, topping out, is bringing about a topping to the global debt trade, BND, that has provided prosperity under Crony Capitalism, European Socialism, and Greek Socialism.

The ongoing Yahoo Finance chart of Distressed Investments FAGIX, with ETFs, JKE, RZV, MTK,VGK, BJK, SLX, XSD, with a close December 7, 2012 for FAGIX of 9.47, having risen from its September 14, 2012 value of 9.37, reflects the seigniorage, that has come from rising commodity currencies, CCX, such as the Euro, FXE, the Canadian Dollar, FXD, the Australian Dollar, FXA, as well as the British Pound Sterling, FXB, Emerging Market Currencies, CEW, the Indian Rupe, ICN, the Brazilian Real, BZF, and the Chinese Yuan, CYB, giving rally to Small Cap Pure Value Shares, RZV, Technology Stocks, MTK, European Stocks, VGK, Vice Socks, BJK, Steel Stocks, SLX, and Semiconductors, XSD.

Yet, Large Cap Growth Stocks, JKE, such as Exxon Mobil, XOM, on the trade lower in Oil, USO, did not participate in the what amounts to the final risk on momentum rally of world central bank monetary authority. Large US Telecom, IYX, shares such as AT&T, T, did not participate in the recent currency driven rally.  Uranium Stocks, URA, Junior Gold Mining Stocks, GDXJ, Gold Mining Stocks, GDX, and Silver Mining Stocks, SIL, were completely abandoned beginning September 14, 2012.

Neoliberalism’s final risk on currency based carry trade rally gave strong seigniorage to the World’s  Banks, IXG, in particular to Ireland’s Bank, IRE, Netherlands Insurer, ING, India’s Banks, IBN, HDB, Brazil Banks, ITUB, BBD, Argentina Banks, BBVA, GGAL, BFR, BMA, Swiss Banks, CS, UBS, Chinese Financials, CHIX, German Bank, DB, UK Banks, RBS, HBS, LYG, Korea Banks, WF, KB, SHG, Japanese Banks, NMR, SMFG, MFG, MTU,  Canadian Banks, RY, BMO, Spain’s Bank, SAN, Australia Bank, WBK; but failed to give seigniorage to Regional Banks, KRE.

Currency carry trade leverage came to carry trade darlings have carried country stocks higher, as seen in the Finviz Screener of the following stocks.
EWI … LUX,
EWU … DLPH, RUK, DEO, UL, ARMH,
EWN … PHG, LYB, ENL, UN,
EWA … BHP, AWC,
EWG … SI, SAP,
EWD … ALV,
EIRL … ACN, JHX, CX, IR, ICLR,
EPU … SCCO
EWL … SYT, ABB, MTD, TEL
EIS … PERI,
EWZ … ABB, FBR, rose vertically
EWQ … SNY,
TUR … TKC,
YAO … NTE, ED, HNP, ACH, LIWA
EWT … HIMX, TSM, ASX, AUO,
EWY … LPL, MX
EZA … SPP, rose vertically
EWW … IBA, ASR, KOF, PAC rose parabolically
EWJ … KYO, KUB, MKTAY,
VGK … BUD, TX
The Euro, FXE, traded parabolically lower on Thursday December 6, 2012 and close at 128.36 on Friday December 7, 2012. Of note the South African Rand, SZR, and the Japanese Yen, FXY, are the loss leaders in global competitive currency devaluation, the first on the failure of gold mining stocks, GDX, and the latter on the huge amounts of Japanese Government Bonds held in Japanese Banks.

The world has reached Peak Prosperity coming from maximum beneficial debt monetization by the world central banks. As world stocks, VT, traded lower on September 14, 2012, they pivoted through Peak Stock Wealth, and today December 7, 2012, they have reached yet another tipping point, as the world is attaining Peak Currency, with the World Major Currencies, DBV, Commodity Currencies, CCX, and Emerging Market Currencies popping higher to produce Peak Credit, with Aggregate Credit, AGG, and Total Bonds, BND, rising to new highs.

Ambrose Evans Pritchard relates the aggressive monetary polciy of the ECB.  The ECB mulls negative rates as Europe’s economic crisis deepens. The European Central Bank has slashed its eurozone growth forecasts and warned that recession will drag on into the middle of next year, sending the euro plunging below €1.30 to the dollar. And Bloomberg reports Draghi leaves rate-cut door ajar as ECB reduces forecasts. The European Central Bank cut its growth and inflation forecasts and President Mario Draghi said the euro area won’t start to shake off its slump until the second half of 2013, leaving the door ajar for further interest- rate reductions. “Weak activity is expected to extend into next year,” Draghi said at a press conference in Frankfurt after policy makers left the benchmark rate at a record low of 0.75 percent. “By the second part of the next year, we should see the beginning of a recovery” as global demand strengthens and the ECB’s low rates feed through to the economy.

Fidelity Investments Distressed Investments, FAGIX, reflects the topping out of toxic investments taken in by the US Federal Reserve under QE 1, and which are held by Investment Banker JPMorgan, JPM, and the Too Big To Fail Bank, RWW, in particular Bank of America, BAC. These banks, because of their debt holdings have been given strong seigniorage, that has accompanied the rise in value of the worst of debt such as Junk Bonds, JNK, Leverage Buyouts, PSP, and Senior Bank Loans, BKLN, which has risen strongly since mid November 2012. The three week currency rally, that began in mid November 2012, has given strong seigniorage to International Corporate Bonds, PICB, which have risen to a new high, as well as to High Yield Municipal Bonds, HYB.  S&P High Beta, SPHB, rose, taking the S&P, SPY, higher. World Stocks Monthly, ACWI, appear to be at the point of entering an Elliott Wave 3 of 3 Down from 2008 high, with November 2012 likely being the actual turn lower, should stocks fall lower in December 2012.

The speculative global debt trade, BND, is coming to an end, and with that a pivot from investment choice to ruler diktat. The dynamos of global growth and trade, together with corporate profit are winding down. The dynamos of regional security, stability, and sustainability, are powering up. The Milton Friedman Free To Choose Floating Currency Regime, that has provided a basis for global economics since in 1971, when the US abandoned the gold standard, is giving way to the Beat Regime of Totalitarian Collectivism and Regionalism.

The fiat money system has collapse, as is seen in the value of Mortgage Backed Bonds, MBB, trading lower in value, resulting in Real Estate, IYR, falling in value, and Mortgage REITS, REM, turning lower, as World Real Estate, DRW, is topping out on Chinese Real Estate, TAO, and World Water Resources, CGW, is topping out on American States Water, AWK.  Peak Money is seen in the topping out of the Major World Currencies, DBV, Commodity Currencies, CCX, and the Chinese Yuan, CYB; and Peak Credit seen in the topping out of the World’s Major Bank, IXG, seen in this Finviz Screener, whether they be European Financials, EUFN, Brazil Financials, BRAF, India Financials, EPI, the Too Big To Fail Banks, RWW, Chinese Financials, CHIX, or Japanese Banks. There are no more speculative adventures or stock safe haven investments.

The risk on global currency carry trade that began in mid November 2012, has rallied European Stocks, VGK, and Asian Stocks, EPP, to the very apex of Systemic Risk on December 6, 2012. All that awaits is a sharp or sustained sell off with impetus coming from a number of sources, such as political conflict in Italy, investor awareness of the excesses of neoliberal credit stimulus, that is world central bank credit liquidity and monetary easing, investor margin calls, or a correction in the price of copper commodity which is used as collateral in the Chinese shadow banking system.

Fiat Money is based upon trust and speculation. Now trust in the world central banks has reached the breaking point; the global credit bubble, BND, is about to burst, and stock values, VT, are going to fall off quickly. Deleveraging out commodities and derisking out of stocks is the process which precedes Financial Armageddon, a global credit bust and worldwide financial system breakdown, as foretold in bible prophecy of Revelation 13:3-4. The chart of Consumer Goods, such as Cleaning Products, Ecolab, ECL, Packaging and Containers, TUP, and BMS, Appliance Manufacturer, WHR, Soft Drink Producer, FIZZ, Toy Manufacturer, MAT, Recreational Vehicle Manufacturer, WGO, Personal Products, IPAR, Rubber And Plastics Manufacturer, CSL, and CTB, Housewares, NWL, Home Furnishings And Fixture, BEST, and FBHS, and ETH, and LEG, Sporting Goods, POOL, Business Equipment, SCS, Auto Parts Manufacturer, DORM, Food Producer, HRL, Textile Manufacturer, PVH, and HBI, Paper Producer, IP, and COLM, and GILD, Steel Manufacturing, MUSA, and ROCK, Diversified Electronics Manufacturer, RVLT, Solar Manufacturer, FSLR, Semiconductors, MPWR, SLAB, LSI,  Gaming Stocks, MCRI, VAC, ASCA, PNK, communicates Peak Fiat Wealth, and the end of the Age of Prosperity and Credit Creation.

The Fiat Money System was replaced by The Diktat Money System on December 7, 2012, as the Euro, FXE, traded below 1.30.

The high in the S&P of 1,465 was attained September 14, 2012, and the recent downturn to 1,412 on October 31, 2102 to 1,412, and rally to 1,418, in front on next week’s Fed meeting is a rally high on the exhaustion of the ECB’s and US Fed’s monetary authority.

The failure of neoliberalism’s seigniorage, that is moneyness, has introducing the Age of Austerity and Debt Servitude, where people will come to trust in the Diktat Money System, where diktat serves as currency, credit, and wealth, as exemplified in Egypt, EGPT, and Argentina, ARGT.

The failure of neoliberalism’s seigniorage, that is moneyness, has introduced the new global economic paradigm of neoauthoritarianism. Crony Capitalism, European Socialism, and Greek Socialism are being replaced by Regionalism and Diktat.

Milton Friedman suggested the Free To Choose Floating Currency Regime, and it was adopted by President Nixon who used it to fund the Vietnam war.  Now Mario Draghi and the Troika are providing the Beast Regime of Regional Governance And Totalitarian Collectivism to establish debt servitude.

Previously seigniorage, that is moneyness, came from a combination of sovereign nation states and central banks. For example, from November 15 through December 7, 2012, a combination of the US Fed Reserves’ and ECB’s monetary authority gave strong seigniorage to Small Cap Pure Value Stocks, RZV, and Small Cap Pure Growth Stocks, RZG, as the Euro, FXE, rose to over 130.

From December 7, 2012 forward, seigniorage will come from a combination of regional sovereign leaders and central banks.  In Europe, a Regional President will be appointed by country Presidents and country Finance Ministers who will work with Mario Draghi and Public Private Partnerships to oversee the Eurozone’s economy.  As moneyness comes more and more from regional governance, investors will be deleveraging ever increasingly out of stocks world wide.  Small Cap Pure Value Stocks, RZV, will fall more precipitously than Small Cap Pure Growth Stocks, RZG, as World Currencies such as the Euro, FXE, the Yen, FXY, the South African Rand, SZR, the Brazilian Real, BZF, the Swedish Krona, FXS, the Swiss Franc, FXF, the British Pound Sterling, FXB, the Indian Rupe, ICN, the Canadian Dollar, FXC, the Australian Dollar, FXA, the Chinese Yuan, CYB, and a whole host of Emerging Market Currencies, CEW, trade competitively lower, while the US Dollar, $USD, UUP, has relative stability.

Beginning the week of December 10  2012, global trade dependent South Korea, EWY, will be falling more rapidly than most other country stocks; yes it will be falling like a rock, reflecting the unwinding of global economic trade. India Infrastructure, INXX, and India Small Caps, SCIF, which have seen speculative investment will also be fast fallers. The country stocks KWY, INXX and SCIF are high beta ETFs which will be losing value very quickly.

The chart of both oil, USO, and Gold, GLD, show a bottoming out; the chart of Silver, SLV, shows a massive consolidation triangle, from which its price will either rise or fall. The investment demand for gold will soon rising taking gold, $GOLD, higher from its current price of $1,700.  Commodities, DBC, traded lower today December 6, 2012, falling through a consolidation triangle, to the edge of a massive head and shoulders pattern, suggesting a fall lower is coming soon.  In the Age of Deleveraging and the Age of Competitive Currency Devaluation, both diktat and physical ownership of gold, either in gold coins, or in Internet trading vaults, such as Gold Is Money or Bullion Vault, will be the sole forms of sustained and sovereign wealth.

7)  … Are you looking for demographic data, graphs, and maps for a zip code?
Have you considered what the average American neighborhood is like? For Seattle, it might be Old Ballard and Woodlawn, which is Zip Code, 98107 with household income of 42,000. One can investigate zip codes with Very Local Data, Movoto, CLR Search, Zip Atlas Zip Area Code and City Data. Hot Pads relates that a two bedroom apartment rents for $1,400 a month.  The Seattle PI reports Seattle-area house prices surge. King County house prices rose by nearly 20 percent over the past year, according to a new report. The median price of a King County house that sold in November was $385,000, up 19.7 percent from a year earlier and 4.1 percent from this October, the Northwest Multiple Listing Service reported Wednesday. The median price in Seattle was $425,000, up 18.1 percent from last November and 1.2 from October. Inventory sunk to 1.7 months worth of homes at the current sales pace in Seattle and 2.1 months worth countywide in November, down from 4.2 months and 4.5 months, respectively, a year ago. Around six months of inventory is generally consistent with a market balanced between buyers and sellers.

8) … Is there a psychopath in your life?
I am retired, and I reside in the 66 Claritas Nielsen PRIZM NE geo-demographic lifestyle segment known as Low Rise Living, a transient world of young, ethnically diverse singles and single parents who rent.

Unfortunately, I continually come in contact with many antisocial men and women.  I seem to be a lightning rod for psychopaths, largely because I bicycle for transportation, carry a laptop, and am outspoken about Christian faith if asked.  If one is a psychopath, these factors tend to “set off” their antisocial ways and I become a target for their  mean and crazy behavior and speech.

I spot these individuals and avoid them at all cost. When leaving home, I turn on my psychopath radar screen, which is observant for psychopathic characteristics. I see these bad actors coming, highlight them in my mind with a yellow marker, and turn away from them. The antisocial individuals are easily identified as they,
1) Wear a hoodie, or a cap, or a hat.
2) Are loud; they whistle, walk loudly, and speak loudly.
3) Are intrusive, that is rude.
4) Use a computer to listen to music,which one can hear a long ways off.
5) Are preeminent; they are like Diotrephes who loves to have the preeminence.
6) Manifest as social sheriffs, community sheriffs, and social coordinators, who are busybodies in other people’s business;
7) Are confrontational about any number of things towards others; they see themselves as overlords in their territory; and see themselves as upholding sound community values.

Anti social people can relate what something says, but they often cannot relate what something means as they lack wisdom, the ability to comprehend and understand. Meaning comes from rules which they create and that they understand. For example they might say, I am a libertarian, but in reality they are a libertine.

Anti social people are both human predators and chameleon, that is, they feast on others and they manifest different persons, that is different personas; they do not have multiple personality disorder; they have no genuine person, they are accomplished mimickers and present different persons as they desire. They have no conscious regard for others; a good conscience was not developed in childhood or their seared theirs with mean and crazy behavior; the only thing they are conscious of is their need to rule over others.

The anti social individual’s satisfaction in life comes from being intrusive and/or domineering in the life of another.

9) … Symbols used in this report
UUP, FXY, FXE, FXC, FXB, FXS, SZR, FXF, CYB, BZF, FXA, ICN, CEW, DBV, UUP, RZV, RZG, EWI, EWP, VGK, VT, GLD, DBC, BND, EPP, IXG, EUFN, STPP, FLAT, TIP, LTPZ, EWY, REM, DRW, MTK, SLX,