Archive for January, 2013

The World Is Pivoting From Liberalism To Authoritarianism On The Exhaustion Of The World Central Banks’ Monetary Authority

January 30, 2013

Financial market report for January 30, 2013

1) … On Tuesday, January 29, 2013, World Shares,WT,  Global Producers, FRX, and Carry Trade Nations, EFA, traded higher.  
Consumer Staples, KXI, rose, taking beverage laden, FMX, KOF,  Mexico, EWW, higher.
Global Natural Resources, GNR, Energy, XLE, XOP, and Energy Service, OIH, IEZ, rose strongly.
Utilities, XLU, rose to strong resistance and DBU, rose to channel resistance.
Leveraged Buyouts, PSP, traded higher
Dividend Appreciation, VIG, traded higher
Vietnam, VNM, the Philippines, EPHE, and Thailand, THD, continued higher.

Technology Shares, MTK, traded lower as, Semiconductors, XSD, Networking Shares, IGN, NTGR, JNPR, FTNT, VMW, RAX, JDSU, CVLT, APKT, RHT, CSCO, AKAM, ARUN, AVNW, and Software Shares, IGV, traded lower.
Airlines, FAA, and Internet Retail FDN, traded lower.
UK Banks, RBS, and lYG traded lower.

2) … On Wednesday January 30, 2013, World Stocks, VT, Major World Currencies, DBV, Emerging Market Currencies, CEW, and Bonds, BND, all traded lower, suggesting that the Stimulus Bubble is bursting on the exhaustion of the world central banks’ monetary authority.
CNBC reports Fed Keeps Stimulus Amid Signs of Weak Economy.  The Federal Reserve said Wednesday it will maintain its asset buying at $85 billion a month and stick to its commitment to hold interest rates near zero until unemployment falls to at least 6.5 percent

Scott Grannis writing in Developments in China explain the end of gold’s rise  make an important statement “As I explained in this post, it now appears that this process of forex purchases and yuan appreciation is at an end.”

Mr Grannis continues,  Don Luskin, a good friend, got me started down the path to an explanation for how China’s forex reserves are connected to the rise in the price of gold. He argues that the outstanding stock of gold is relatively fixed—growing only about 3% per year—but that the demand for gold has jumped by orders of magnitude since China, India, and other emerging markets have enjoyed explosive growth and prosperity gains. In other words, the number of potential buyers of gold has risen much faster than the supply of gold, so naturally gold’s price has increased. This is not a story about massive money printing and hyper-inflationary consequences, it is a story about a one-time surge in the demand for the limited supply of gold.

And that surge in demand for gold stopped almost two years ago as China’s capital inflows have settled down to more manageable levels. Since capital is no longer flooding into China, China’s growth rate is subsiding. Instead of purchasing massive amounts of foreign exchange reserves, China will in the future be purchasing more goods and services from the rest of the world as its economy continues to expand. This is “organic” growth, not super-charged, foreign investment-led growth.

His article does have a number of excellent points, but from a gold bug, that is a physical gold bug position, and from a Christian Dispensationalist position, it has some statements that deserve a presentation of a  contrary position.

First of all, I suggest that one read, the Austrian Economist gold bug authored China averts $482 Billion in local bank defaults via massive Rollover Scheme; Extend-and-Pretend Chinese style  … http://tinyurl.com/bghawmv  … where Mike Mish Shedlock correctly writes the obvious.  “The Chinese banking system is insolvent”.

Yet stunningly, on the day he wrote this Chinese Financials, CHIX, rose, illustrating what a Unified Monster of Authoritarianism that China has become; it is now through mandate, a Regional Beast of central banking, industrialization, CHII,  infrastructure, CHIX, small business operations, HAO, and Banking, CHIX. China’s Rollover Scheme, is an example of bible prophecy of Revelation 6:1-2, being fulfilled, where Jesus Christ has unleashed the First Horseman of the Apocalypse, to effect a global coup d etat passing the baton of sovereignty from nation states to an Authoritarian, Totalitarian Collectivist, and Regional Governance Regime, replacing the current Liberal, Banker, and Nation State Regime, as foretold in Revelation 13:1-4, where diktat, not democracy, wll rule in all of mankind’s ten regions and in all of mankind’s seven regions. Yet this development is unseen to practically everyone, as the Beast Regime has the feet of a bear, the mouth of a lion, and the coat of a leopard. In other words, the Beast Regime, is the ultimate predator, having feet which enables it to stand its ground as well as root out its enemies, a mouth to make authoritative statements, and a coat whereby it blends in with all of mankind’s media, technology, banking, educational, banking, government and religious and think tank institutions.

Jesus Christ is at the helm of the economy of God, Ephesians 3:10, pivoting the world from fiat asset appreciation to fiat asset deflation, as the dynamos of a Flattening Yield Curve, FLAT, ZIRP, global growth, corporate profitability, are failing, on the exhaustion of the world central banks’ monetary authority, and are winding down Crony Capitalism and European Socialism and Asia Exports.

Liberalism’s choice, credit and prosperity, is being replaced by Authoritarianism’s diktat, debt servitude and austerity.

The dynamos of a steepening Yield Curve, STPP, a higher US Ten Year Note Interest Rate, ^TNX, regional stability, security and sustainability, are winding up Regional Governance, Totalitarian Collectivism, and Regional Private Public Partnerships.

And Mr. Grannis continues Meanwhile, as the chart above shows, gold prices in real terms have reached very high levels. Should it be surprising that demand for gold is no longer accelerating now that its price has reached historically high levels relative to other goods and services? Gold is very expensive relative to other things at today’s prices. Demand has its limits. At the same time, the very high price of gold is undoubtedly stimulating all kinds of efforts to increase gold production, thus bringing supply and demand into balance. As we approach two years of relatively stable gold prices, it is reasonable to conclude that the heydays of gold are now a thing of the past.  To sum up, the slowdown in Chinese growth and the end to China’s massive forex purchases are good signs that the boom in gold is over

Definitely China’s growth will slow as will all of Asia’s, as Foreign Investment, EFA, SCZ, and Emerging Market Investment, EEM, VWO, and Global Producer Investment, FXR, has came to an end, as the Yen Bomb went off starting Competitive Currency Deflation.  Japan in its efforts to stimulate inflation, has sunk the Yen, FXY, and has succeeded in producing Liberalism’s last inflationary World Stock, ACWI, Major Currency, DBV, and Emerging Currency, CEW, rally. Now these currencies are no longer rising, they are sinking, and are longer able to provide appreciation in Global Stocks, VT, Bonds, BND, and Commodities, DBC.  And yes, China will not be sucking up FX Currencies,  But an investment demand for gold, will once again commence, as all forms of fiat weatlh will trade lower in value, as the Age of Fiat Asset Appreciation has come to an end, and as the Age of Fiat Asset Deflation has commenced. Under Authoritarianism, physical possession of Gold, in bullion form, or in Internet trading vaults, such as Bullion Vault, as well as Diktat will be the only forms of sovereign wealth. The investment demand for gold will not only be seen in spot gold, $GOLD, rising from $1,650; but also in these metal based ETFS, FSG, UGL, AGQ, NUGT, DGP, seen in this Finviz Screener, rising, and in these gold mining stocks AEM, EGO, GOLD, ANV, RGLD, FNV NGD, AUY, KGC seen in this Finviz Screener, rising as well.

Stocks, currencies, and bonds, all traded lower, as investors feared that the World Central Banks’ monetization of debt, has crossed the rubicon of sound monetary policy, and has now turned “money good”  investments bad. Great Depression II is on the way.

World Stocks, VT, and Global Producers, FXR, traded lower today. But carry trade investing, in particular the  EUR/JPY, rising above it Fibo level of 123.08 seen in this Action Forex Chart Article, caused Carry Trade Nations, EFA, IFSM, to rise higher. Sweden, EWD, the Netherlands, EWN, Ireland, EIRL, Finland, EFNL, and Switzerland, EWL, traded higher on a higher Euro, FXE, that has risen to a yearly high to close at 134.59, and a lower Japanese Yen, FXY, which has fallen to close at 107.60. India, INP, Vietnam, VNM, Thailand, THD, and the Phillippines, EPHE, traded higher. The US Dollar, $USD, UUP, traded  lower to 79.50,  which is a component of Major World Currencies, DBV, which fell sharply lower; its peer  Emerging Market Currencies, CEW traded unchanged, but below its recent high.

Stock ETFs trading lower included
Small Cap Pure Value, RZV, which includes SAH, LAD, KMX, ABG, URI, UHAL, TAL, EEFT, ASR, CAR, POOL, INT, PRAA
Solar, KWT
Networking, IGN
Airlines, FAA
Shipping, SEA
Automobiles, CARZ
Paper Producers, WOOD
Homebuilders, ITB
Retailers, XRT
US Infrastructure, PKB
Steel, SLX
Copper Miners, COPX
Aerospace, PPA
Coal Miners, KOL
Small Cap Industrials, PSCI, which includes MWA, SEH, CSL, CTB, WTS, JBT, BMI, BEAV, MIDD, BGG, LECO, SNA, SXI, ROLL

Dividend ETFs trading lower included
Dividend Appreciation, VIG
Dividend Excluding Financial, DTN
Leveraged Buyouts, PSP
US Telecom, IYZ
Energy Service, OIH … Halliburton, HAL, traded 1.7% lower
Energy, XLE, … Exxon Mobil, XOM, traded 1.1% lower.
Real Estate, IYR, and Small Cap Real Estate, ROOF,
Brazil Financials, BRAF, and Australian Dividend, AUSE
Junk Bonds, JNK
Emerging Market Bonds, EMB,

Countries ETFs trading lower included
Turkey, TUR,
Russia. RSX,
Italy, EWI
Greece, GREK
Spain, EWP
South Africa, EZA
Russell 2000, IWM

Banks trading lower included
Mexico, BSMX
Ireland, IRE,
Brazil, BBDO, ITUB,
Argentina, BFR, BMA, BBVA

Vietnam, VNM, the Philippines, EPHE, and Thailand, THD, continued parabolically higher. And Huaneng Power International, HNP, popped 2.8% higher.

The end of ZIRP has arrived, as Competitive Currency Devaluation, that is debt deflation, is underway as the Major World Currencies, DBV, and Emerging Market Currencies, CEW, are trading below their January 17, 2012 highs. The bond vigilantes have gained control of interest rates globally as reflected in the Interest Rate on the US Ten Year Note, ^TNX, rising above 2.0%, a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, resulting the the the Steepner ETF, STPP, breaking out, and in US Government Bonds, GOVT, and Total Bonds, BND, trading lower since December 6, 2012. The world is at a major tipping point, as is seen in the climaxing of the 200% Inverse Yen, YCS, together with EFA, FXR, EEM. This as Zero Hedge reports NYSE margin debt rises to fresh five year high as short interest slide continues. Soon there will be a massive derisking out of carry trade positions, and a painful squeeze will pinch those long with margin debt, as it becomes all to real that the world central banks’ monetary policies have not only exhausted, but turned “money good” investments bad.

Confirmation that debt deflation is underway is Small Cap Value Shares, RZV, 1.6%, loss, compared to the Small Cap Growth Shares, RZG, 1.4%, loss. The ratio of the two, RZV:RZG, is known as the currency demand curve; and the massive Lollipop Hanging Man Candlestick, at 50 day moving average communicates that there will soon be a sell of currencies and a demand for the US Dollar.

Commodities, DBC, with the exception Timber, CUT, were drawn high as part of Liberalism’s Grand Finale toxic debt, global currency carry trade, risk on rally. Silver, SLV, and Gold, GLD, rose strongly to resistance.

It has been the most toxic of debt, specifically Distressed Investments, like those taken in by the Fed under QE1, traded by the Fidelity Mutual Fund FAGIX, and Junk Bonds, JNK, and Senior Bank Loans, BKLN, that have given seigniorage, that is moneyness to Liberalism’s seven month long rally. These turned parabolically lower signaling an end to Liberalism and the Beginning of Authoritarianism.

Volatility, ^VIX, is  heating up; VIXM, is bottoming out and VIXY, is rising; Inverse Volatility, ZIV, has topped out. And Closed End Equity, CSQ, is no longer able to leverage up over Closed End Debt PFL. as is seen in their combined ongoing Yahoo Finance Chart, strongly suggesting that a stock market turn lower is imminent.

3) … The short selling opportuntiy of a lifetime has arrived; one might sell the following short
Dow Theory communicates that market bull and bear markets commence when both Transportation Shares and Industrial Shares pivot together. Transports, IYT, traded 1.5% lower and Industrials, IYJ, traded 1.0% lower; both from a seven month rally, giving warning that a bear market has commenced. Great Depression II is on the way. The short selling opportuntiy of a lifetime has commenced; one might consider selling the following short..

.. Sector ETFs .. such as PSP, IBB, RZV, FAA, CARZ, BJK, KWT, FXR, TAO, COPX, WOOD, IGN, ITB, FEMS, SEA, FAN, REM, JJT, CHII, FLM, AUSE, XPH, DLS, VIG, EMLP, IHF, IYZ, FDN, XRT, ZIV, seen in this Finviz Screener
.. Country ETFs .. such as EPHE, EWW, THD, TUR, ECNS, VNM, GREK, URTY, EWY, ARGT, EIRL, EWP, CAF, SCIN, FPX, seen in this Finviz Screener
.. and Banks .. such as BAC, C, BCS, LYG, RBS, SAN, DB, IBN, HDB, NMR, MTU, UBS, WF, CS, GGAL, BFR, BMA, BPOP, IRE, CHIX, SMFG, MFG, BSMX, NBG, JPM, seen in this Finviz Screener

And, I see opportunities in going long in the following:
.. Proshares 200% Inverse ETFs .. such as BIS, FXP, SQQQ, SMK, SDD, EEV, EFU,
.. Direxion 300% Inverse ETFs .. such as EDZ, YANG, RUSS, DPK
.. Metal Based ETFS .. such as FSG, UGL, AGQ, NUGT.

These financial instruments can be viewed on my public chart site through Sunday February 3, 2013. http://stockcharts.com/public/1270699

4) … Soon, Regional Governance will rise to replace sovereign nation states, where diktat not credit will rule economic and political life.
Aristides N. Hatzis, an associate professor of law and economics at the University of Athens and  founder of the Greek Crisis Blog, writes in the NYT, Political unity must come first.  Milton Friedman, in a prophetic article published 16 years ago, predicted that the adoption of the euro would have the opposite effect of the one anticipated from its founders: “It would exacerbate political tensions by converting divergent shocks that could have been readily accommodated by exchange rate changes into divisive political issues. Political unity can pave the way for monetary unity. Monetary unity imposed under unfavorable conditions will prove a barrier to the achievement of political unity.”

This is exactly what happened. The troubles in the euro zone shattered the European edifice. The crisis led to political divisions between North and South, rich creditors and poor “PIGS” (Portugal, Italy, Greece, Spain) but also to schisms in every single country: Austerity or growth? Bailout or exclusion? Payment or default?

These divisions might lead to extreme solutions that were almost unthinkable until recently: exiting from the euro zone or the E.U., or perhaps even abandoning the unification project altogether, which could result in isolationism or even something worse, like a rise to power of extremist parties touting radical agendas of nationalism, protectionism and statism. Needless to say that such a development will have dreadful repercussions for Europe as a continent of peace, democracy and wealth. The divisions could be further exacerbated and war could be back. Not the military kind of war but an economic one where barriers will replace cooperation and reciprocity.

Most European leaders realize that Milton Friedman was right in emphasizing political unity as a necessary prerequisite for the monetary union. However I am not sure that they are ready to make the necessary steps. These steps are not politically costless and we are, after all, talking about politicians.

I relate that Regional Governance will rise to replace sovereign nation states. With the failure of monetary sovereignty, that is the exhaustion of the world central banks’ monetary authority, we will see the death of sovereign nation states, and the rise of regionalism, as foretold in Bible prophecy of Daniel 2:25-45, which foretells that the two iron legs of global hegemony of the UK and the US, will give way to a Ten Toed Kingdom of regional governance, where ten toes, that is ten regions, will serve as the basis for economic and political government, composed of a miry mixture of iron diktat and clay democracy.

Sovereignty begets seigniorage, that is moneyness.  Insolvent sovereigns, Greece, GREK, Spain, EWP, Italy, EWI, Ireland, EIRL, Britain, EWU, China, YAO, and their insolvent financial institutions, the European Financial Institutions, EUFN, Lloyds Group, LYG, Royal Bank of Scotland, RBS, and Chinese Financials, CHIX, cannot provide seigniorage.

Out of a soon coming Financial Apocalypse, that is a global credit bust and financial system breakdown, foretold in Revelation 13:3, leaders will meet in summits, to renounce national sovereignty and pool sovereignty regionally, by announcing regional framework agreements which appoint  regional sovereign bodies such as the ECB, and nannycrats, working in public private partnerships, such as Macquarie Infrastructure Company, MIC, to provide the Authoritarianism’s seigniorage of diktat, replacing Liberalism’s seigniorage of choice.  As Liberalism Debts, BND, cannot be repaid, lending will decrease and debt servitude increase.  All of Liberalism’s Credit, AGG, will be applied to every man, woman, and child in the world.

Excessive Credit, in particular, the Fed’s QE4, the ECB’s LTROs, and OMT, and the BoJ’s Unlimited Easing, have turned “money good” investments bad, resulting in both the death of the fiat money system. The diktat money system is coming on line, where the word will and way of monetary popes and their technocratic government cardinals, will enforce ever increasing austerity.

Liberalism’s premier think tank, Brookings Institute, established by Robert S Brookings, promotes research to achieve a cooperative international system; it has received funding from Rockefeller Foundation, and as SourceWatch reports as well from John M. Olin Foundation, F. M. Kirby Foundation, Walton Family Foundation, and Smith Richardson Foundation.

Wikipedia relates Brookings traces its history back to 1916, and has contributed to the creation of the United Nations. It is ranked the number one think tank in the US in the annual think tank index published by the Council On Foreign Policy’s Foreign Policy Magazine.

Just as the vision of Milton Friedman served to provide the Free To Choose Floating Currency Regime as the bedrock for the edifice of Crony Capitalism and European Socialism, a new vision, that of true European economic governance, has been put forth in the December 12, 2013 report Brookings survey on Eurozone progress, written by Justin Vaïsse, Douglas J. Elliott, Domenico Lombardi and Thomas Wright. which envisions a New Europe based upon a new sovereignty scheme, which replaces the scheme of sovereign nation states. “There are many possible roads to Eurozone 2.0. Rather than choosing a path, we have drawn a list of six broad objectives where we think progress is needed in the coming years if the eurozone is to become self-sustaining and resilient: 1. creating a political union, 2. creating a fiscal union, 3. creating a banking union, 4. enhancing the role of the ECB in ensuring liquidity and market access, 5. creating sovereign crisis resolution tools, 6. improving competitiveness and economic adjustment”.

All Forms Of Wealth Trade Lower On The Exhaustion Of The World Central Banks’ Monetary Authority

January 29, 2013

Financial Market Report for Monday January 28, 2013

All forms of fiat wealth traded lower on Monday January 28, 2013.

World Stocks, VT, World Small Cap Stocks, VSS, IFSM, Foreign Investment, EFA, SCZ, Emerging Markets, EEM, Global Producers, FXR,  Bonds, BND,  Commodities, DBC,  Major World Currencies, DBV, and Emering Market Currencies, CEW, traded lower, with Basic materials, XLB, and US Basic Materials, IYM, leading the way lower, on the exhaustion of the world central banks’ monetary authority.

An unwinding of currency carry trade investment that began in June 2012, has commenced.  The Yen, FXY, traded slightly higher, while the Commodity Currencies, CCX, such as the Australian Dollar, FXA, traded strongly lower, inducing Global Natural Resources, GNR, and the Basic Materials, XLB,  lower.

The British Pound Sterling, FXB, led Major World Currencies, DBV, lower. Emerging Market Currencies, CEW, traded lower, and the US Dollar, $USD, UUP, rose to 79.78, continuing a trend  from its December 18, 2012, low of 79.25.

Iron Ore Producers, RIO, and CLF, led Global Miners, PICK, World Stocks, VT, and Foreign Investment, EFA, lower.  And EMMT, DGS, EDIV, led the Emerging Markets, EEM, VWO, lower.
China Minerals, CHIM, led China, YAO, lower.
EXP, TXI, HW, GMO, CCJ, ZINC, UAMY, led US Basic Materials, IYM lower.
PPG, and LYB, led Specialty and Agricultural Chemical Producers, seen in this Finviz Screener lower.
CE, led the Chemical Manufactuers seen in this Finviz Screener lower.
MCP, led Rare Earth Miners, REMX, lower.
AA, CENX, and NOR, led Aluminum Producers lower.
BTU, and WLT, led Coal Miners, KOL, lower.
URZ and UEC, led Uranium Miners, URA, lower.
SCCO, led Copper Miners, COPX, lower.
WY, LPX, KS, BKI, FBR, and IP, led Timber Producers and Paper Manufacturers, WOOD, lower,
MOS, led Fertilizers, SOIL, lower.
TLR, led Gold Miners, GDX, lower
SSRI, led Silver Miners, SIL, lower. Silver Standard Resources, SSRI, has probably been the most yen carry traded stock of all time, and today risk off investment took the shares 3.5% lower to 11.75.

FLS, and ARG, and SNA, led Industrials, IYJ, lower.
ROLL, led Small Cap Industrials, PSCI, lower.
UNP, and UACL, traded lower, but Transportation, IYT, traded unchanged.

Other sectors trading lower included:
SCCO, MKTAY, WHR, EXP, PPG, LYB, and AA led Global Producers, FXR, lower.
TSL, led Solar Stocks, KWT, lower.
AMWD, USG, OC, MAS, and MIC, led US Infrastructure, PKB, lower.
PCP, led Metal Manufacturing, XME, lower.
PHM, KBH, SPF, RYL, LEN, and KBH, led Homebuilders, ITB, lower.
AKS, and PKX, led Steel, SLX, lower.
LMT, led Defense Contractors, PPA, lower.
GNTX, led Automobiles, CARZ, lower.
AMZN, NILE, EBAY, led Internet Retailers, FDN, lower.
JNPR, led Networking, IGN lower.
SBUX, and DIN, led Consumer Discretionary, IYC, lower.
FLT, and FIS, led Business Service Companies, seen in this Finviz Screener, lower.
REGN, led Biotechnology, IBB, lower.
FEIC, led Nanotechnology, PXN, lower.
UAL, and DAL, led Airlines, FAA, lower
DFS, MA, and V, led Credit Services, seen in this Finviz Screener lower.
SHW, LOW, HD, PIR, BBBY, led Home Improvement Stores lower.
Apparrel Retailers, JOSB, MW, ANN, CHS, ANF, and Pet Products, PETM, led Retail, XRT, lower.
JVA, and INGR, led Consumer Staples, KCI, lower.
TOPS, and PRGN, led Shipping, SEA, lower.
TAO, led Global Real Estate, DRW, lower.

World Banks, IXG, trading lower included:
BAC, C, JPM, seen in their combined ongoing Yahoo Finance chart, traded lower.
BCH,
BMA, BFR, BMA,
BSMX
NBG
LYG
NMR, MFG, MTU
ITUB
IRE

Foreign Investment, EFA, SCZ, and Emerging Markets, EEM, VWO, trading lower included:
MKTAY, and ATE, led Japan, NKY, lower.
PXX, led South Korea, EWY lower.
AUO, HIMX, TSM led Taiwan, EWT lower.
PHG, led Netherlands, EWN lower.
South Africa, EZA
Turkey, TUR
Egypt, EGPT
Peru, EPU
Chile, ECH
Argentina, ARGT
Mexico, EWW
The UK, EWU
Phillippines, EPHE
Ireland, EIRL

Natural Gas, UNG, Tin, JJT, Silver, SLV, and Gold, GLD, led Commodities, DBC, lower.

Closed end stocks, CSQ, traded off more than closed end debt, PFL, communicating that equities are no longer able to leverage higher on credit.

The S&P 500, ^SPX, SPY, traded 0.2% lower, to close at 1,500.18, while the Dow, DIA, the Russell 2000, IWM, and the Large Cap Nasdaq, QQQ, traded higher, as seen in their combined ongoing Yahoo Finance Chart.   The weekly chart of the S&P 500, SPY, shows that the week ending January 27, 2013, was an Elliott Wave 5 High at 150. And the weekly chart of World Stocks, ACWI, shows that the week ending January 27, 2013, was an Elliott Wave 2 High at 50. An Elliott Wave 3 Down has commenced in World Stocks, ACWI, this wave is the most destructive of all waves, as it destroys practically all of the wealth invested in the stocks.

Mid Cap Growth, Vanguard IVOG, iShares IJK, and JKH, Powershares PDP, and SPHQ, were the style loss leaders of the day.

The Asset Managers, State Street, STT, and Blackrock, BLK, traded lower today.  ETF Trends reported on December 11, 2013 The Vanguard Effect. Since the market bottomed in March 2009, equity mutual funds have experienced a cumulative net outflow of $242 billion, compared with a net inflow of $270 billion to equity ETFs,

Vanguard is neck-and-neck with BlackRock’s, BLK, iShares for the best-selling ETF family in 2012 as the fund company enjoys its best year ever.  The $130.4 billion in deposits in mutual funds and exchange-traded funds that Vanguard has taken in through November is the most ever for the industry,” Bloomberg News reports. Vanguard is the third-largest ETF provider with $236 billion through the end of November, or about 18% market share, while iShares controls $539 billion and State Street, STT,  manages $318 billion. Year to date, Vanguard has attracted ETF inflows of $46.9 billion and iShares has brought in $47.2 billion. Now the market is watching, with equal parts gratitude and trepidation, the rapid escalation of the Vanguard Effect. It’s asymmetric warfare, as Vanguard’s sole ownership and constituency is its fundholders, the savings it wrings from its buying power are passed on to them, not to shareholders or partners, Bloomberg reports.

In the U.S. marketplace, there are 1,442 exchange traded products from 50 fund managers, according to XTF. It is a $1.3 trillion industry. ETF assets have risen by $265.9 billion this year, or 25%, while net inflows have totaled $163.2 billion.

IPOs, FPX, traded parabolically higher, Jim Cramer is a Television Personality who acts as Wall Street’s Bull Horn. Wikipedia reports that on August 3, 2007, Cramer made a plea for Federal Reserve Chairman Ben Bernanke to cut interest rates supposedly because of comments he was getting from investment banks, and their concern about adjustable-rate mortgage borrowers increasing loan rates. CNBC reports Jim Cramer on IPOs, The best and the rest.  If you’ve been looking for new ideas, chances are you’ve been looking at stocks about to go public. “So far, 2013 is turning out to be a real good year for IPOs,” Cramer said. We’ve seen seven deals since the new year began, and at this point all of them have made you money.” Four of them, Bright Horizons, LipoScience, CyrusOne, and Norwegian Cruise Lines all popped by double digits on their first day of trade. The other 3 were master limited partnership IPOs that were not so hot in their first day of trading, but have since bounced back. “That’s a darned good track record, especially when you consider that we’ve got five more IPOs coming next week, including Zoetis, which is the spin-off of Pfizer’s animal health division,” said Cramer.

The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened significantly, resulting in the Steepner ETF, STPP, breaking out as bond vigilantes gained control of the US Interest Rates forcing US Government Bonds, GOVT, and Total Bonds, BND, lower, as the interest rate on the US Ten Year Note, ^TNX, rose to close at 1.97%.

The most toxic of debt, Distressed Investments, FAGIX, which the US Fed took in under QE 1, and which had supported a seven month risk-on global debt, carry trade rally, on a falling Yen, FXY, traded lower.

Japan in its efforts to stimulate inflation, has sunk the Yen, FXY, and has succeeded in producing Liberalism’s last inflationary World Stock, ACWI, Major Currency, DBV, and Emerging Currency, CEW, rally.

Foreign Investment, EFA, SCZ, and Emerging Market Investment, EEM, VWO, and Global Producer Investment, FXR, came to an end on January 28, 2013, as the Yen Bomb went off starting Competitive Currency Deflation.

Reuters reports Japan approves $1.02T budget for 2013/14, Borrowing is at new highs.

Monetization of debt by the World Central Banks, specifically, the credit liquidity of the US Federal Reserve, the ECB, the BoJ, and the Chinese Central Bank, has crossed the rubicon of sound monetary policy, and has created Debt Deflation, that is Competitive Currency Deflation, as FX Currency Traders, sold the Yen, FXY, short, beginning in October 2013, which rose today January 28, 2013, introducing the Bear Market of all time.  Great Depression II is on the way.  The world has entered into Kondratieff Winter, the final part of the Business Cycle, on what constitutes global money printing.

Excessive Credit, in particular, the Fed’s QE4, the ECB’s LTROs, and OMT, and the BoJ’s Unlimited Easing, have turned “money good” investments bad, resulting in both the death of the fiat money system. Thee Japanification of the Global Economy is underway.

Regional Governance will rise to replace sovereign nation states. With the failure of monetary sovereignty, that is the exhaustion of the world central banks’ monetary authority, we will see the death of sovereign nation states, and the rise of regionalism, as foretold in Bible prophecy of Daniel 2:25-45, which foretells that the two iron legs of global hegemony of the UK and the US, will give way to a Ten Toed Kingdom of regional governance, where ten toes, that is ten regions, will serve as the basis for economic and political government, composed of a miry mixture of iron diktat and clay democracy.

Insolvent sovereigns, GREK, EWP, EWI, EIRL, EWU, EFA, and insolvent financial institutions, EUFN, RWW, cannot provide seigniorage, that is moneyness. The dynamos of global growth and trade are winding down on the exhaustion of the world central banks’ monetary authority. The dynamos of regional security, stability, and sustainability are winding up to provide regional governance. Soon regional sovereign bodies such as the ECB, and nannycrats, working in public private partnerships, such as Macquarie Infrastructure Company, MIC, will provide the seigniorage of diktat.

Liberalism was characterized by wildcat finance, a Doug Noland term. Asset Managers, such as STT and BLK, together with Investment Bankers such as JPMorgan, JPM, and Hedge Funds such as APO, seen in this Finviz Screener, coined prosperity, with credit investments such as Leveraged Buyouts, PSP, and Junk Bonds, JNK.  But Authoritarianism, will be characterized by wildcat governance, where Sovereigns, such as Angela Merkel, and Seigniors, such as Mario Draghi, will enforce austerity and debt servitude.

And as communicated in Bible prophecy of Revelation 13:1-4, Liberalism’s Banker, Milton Free To Choose, Floating Currency Regime, which has underwritten Capitalism and European Socialism, and produced the age of prosperity, through credit liberality, is being pivoted by Jesus Christ, Ephesians 1:10,  to Authoritarianism’s Beast, Diktat, Totalitarian Collectivism, and Regional Governance Regime, to produce the age of austerity, through debt servitude, where the debts of Liberalism, that is Aggregate Credit, AGG, will be applied to every man, woman, and child on planet earth.

Liberalism’s premier think tank, Brookings Institute, established by Robert S Brookings, promotes research to achieve a cooperative international system; it has received funding from Rockefeller Foundation, and as SourceWatch reports as well from John M. Olin Foundation, F. M. Kirby Foundation, Walton Family Foundation, and Smith Richardson Foundation.

Wikipedia relates Brookings traces its history back to 1916, and has contributed to the creation of the United Nations. It is ranked the number one think tank in the US in the annual think tank index published by the Council On Foreign Policy’s Foreign Policy Magazine.

Just as the vision of Milton Friedman served to provide the Free To Choose Floating Currency Regime as the bedrock for the edifice of Crony Capitalism and European Socialism, a new vision, that of true European economic governance, has been put forth in the December 12, 2013 report Brookings survey on Eurozone progress, written by Justin Vaïsse, Douglas J. Elliott, Domenico Lombardi and Thomas Wright. which envisions a New Europe based upon a new sovereignty scheme, which replaces the scheme of sovereign nation states. “There are many possible roads to Eurozone 2.0. Rather than choosing a path, we have drawn a list of six broad objectives where we think progress is needed in the coming years if the eurozone is to become self-sustaining and resilient: 1. creating a political union, 2. creating a fiscal union, 3. creating a banking union, 4. enhancing the role of the ECB in ensuring liquidity and market access, 5. creating sovereign crisis resolution tools, 6. improving competitiveness and economic adjustment”.

Dispensationalism is the key to understanding life.  
Please consider that Christians are the preeminent ones of intellectual and spiritual life; and that Christians present dispensationalism as the key to understanding life.

John McArthur writes in pae 788 of the John McArthur Study Bible of the Davidic right to rule. The theocratic anointing was taken from Saul nd given to David, 1 Samuel 16:1-14. King David no doubt had had this special ministry of the spirit in mind in his prayer of repentance in Psalm 51. He was not afraid of losing his salvation, but rather was concerned that God would remove this spiritual wisdom and administrative skill from him. When the theocracy went out of existence as Judah was carried away into captivity, and the last davidic king was disempowered, the theocratic anointing was no longer given Ezekiel 8-11.

The Key of David is the Key of Sovereign Authority, it is held by Jesus Christ.  Bible scripture gives two references to this Key. In Revelation 3:7-8, Jesus addresses the Church in Philadelphia with these words, “These are the words of him who is holy and true, who holds the key of David. What he opens no one can shut, and what he shuts no one can open. I know your deeds. See, I have placed before you an open door that no one can shut.” And in Isaiah 22:20-22, the Prophet states: “In that day I will summon my servant, Eliakim son of Hilkiah. I will clothe him with your robe and fasten your sash around him and hand your authority over to him. He will be a father to those who live in Jerusalem and to the house of Judah. I will place on his shoulder the key to the house of David; what he opens no one can shut, and what he shuts no one can open.”

Dispensationalism is the ideology that Jesus Christ is at the helm of God’s Sovereignty, Ephesians 1:1-15, working in covenant relationships with God’s chosen ones. Dispensationalism holds that in a former dispensation, that is in a previous epoch, God named the nation of Israel to be preeminent, that is sovereign. In the current dispensation, that is in the current age, it is the Church, that is the called out ones, that have inherited God’s blessings, through his Son, Jesus Christ. God has named these, the Israel of God, to be his presence and authority at this time. Being called Christians, they carry his name, that is His presence and authority. It is from this body of believers, the Prince of God, that all the blessings of God now flow. The Present Truth is that God’s elect, that is God’s chosen ones from Eternity Past, are God’s covenant people, experience Christ as their life, grow in His grace and truth, exist as intellectually superior, are seated with him in heaven’s throne room, sovereignly ruling with him, and are heralding His soon coming one thousand year reign over planet earth, where he will govern from a rebuilt Jerusalem, which will serve as the global city of peace, and be an undivided and sovereign headquarters of God’s world wide prosperity and peace.

In today’s news
Bellingham Herald reports Border traffic at pre 9/11 level. Last year 15.4 million people crossed the Canada/U.S. border into Whatcom County, an 8.5 percent increase compared to 2011. It’s the highest annual total since 1997, when 18.3 million came into Whatcom County, according to data collected by Western Washington University’s Center for Economics and Business Research.  Border traffic is expected to increase in 2013, but not as fast as recent years because there’s been little change lately in key economic factors, such as the Canadian dollar, FXC, and product prices. Hart Hodges, director at Western’s CEBR, said the difference in price on a variety of items, including gasoline and dairy products, remains large enough to make the trip attractive, even if the Canadian dollar were to weaken slightly. The Canadian dollar has remained at around parity with the U.S. dollar for the past three years.

CNBC reports Irish bank debt is a Global Responsibility, former PM says.  Ireland’s shortcomings in underwriting its troubled banks is now a global responsibility that should be addressed, the country’s former Prime Minister John Bruton told CNBC on Monday. The Irish government spends 3.1 billion euros ($4.2 billion) a year to help underwrite Anglo Irish Bank and Irish Nationwide, both of which were hit hard during the housing crash of 2008, and are now part of Irish Bank Resolution Corporation Limited.

Irish policymakers now wish to convert this annual liability into a long-term government bond to ease its debt burden but Reuters news agency reported on Saturday that the ECB have rejected the proposals.

“There is, we would contend in Ireland, EIRL, a Global and European Responsibility to help us now resolve this issue and get back into the markets,” Bruton told CNBC Monday, explaining that the current deal is “sucking money” out of the economy in the short term.

“Government did this in order to prevent a bank run, in a particular bank, which could have led to contagion all over Europe, so in a sense the Irish taxpayer put her resources on the line in order to protect the global economy.”

Directly refinancing banks is against the rules of the EU treaty. Under the current structure, the Irish government will spend 3.1 billion euros each year until 2023 to aid the two banks via a promissory note. The two banks then use the money to help pay-off the Irish central bank.

The European Central Bank wouldn’t be drawn on the news that it had dismissed Ireland’s proposals, telling CNBC.com that the talks are ongoing and any conclusions about the outcome are “premature”.
Ireland, the second country to receive a bailout after Greece, is currently fighting on two fronts. Policymakers traveled to Brussels last week to try to seek an extension on their EU/IMF bailout which granted the country 67 billion euros ($89 billion) in financial support till the end of 2013.

Speaking in Chile on Sunday, current Deputy Prime Minister Eamon Gilmore, called for solidarity and certainty in Europe and highlighted that a failure to conclude negotiations on the promissory notes would have a potentially “catastrophic effect”.

“The question is, is there some other way with dealing with this very big liquidity demand on the Irish taxpayer, spreading the burden more evenly over time,” former Irish Prime Minister Bruton said.
“I think the issue is in great measure a legal problem rather than a political problem at this stage.”
But Bruton added that a solution would be more likely after the German elections, alluding to the possibility that a German Chancellor would be more likely to push forward actions without the threat of upsetting the country’s taxpayers.

Stockbroker NCB has noticed that politicians are showing a softer line towards Ireland, but agreed that receiving the backing of the ECB for the promissory notes would be difficult to secure.
“We expect to see further twists in this tale as we move nearer to the next payment deadline,” it said in a morning note.

Robert Wenzel of Economic Policy Journal asks Will Stanley Fischer become the next Fed Chairman?  Bank of Israel chief Stanley Fischer is stepping down in June as head of the central bank of Israel. Could he become the next Fed chairman? Current Fed chairman Ben Bernanke has indicated he is likely to leave the Fed after his term expires on January 31, 2014.

Fischer was appointed Governor of the Bank of Israel in January 2005 by the Israeli cabinet but did not renounce his American citizenship.

He previously served as Chief Economist at the World Bank. Fischer also served as a professor at the MIT Sloan School of Management from 1977 to 1988.  He was Ph.D. thesis advisor to both Ben Bernanke and Greg Mankiw, while at MIT.

Fischer received his B.Sc. and M.Sc. from the London School of Economics. And his Ph.D. from MIT.

EPJ has previously reported on the strong M.I.T. influence at the Fed. Indeed, in many ways it could be considered the “Fischer influence.”

The Once Great British Empire Has Lost Its Global Power .. Soon The US Will Lose Its Global Supremacy To A Ten Toed Kingdom Of Regional Governance … As The Major World Currencies And The Emerging Market Currencies Trade Lower Terminating Foreign Investment

January 28, 2013

Financial Market report for Friday, January 25, 2013

1) … The two iron legs of global hegemony that have ruled the world from the late 1700s, these being the British Empire and the US, are losing their sovereignty to regional governance.

1A) … From the late 1700s to WWII, the British Empire was the world’s preeminent power, which supported foreign investment and worldwide economic development.
Mr Mises in  Ludwig Von Mises Institute article Foreign Investment relates The difference between the less developed and the more developed nations is a function of time: the British started to save sooner than all other nations, and to accumulate capital and to invest it in business. What happened next was the greatest event in the history of the nineteenth century: the development of foreign investment.

They also started sooner to accumulate capital and to invest it in business. Because they started sooner, there was a higher standard of living in Great Britain when, in all other European countries, there was still a lower standard of living. Gradually, all the other nations began to study British conditions, and it was not difficult for them to discover the reason for Great Britain’s wealth. So they began to imitate the methods of British business. Since other nations started later, and since the British did not stop investing capital, there remained a large difference between conditions in England and conditions in those other countries. But something happened which caused the headstart of Great Britain to disappear.

What happened was the greatest event in the history of the nineteenth century, and this means not only in the history of an individual country. This great event was the development, in the nineteenth century, of foreign investment. In 1817, the great British economist Ricardo still took it for granted that capital could be invested only within the borders of a country. He took it for granted that capitalists would not try to invest abroad. But a few decades later, capital investment abroad began to play a most important role in world affairs.

Without capital investment it would have been necessary for nations less developed than Great Britain to start with the methods and the technology with which the British had started in the beginning and middle of the eighteenth century, and slowly, step by step — always far below the technological level of the British economy — try to imitate what the British had done.

It would have taken many, many decades for these countries to attain the standard of technological development which Great Britain had reached a hundred years or more before them. But the great event that helped all these countries was foreign investment.

Foreign investment meant that British capitalists invested British capital in other parts of the world. They first invested it in those European countries which, from the point of view of Great Britain, were short of capital and backward in their development. It is a well-known fact that the railroads of most European countries, and also of the United States, were built with the aid of British capital. You know that the same happened in this country, in Argentina.

The gas companies in all the cities of Europe were also British. In the mid 1870s, a British author and poet criticized his countrymen. He said, “The British have lost their old vigor and they have no longer any new ideas. They are no longer an important or leading nation in the world.” To which Herbert Spencer, the great sociologist, answered, “Look at the European continent. All European capitals have light because a British gas company provides them with gas.” This was, of course, in what seems to us the “remote” age of gas lighting. Further answering this British critic, Herbert Spencer added, “You say that the Germans are far ahead of Great Britain. But look at Germany. Even Berlin, the capital of the German Reich, the capital of Geist, would be in the dark if a British gas company had not invaded the country and lighted the streets.”

In the same way, British capital developed the railroads and many branches of industry in the United States. And, of course, as long as a country imports capital its balance of trade is what the noneconomists call “unfavorable.” That means that it has an excess of imports over exports. The reason for the “favorable balance of trade” of Great Britain was that the British factories sent many types of equipment to the United States, and this equipment was not paid for by anything other than shares of American corporations. This period in the history of the United States lasted, by and large, until the 1890s.

But when the United States, with the aid of British capital — and later with the aid of its own procapitalistic policies — developed its own economic system in an unprecedented way, the Americans began to buy back the capital stocks they had once sold to foreigners. Then the United States had a surplus of exports over imports. The difference was paid by the importation — by the repatriation, as one called it — of American common stock.

This period lasted until the First World War. What happened later is another story. It is the story of the American subsidies for the belligerent countries in between and after two world wars: the loans, the investments the United States made in Europe, in addition to lend-lease, foreign aid, the Marshall Plan, food that was sent overseas, and other subsidies. I emphasize this because people sometimes believe that it is shameful or degrading to have foreign capital working in their country. You have to realize that, in all countries except England, foreign capital investment played a considerable part in the development of modern industries.

If I say that foreign investment was the greatest historical event of the nineteenth century, you must think of all those things that would not have come into being if there had not been any foreign investment. All the railroads, the harbors, the factories and mines in Asia, and the Suez Canal and many other things in the Western hemisphere, would not have been constructed had there been no foreign investment.

Foreign investment is made in the expectation that it will not be expropriated. Nobody would invest anything if he knew in advance that somebody would expropriate his investments. At the time when these foreign investments were made in the nineteenth century, and at the beginning of the twentieth century, there was no question of expropriation. From the beginning, some countries showed a certain hostility toward foreign capital, but for the most part they realized very well that they derived an enormous advantage from these foreign investments.

In some cases, these foreign investments were not made directly to foreign capitalists, but indirectly by loans to the foreign government. Then it was the government that used the money for investments.
Such was, for instance, the case in Russia. For purely political reasons, the French invested in Russia, in the two decades preceding the First World War, about twenty billion gold francs, lending them chiefly to the Russian government. All the great enterprises of the Russian government — for instance, the railroad that connects Russia from the Ural Mountains, through the ice and snow of Siberia, to the Pacific — were built mostly with foreign capital lent to the Russian government. You will realize that the French did not assume that one day there would be a communist Russian government that would simply declare it would not pay the debts incurred by its predecessor, the tsarist government.

Starting with the First World War, there began a period of worldwide open warfare against foreign investments. Since there is no remedy to prevent a government from expropriating invested capital, there is practically no legal protection for foreign investments in the world today. The capitalists did not foresee this. If the capitalists of the capital exporting countries had realized it, all foreign investments would have come to an end forty or fifty years ago. But the capitalists did not believe that any country would be so unethical as to renege on a debt, to expropriate and confiscate foreign capital. With these acts, a new chapter began in the economic history of the world.
With the end of the great period in the nineteenth century when foreign capital helped to develop, in all parts of the world, modern methods of transportation, manufacturing, mining, and agriculture, there came a new era in which the governments and the political parties considered the foreign investor as an exploiter who should be expelled from the country.

The problem — as you know — is domestic capital accumulation. In all countries today there are very heavy taxes on corporations. In fact, there is double taxation on corporations. First, the profits of corporations are taxed very heavily, and the dividends which corporations pay to their shareholders are taxed again.

What is lacking in order to make the developing countries as prosperous as the United States is only one thing: capital — and, of course, the freedom to employ it under the discipline of the market and not the discipline of the government. These nations must accumulate domestic capital, and they must make it possible for foreign capital to come into their countries.For the development of domestic saving it is necessary to mention again that domestic saving by the masses of the population presupposes a stable monetary unit. This implies the absence of any kind of inflation.

The prerequisite for more economic equality in the world is industrialization. And this is possible only through increased capital investment, increased capital accumulation.

Unions cannot industrialize the country, they cannot raise the standard of living of the workers. And this is the decisive point: One must realize that all the policies of a country that wants to improve its standard of living must be directed toward an increase in the capital invested per capital. This per capita investment of capital is still increasing in the United States, in spite of all of the bad policies there. And the same is true in Canada and in some of the West European countries. But it is unfortunately decreasing in countries like India. We read every day in the newspapers that the population of the world is becoming greater, by perhaps 45 million people — or even more — per year. And how will this end? What will the results and the consequences be? Remember what I said about Great Britain.

In 1750 the British people believed that six million constituted a tremendous overpopulation of the British Isles and that they were headed for famines and plagues. But on the eve of the last world war, in 1939, fifty million people were living in the British Isles, and the standard of living was incomparably higher than it had been in 1750. This was the effect of what is called industrialization — a rather inadequate term.

Britain’s progress was brought about by increasing the per capita investment of capital. As I said before, there is only one way a nation can achieve prosperity: if you increase capital, you increase the marginal productivity of labor, and the effect will be that real wages will rise.

In a world without migration barriers, there would be a tendency all over the world toward an equalization of wage rates. If there were no migration barriers today, probably twenty million people would try to reach the United States every year, in order to get higher wages. The inflow would reduce wages in the United States, and raise them in other countries.

Around 1840, in the western part of Germany — in Swabia and Würtemberg, which was one of the most industrialized areas in the world — it was said, “We can never attain the level of the British. The English have a head start and they will forever be ahead of us.” Thirty years later the British said, “This German competition, we cannot stand it; we have to do something against it.” At that time, of course, the German standard was rapidly rising and was, even then, approaching the British standard. And today the German income per capita is not behind that of Great Britain at all.

In the center of Europe, there is a small country, Switzerland, which nature has endowed very poorly. It has no coal mines, no minerals, and no natural resources. But its people, over the centuries, have continually pursued a capitalistic policy. They have developed the highest standard of living in continental Europe, and their country ranks as one of the world’s great centers of civilization. I do not see why a country such as Argentina — which is much larger than Switzerland both in population and in size — should not attain the same high standard of living after some years of good policies. But — as I pointed out — the policies must be good.

1B) … Foreign investment, that came via US Dollar Hegemony, is starting to fail;, and with that Regional Governance is rising to rule mankind’s economic and political activity.
The Milton Friedman Free To Choose Floating Currency Regime, that provided the US Dollar as the global reserve currency, has failed with the rise of the US Dollar, UUP, and the decline of Major World Currencies, DBV, and Emerging Market Currencies, CEW, in January 2013.

Crony Capitalism and European Socialism is ending and in its place, Regionalism and Totalitarian Collectivism is rising to govern mankind’s economic activities, as a Financial Apocalypse, that is a credit bust and global financial breakdown commences, destroying global prosperity. And a Middle East War as foretold in both Illuminati prophecy and Bible prophecy occurs, destroying global peace.

The British Empire’s vast territories covered the globe giving rise to the phrase “the sun never sets on the British Empire”.

Yet after WWII, the UK fell into increasing debt and was unable to sustain its hegemony.  The  US rose to become the global superpower as President Eisenhower pressured Britain to transfer sovereignty over the Suez Canal to Egypt to keep Egypt from straying into the Russian camp. And the British Empire began to dissolve as nation after nation gained independence. Now the UK is an empire being totally swept into the dustbin of history by excessive debt, by a falling British Pound Sterling, FXB, currency, and by the inherent financial instability of the City of London Financial District toxic banks. The ongoing Yahoo Finance chart of the UK, LYG, RBS, and BCS, reflects their recent rally in Liberalism’s grand finale risk on currency carry trade rally.

In the UK’s place, the US has risen to global preeminence with the US Dollar replacing the British Pound Sterling as the international reserve currency.  With the Milton Friedman Free To Choose Floating Currency Regime firmly in place, and with the repeal of the Glass Steagall Act, and through abundant credit liquidity of the US Federal Reserve’s monetary policy of ZIRP, supported with the ECB with its LTROs and OMT, and with anticipated Unlimited QE from the Bank of Japan, the World has attained Peak Sovereignty and Peak Seigniorage producing Peak Commodities, DBV, Peak Credit, BND, Peak Currencies, DBV, and CEW, and now most likely, Peak Stock Wealth, VT

Peak Peace, has also likely been achieved now that unrest has come to Egypt, and international conflict to Mali. The fall of the Yen on the Bank of Japan’s debt monetization to trade at 107.62, on January 25, 2013, gave credit liquidity and investment leverage, but it will prove to be terribly destructive to global trade and economic growth, as well as global peace, as it is the now the engine of competitive currency devaluation.

Look for Peak Sovereign Wealth to come in February 2013 as Money M2 Money Supply, and  Global Central Bank International Reserve Assets, excluding gold, to turn lower.

Bible prophecy of Daniel 2:25-45, foretells that the two iron legs of global hegemony will give way to a Ten Toed Kingdom of regional governance, where ten toes, that is ten regions, will serve as the basis for economic and political government, composed of a miry mixture of iron diktat and clay democracy.

God has appointed Jesus Christ to oversee the economy of God, Ephesians 1;10. He is no longer dealing with “a company of nations”, that is Britain, and a “great nation”, that is America, rather Jesus is pivoting the world from global economics based upon sovereign nation states to regional economics, based upon sovereign regional leaders and soveign regional bodies such as the ECB. To accomplish His aims, he has unleashed the First Horseman of the Apocalypse, to pass the baton of sovereignty from nation states to region leaders and regional bodies, as is seen in Revelation 6:1-2. The other three Horsemen, will be following to utterly destroy all current forms of economic and political life.

In prophetic announcement, the November 5, 2012 issue of Der Spiegel, shows a very sick Uncle Sam on a hospital bed, the headline reads The American Patient The Decline of a Great Nation and which suggests a soon coming disintegration of Dollar Hegemony. The coming fall of America is simply part of God’s destiny, planned from Eternity Past. Liberty Crier writes America is not the king of the world, Ron Paul relates.

God’s sword of Judgement fell upon the world in May 2012, with the emergence of the Greek Sovereign Debt and Banking Crisis, highlighting the fiscal prolificacy of the PIGS. And the so called Great Christian America, is about to be humbled by a soon coming global war, as Illuminati genius, Albert Pike, in the 19th Century, established a framework for bringing about the One World Order through Three World Wars. Based on a vision revealed to him, Albert Pike wrote a blueprint of events that would play themselves out in the 20th century, with even more of these events yet to come.

It is this blueprint which we believe unseen leaders are following today, knowingly or not, to engineer the planned Third and Final World War. Albert Pike was born on December 29, 1809, in Boston, and was the oldest of six children born to Benjamin and Sarah Andrews Pike. He studied at Harvard, and later served as a Brigadier-General in the Confederate Army. After the Civil War, Pike was found guilty of treason and jailed, only to be pardoned by fellow Freemason President Andrew Johnson on April 22, 1866, who met with him the next day at the White House. On June 20, 1867, Scottish Rite officials conferred upon Johnson the 4th to 32nd Freemasonry degrees, and he later went to Boston to dedicate a Masonic Temple. Pike was said to be a genius, able to read and write in 16 different languages.

At various stages of his life we was a poet, philosopher, frontiersman, soldier, humanitarian and philanthropist. A 33rd degree Mason, he was one of the founding fathers, and head of the Ancient Accepted Scottish Rite of Freemasonry, being the Grand Commander of North American Freemasonry from 1859 and retained that position until his death in 1891. In 1869, he was a top leader in the Knights of the Ku Klux Klan.

Pike’s right-hand man was Phileas Walder, from Switzerland, who was a former Lutheran minister, a Masonic leader, occultist, and spiritualist. Pike also worked closely with Giusseppe Mazzini of Italy (1805-1872) who was a 33rd degree Mason, who became head of the Illuminati in 1834, and who founded the Mafia in 1860. Together with Mazzini, Lord Henry Palmerston of England (1784-1865, 33rd degree Mason), and Otto von Bismarck from Germany (1815-1898, 33rd degree Mason), Albert Pike intended to use the Palladian Rite to create a Satanic umbrella group that would tie all Masonic groups together. Albert Pike died on April 2, 1891, and was buried in Oak Hill Cemetery, although the corpse of Pike currently lies in the headquarters of the Council of the 33rd degree of the Scottish Rite of Freemasonry in Washington, D.C.

During his leadership, Mazzini enticed Albert Pike into the (now formally disbanded, but still operating) Illuminati. Pike was fascinated by the idea of a one world government, and when asked by Mazzini, readily agreed to write a ritual tome that guided the transition from average high-ranking mason into a top-ranking Illuminati mason (33rd degree). Since Mazzini also wanted Pike to head the Illuminati’s American chapter, he clearly felt Pike was worthy of such a task. Mazzini’s intention was that once a mason had made his way up the Freemason ladder and proven himself worthy, the highest ranking members would offer membership to the secret ‘society within a society’.

It is for this reason that most Freemasons vehemently deny the evil intentions of their fraternity. Since the vast majority never reach the 30th degree, they would not be aware of the real purpose behind Masonry. When instructing Pike how the tome should be developed, Mazzini wrote the following to Pike in a letter dated January 22, 1870. Remember that Freemasonry wasn’t started by Pike – rather it was infiltrated by the Illuminati who were looking for a respectable forum in which to hide their clandestine activities.

After Mazzini’s death on March 11, 1872, Pike appointed Adriano Lemmi (1822-1896, 33rd degree Mason), a banker from Florence, Italy, to run their subversive activities in Europe. Lemmi was a supporter of patriot and revolutionary Giuseppe Garibaldi, and may have been active in the Luciferian Society founded by Pike. Lemmi, in turn, was succeeded by Lenin and Trotsky, then by Stalin. The revolutionary activities of all these men were financed by British, French, German, and American international bankers; all of them dominated by the House of Rothschild.

Between 1859 and 1871, Pike worked out a military blueprint for three world wars and various revolutions throughout the world which he considered would forward the conspiracy to its final stage in the 20th Century.

Albert Pike received a vision, which he described in a letter that he wrote to Mazzini, dated August 15, 1871. This letter graphically outlined plans for three world wars that were seen as necessary to bring about the One World Order, and we can marvel at how accurately it has predicted events that have already taken place.

Pike’s Letter to Mazzini. It is a commonly believed fallacy that for a short time, the Pike letter to Mazzini was on display in the British Museum Library in London, and it was copied by William Guy Carr, former Intelligence Officer in the Royal Canadian Navy. The British Library has confirmed in writing to me that such a document has never been in their possession. Furthermore, in Carr’s book, Satan, Prince of this World, Carr includes the following footnote: “The Keeper of Manuscripts recently informed the author that this letter is NOT catalogued in the British Museum Library. It seems strange that a man of Cardinal Rodriguez’s knowledge should have said that it WAS in 1925”. It appears that Carr learned about this letter from Cardinal Caro y Rodriguez of Santiago, Chile, who wrote The Mystery of Freemasonry Unveiled.
To date, no conclusive proof exists to show that this letter was ever written. Nevertheless, the letter is widely quoted and the topic of much discussion. Following are apparently extracts of the letter, showing how Three World Wars have been planned for many generations.

“The First World War must be brought about in order to permit the Illuminati to overthrow the power of the Czars in Russia and of making that country a fortress of atheistic Communism. The divergences caused by the “agentur” (agents) of the Illuminati between the British and Germanic Empires will be used to foment this war. At the end of the war, Communism will be built and used in order to destroy the other governments and in order to weaken the religions.” 2 Students of history will recognize that the political alliances of England on one side and Germany on the other, forged between 1871 and 1898 by Otto von Bismarck, co-conspirator of Albert Pike, were instrumental in bringing about the First World War.

“The Second World War must be fomented by taking advantage of the differences between the Fascists and the political Zionists. This war must be brought about so that Nazism is destroyed and that the political Zionism be strong enough to institute a sovereign state of Israel in Palestine. During the Second World War, International Communism must become strong enough in order to balance Christendom, which would be then restrained and held in check until the time when we would need it for the final social cataclysm.” 3 After this Second World War, Communism was made strong enough to begin taking over weaker governments. In 1945, at the Potsdam Conference between Truman, Churchill, and Stalin, a large portion of Europe was simply handed over to Russia, and on the other side of the world, the aftermath of the war with Japan helped to sweep the tide of Communism into China. (Readers who argue that the terms Nazism and Zionism were not known in 1871 should remember that the Illuminati invented both these movements. In addition, Communism as an ideology, and as a coined phrase, originates in France during the Revolution. In 1785, Restif coined the phrase four years before revolution broke out. Restif and Babeuf, in turn, were influenced by Rousseau – as was the most famous conspirator of them all, Adam Weishaupt.)

“The Third World War must be fomented by taking advantage of the differences caused by the “agentur” of the “Illuminati” between the political Zionists and the leaders of Islamic World. The war must be conducted in such a way that Islam (the Moslem Arabic World) and political Zionism (the State of Israel) mutually destroy each other. Meanwhile the other nations, once more divided on this issue will be constrained to fight to the point of complete physical, moral, spiritual and economical exhaustion…We shall unleash the Nihilists and the atheists, and we shall provoke a formidable social cataclysm which in all its horror will show clearly to the nations the effect of absolute atheism, origin of savagery and of the most bloody turmoil. Then everywhere, the citizens, obliged to defend themselves against the world minority of revolutionaries, will exterminate those destroyers of civilization, and the multitude, disillusioned with Christianity, whose deistic spirits will from that moment be without compass or direction, anxious for an ideal, but without knowing where to render its adoration, will receive the true light through the universal manifestation of the pure doctrine of Lucifer, brought finally out in the public view. This manifestation will result from the general reactionary movement which will follow the destruction of Christianity and atheism, both conquered and exterminated at the same time.” 4  Since the terrorist attacks of Sept 11, 2001, world events, and in particular in the Middle East, show a growing unrest and instability between Modern Zionism and the Arabic World. This is completely in line with the call for a Third World War to be fought between the two, and their allies on both sides. This Third World War is still to come, and recent events show us that it is not far off.

Eric Margolis writes in Economic Policy Journal sets the backdrop for rising Islamic challenges, Why Mali has become a crisis for France, the US and Britain. Western governments and media have done the public a major disservice by trumpeting warnings of an “Islamist threat” in Mali.Mali’s troubles began last year when it shaky government was overthrown. Meanwhile, heavily-armed nomadic Tuareg tribesmen, who had served Libya’s late Col. Gadaffi as mercenaries until he was overthrown by French and US intervention, poured back into their homeland in Mali’s north. A major unexpected consequence. Fierce Tuareg warriors, who battled French colonial rule for over a century, were fighting for an independent homeland, known as Azawad. They, a small, violent jihadist group, Ansar Din, and another handful of obscure Islamists drove central government troops out of the north, which they proclaimed independent, and began marching on the fly-blown capital, Bamako. Other shaky western-backed West African governments took fright at events in Mali, fearing they too might face overthrow at the hands of angry Islamists calling for stern justice and an end to corruption. Nigeria, the region’s big power, vowed to send troops to Mali. Nigeria has been beset by its own revolutionary jihadist movement, Boko Haram, which claims Muslim Nigerians have been denied a fair share of the nation’s vast oil wealth, most of which has been stolen by corrupt officials. France’s overheated claim that it faces a dire Islamic threat in obscure Mali could attract the attention of numbers of free-lance jihadists, many who are now busy tearing up Syria. Paris was better off when it claimed its troops were to protect ancient Muslim shrines in Timbuktu. Or it could have quietly sent in the Foreign Legion, as in the past.

Of note Business Insider reports ‘I will win, even if Damascus is destroyed’, Assad Says.

An inquiring mind asks Is The Ezekiel 38 War coming soon?

1C) … Jesus Christ has been appointed sovereign in mankind’s unfolding dispensations, that is epochs, as is presented in Ephesians, 1:10.  
Dispensationalism holds that in a former dispensation, that is in a previous epoch, God named the nation of Israel to be preeminent, that is sovereign. In the current dispensation, that is in the current age, it is the Church, that is the called out ones, that have inherited God’s blessings, through his Son, Jesus Christ.  God has named these, the Israel of God, to be his presence and authority at this time. Being called Christians, they carry his name.  It is from this body of believers, the Prince of God, that all the blessings of God now flow. The Present Truth is that God’s elect, that is God’s chosen ones from Eternity Past, are God’s covenant people, experience Christ as their life, grow in His grace and truth, and are heralding His soon coming one thousand year reign over planet earth, where he will govern from a rebuilt Jerusalem, which will serve as the global city of peace, and be an undivided and sovereign headquarters of God’s world wide prosperity and peace.

True Christians believe that all things are of God, and know that all sovereignty coalesces in Christ, and honor Him with their trust, as he is the sole Trustworthy One.  In contrast, many trust in the Dollar, or in fiat constructs such as Libertarianism, Socialism, Republicanism, or Roman Catholicism. Such have no awareness of God’s Dispensation, Ephesians 3:10, because they are addicted to social media such as Facebook, Television Programs such as Big Love, or Syndicated Radio Programs like Rush Limbaugh or Glenn Beck, or Tea Party Conventions, or any number of Libertarian Internet sites. In contrast, Christians are addicted to the Word of God, listen to Christian programming, buy Study Bibles, such as the John McArthur Study Bible, and acquire Bible Study Materials from sources such as Logos Bible Software.  Genuine Christians, worship God in Spirit and in Truth, sacrifice financially for the needs of others, and are responsible in some personal acts of charity.  However, many fiat individuals, worship celebrities and engage in conspicuous consumption; the apostle Paul pointed out that such covetousness is idolatry, Colossians 3:5.

Reuters reports Eurogroup bids farewell to mercurial Juncker, heralds new era. And Holly Ellyatt of CNBC believes, The Euro Zone crisis is over…for now.  And whereas some call for “national repentance”, as a basis for “restoration” of “God’s Blessings”. True Believers live by the knowledge that “all blessings” are found in a relationship with Christ,and that bible prophecy that current sovereign nation states were planned from eternity past to experience a rise and fall in the cycling of power from the UK and the US, to a globally sovereign beast regime of authoritarianism, totalitarian collectivism and regional governance, that is rising out of the Mediterranean Sea nations’ banking and debt crisis, specifically the PIGS, that is Portugal, Italy, Greece, and Spain, which  will come to rule in the world’s ten regions, and occupy in all of mankind’s seven institutions, Revelation 6:1-2, Daniel 2:25-45, and Revelation 13:1-4.

1D) … Competitive Currency Devaluation is underway on monetization of debt by the UK and by Japan … and is the dynamo whereby Inflationism is turning to Destructionism … and is the power whereby Liberalism is transitioning to Authoritarianism … and  is the force whereby Crony Capitalism and European Socialism are being replaced by Regionalism and Totalitarian Collectivism.

The world central banks’ monetary policies of quantitative easing and credit liquidity are creating Liberalism’s Peak Prosperity. Peak Commodities, DBC, occurred on September 10, 2012, Peak Credit, BND, on December 3, 2012, Peak Currencies, DBV, and CEW, on January 18, 2013, and very likely, Peak Stock Wealth, VT, on January 25, 2013.

The Japanese Yen and now the British Pound Sterling are the first Major World Currencies to fall lower in value. The Yen, FXY, closed at 107.82.  Shares of Japanese multinationals such as Toyota, TTM, and Makita, MKTAY, have surged in reaction as a weaker Yen, FXY, makes them significantly  more competitive versus their global competitors, such as F, GM, and ITW.  The Yen’s weakness is a direct result of the campaign promises and policies of new Prime Minister Shinzo Abe, who won a landslide election in December 2012. And The British Pound Sterling, FXB, traded lower to 156.28. Richard Blackden of the Telegraph writes EU doubts put pound’s ‘safe haven’ status at risk, traders warn. The pound risks losing the ‘safe-haven’ status it has enjoyed among international investors as doubts grow over Britain’s future in the European Union, one of the world’s largest currency traders has warned. Scott Hamilton of Bloomberg reports Britain’s economy shrank more than forecast in the fourth quarter as the boost from the Olympic Games unwound and oil and gas output plunged, leaving the country on the brink of an unprecedented triple-dip recession. Gross domestic product dropped 0.3% from the three months through September, when it grew 0.9%.

Satyajit Das writes in Econo Monitor The Setting Sun – Japan’s forgotten debt problems.   In 1979, the publication of Harvard sociologist Ezra Vogel’s international best-selling book Japan As Number 1, signalled the nation’s arrival as an economic power. Today, Japan’s industrial and economic decline is palpable. But in 2012, Japan’s Nikkei, NKY, rose by around 23%.  Much of the increase reflects faith in the reflation strategy of second time Prime Minister Shinzo Abe to increase growth through an additional US$120 billion of public spending, create inflation to reduce the debt to GDP ratio and devalue the Yen. The strategies, which have all been tried before with limited success, may not restore the health of the Japanese economy. And Financial Times reported BoJ follows Fed and ECB with new pledge.  The Bank of Japan has bowed to political pressure and followed the lead of the US Federal Reserve and the European Central Bank as it pledged to buy a potentially unlimited amount of government bonds.

Sovereignty begets seigniorage. Business Insider reports $7.66 Trillion of stimulus In America from 2008 to 2012, itemized. It has been US Federal Reserve credit liquidity and monetary easing, that is money printing, that has caused a stunning rise in M2 Money, which gave moneyness to Global Producers, FXR, as well as to Small Cap Revenue Shares, RZV, ASR, and Small Cap Growth Shares, RZG, such as HIMX. Specifically it has been national sovereignty that has supported currency carry trade foreign investment, and given moneyness to companies worldwide, as is seen in the ongoing Yahoo Finance chart of the following corporations, together with the S&P, SPY. Leading Country Stocks, such as EFA, IFMS, DLS, and Economic Producer, FXR, stocks include the following; their charts suggests a market top is being achieved.
Japan, KUB … Industrial Equipment
Mexico, FMX … Consumer Discretionary
Italy, E … Energy
Netherlands, LYB, …. Materials
Netherlands, UN … Consumer Goods
Brazil, SBS ….Utilities,
Denmark, NVO … Health Care
United Kingdom, ARMH … Technology
India, HDB … Banking
US, VZ … Telecom

It is very likely that an Elliott Wave 5 high is being achieved in the S&P 500. On Tuesday, January 22, 2013, the chart of the S&P, $SPX, SPY, hit a 5 year high as Bespoke Investment Group reports in Seeking Alpha, 10th Longest 10% Rally on Record.  World Stocks, VT, traded to a new rally high on rising Basic Material Stocks, IYM, and XLB, and rising Financial Stocks, XLF. Global Producers, FXR, rose to a new high.  Countries such as Greece, GREK, Italy, EWI, Ireland, EIRL, Spain, EWP, Argentina, ARGT, Thailand, THD, Australia, EWA, Netherlands, EWN, Finland, EFNL, Russell 2000, IWM, Russia, RSX, and the Shanghai Shares, CAF, rose to new rally highs. Over the last two years, EXP, MIC, HW, BECN, MHK, have been basic material leaders, that have driven US Infrastructure, PKB, consistently higher. Of note, Transportation, IYT, CP, UNP, KSU, CVTI, JBHT, ODFL, and Homebuilding, ITB, rose strongly.

Peak Currencies, DBV, and CEW, occurred January 17, 2013, as Competitive Currency Devaluation commenced at that time. The Currency Demand Curve, RZV:RZG,  has fallen from 50 day support, which turned the US Dollar, $USD, UUP, higher since January 14, 2013.  Major World Currencies, DBV, and Emerging Market Currencies, CEW, have been trading lower since January 17, 2013, which have turned Emerging Market Stocks, EEM, lower, reflecting an extinguishment of foreign investment; this on the exhaustion of the World Central Banks’ monetary authority ability to sustain global growth and corporate profitability, as CNBC reports IMF cuts world growth forecast on Euro Crisis. It is the Nikkei, NKY, shares, such as TTM, HMC, NSANY, KUB, MKTAY, that are leading Japan Shares, EWJ, JSC lower, these have induced the Automobiles, CARZ, seen in this Finviz Screener to trade lower.  The Euro, FXE, closed at 133.55 on January 25, 2013.

Of note, Closed End Equities, CSQ, likely peaked out, trading 0.1% higher, as Closed End Debt Fund, PFL, traded 0.8% lower The ratio of these, CSD:PFL, two has been trading lower since September 14, 2012, suggesting stocks are reaching a point where they will no longer leverage higher over credit.

It has been the most toxic of debt, specifically, Distressed Investments, FAGIX, (like the debt taken in by the US Federal Reserve under QE1), Junk Bonds, JNK, Leveraged Buyouts, PSP, and Senior Bank Loans, BKLN, seen in this combined ongoing Yahoo Finance Chart, that have been the basis for Liberalism’s global debt based, currency carry trade rally, that commenced with the anticipation of the ECB’s OMT, in June 2012. The WSJ reports that this week, the fuel for the stock rally continued in full supply Junk-bond yields fall to fresh all-time low. The world passed through Peak Credit, AGG, on December 6, 2012, and it is unlikely that the toxic debt can continue to give seigniorage, that is moneyness, to stocks, VT. It is likely that a stock market top was achieved January 25, 2013..

Of note, this week, these corporation KUB, MKTAY, NOK,  LPL, TSM, MAT, QCOM, TTM, lost investment value on debt deflation, specifically currency deflation as monetization of debt by the world central banks has turned “money good” investments bad.

The world is attaining Peak Stock Wealth, VT, and Peak Carry Trade Investing, EFA, just as the ability of the world central banks’ monetary authority to sustain global growth and corporate profitability is starting to exhaust. The Too Big To Fail Banks, RWW, the European Financials, EUFN, and the Regional Banks, KRE, rose, taking the Major World Banks, IXG, to a new rally high, as Chinese Financials, CHIX, traded lower

The Fiscal Times writes Big Banks’ biggest foe says it’s time to break up.  And the Economic Populist writes Mr. Fisher Goes to Washington.  And Richard W. Fisher of The Federal Reserve Bank of Dallas writes Ending Too Big To Fail,  A proposal for reform before it’s too late.

Frankly it is too late, Competitive Currency Devaluation is now the dynamo whereby Inflationism is turning to Destructionism. World Stocks, VT, and World Carry Trade Republics, EFA, traded this week as follows:
EWM … -3.7%
EPU … -3.1% SCCO Investors are derisking out of the Copper Mining Republic
IDX … -1.3%
ECH … -1.0%
YAO … -1.7%  Investors are derisking out of the Asian Communist Republic
EWT … -1.6% … TSM -2.1% … Investors are derisking out of the Semiconductor Republic.
INDY…  -0.4% … SCIN -3.6% … TTM -9.4% Investors are derisking out of the Cheap Labor Republic
EWC … -0.7%

EWJ  …  unchanged … KUB, TTM
EWZ …  unchanged … FBR
EPHE  … unchanged

EFNL … 0.9% …  NOK
EWD … 2.2% … ERIC,
EWN  … 2.6 … PHG, ASML
EWU … 1.6% … ARMH
EWI … 1.8% … E
EWG … 2.9% …SAP
EWA … 0.8% …BHP
EWL … 2.1% … FWLT, MTD,
EWU … 2.0% … ARMH

Liberalism’s top thirteen carry trade nations, EFA, and their leading stocks are seen in this Finviz Screener; look for strong capital disinvestment to come out of the nations which have seen tremendous capital investment; these include,
EWY …  -4.2% …  LPL  -2.2%  Investors are derisking out of  Liberalism’s Consumer Electronics Republic. CME Group reports The South Korean won led gains among global currencies in carry trade performance during the fourth quarter, posting returns in excess of 4% against the U.S. dollar. Now that carry trade is beginning to unwind.
THD … 1.6%
TUR … -1.2%
ECNS … -1.8%
VNM … 2.9%
GREK … 5.4%
URTY … 4.3%
ARGT … 0.3%
EIRL …  +3.4% … IR +1.7%
EWW … 0.7% … FMX
EWP … 2.4%
CAF …  3.6%
VNM … 3.0%.

Ireland, EIRL, is a heavily indebted nation; yet this did not hinder it from being one of the poster countries for nation investment, as it was given seigniorage of a rising Euro, FXE, by Mario Monti’s LTROs’ and OMT.  And, Argentina, one of Liberalism’s basket cases, was given risk-on seigniorage by a rise in Global Financials, IXG. Thailand was given seigniorage by the production of a wide variety of industrial and consumer products. Turkey, TUR, has been a destination of hot money flows out of Iran. And Vietnam, VNM, Asia’s economic basket case, was given risk-on carry trade cool aide seigniorage from all over Asia.

Heather Stewart of the Guardian writes Dr Doom says quantitative easing will create Zombie Banks, firms and borrowers: Nouriel Roubini said at Davos that central bankers risked saddling the economy with debt-burdened QE addicts. Liberalism’s Zombie Banks are BAC, C, BCS, LYG, RBS, SAN, DB, IBN, HDB, NMR, MTU, UBS, WF, CS, GGAL, BFR, BMA, BPOP, IRE, CHIX, SMFG, MFG, BSMX, NBG, and JPM, which are seen in this Finviz Screener.

It has been capital investing, coupled with a higher level of educational achievement, that has produced Liberalism’s great places to live
Austin, TX
Boulder, CO
Seattle, WA
Silicon Valley, that is San Jose, CA all the way to San Francisco, CA
Irvine, CA
Raleigh, NC, corporate home of Red Hat
Madison, WI
Plano, TX,
The Oil Belt, that is Midland, TX to Odessa, TX
Bellingham, WA, the city of subdued excitement

And it has been capital disinvestment or lack thereof, coupled with low educational achievement, that has produced Liberalism’s worst places to live
Newark, DE
Providence, RI,
Athens, GA
Birmingham, AL
Newark, NJ,
Cleveland, OH,
San Bernadino, CA
Stockton, CA
Miami, FL,
Detroit, James Brewer of WSWS writes New report details explosive growth of poverty among Detroit children. A report issued, published in PDF Format, this week entitled “State of the Detroit Child” quantifies the city’s catastrophic social crisis and reveals an unprecedented level of social devastation.

Under Liberalism, Banker Driven, and Floating Currency Regime, Differential Educational Achievement, was a factor in meritocracy, that underwrote foreign investment, and capital accumulation. But Competitive Currency Devaluation is the force whereby Liberalism is transitioning to Authoritarianism, …. and it is the dynamic whereby Crony Capitalism and European Socialism is being replaced by Regionalism and Totalitarian Collectivism.

This transition in global empires was foretold by the Apostle John  in bible prophecy of Revelation 13:1-4, where the Beast Regime of Authoritarianism, Regionalism, and Totalitarian Collectivism, is seen rising from the prolificacy of Mediterranean Sea countries of Greece, GREK, Italy, EWI, and Spain, EWP.  And it was foreseen by the prophet Daniel in Daniel 2:25-45, where the two iron empires, the British Empire, and the USA Empire, would lose their global hegemony, and a Ten Toed Kingdom of Regional Goverance, with toes of iron diktat and clay democracy, would rise in their place, before the End Time Beast Regime of Daniel 7:7, would come to govern the entire world for 3 ½ years, Daniel 9:25, where the Sovereign, Revelation 13:5-10, and his Seignior, meaning top dog banker who takes a cut, Revelation 13:11-18, will rule through the charagma money system, where all will be required to take the Sovereign’s Mark, that is an etching in, or tattoo upon, the hand or forehead, in order to buy or sell.

After the soon coming Financial Apocalypse of Revelation 13:3, look for regional leaders to meet in summits,, to renounce national sovereignty, and pool sovereignty regionally, and announce regional framework agreements, which provide for regional security, stability and sustainability, establishing regional governance.

2) … An investment demand for gold will be commencing in February 2013.
Beginning in the last week of January 2013, or the month of February 2013, expect to see a  rise in value in the following precious metal based ETFS, FSG, UGL, AGQ, NUGT, DGP, seen in this Finviz Screener, as Liberalism’s final rally fades. This week’s toxic debt saturation, which poured out Liberalism’s cool aid, drove spot gold, $GOLD, down to its 200 day moving average at  $1670.

3) … In the news
In Play reports Invesco Mortgage Capital announced that the public offering of 15,000,000 shares of its common stock has priced at $21.00 per share, IVR, 21.77. Co announced that the public offering of 15,000,000 shares of its common stock has priced at $21.00 per share, resulting in gross proceeds of $315 million, before deducting underwriting discounts and estimated offering costs. In addition, the Co has granted the underwriters a 30-day option to purchase up to an additional 2,250,000 shares of the Co’s common stock. The offering is expected to close on January 28, 2013. Co expects to use the net proceeds from this offering to make additional acquisitions of residential and commercial mortgage backed securities and mortgage loans, on a leveraged basis, and for other general corporate purposes.

Elaine Meinel Supkis writes Circuit Court Forbids Presidential Appointments During Recess.  For many years, GOP Presidents have put into courts many ‘conservative’ judges who in turn, have worked as activists to overrun the Presidential and Congressional processes. This is how the right wingers on the Supreme Court suddenly and flippantly overturned all campaign finance reforms. Now, they are gleefully preventing the President from assigning people to positions when the Congress refuses to OK his choices.

4) … Summary

4-1) … The world central banks’ monetary authority has produced peak fiat sovereign wealth.
24thGold author Nathan Lewis of New World Economics relates The mind-bending ignorance of the Bretton Woods years. Austrian economists have consistently and vociferously decried the Banker fiat money system built on floating currencies, and credit liquidity, to be financially unsound, as well as to be  inflationary.  These will be even more disparaging of the Beast diktat money system, as foretold in Revelation 13:1-4, which will be built on debt servitude, as a violation of liberty. Charles Hugh Smith has already picked up the editorial banner, and is pounding away on his blogging drum, as he writes The road to debt serfdom

Please consider that there is no personal sovereignty or human action as conceived by Libertarians. Instead there is only a sovereign Lord God, 2 Corinthians 2:15-18, who appoints the very times and places in which one should live, Acts 17:26; that God appointed His Son, Jesus Christ, to be heir of all things, Romans 1:4; that objective reality is found in Him alone, Ephesians 4:21; that the Divine Treasury of wisdom and knowledge is found in Him, Colossians 1:3; that He is the Divine Experience, Colossians, 1:5; that the very fullness of God’s being exists in Jesus Christ, Colossians 2:9; that the believer is made complete in Him, who is preeminent in all rule and authority, Colossians 2:10; that all sovereignty coalesces in Him, Colossians 2:19; that the believer in Christ is dead to this world and has life with God in Christ, Colossians 3:1-4; that Christ is the all inclusive life experience, Colossians 3:11; that the believer is chosen, that is selected to believe in Him, from eternity past, Ephesians 1:4; that God has predestinated the believer to sonship, Ephesians 1:5; and is made accepted in The Beloved, Ephesians 1:6; according to the good pleasure and exercise of His will, Ephesians 1:9; and that Jesus Christ is at the helm of the economy of God, Ephesians 1:10; pivoting the world from Liberalism’s wildcat finance, a Doug Noland term, where bankers waive magic wands of credit creating prosperity, to Authoritarianism’s wildcat governance, where tyrants yield clubs of debt servitude enforcing austerity.

In the Age of Leverage, Asset Managers, such as State Street, STT, Blackrock, BLK, Eaton Vance, EV, and others seen in this Finviz Screener, developed ETFs for investing in nation, stock sectors, currencies, bonds, commodities, and as well as other investment vehicles such as closed end funds. The Asset Managers are the money lords that coined Liberalism’s wealth, which is based upon the monetary sovereignty of the world central banks. One can follow their most significant ETFs with this Finviz Screener. Over the last five years, one would have been better off investing in the most toxic of Closed End Municipal Debt, such as MIW, or EIP, rather than the S&P, SPY, as one would have had the same return of principal, but would have had 5.2% interest rather than 2.2% interest as is seen in their combined Yahoo Finance chart, as it was all of the toxic debt that was purchased by the World Central Banks, and insured so as to speak by US Fed Dollar Swaps, that served as sovereign authority for Liberalism’s recovery from its 2008 fall.

The world is passing from the Age of Leverage and Risking, and into the Age of Deleveraging and Derisking, where sovereign wealth will be measured by physical gold in one’s possession in bullion form or in Internet trading vaults such as Bullion Vault, as well as number of people under regional governance. I’ve written many times, Greeks cannot be Germans, the cultural and ethnic divide between Latins and Nordics is much too great; yet all will be one, according to God’s’ foreordained plan of Daniel 2:25-45 and Revelation 13:1-4, living together in debt servitude, existing as chattel.

Liberalism’s metrics of money, specifically sovereign wealth, are reported weekly by Doug Noland, these will be declining in value. Writing in Liquidity bubble, he reported sovereign wealth as follows:
Federal Reserve Credit expanded $46.0bn to a record $2.976 TN. Fed Credit has increased $164.8bn in 11 weeks. Over the past year, Fed Credit expanded $70.4bn, or 2.4%.
Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $743bn y-o-y, or 7.3%, to $10.929 TN. Over two years, reserves were $1.682 TN higher, for 18% growth.
M2 (narrow) “money” supply declined $26.6bn to $10.459 TN. “Narrow money” has expanded 7.4% ($716bn) over the past year. For the week, Currency increased $1.2bn. Demand and Checkable Deposits jumped $34.1bn, while Savings Deposits sank$55.8bn. Small Denominated Deposits slipped $2.4bn. Retail Money Funds declined $3.6bn.
Money market fund assets declined $5.0bn to $2.696 TN. Money Fund assets have expanded $17bn y-o-y, or 0.6%.
Total Commercial Paper outstanding declined $7.3bn to $1.126 TN CP was up a notable $162bn in 11 weeks and $154bn, or 15.9%, over the past year

Authoritarianism’s metrics of sovereign wealth will include such things as number of people under regional governance.

4-2) … The Japanification of the Global Economy is underway. The Age of Deflation will be commencing soon on the exhaustion of the worlds central banks’ monetary authority.
A global economic investment paradigm shift started the week ending January 25, 2013. Inflationism is transitioning to Destructionism, as World Stocks, VT, World Carry Trade Stocks, EFA, Emerging Market Stocks, EEM, and US Stocks, VTI, such as the S&P, SPY, will be falling lower on the exhaustion of the world central bank’s monetary authority.  This pivoting began on September 14, 2012, when Commodities, DBC, traded lower, accelerated on December 6, 2012, when bonds, BND, that is Aggregate Credit, AGG, turned lower in value, and when Major World Currencies, DBV, and Emerging Market Currencies, CEW, traded lower on January 17, 2013.  The Business Super Cycle is transitioning into Kondratieff Winter, as some of the Global Producers, FXR, which have risen parabolically in value, have turned lower, these include NOK, TTM, LPL, TSM, ARG, FLS, QCOM, while Denmark based, NVO, Netherlands based, ASML, PHG, LYB, Sweden Based, FWLT, MTD, ERIC, and Ireland Based, IR, and Mexico based, FMX, traded higher, on the rise of the Euro, FXE, to blast higher to 133.55.

Scott Grannis writes The big news is a weaker yen.  It’s nice that the U.S. equity market is making new post recession highs, but one of the biggest things happening on the margin is the decline of the Japanese yen.  The chart above of Dollar/Yen vs PPP offers some long-term perspective on the yen/dollar exchange rate, by comparing the spot forex rate against my calculation of the yen’s Purchasing Power Parity. The yen hit an all-time high of 76 vs. the dollar just over a year ago, a value that I calculate was about 50% above its PPP. The yen, in other words, was extremely strong. A very strong currency is symptomatic of tight monetary policy, an environment that has prevailed for almost three decades in Japan. It’s not surprising, therefore, that Japanese inflation has been zero or negative for the past two decades. This next chart shows how the value of the yen has been an important factor driving the Japanese equity market. Beginning in 2007, the yen surged from 123 to its all-time high against the dollar in late 2011—a staggering increase of 62%. This coincided quite closely to the 55% decline in the value of the Japanese stock market over the same period. Tight money not only gave Japan a case of deflation, it severely depressed the value of the Japanese equity market. Now, with the yen down 13% since mid-November, the Nikkei 225 is up 26% in dollar terms—a remarkable reversal of fortune.

A sell of the Yen, FXY, beginning in October 2012, and running through Friday January 2013, to close at 107.52, as well as a long of the most toxic of debt, such as Distressed Investments, FAGIX, Junk Bonds, JNK, and Senior Bank Loans, BKLN, has underwritten Liberalism’s grand finale risk on rally.  We are witnessing one of the major carry trade investments of all time; a sell of the Yen, FXY, and a purchase of the Commodity Currencies, CCX, beginning in mid-November. the Euro, FXE, has continued to rise through January 25, 2013, to 133.55; however the Australian Dollar, FXA, and the Canadian Dollar, FXC, traded lower January 18, 2013. It is surprising that neither the Australian Shares, EWA, nor the Canadian Shares, EWC, have not traded lower as of yet.

The Major Carry Trade Republics, EFA, the Developed Market Small Caps, IFSM, the Interntional Small Cap Dividend, DLS, the Emerging Markets, EEM, the Emerging Market Small Cap Dividend, DGS, and the Economic Producers, FXR, were given seigniorage, that is moneyness by the falling Yen, as is seen in the ongoing combined chart EFA, IFSM, DLS, EEM, DGS, FXR, and that of the 200% Inverse Yen, YCS.   Countries ECNS, EIRL, EPHE, VNM, TUR, seen in their ongoing Yahoo Finance Chart, have seen a tremendous rally on a falling volatility, as is seen in 200% Inverse Volatility, ZIV, trading higher.  The economic and investment success of Norway, NORW, has been built on the rising Commodity Currency, CCX, the Euro, FXE, as well as its solid price in Brent North Sea Oil, BNO, which has supported a modern manufacturing and energy services industry.

Credit liquidity of China’s central bank, gave seigniorage, that is moneyness, to Chinese Financials, CHIX, China Minerals, CHIM, China Industrials, CHII, Chinese Small Caps, ECNS, as well as to Chinese Real Estate, TAO, which has no property tax. Chinese wealth spread to be the basis of carry trade investing in the Philippines, EPHE, as well as real estate investing in Vancouver BC, which gave tremendous strength to Canada’s commodity currency, the Canadian Dollar, FXC.

A Yen carry trade, beginning in October 2012, produced appetite for the most extreme of risk assets, these being the Vice Stocks, VICEX, and the Gaming Stocks, BJK. And the sectors, FAA, FAN, CARZ, IGN, KWT, XSD, and WOOD, have been the leaders of the six month risk-on global currency carry trade rally.  The rise in the Semiconductors, XSD, seen in their Finviz Screener, can only be explained through risk on global currency carry trade investing. And the rise in Paper Producers, WOOD, seen in their Finviz Screener can only be explained through a tremendous flood of credit, and increase in the supply of money, that has come by the world central banks money printing operations.  Yet now, world central banks’ credit liquidity, has finally turned money, “bad”, causing investors to derisk out of the Emerging Market Currencies, CEW, and Emerging Market Countries, EEM, such as India Small Caps, SCIN, and Peru, EPU, and Copper Miners, COPX, SCCO, and Emerging Market Banks, EMFN, BAP, and HDB.

Chris Laird of Prudent Squirrel communicates in The Yen Bomb that the The Banker, Milton Friedman Free To Choose Floating Currency Regime is going supernova. Have you ever heard the term ‘patient zero?’ Since then Japan entered into now 25 years of stagnation and deflationary forces which they fought off with huge sums of public money, building lots of bridges to nowhere and basically supporting their banks and stock markets. Their national debt became the world’s largest by GDP at now near 300 pct. They will never be able to repay that.Their economy is now saddled with huge debt and CONTINUING zombie banks. It’s like trying to swim with an anchor around your waist …. The currencies in question could rise rapidly, even as their bond markets falter initially. The last hot money would flow for a while to them. Ultimately, this supernova could suck in all the hot money on the globe, followed by total economic paralysis (remember a rising currency causes companies to burn cash in that country) and subsequent collapse of the currencies involved, and the need for a new currency which is pan national”.  I comment that the new currency will be Regionalism’s Diktat.

Scott Grannis writes The Amazing Yield Conundrum. Despite the huge yield advantage to be gained from alternative investments, bank savings deposits—which yield almost nothing—have surged by almost 70% in the past 4 years (13% per year annualized), and are up from $4 trillion to almost $7 trillion. This can only mean one thing: the market is extremely risk-averse. To pass up equity yields of 7% in favor of cash yields of practically zero, you have to believe that equities are extremely risky, and might well decline at least 6-7% a year for the foreseeable future. One might say that higher equity prices have encouraged a flight to safety. How else to explain that as equity prices return to their pre-recession highs, risk-free yields are approaching historical lows?  Joe responded, Sounds like the perfect description of a liquidity trap, ongoing since 2007/2008 in the US economy.  And, Benjamin responded, If central banks are ossified into driving rates lower and lower, then the Japanification of the Western economies is underway.

The Japanification of the Global Economy is underway. The Age of Deflation will be commencing soon on the exhaustion of the US Fed’s QE4, the ECB’s LTROs and OMT, and the BoJ’s, Unlimited Easing, as World Shares, VT, will be falling lower from their likely January 25, 2013, rally high..

Currency Carry Trade Nations, EFA, trading lower include Japan, NKY, South Africa, EZA, China Small Caps, ECNS, India Small Caps, SCIN, and the Emerging Markets, EEM, DGS, such as Malaysia, EWM, Peru, EPU, and Chile, ECH.  Bloomberg reports Emerging market stocks drop as Apple sales hit Asian suppliers. Emerging market stocks retreated the most in a week as slower sales growth at Apple, AAPL, dragged down Asian suppliers and earnings reports disappointed investors; its shares declined 12% on Thursday January 24, 2012. Sectors trading lower included China Industrials, CHII, China Minerals, CHIM, Uranium Miners, URA, Coal Producers, KOL, Copper Miners, COPX.

Of note, Bloomberg reports Japan exports plunge -5.8%.  “Foreign officials are becoming increasingly vocal over the possibility that Japan’s policy actions have the potential to prompt a currency war,” said Izumi Devalier, a Japan economist at HSBC Holdings Plc in Hong Kong. With imports rising 1.9 percent and exports falling for seven months, the nation’s trade shortfall in December was 641.5 billion yen, the sixth month in deficit. Japan’s export slide comes as Europe’s crisis drags on shipments and a diplomatic dispute with China over islands claimed by both nations hurts demand for products such as Toyota Motor Corp.’s cars. Exports to China fell 15.8 percent from a year earlier, while those to the U.S. dropped 0.8 percent. Shipments to the European Union were 11.1 percent lower. “These are bad numbers for the economy,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. and a former BOJ official. “The positive impact of the yen’s decline on exports has yet to be seen, but it is already boosting import values.”

Debt deflation, has finally commenced as the Major World Currencies, DBV, and Emerging Market Currencies, CEW, turned lower on January 17, 2014, while the US Dollar, $USD, UUP, traded higher one month earlier, beginning December 14, 2012. The Milton Friedman Free to Choose Floating Currency Regime has failed. Competitive Currency Devaluation is underway.

Peak Prosperity and Peak Stock Wealth likely come in on January 25, 2013, as investors derisked out of the Emerging Markets, EEM. Competitive Currency Deflation has commenced as Peak Major Currencies, DBV, and Peak Emerging Market Currencies, CEW, came in on January 17, 2014. Peak Credit, BND, came in on December 6, 2012. And Peak Commodities, DBC, came in on September 14, 2012. The chart of Unleaded Gasoline, UGA, shows a rise to strong resistance as Bloomberg reports The flow of European gasoline to the U.S. is poised to decline in the next two weeks as record fuel stocks for the time of year deter imports and cause shipping rates to slump, a Bloomberg survey showed. And Bloomberg reports Iron Ore seen falling in second quarter as China restocking ends. The raw material used to make steel will average $120 a dry metric ton in the three months from April, said Richard Lee, who most accurately predicted Chinese ore imports in a September survey of 11 analysts, traders and brokers. Iron ore traded at $147.70 a ton yesterday, prices from The Steel Index Ltd. show

The Age of Deflation, will for a short period of time produce a rise in the US Dollar, $USD, UUP, as capital disinvestment, in Global Producers, FXR, and in foreign investment, EFA, begins; but a countervailing force will be bond vigilantes, steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which will be seen in the Steepner ETF, STPP, steepening, as well as bond vigilantes, calling the Interest Rate, $TNX, higher on the US Ten Year Note, ^TNX, from its 2012 low of 1.70% to its current rate of 1.95%. US Government Debt, GOVT, took a hard down on Friday December 25, 2013, as foreign investment, EFA, and Global Producers, FXR, rose strongly.

4-3) … Doug Noland writes Liquidity bubble describing Liberalism’s credit driven Economic Machine.
Credit system robustness or fragility will be determined not by monetary and fiscal policy (or the “reserve” status of one’s currency) but by the wherewithal of the real economy. For years, chairman Greenspan trumpeted the U.S. “productivity miracle” and the incredible efficiency by which our limited amount of “capital” was invested. And each year our nation’s “New Paradigm” economy consumed more than it produced, ran up huge debts, played games with risk intermediation, and watched asset prices inflate and the Credit Bubble grow to dangerous extremes.

From Mr. Dalio, CNBC TV interview, with CNBC’s Andrew Ross-Sorkin When you talk about the economic machine, what is that, exactly? “The fundamental thing that [policymakers] need to do most is to make sure that the nominal interest rate is at or below the nominal growth rate.”  More specifically, are artificially low rates assisting in real economy restructuring through the financing of sound investment? Are they promoting the overall reduction in system debt – or accommodating further profligate borrowing and spending?

Is the policy and market backdrop incentivizing a more favorable mix of investment versus consumption? Production vs. services? Is the manipulated cost of finance spurring greater distortions in market pricing mechanisms and further economic malinvestment? Is the policy backdrop supporting a more robust Credit system, with financial claims increasingly backed by real economic wealth creating capacity? Or is government sector dominance only fostering greater quantities of non-productive debt and myriad distortions and imbalances? Does virtual government control over the pricing of finance have, on balance, positive or negative ramifications? Are underlying risks being effectively recognized and priced in the marketplace – or are risk perceptions dictated by government liquidity and market backstops? Are the securities markets promoting an effective allocation of resources or are the markets more akin to a “whirlwind of speculation?”

Well, these are no doubt incredibly complex and difficult concepts to contemplate – let alone gauge. Different viewpoints, frameworks, analytical perspectives and ideologies will come to radically different – often directly opposing and irreconcilable – conclusions. That is the unsettled world in which we live. But keep in mind that we’re at the stage of the cycle where those that have most adroitly profited from policymaking now control Trillions of assets – while enjoying a commensurate impact on how the financial media view the world.

Mr. Dalio believes we’re at some risk of a “liquidity bubble.” “Money” seems to play an important role in his analytical framework. But Dalio, like many of us, ponders the question “what is money?” The role of “money” is fundamental to my analytical framework and Bubble thesis.

Contemporary “money” and Credit are essentially electronic-based. Outside of currency, what we think of as “money,” Credit and “finance” are electronic debit and Credit entries in a complex global accounting system. It’s essentially a comprehensive system of liabilities and corresponding assets – one person’s IOU is another’s financial asset; one institution’s…; one government’s…; and so on.
“Money” is special – always has been. It’s “precious.” But, importantly, contemporary money is made precious in a much different manner than had been the case historically. Money traditionally enjoyed preciousness because it was “backed” – it was a claim supported by either gold, precious metals or other forms of tangible economic wealth. Trust in money was maintained only when it was issued in limited quantities. Importantly, money is dangerous specifically because of its preciousness – faith that it won’t be over-issued and conspicuously debased. To a point, demand for money is almost insatiable. And too many times throughout history the government printing press has been used as a political expedient.

There is today seemingly little that differentiates “money” from Credit. They’re all just electronic entries. Contemporary “money” is Credit – but it’s special Credit. It’s special because of the perception that it’s a safe and liquid store of nominal purchasing power. It’s precious these days specifically because of the perception that policymakers – especially central bankers – will ensure that it maintains its essentially “risk free” attributes. It has indeed enjoyed insatiable demand – and this has allowed Trillions of “money” to be issued in the post-2008 crisis environment. And this “money” inflation has been absolutely instrumental in sustaining the global Credit expansion – in the process reflating markets, economies and animal spirits. It has again proved invaluable as an “expedient.”

Dalio is calling 2013 a “transition year” and a “game changer.” I’m sticking with my “Bubble Year.” From Dalio: “There’s a lot of money in a place that’s getting a very bad return and in this particular year there’s going to be, in my opinion, a shift. The complexion of the world will change as that money goes from cash into other things. The landscape will change particularly later in the year and beyond.”
I’m OK with “liquidity Bubble” terminology – and I’d be alright with “money Bubble.” The key to the analysis is to recognize it remains an unprecedented monetary Bubble – an integral facet to sustaining a global Credit Bubble. I agree with Dalio that a flight out of this “money” holds the potential for an extraordinary 2013. I just wish I could be as sanguine. I worry about what this “money” might do. But my greater fear is that global policymakers have impaired the creditworthiness of “money” – the foundation of global finance. They fell for the same monetary inflation trap that has cursed humanity throughout history.

Unprecedented “money printing” has continued for too many years. The debits and Credit add to the Trillions. Along the way, the Fed has tried to assure that they do indeed have an exit strategy. I have all along the way argued there would be No Exit. The Fed has theorized how they would withdraw liquidity before it could fuel higher inflation. From a global Bubble perspective, I’ve seen the greater risks in asset inflation and rejuvenated market Bubbles.

The Fed and global central bankers have essentially been in the business of creating Trillions of market-based liquidity. When they’re content to sit patiently in “cash” accounts, all these debits and Credits are seductively benign. Inevitably, however, they’re also a tinderbox. After all, it is the nature of return-seeking market-based liquidity to chase the inflating asset market (“liquidity loves inflation”). And if enormous amounts of trend-following and performance-chasing “money” flow into already speculative and increasingly dislocated financial markets, well, some will rejoice a new secular bull market.

The Fed, of course, would never admit it has fomented another major Bubble. They will, once again, see inflating asset prices as confirmation of the success of their policymaking regime. The (highly unstable) rate of market price inflation will continue to play a backseat to the (relatively stable) high rate of unemployment. But you’d think they’d begin questioning the necessity of their $85bn monthly “money printing” in an environment where it is increasingly obvious that there’s way too many Trillions of “money” looking to chase too few global risk assets. The Fed would be well served to go immediately back its drawing board and try to figure out how to stop all this liquidity from turning inflated and highly speculative global risk markets into a completely out of control mania. I’m not holding my breath.

4-4)  …. A timeline history of banking is provided by Andrew Hitchcock who writes A history of the House of Rothschild
1875: On January 1 of this year Jacob Schiff, now Solomon Loeb’s son- in-law after marrying his daughter, Teresa, takes control of the banking house, Kuhn, Loeb & Co. He goes on to finance John D. Rockefeller’s Standard Oil Company, Edward R. Harriman’s Railroad Empire, and Andrew Carnegie’s Steel Empire. This is all with Rothschild money. He then identifies the other largest bankers in America at that time. They are, J.P. Morgan who controls Wall Street, and the Drexels and the Biddles of Philadelphia. All the other financiers, big and little, danced to the music of those three houses. Schiff then gets the European Rothschilds to set up European branches of these three large banks on the understanding that Schiff, and therefore Rothschild, is to be the boss of banking in New York and therefore America. This year Lionel De Rothschild also loans Prime Minister Benjamin Disraeli the finance for the British government to purchase the shares in the Suez Canal, from Khedive Said of Egypt. This was done as the Rothschilds needed this access route to be held by a government they controlled, so they could use that government’s military to protect their huge business interests in the Middle East
1887: Opium trafficker in China, Edward Albert Sassoon, marries Aline Caroline de Rothschild, the grand daughter of Jacob (James) Mayer Rothschild. Aline Caroline’s father, Gustave, together with his brother, Alphonse, took over the Rothschild’s french arm following their father Jacob’s death.
The Rothschilds finance the amalgamation of the Kimberley diamond mines in South Africa. They subsequently become the biggest shareholders of this company, De Beers, and mine precious stones in Africa and India
1895: Edmond James de Rothschild the youngest son of Jacob (James) Mayer Rothschild visits Palestine and subsequently supplies the funds to found the first Jewish colonies there, this is to further their long term objective of creating a Rothschild owned country.
1897: The Rothschilds found the Zionist Congress to promote Zionism (a political movement with the sole aim of moving all Jews into a singularly Jewish nation state)
Herzl is subsequently elected President of the Zionist Organisation which adopts the, “Rothschild Red Hexagram or Sign,” as the Zionist flag which 51 years later will end up as the flag of Israel. Edward Henry Harriman becomes a director of the Union Pacific Railroad and goes on to take control of the Southern Pacific Railroad. This is all financed by the Rothschilds.
1907: Rothschild, Jacob Schiff, the head of Kuhn, Loeb and Co., in a speech to the New York Chamber of Commerce, warns that,“Unless we have a Central Bank with adequate control of credit resources, this country is going to undergo the most severe and far reaching money panic in its history.”Suddenly America finds.  itself in the middle of another typical run of the mill Rothschild engineered financial crisis.
1913: It is important to note that the Federal Reserve is a private company, it is neither Federal nor does it have any Reserve. It is conservatively estimated that profits exceed $150 billion per year and the Federal Reserve has never once in its history published accounts.

4-5) … Inflationism is turning into Destructionism as the World Central Banks’ monetary policies have turned toxic, causing investors to derisk and deleverage out of fiat investments.
Sandrine Rastello of Bloomberg reports The International Monetary Fund cut its global growth forecasts and now projects a second year of contraction in the euro region. The world economy will expand 3.5% this year, less than the 3.6% forecast in October. It expects the 17-country euro area to shrink 0.2% in 2013, instead of growing 0.2% as forecast in October, as Spain leads the contraction and Germany slows. ‘Is Europe on the mend? I think the answer is yes and no,’ IMF Chief Economist Olivier Blanchard said… ‘Something has to happen to start growth.’

I relate that the US Fed certainly has gone all out to support growth as Joshua Zumbrun and Jeff Kearns of Bloomberg report Federal Reserve Chairman Ben S. Bernanke’s unprecedented bond buying pushed the Fed’s balance sheet to a record $3 trillion as he shows no sign of softening his effort to bring down 7.8% unemployment. The Fed is purchasing $85 billion of securities every month, using the full force of its balance sheet to stoke the economic recovery. The central bank began $40 billion in monthly purchases of mortgage-backed securities in September and added $45 billion in Treasury securities to that pace this month.

Monetization of debt by the world central banks has finally resulted in the beginning of the death of the fiat money system. Look for M2 Money to turn lower in February 1, 2013. After a soon coming Financial Apocalypse, that is a credit bust and global financial system breakdown, the fiat money system, will be replaced by the diktat money system, where mandates of regional leaders will serve as money, credit, power and wealth.

Liberalism’s Banker, Free to Choose Floating Currency, Credit, and Nation Investing Regime will be replaced by Authoritarianism’s Beast, Diktat, Totalitarian Collectivism, and Regionalism Regime.
Investment schemes by Asset Managers such as BlackRock, BLK, State Street, STT, and Eaton Vance, which supported foreign investment, EFA, and EEM, in Global Producers, FXR, are now part of the bygone era of prosperity, as the dynamos of corporate profitability and global growth are winding down, introducing the age of austerity.

The dynamos of regional security, stability, and sustainability, will be winding up regionalization schemes, as regional leaders will meet in summits, to renounce national sovereignty, pool sovereignty, and announce regional framework agreements, which provide for a regional a monetary pope and fiscal lord, as well as regional nannycrats to work in public private partnerships, that is combines of state and corporate entities, to manage regional factors of production and promote regional economic activity.

The currency carry trade Small Cap Pure Value Shares, RZV, manifested a dark cloud covering candlestick at the top of an ascending wedge. The ration of RZV, to its RGZ peer, is known as the Currency Demand Curve, RZV:RZG, and has fallen below 50 day moving average, suggesting an end to their rally which began in June 2012, which commenced on the anticipation of the ECB’s OMT.

Leveraged Buyouts, PSP, Junk Bonds, JNK, and Senior Bank Loans, BKLN, are likely topping out, documenting an end to the six month long World Central Banks’ global debt based currency carry trade rally. Liberalism’s final risk on rally was based upon confidence and trust in the most toxic of debt, specifically the Distressed Investments taken in by the US Fed under QE1, FAGIX,  It was Distressed Investments, FAGIX, that underwrote and leveraged the Vice Stocks, VICEX, to a 35% gain over the last two years.

The ability of stocks to leverage up over debt is reaching a climax. The Age of Leverage is ending, and the Age of Deleveraging will be commencing, which can be followed in the combined chart of Closed End Stocks, CSQ, trading ever lower, over Closed End Debt, PFL.

We are no longer in a zero bound investment world. The World Central Banks’ ZIRP Regime is now beginning to fail, as the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, has been steepening since early December 2012, and is now trading at 0.606. A Steepening Yield Curve, seen in the Steepner ETF, STPP, steepening, means an end to risk free investing. Both International Treasury Bonds, BWX, and Inflation Protected Bonds, TIP, have been fallen lower in value since early December, as bond vigilantes have been calling interest rates higher globally.

An inquiring mind asks, will money market funds, which have traditionally maintained a constant $1.00 dollar value, fail to do so, and start to produce negative returns, oncee interest rates on the 10 Year Interest Rate, ^TNX, rise above 2.0%, and all interest bearing investments, seen in this Finviz Screener, http://tinyurl.com/alxpaho turn lower in value on alarm that the world central banks monetary authority, has not only failed to sustain global growth and corporate profitability, but because of debt deflation, has turned “money good” assets bad.

I recommend that one consider dollar cost averaging into a physical possession of gold, that is in gold bullion, as well as an investment in trading at BullionVault as the Telegraph reports A new Gold Standard is being born. Spot Gold, $GOLD, closed at $1,658. The chart of the gold ETF, GLD, shows that it is fallen to the bottom of a a consolidation triangle, to a price of 160, from which it will break out higher very soon.

4-6) … Regional Governance will rise to replace sovereign nation states.
Some write from the leftist Socialist perspective believing that private property should be done away with, while personal property should be retained; thus thing like intellectual property, real estate, investment accounts, and the like belong to the people; whereas things like toothbrushes belong to individuals.

Others write from the Republican perspective and come under fire from the Piper of Liberalism, as The Daily Ticker writes GOP state income tax proposal is reverse Robin Hoodism, Krugman says. Republican governors of Kansas, Nebraska and Louisiana are pushing to eliminate personal and corporate income taxes, setting up a possible fight with the Obama administration, which has already vowed to reform the nation’s tax code this year.

Others write from the Libertarian Austrian Economist perspective and advocate there be no taxation on personal property, and that one be able to use his personal property without government intervention; these desire a sound money system based upon the precious metal gold.

Please consider that the perspective of Socialists, Liberals, Conservatives, and Libertarians, are simply economic and political expressions of will worship, that is, the worship of one’s own will, as described by the Apostle Paul in Colossians 2:23. And that one adopt the New Testament perspective, that Jesus Christ is objective reality, Ephesians 4:17-21. That God has given all sovereignty to His Son, Jesus Christ, Ephesians 1:20-22, and that he is the All Sovereign One, Ephesians 1:23. And that God has appointed Him to oversee the dispensations, that is epochs, or ages, to bring about the fullness of each time period, Ephesians 3:10.

Immediately before Jesus departed, he said in reference to His Body, the Church, that is the called out ones, “Destroy this temple, and in three days, I will raise it up”. And inasmuch as we have entered the twenty first century, and that it has thus been two one-thousand-year days, with the world destroying and persecuting genuine Christians, it is time that the Israel of God, that is God’s Covenant People, observe a Sabbath’s Ont Thousand Year Day Of Rest.

With the failure of monetary sovereignty, that is the exhaustion of the world central banks’ monetary authority, we will see the death of nations, and the rise of regionalism, as foretold in Bible prophecy of Daniel 2:25-45, which foretells that the two iron legs of global hegemony of the UK and the US, will give way to a Ten Toed Kingdom of regional governance, where ten toes, that is ten regions, will serve as the basis for economic and political government, composed of a miry mixture of iron diktat and clay democracy.

And as communicated in Bible prophecy of Revelation 13:1-4, Liberalism’s Banker, Milton Free To Choose, Floating Currency Regime, which has underwritten Capitalism and European Socialism, and produced the age of prosperity, through credit liberality, is being pivoted by Jesus Christ to Authoritarianism’s Beast, Diktat, Totalitarian Collectivism, and Regional Governance Regime, to produce the age of austerity, through debt servitude, where the debts of Liberalism, that is Aggregate Credit, AGG, be applied to every man, woman, and child on planet earth.

Liberalism’s premier think tank, Brookings Institute, established by Robert S Brookings, promotes research to achieve a cooperative international system; it has received funding from Rockefeller Foundation, and as SourceWatch reports as well as from John M. Olin Foundation, F. M. Kirby Foundation, Walton Family Foundation, and Smith Richardson Foundation.

Wikipedia reltes Brookings traces its history back to 1916 and has contributed to the creation of the United Nations. It is ranked the number one think tank in the U.S. in the annual think tank index published by the Council On Foreign Policy’s Foreign Policy Magazine.

The December 12, 2013 report Brookings survey on Eurozone progress, written by Justin Vaïsse, Douglas J. Elliott, Domenico Lombardi and Thomas Wright. envisions a New Europe based upon a new sovereignty scheme, which replaces the scheme of sovereign nation states. “There are many possible roads to eurozone 2.0. Rather than choosing a path, we have drawn a list of six broad objectives where we think progress is needed in the coming years if the eurozone is to become self-sustaining and resilient: 1. creating a political union, 2. creating a fiscal union, 3. creating a banking union, 4. enhancing the role of the ECB in ensuring liquidity and market access, 5. creating sovereign crisis resolution tools, 6. improving competitiveness and economic adjustment”.

Social Disintegration And Loss Of Virtue Is Increasing With The Breakdown Of National Sovereignty … Yet The Elect Will Be Going Down The Road Of Virtue And Life In Christ

January 25, 2013

Robert Wenzel, writes in Anomic breakdown and beyond The bankster controlled elitist states around the world are collapsing. Greece is a preview. So what is happening in Greece? Social breakdown. Paul Mason in BBC reports Struggling Greeks losing belief in the state. During the autumn, Greek commentators began to speak of anomic breakdown, where people begin to disobey laws and social norms individually. There are all kinds of factions developing: hard-right, extreme left, anti-German, most appear unaware that central planning is itself the problem. Most just want their central planners in power. Governments around the world are all at varying stages of collapse. I fear what will replace them.  Anomic breakdown, itself, sounds like something close to the spontaneous breakdown of current state tyranny. If it stopped there, new free markets would develop. However, many will seek to replace the power removed by anomic breakdown. The danger is in these replacements.  The real problem is that the masses may not be able to tell the difference between freedom and chains, and thus simply choose new shiny chains.

Bible prophecy communicates that the Sovereign Lord God, Psalms 2:4-5, is effecting a global coup d etat, Revelation 6:1-2, through the destruction of fiat money, which traditionally has been based upon the sovereignty of nation states.

The death of fiat money commenced in 2007 and 2008 with Major World Currencies, DBV, and Emerging Market currencies, CEW, tumbling lower. But through the world central banks’ monetary policies, specifically the US Federal Reserve’s QE1 through QE4, the ECB’s OMT, and the BoJ’s Unlimited Easing, the currencies have recovered as is seen in their ongoing Yahoo Finance Chart. The world central banks‘ monetary policies have caused the investment, economic and political tectonic plates to shift, with the result that a Eurozone authoritarian economic and political structure is rising, to govern those nations that use the Euro currency.

In May 2010 Greece lost its monetary sovereignty, and since that time Portugal, Italy and Spain have as well.  National monetary sovereignty has been usurped by the regional monetary sovereignty of The ECB, which has led to increasing oversight by the EU ECB IMF Troika, as it provides seigniorage aid to Greece, and is now plundering Greek wealth by demanding that state assets, such as state owned office buildings even beaches as Global Post reports Greece’s blowout sale. Everything from police and tax agency headquarters in Athens to some of the world’s most beautiful beaches are now open for investment at bargain basement prices as the government struggles to raise capital. With the monetization of debt by the ECB’s LTROs and OMT, new political capital of regional governance is rising to replace traditional political capital of national governments.

The paradigm of choice provided by the Milton Friedman Free To Choose Script, that governed for the last forty years is history. Now, the paradigm of diktat, implied in the 1974 Clarion Call by the Club of Rome for regional governance, is rising to govern human economic and political activities.

Fate is the order of the day, Destructionism is terminating Liberalism, and is producing Authoritarianism. There is no human action, there is only Destiny destroying choice and democracy, as Liberalism’s credit and money fails. Libertarianism will not see the light of day; and as such, there will not be any Freedom, Free Enterprise, nor a Free Monetary System, as envisioned by Hayek, Rothbard and Mises; such things are simply mirages on the Authoritarian Desert of the Real.

Those who taken the Red Pill, know that the debt economy of Capitalism is coming to an end, as the dynamos of global growth and corporate profit are failing. The recent driver of investment reality has been the US Fed’s QE4, and European Central Bank’s LTROs as well as its OMT, which in turn is now fueling stock and debt purchases of all types including Spain’s Sovereign Debt. The effect of the last injection of liberal credit will be fleeting as fears of banking insolvency arise, and as competitive currency devaluation commences, causing investors to derisk out of stocks and bonds, and delever out of commodities.

Fiat money is now finally and utterly dying, as the weekly charts of Major World Currencies, DBV, and CEW, show a topping out of value.  Liberalism’s Milton Friedman Free To Choose Floating Currency Regime, which provided the US Dollar as a reserve currency is being replaced by Authoritarianism’s Regionalism And Totalitarian Collectivism Regime, where Diktat serves as credit, money, power and sovereign wealth.

The Third Greek Bailout is the nail in the coffin for both Capitalism and European Socialism which were based on global growth and corporate profit. Through Regionalism, Capitalism is being replaced by Regional Governance.  A ten toed kingdom of regional global governance, where diktat is de rigueur, is coming to govern mankind’s economic and political activities, as is seen in Nebuchadnezzar’s dream, which presents the statue of the progressions of kingdoms, Daniel 2:31-45.  Kings have ruled mankind throughout history; these have included Nebuchadnezzar ruling Babylon; Cyrus and Cyrus and Darius ruling Merdo Persia; Charlemagne ruling Rome; Tony Blair ruling Great Britain, and George Bush, The Decider, ruling America. The two iron kingdoms, the UK and the US, that is British Hegemony and US Hegemony, have governed the world; their power is now flowing into a ten toed kingdom of regional global governance, as foretold in bible prophecy of Daniel 2:31-33.

God’s Sovereign Will, Ephesians 1:1-11, not any human action, will bring forth a revived Roman Empire, that is a German led Europe. In the supranational New Europe, national sovereignty will be seen as a relic of a bygone era. Martin Luther wrote in On the Bondage of the Will, there is no free will for humanity because any will they might have was and is totally overwhelmed by the influence of sin.  God is effecting His sovereign will, and bringing forth Authoritarianism’s Beast Regime of Regionalism and Totalitarian Collectivism, Revelation 13:1-4.  This monster is coming like a terminator that can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop, ever, until mankind is totally dominated and subdued.

At the appropriate time, God will open the curtains, and onto the Europe’s stage will step the most credible of political leaders, the Sovereign, Revelation 13:5-10.  He will be accompanied by Europe’s banker, the Seignior, Revelation 13:11-18.  These two will have have EU wide sovereign authority. The Little Authority, Daniel 7:24-25, will work behind the scenes in regional framework agreements to change our times and laws. The people will be amazed by this, and place their faith and trust in the Sovereign; they will give their allegiance to his diktat, Revelation 13:3-4.

Life in Europe will be characterized as a totalitarian collective. Totalitarian collectivism is the EU’s future. European Socialism will die in 2013. Diktat will provide seigniorage, that is moneyness, to replace the seigniorage of national treasury bonds. Diktat will become a currency, that is a payment used in the exchange of goods or services.

Going down the path of social breakdown, will destroy one’s arete, that is one’s set of moral excellencies.  Financial Apocalypse, that is a credit bust and global financial breakdown, is coming soon; this collapse will present a tremendous threat to one’s arete, and opens the door to searing one’s conscience, and becoming a psychopath or supporting those who are psychopaths. Wikipedia relates that Robert Hare’s Psychopathy Checklist, is the psychological diagnostic tool most commonly used to assess psychopathy. One is to mark and avoid those those who are psychopaths, as they cause divisions and offenses, contrary to sound doctrine and a godly life, Romans 16:17-18.  Psychopaths are presented in 2 Thessalonians 3:2, as being unreasonable, and wicked. Paul’s words to mentally highlight them, and make every effort to avoid them, is good advice.

The Apostle Paul foretold in 2 Timothy 3:2-5, that in an increasingly decapitalized world, many will be going down the path of social breakdown, where people disobey laws and social norms,  However a few, God’s Elect, will be going down the path of virtue and life in Christ, ever maturing in the only right there is, and finding genuine freedom therein, as put forth in John 1:12, “But as many as received Him, to them He gave the right to become children of God, to those who believe in His name.”

This article is found on the Internet as Social Disintegration And Loss Of Virtue Is Increasing With The Breakdown Of National Sovereignty … Yet The Elect Will Be Going Down The Road Of Virtue And Life In Christ

The Debt Doom Loop Closes In On Europe … A Financial Apocalypse Is Coming Soon

January 21, 2013

Financial Market Report for the week ending January 18, 2013

1) … The debt doom loop will be the basis for a soon coming Financial Apocalypse.
Mike Mish Shedlock writes the article Debt doom loop in Spain; Deficit target impossible once again; Bond rally masks European macro problems. No Credibility. There is no credibility and if there is any confidence, there shouldn’t be. Yields in Spain, Italy, and Portugal have crashed, but I wonder for how long. Italy and Spain are known basket cases. More importantly, France, the Hidden Zombie in Europe, is about to take a deep plunge. “Confidence” may be robust for now, but it’s all a mirage based on low rates that cannot last and the foolish notion that Europe has turned the corner just as Germany and France head down the sinkhole.

Mr. Shedlock’s conclusion of No Credibility is 100% right on target. Yet, Greece is even more of a basket case than Spain or Italy. Greece is an insolvent sovereign and its banks are insolvent financial institutions; at the bottom of all of this is the fact that it cannot make good on its Treasury debt which the bankers gleefully created with the advent of the Euro. Greek Socialism is the most extreme form of European Socialism. It cannot exist having huge numbers of employees on the public payroll, having no viable tax collection system, and having high levels of public corruption, and having immense legal barriers for private corporations to enter the economy.

The Telegraph reports Greek opposition warns bailouts are a ‘bottomless pit’. Greece’s left wing opposition leader has warned Germany that his country is a “bottomless pit” for European taxpayers and claimed Berlin’s austerity drive was “inhuman”.  It is no wonder that in Revelation 13:1, the Apostle John, saw the Beast Regime of Regionalism, Totalitarian Collectivism rising from the Mediterranean Sea. In other words, what the Economist Magazine calls Greek “pork and patronage” in its article What have we become, will be the springboard for the rise of Regionalism and Diktat to replace Crony Capitalism and European Socialism.

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 to deal with an impending Financial Apocalypse, that is a credit bust and financial system breakdown.

Please consider that there is no human action as perceived by Austrian economist and Libertarians. Just as there are no sovereign individuals. There is only a Sovereign God, who as revealed in Ephesians 1:10, has appointed His Son Jesus Christ to pivot the world from the prosperity and credit that came via Inflationism, into the austerity and debt servitude that is coming via Destructionism.

Matt Clinch of CNBC reports Investors return to Spain believing worst is over. The weekly chart of Spain, EWP, shows a parabolic rise in value since mid November 2012, and the three month ongoing chart of Spain, EWP, Greece, GREK, and Italy, EWI shows Spain outperforming its peers.

Referencing the Bloomberg article Bloomberg Draghi’s bond rally masks trapping Spain Debt Doom Loop, I relate that the ever growing load of Spanish Treasury Debt, cannot be sustained, nor can it be repaid.

Sarah Gordon of the Financial Times reports Spain remains shackled by corporate debt. New economic growth is likely to be tepid at best. In Europe, at least, there is still a widespread failure to recognise the need for further radical adjustment. Nothing epitomises this failure so well as Spain.  And Charles Penty of Bloomberg reports Bad loans as a proportion of total lending at Spanish banks jumped to a record 11.38% in November in a sign of the challenges still facing the country’s banks even as their shares and bonds rally. The proportion rose from 11.23% in October as 2 billion euros ($2.67bn) of credit soured in the month to take the total amount of defaulted loans in the banking system to 191.6 billion euros.   And Ben Sills and Angeline Benoit of Bloomberg report The bond rally that has sent Spanish borrowing costs to 10-month lows has distracted attention from the nation’s growing debt pile. Spain’s budget deficit probably exceeded 9% for a fourth year in 2012 as Europe’s highest unemployment rate, a third recession in four years and the cost of bailing out its banks offset almost all of the government’s 62 billion euros ($83bn) of spending cuts and tax increases, according to economists at Societe Generale SA, Lombard Street Research and the Madrid-based Applied Economic Research Foundation. Total debt will reach 97% of gross domestic product this year, the International Monetary Fund forecasts. ‘This is a classic example of the doom loop,’ Societe Generale’s  chief European economist, James Nixon, said ‘They just aren’t making any progress.’”

A stunning Financial Apocalypse, that is a credit bust and global economic system breakdown, is coming; this is foretold in bible prophecy of Revelation 13:3, where the economic head of the Beast Regime suffers what appears to be a mortal wound, yet recovers.

Katie Linsell of Bloomberg reports Speculation that banks will start repaying European Central Bank loans early prompted futures traders to step up bets that borrowing costs will rise as liquidity is drained from the system. The implied rate on Euribor futures expiring in December rose as much as 18 bps over the past two days to 0.54%, the highest since July 10, 2012. That’s the biggest jump since the yield started climbing in December, after a 29 basis-point drop in the preceding three months”

Liberalism’s debts, that is Aggregate Credit, AGG, consisting of World Treasury Debt, BWX, Municipal Bonds, MUB, Emerging Market Bonds, EMB, International Corporate Debt, PICB, Long Term Corporate Debt, BLV, Corporate Bonds, LQD, Junk Bonds, JNK, Leveraged Buyouts, PSP, Bank Loans, BKLN, and Distressed Investments, like those taken in under QE1, FAGIX, will be applied by nannycrats in all of the world’s ten regions to the world’s population, as Authoritarianism’s Beast Regime rises in Regionalism to replace the Banker Regime of Crony Capitalism and European Socialism.

The diktat money system is rising; and it will replace the fiat money system. Soon Diktat will serve to govern mankind’s economic activities just as Choice does today. Mandates of authoritarians will replace the Securities of bankers. Wildcat governance will be the order of the day, where only the most fierce of cats come to govern regionally; what a contrast it will be from what Doug Noland describes as today’s wildcat finance. Look for a Sovereign, Revelation 13:5-10 and a Seignior, Revelation 13:11-18, to come to rule in Euroland; the former will be the EU’s King, and the latter, it’s Monetary Pope.

2) … Trust is seen disappearing.
Dr Worden writes Mistrust in Business: A Nietzschean Critique.  This morning I ate at a Denny’s restaurant. To my surprise, the waitress put the bill on the table along with the food at the beginning rather than end of the meal. My immediate “gut instinct” reaction was that for some reason she did not trust me. It was not as though I had walked in wearing rags, but neither was I in a business suit. Seeing that another waitress waited until the end of the meal to deliver the bill to another table, I was curious enough to ask the manager. He explained that it is Denny’s policy at breakfast to drop the check at the outset of the meal “because there is no dessert.” That a customer might want to add an item during the breakfast suggests that the policy was at the very least not well thought out. Moreover, the logical inconsistency opens up the possible of an alternative, real reason behind the policy. The manager proffered a hint in prefacing that breakfast is particularly busy at Denny’s restaurants. Although the policy could thus merely be a time-saving devise for the wait-staff, the underlying reason could be that it is more difficult for the servers to keep tabs on their respective customers. With the manager’s problematic rationale and his near passive-aggressive dismissiveness of my objection (as well as his notable refusal to compensate me even in part) serving as a sort of confirmation, I came away with the sense that “leaving without paying” was at least in part the underlying fear behind the policy. Such distrust breeds distrust, as well as resentment. In spite of making this transparent to him by indicating that I would not be generous with the tip as a result, he did not seem to grasp the link or even that it is so avoidable. Instead, he clung to the path of least resistance for himself and his restaurant.

Why are some politicians all too willing to go back on their campaign promises when in office? The prime minister of Japan, Shinzo Abe, took only five days in office early in 2013 before reversing his campaign pledge to wean Japan off of nuclear power. Why do some religious leaders apparently not understand the value of trust in something as intimate as one’s spirituality? The Vatican’s initial reaction to the disclosure of priests sexually molesting children was to look the other way, as if the “trust issue” would somehow go away

In his commentary Trust use to be worth something, where he writes on the loss of trust in business, government and society, Michael Wolff, laments to decline of trust through what he calls “consumer history.” As trust can be maintained with little or no further cost once established, Wolff is perplexed as to why more business practitioners, politicians and even religious functionaries do not rush to fill the gap.

Why are some politicians all too willing to go back on their campaign promises when in office? The prime minister of Japan, Shinzo Abe, took only five days in office early in 2013 before reversing his campaign pledge to wean Japan off of nuclear power. Why do some religious leaders apparently not understand the value of trust in something as intimate as one’s spirituality? The Vatican’s initial reaction to the disclosure of priests sexually molesting children was to look the other way, as if the “trust issue” would somehow go away. Why don’t business managers invest more in authentic trust as distinguished from “brand management”? For example, the photos of food on the menus at Denny’s exaggerate the actual amount of food. The duplicity alone can eviscerate trust as well as cause considerable resentment.

Pointing to the hidden invasiveness of some businesses, Wolff asks his readers, “Would you trust Amazon? Do you trust any company whose main mission is to collect your data? You might acquiesce to it, but do you trust it—or anyone whose central activity is to keep tabs on you? Google, founded on a do-gooder credo, is now the leviathan of data collection and opacity.” Facebook is another such hegemon, whose Instagram announced “it was selling the pictures people had entrusted it with.” That is to say, a person’s own pictures of oneself, one’s friends, family and even home unknowingly put on the market and possibly purchased by marketers. If anything calls out for a constitutional right to privacy, such a practice surely does.

Wolff views the decline of trust in commerce and politics as either a threat to capitalism and democracy or an opportunity for a historical turn-around. In viewing information overload as salient in the crisis, he has absorbed too much of his information age. The problem is one of attitude rather than information. Might it be that people working in business no longer trust the general public and thus their own customers, and thus do not expect to be trusted in return. Why work to build up trust if one doesn’t think one will be trusted anyway? The mistrust of business managers, sales people, and customer service reps creates mistrust, which is directed back on them. The result is an overly tedious manner of “check and double check.”

For instance, when I make hotel reservations, I take extra time to ask whether I would be charged for a room safe whether I use it or not. I ask whether there are any other mandatory charges. In terms of “local calls,” I have even asked which area-codes are covered. On the other side, hotels and especially motels now regularly take deposits as much as $200 for a night’s stay in addition to the room charge. Customers with debit cards are especially mistrusted, as per the differential policy concerning deposits. It is apparently not enough to take down a customer’s driver’s license number. The hypocrisy in mislabeling customers as “hotel guests” only adds to a customer’s sense of duplicity and thus mistrust. At the very least, the practitioners come off as fake with respect to their use of language. What else might they be hiding? What hidden charges might one find at the end of one’s stay if one does not ask enough questions before reserving a room?

The social glue that lubricates the system of capitalism becomes sticky, and the social bonds even between strangers become increasingly frayed. A similar stickiness has seeped into Congress, also due to a decline in mutual trust. Even in religion, parishioners now take greater precautions regarding what exactly their kids will be doing with clergy. A parent keeping an eye on a priest is not likely to enter into a close spiritual connection with him.

Generally speaking, commercial transactions, representative democracy, and religion all become more difficult. If trust is as easy to muster and as valuable to have as Wolff suggests, the need for the difficulty is all the more inexplicable. For instance, a social media business model should pop up that stresses the privacy of user information. The problem is not too much information; rather, a certain attitude shirts trust as a potential asset. It is not only selfishness, greed and a lack of consideration (and respect) for others. One need only go to Miami to get loads of that sordid cocktail.
There has perhaps been a proliferation of cheating and thus taking advantage of others, while giving up on the value that trust could proffer. The rise of the great cities has substituted anonymity for knowing one’s customers and banker. Anonymity is fertile ground for mistrust as well as duplicity. Furthermore, as the modern business model has come to stress getting as much money as possible out of one’s customers, duplicity has come at the expense of trust.

For example, with the advent of so many differently-priced tiers of seats in coach alone on planes and the complex baggage-charge “regulations” has come greater uncertainty for the customer at the airport. The distrust concerns what one will actually have to pay even after having purchased a ticket. Similarly, a customer who pays for a reserved hotel room at the hotel with cash or a debit card may find herself stranded because a sizable, hitherto unmentioned deposit is also “required.” To subject travelers to possibly being stuck in another city is nothing short of cruel. When the pettiness has to do with secondary issues (i.e., a deposit rather than the room charge itself), the profit-motive is not the driving force behind the cruelty.

This is finally the core of the problem that eclipses trust: a desire to inflict passive aggression accompanied by the instinctual need to dominate others. Seen in this light, the inhabitants of the modern shopping mall on both sides of the counter are not as far removed from other species as one might think. The problem can be put more abstractly as the hypertrophy of the instincts of cowardly aggression and dominance. In fact, the combination may even be a subtle form of sadism that has been made socially acceptable by its sheer ubiquity in the public square.

As long as “control issues” and an overwhelming urge to inflict passive aggression set the contours for public interactions in business, government and society, nothing much will change concerning the dearth of trust. Amassing trust beyond the superficial sort from branding ads and management by “presentment” will be nearly impossible for businesses unless their managers and employees relax their grip on the pettiness at the expense of long-term profitability. Unwilling to face their underlying dominant instincts, business managers and employees will continue to conclude that customers are inherently untrustworthy, even abusive, rather than retaliatory as well.

Rather than being untrustworthy, customers subjected to close-minded yet supercilious pettiness are merely returning passive aggression for the passive aggression and resisting the unfairness in the arrogant dominance. To be sure, this does not account for every rude customer, but neither can a customer’s frustration be necessarily relegated so utterly conveniently as idiosyncratic. Power that presumes it can’t be wrong is naturally infuriating, especially if access to the supervisor is closed off as when customer “service” employees convenient “lose” calls while “transferring” them to a manager. Gate-keeping enforced on callers against their will is about as naked as passive aggression conjoined to a lust for power gets in today’s retail sector.

Even so, the ubiquity of passive aggression as a weapon and a fixation on dictating the terms in even the most banal transactions is still nearly invisible to managers, employees and customers. This makes the task of restoring trust all the more difficult, if not impossible. That is, the link between the excessive, albeit camouflaged, aggression and dominance and the resulting resentment is almost never revealed or made conscious on either side of the counter or telephone. This blockage is itself rather puzzling. Distrust is sensed and yet not connected to its roots. As a result, customers put up with much too many plays for control and acts of passive aggression in the name of “policy” while many managers and problematic employees oriented to “presentation” as though on a stage are simply out of touch with what is driving them.

As valuable as trust is, it will be thwarted as long as people choose, enable or react in kind to excessive passive aggression and dominance rather than confront them in themselves. Aggression and dominance are both causes and effects of mistrust. Wolff suggests that “nobody quite knows what trust is anymore. Hence, even people who think they are selling trust are so often selling phoniness or duplicity.” Sadly, such people come to view their fake demeanor as the epitome of professionalism. Actually, the fake smile is fueled by anger and an irresistible urge to dominate others. The masks are enabled by an approach to management that is oriented to appearances rather than attitude. Much too often, professionalism is a weapon of pride rather than a mark of maturity.

In the context of modernity, everyone is a professional in his or her own infallible yet purblind eyes. This is deemed so even without a college education. From this seemingly-solid basis, it is easy to assume a perch from which one presumes the right to dominate and inflict pain—indirectly of course given the underlying weakness.

As Nietzsche suggests, dislodging such a “new bird of prey” can be incredibly difficult, even for the strong. Those from among the weak who are nonetheless driven to dominate the rest of the herd and even the strong are not strong enough to dominate. Therefore, the new birds of prey inflict pain both out of their anguish for being too weak to lead and as a means of achieving the dominance they crave. In contrast, the self-confident strong have no need to be cruel. The weak have somehow been able to beguile the strong through guilt (modern morality) into accepting the artificial dominance. That is, the dominating birds from among the flock have somehow been able to foist their illusion of superiority on the strong, who thus unnecessarily submit even though they can fly higher. By the twenty-first century, corporate “branding” of trust, a dominating form of weakness claiming a share of social reality, had come to replace higher trust that is authentic. Even so, human beings in any age instinctively know authentic trust. We can sense strength (and weakness). This intuition comes out of strength, and yet it has been insufficient to dislodge the fake, one-sided trust that is so convenient to the petty.

Whereas Wolff looks to technology to prioritize information as a solution (as if the problem of trust were predominantly cognitive), I contend that attitude-change resides at the core of any possibility for a restoration of trust in commerce as well as politics and religion. Perhaps the solution is as simple as replacing the excess of pride, pettiness and especially passive aggression with even just a little heart-felt compassion that goes with serving others rather than contrived corporate scripts. As simple as this recipe may be, putting it into action would face considerable resistance from those culprits who presume they cannot be wrong or at fault and yet are in power. Such is the nature of weakness that seeks to dominate beyond its innate pith.

3)  … A Financial Apocalypse, that is a global credit bust and financial collapse, is coming soon.
Marc Jones of Reuters reports Chinese and US data push global shares to twenty-month high as currency traders push Yen lower ahead of BoJ meeting. World Stocks, VT, and The Carry Trade Republics, EFA, traded higher on a continuing sell of the Japanese Yen, FXY, ahead of next week’s Bank of Japan meeting.  Bloomberg reports Japan’s government and central bank have agreed to set 2% inflation as a new target next week, when the Bank of Japan will also consider making an open-ended commitment to buy assets until the target is in sight.

Charts show that Major World Currencies, DBV, and Emerging Market Currencies, CEW, are at what is likely their peak in the Milton Friedman inspired, Richard Nixon inaugurated and Global Banking loved, Floating Currency Regime; Peak Currencies, DBV, CEW, are being achieved.

Unknown to many is that a Financial Apocalypse, that is a global credit bust and financial system collapse, is coming soon out of competitive currency devaluation, with investors derisking out of stocks, ACWI, which this week entered a blow off top high, and deleveraging out of commodities, DBC, which have been falling from their September 14, 2012 high, to manifest a current broadening top chart pattern at strong resistance, portending a strong trade lower.  Foreknowledge of this fatal economic event was given by angels to the Apostle John in a dream, while in his 90s, living in exile on the Isle of Patmos, in the first century, and is presented in bible prophecy of Revelation 13:3, that one might know the future and come to trust in God for deliverance.

Liberalism’s twn spigots of credit liquidity, have been, first, the historic yen carry trade, and second, the world central banks’ Zero Interest Rate Program, ZIRP, featuring what has come to be unlimited quantitative easing.

Investors for the longest time would borrow Yen, FXY, for next to nothing, from the Bank of Japan and its agents, and go long the world’s major currencies, DBV, and emerging market currencies, CEW, as part of a risk-on, and then risk-off, global debt based, FAGIX, JNK, BKLN, PSP, Milton Friedman Free To Choose Floating Currency Regime scheme, to maximize corporate profits, expand global growth, and stir up wars for glory and power across the globe for control of natural resources GNR.

This week ending Friday January 16, 2013, may very well mark the week when the Jamie Damon Banker and Milton Friedman Floating Currency Regime peaks out and starts to fall apart, as competitive currency devaluation has already commenced, on a fall of the Japanese Yen, FXY.  Soon risk appetite will reverse and become risk aversion, as currency traders go short every Major Currency, DBV, including the currently strong Commodity Currency, CCX, the Australian Dollar, FXA, the Emerging Market Currencies, CEW, and the Chinese Yuan, CYB, which will cause the US Dollar, $USD, UUP, to rise for a while.

This week, the chart of the British Pound Sterling, FXB, shows a fall through strong support; the Swedish Krona, FXS, traded lower. The Canadian Dollar, FXC, fell lower in a consolidation triangle. While the Indian Rupe, ICN, rallied strongly. The Australian Dollar, FXA, is bumping up into resistance in an ascending triangle. The Brazilian Real, BZF, traded at strong resistance at 19.00  Doug Noland reports The U.S. dollar index gained 0.6% to 80.04 (up 0.3% y-t-d). For the week on the upside, the New Zealand dollar increased 0.1%. For the week on the downside, the Swiss franc declined 2.2%, the South African rand 1.8%, the British pound 1.6%, the Norwegian krone 1.3%, the Japanese yen 1.0%, the Swedish krona 0.8%, the Canadian dollar 0.7%, the Brazilian real 0.4%, the Australian dollar 0.2%, the South Korean won 0.2%, the Singapore dollar 0.2%, the Danish krone 0.2%, the euro 0.2%, and the Mexican peso 0.1%.

Ambrose Evans Pritchard relates Europe drawn into global currency wars.  The world is edging closer to all out currency conflict as Europe’s politicians join a chorus of policy-makers across the globe pushing for devaluations to fight for market share. And Andrey Ostroukh of Dow Jones reports The budgetary policies of the world’s central banks are leading to major global imbalances and could lead to currency wars, Russia’s central bank’s first deputy Chairman Alexei Ulyukayev said. ‘We are on the verge of very serious and confrontational actions in the sphere, which is, not to get too emotional, called ‘currency wars’,’ Mr. Ulyukayev said.  Mr. Ulyukayev cited the recently elected Japanese government’s stepped up efforts to stimulate Japan’s deflation-dogged economy and talk down the yen, which has sent the currency tumbling. Quantitative easing by leading central banks including the U.S. Federal Reserve is also pressuring other major currencies like the dollar. ‘This is not a way to unity of global macroeconomic regulations, but to separation, segregation, to a break-up into separate zones of influence, all the way to very strong competition, all the way to global trade and currency wars, which is indeed counterproductive.’

And Zero Hedge writes The currency wars: now US automakers are squealing

Excessive credit liquidity of all types, AGG, has passed the Rubicon of sound monetary practice, making “money good” investments, like US Government Debt, GOVT, bad.  Monetization of debt, that is debt debauchery, by Ben Bernanke, Mario Draghi, and Shinzo Abe, has made moral hazard come of age.  Forbes writes  US government debt monetization. Liberality of credit has killed the Golden Goose of Prosperity. Inflationism is pivoting to Destructionism, and the Beast of Authoritarianism is rising with diktat to impose austerity and debt servitude.

Bond Vigilantes, have been calling interest rates higher globally as is seen in World Treasury Bonds, BWX, and Emerging Market Bonds, EMB, trading lower in value. The world central banks’ monetary policies no longer stimulate global growth and corporate profitability.  Bespoke Investment Group reports S&P 500 and Sector P/E Ratio Charts, which presents a look at P/E ratio (trailing 12-month) charts for the S&P 500 and its ten sectors. P/E ratios for most sectors have also increased throughout this rally.  (I comment that the S&P ratio is at 14.80, which is below its September 2012 high, communicating that stocks are unable to continue in their ability to generate high levels of profit.)   Telecom has the highest P/E ratio at 21.98, followed by Consumer Discretionary and Consumer Staples.  (I comment that the weekly chart of S&P International Telecom, IST Weekly, traded 0.5% lower this week, after hitting resistance, and manifested the lollipop hanging man candlestick, portending a market turn lower. Thus we have the strongest S&P sector, starting to turn lower).

Bloomberg reports World Bank cuts growth forecasts as developed nations lose steam. Charts suggest that the rally in the Developed Nations, EFA, and the Global Producers, FXR, are finally peaking out.

The currency demand curve, that is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Pure Growth Shares, RZG, RZV:RZG, is now trading for the first time below 50 day support, communicating that competitive currency devaluation has commenced. Confirmation of such comes from the Proshares 200% Inverse ETF, YCS, falling parabolically lower.  Small Cap Value Shares, RZV, have been the crown and glory of the seven month long risk-on, global toxic debt, currency carry trade rally. Stocks such as VVI, BBSI, CNK, LOV, having been carry trade darlings, as is seen in their ongoing Yahoo Finance chart; these will soon be very fast fallers.

Peak Commodities was achieved September 14, 2012, And beginning in January, 2013, investors began derisking out of Base Metals, DBB, turning Commodities, DBC, lower, despite the rise in Timber, CUT, Natural Gas, UNG, Oil, USO,.Cotton, BAL, and Agricultural Commodities, RJA, JJA.  Of note the chart of both Natural Gas, UNG, and Base Metals, DBB, shows a broadening top pattern, and as Street Authority relates, when you see the broadening top, the market will eventually drop. Between the Hedges reports that China Iron Ore Spot 145.10 USD/Ton traded 6.3% lower this week.

Doug Noland relates the VIX Index (expectations for market volatility/risk) fell Friday to the lowest level since April 2007. Volatility, TVIX, fell to 5.28; and Volatility, VIXM, fell to 29.45. Zero Hedge reports NYSE short interest plunges to March 2012 levels

The world central banks’ monetary policies of quantitative easing and credit liquidity  have created Liberalism’s Peak Prosperity. The Morgan Stanley Cyclical Index, ^CYC, traded by Global Producers, FXR, closed at 1,112, up 1.9% … The S&P 500, $SPX, traded by the ETF, SPY, traded up 0.9% this week to a record high to close at 1485 … The Russell 2000, $RUT, traded by the ETF, IWM, traded up 1.4% this week to a record high. These are all Elliott Wave 5 highs. Peak Stock Wealth was achieved January 18, 2013.

Sectors trading up this week included:
World Shares, VT, 0.5%
Global Real Estate Excluding The US, DRW, 0.9%
Networking, IGN, 2.1%
Retail, XRT, 3.9%
US Infrastructure, PKB, 1.9%
Gaming, BJK, 0.9%
Automobile Manufactuers, CARZ, 0.9%
Paper, WOOD, 1.0%
Metal Manufacturing, XME, 0.5%
Semiconductors, XSD, 0.5%
Energy Partnerships, EMLP, 1.3%
Energy, XLE, 2.5%
Small Cap Energy, PSCE, 1.2%
Energy Service, OIH, 3.4%
Dow Energy Service, IEZ, 3.4%
Health Care Provider, IHF, 2.9%
Global Producers, FXR 1.9%
Airlines, FAA, 0.8%
Homebuilding, ITB, 2.3%; chart of Lennar, LEN, 2.6%, and PHM, 6.0%, show blow off market tops.
Shipping, SEA, 1.3%
Consumer Staples, KXI, 1.3%
Consumer Discretionary, RXI 1.4%

Tin, JJT

Top 100 Dividend Payers, DOO, 0.2%
Large Cap Value, VTV, 1.2%
Dividend Growth, VIG, 1.6%
Mortgage REITS, REM, 1.5%

Leveraged Buyouts, PSP,

Major World Banks, IXG, 0.3%
European Financials, EUFN, -0.4
The Too Big To Fail Banks, RWW, 0.6%
Regional Banks, KRE, 2.3%
China Financials, CHIX, 2.8%

Sectors trading lower this week included:
Solar, KWT, -6.2%
Clean Energy, ICLN, -1.4%
Wind Energy, FAN, -0.5%
Fertilizers, SOIL, -1.0%
Steel, SLX, unchanged
Miners, PICK, -1.5%
Copper Miners, COPX, -2.0
Telecom, IYZ, -1.1%
Biotechnology, IBB,  -0.5%
Internet Retail, FDN. -0.3%
Global Engineering, Design and Build, FLM, -0.3

Countries traded as follows
Carry Trade Nations, EFA, 1.9%
Emerging Markets, EEM,  0.7%

Greece, GREK, GREK, -2.3%, led lower by the National Bank of Greece,NBG, -10.8%
Spain, EWP, -0.3%
Ireland, EIRL, 0.3%
Italy, EWI, 0.1%
Germany, EWG, -0.8%
Europe, VGK, -0.1%

Turkey, TUR, 5.2%
New Zealand, ENZL, 1.6%
Philippines, EPHE, 1.3%
Thailand, THD, 2.9%
Peru, EPU, 0.8%
Australia, EWD, 0.5%
Finland, EFNL, 0.5%

Norway, NORW, 0.7%
Netherlands, EWN, 0.1%
Switzerland, EWL, 0.3%
Sweden, EWD, 0.3%
Austria, EWO, -0.1%

The UK, EWU, -0.6%

Brazil, EWZ, 0.8%

Russia, RSX, 2.8%

India, INDY, 4.1%

Mexico, EWW, 0.4%

Taiwan, EWT, -1.1%
South Korea, EWY. -1.0%

China Industrials, CHII, -1.8%
China Real Estate, TAO, 1.5%
China Small Caps, ECNS, 1.2%
China Shanghai, CAF, 7.2%
Japan, NKY, -0.4%

Alpha Stocks, FEMS, 0.9

Bespoke Investment Group reports Financial Sector at Key Inflection Point.  The S&P 500 Financial sector has been on a big run for more than a year now, and the sector is now finally back to its prior bull market highs that were reached back in April 2010 and February 2011.  This obviously leaves the Financial sector at a key inflection point, with big resistance in its way.  The sector just happens to be touching up against this big resistance as the major financial firms are reporting their quarterly earnings this week.  If the sector can take out this resistance over the next week or so, we’re likely at the beginning of the next stage of the rally for the Financial sector.  If it can’t take out this resistance, we’re looking at a pretty significant triple top. Financials weekly, XLF weekly, ended January 2013 at 17.05, and has risen 4.6%, this week to close at 17.15; the daily chart, XLF, shows a blow off market top.

Debt monetization has reached its limit in the UK. Monetary easing has had its full expansion effect as UK Banks, HDB, LYG, RBS, BCS, led the UK, EWU, 0.7% lower this week, as the British Pound Sterling, FXB, traded strongly lower as The Telegraph reports Britain has more debt than the eurozone, says Germany’s Schaeuble.  Loose monetary policies, coupled with excessive defecit spending in Britain has so grossly monetized the UK’s sovereign debt that its currency is finally starting to be successfully sold short by currency traders. Despite this, Scott Hamilton and Jennifer Ryan of Bloomberg report “Bank of England policy maker Ian McCafferty said officials must have an open mind about ways to help the recovery, signaling he may support new measures if needed to target specific weaknesses in the economy. ‘We need to be open to considering other unorthodox means to conduct monetary policy if they become necessary,’ McCafferty said”.   FT Advisor writes Too big to fail and too big to bail out: New report argues that the financial crisis [in the UK] has exposed the risks associated with a large financial sector.  And The Institute For Policy Research relates Don’t bank on it: The financialisation of the UK economy.

Outside of Citigroup, C, most of the Too Big To Fail Banks, RWW, and the World Banks, IXG, were able to beat profit expectations, after blasting 28 % higher last year, and leading a 13%, S&P 500, SPY, gain, they’ve returned 4%, and are the fourth best of the 10 S&P 500 sectors.

Ireland’s IRE, Germany’s DB, Spain’s, SAN,and Greece’s NBG, have taken the European Financials, EUFN, and Europe, VGK, higher this month; the Euro, FXE, has likely peaked and is now trading lower at 132.19.

India Bank, IBN, led India, INDY, and India Small Caps, SCIN, higher this week, as HDB, traded lower.
Peru’s, BAP, took Peru, EPU, higher.
Mexico’s BSMX, took Mexico, EWW, higher.
Chile’s BCA took Chile, ECH, higher.
Puerto Rico’s BPOP led the Emerging Market Financials, EMFN, higher. .
Regional Banks, KRE, led the Russell 2000, IWM, higher
Brazil’s ITUB, and BBD, led Brazil, EWZ, higher
Brazil’s CS and UBS, led Switzerland, EWL higher.
Japanese Banks, MTU, SMFG, NMR, traded lower, while SHG, and MFG, traded higher, taking the Nikkei, NKY, lower.
Regional Banks, KRE, lacking global seigniorage coming from a short of the Yen, and a long of Major World Currencies, DBV, and Emerging Market Currencies, have been mostly flat since the banks began reporting.

CNBC reports KBW analyst Fred Cannon relates “Share repurchases are a critical feature of capital management for most of these large institutions as their capital levels are strong and asset growth is weak,” Cannon said in a note. “However, achieving net share reduction is difficult for many because of Fed restriction and because they are issuing significant numbers of shares as part of compensation.”
Float, as it is called, indicates the numbers of shares available. A decrease in float is considered a positive sign for a stock based on supply-demand rules. Of those banks under Federal Reserve stress test jurisdiction, just five have decreased their shares available. Those banks include Goldman Sachs, GS, and Bank of New York Mellon, BK.  Four institutions, including Bank of America, BAC and Morgan Stanley, MS, have had the amount of shares surpass growth in assets.

The ratio of Transportation Stocks to Industrial Stocks, IYT:IYJ, has risen from its October 1, 2012, low to reach its 200 day moving average communicating that a Dow Theory inflection point has been achieved and that both will be trading lower.

Total Bonds, BND, traded, 0.1% higher, from strong support, as toxic debt rose: Leveraged Buyouts, PSP, 0.5%, Junk Bonds, JNK, 0.3%, BKLN, 0.4%, and Distressed Investments, FAGIX, 0.3%.
Other debt rising included Government Debt, GOVT, 0.1%, Emerging Market Bonds, EMB, 0.6%,
Other debt declining included Sovereign Debt, BWX, -0.6%, Int’l Corporate Debt, PICB, -0.5%,

After the soon coming Financial Apocalypse, that is a worldwide credit bust and global financial breakdown, the Beast Regime of Authoritarianism, Totalitarian Collectivism, and Regionalism, as presented by the Apostle John, in Revelation 13:1-4, will come to rule in regional governance in all of the world’s ten zones, and in each of mankind’s seven institutions, as regional leaders meet in summits, renounce national sovereignty, announce regional sovereignty, and appoint regional sovereigns and regional monetary popes, to implement policies for regional security, stability and sustainability.

The Peace of Liberalism came through the Milton Friedman Free To Choose paradigm that was based upon floating currencies and a falling US Dollar. The Peace of Authoritarianism comes through the   Mario Draghi Diktat paradigm is based upon regional rule, where diktat serves as currency, credit, and power.

The fiat money system featured choice of investments based upon credit. The diktat money system will feature mandates of debt servitude based upon tyrannical rule.

4) … This week’s news reports portend a market turn lower.
Bloomberg reports Abe stimulus risks fizzling as Citigroup sees Japan job gap. Japan’s 10.3 trillion yen ($117 billion) fiscal stimulus may add less than a quarter of the jobs the government predicts, casting doubt on Prime Minister Shinzo Abe engineering a sustained recovery. Even with more central bank easing, most of the impact of Abe’s spending won’t spread far beyond public works projects, Citigroup says. It estimates that 100,000 jobs will be created, compared with the government’s figure of 600,000. BNP Paribas SA says 150,000.

Bloomberg reports Singapore exports drop most in 14 months as recovery delayed. Singapore’s exports declined the most in 14 months in December as manufacturers shipped fewer electronics and pharmaceuticals, hurting economic recovery. Non-oil domestic exports slid 16.3 percent from a year earlier, after a revised 2.6 percent drop in November, the trade promotion agency said in a statement today. The median of 18 estimates in a Bloomberg News survey was for a 7.6 percent decline. The drop was the most since October 2011, based on previously reported data. Exports rose 0.5 percent in 2012, the worst performance in three years, according to Bloomberg calculations. “The ugly export reading raises the specter of recession once again,” Chua said. “There is a high likelihood that industrial production also contracted sharply in December. These are signs that Singapore’s manufacturing is facing hollowing out pressures, especially given the better trade data seen in Northeast Asia and Malaysia.” Singapore’s electronics shipments by companies such as Venture Corp. fell 19.1 percent in December from a year earlier, after slipping 16.5 percent the previous month

Boeing 787 Fleet grounded by US in first since 1979. U.S. regulators’ decision to temporarily ground Boeing’s 787 Dreamliner, their first move involving an entire model in 34 years, came five days after Transportation Secretary Ray LaHood proclaimed it safe. The Federal Aviation Administration, which certified the plane in 2011, ordered flights on the 787 halted until airlines can show the plane’s lithium-ion batteries “are safe and in compliance,” according to an agency statement yesterday. It didn’t say how they should accomplish that.

CNBC reports Fed Hawk Voices doubts over benefits of bond buying. A senior Federal Reserve official voiced skepticism on Wednesday about the benefits of additional asset purchases by the U.S. central bank, while a more dovish policy maker maintained his campaign for additional policy easing. Dallas Federal Reserve President Richard Fisher, in remarks that were mainly about the need to reorganize banks that were “too big to fail,” said the effectiveness of the Fed’s massive bond purchases in helping the economy was fading

CNBC reports Why Brazil’s once booming economy is losing its shine. “The last decade was very good for Brazil,” James Lockhart Smith, head of Latin America, Maplecroft, told CNBC. “Now, Brazil is having to compete with a lot of other countries and it has an Achilles heel in the cost of doing business, so it’s much more complicated to generate growth.”

Reuters reports Google snaps up junk bonds in desperate grab for yield. Corporate treasurers at companies like Google are being forced by the Federal Reserve’s low-rate policy to invest in ever-riskier credit products, including longer-dated investment-grade bonds, junk bonds and leveraged loans, according to buyside and sell-side sources. In an effort to get a return on their mountains of cash at hand, Google and others have purchased high-yield bonds and leveraged loans, while names like Microsoft and Apple are said to have dabbled in non-investment-grade securities. “Many of the companies with the largest levels of cash on hand have bought high-yield bonds and one of the big areas of interest this year is leveraged loans,” said a fund manager at one of the biggest US investment firms. “Some are also looking at emerging market local debt as a category,” he said, although far fewer than those going down the credit spectrum and into non-investment-grade loans and bonds.

Reuters reports Nearly $1 trillion of debt at risk of downgrade to junk in 2021 by S&P. The amount of sovereign and corporate credit on the cusp of being downgraded to junk status more than quadrupled in 2012, due primarily to an erosion in the credit quality of the world’s banking sector, S&P’s data showed on Wednesday. At the end of last year, S&P rated $984.8 billion worth of debt, from 52 separate issuers, one step away from speculative grade, also referred to as junk. At the end of 2011, the number of credits that were one downgrade away from junk status was 38, representing $227.4 billion. “Most of the downward pressure that affected potential ‘fallen angels’ was because of the European credit crisis,” Diane Vazza, credit analyst at S&P, told Reuters, referring to issuers whose ratings are close to being cut to junk.

The Telegraph reports Europe drawn into global currency wars as slump deepens. The world is edging closer to all out currency conflict as Europe’s politicians join a chorus of policy-makers across the globe pushing for devaluations to fight for market share

Elaine Meinel Supkis writes Sovereign wealthy Germany wants half its gold back from Federal Reserve vaults In NYC. Germany is demanding the Bank of NY which is a Federal Reserve entity, hand over half of the gold it has held for Germany since WWII.
Germany is, along with China, one of the few major countries with sovereign wealth and it is as of today, #1. Not Japan nor China, it is Germany. The Germans are still hitched to the euro but they fear it is doomed at this point in time so are quietly preparing the ground for the possibility their fellow sovereign wealth holders might switch suddenly to the gold standard which ruled international trade for hundreds of years, with one empire after another wearing the Gold Trade Crown and then giving it up through bankruptcy and war.
Europe doesn’t want a strong euro, their entire problem these days is, like with Japan, the weak dollar. Neither Europe nor Japan can buy up enough dollars to make their currencies weak enough to flood the US with their exports.
So, gold is meaningless unless there is a crisis. HAHAHA. All the people who pretended gold was some foolish thing of the past obviously don’t understand the basis of ‘money’ which has been, for the most part, gold. That is the gold standard for currencies which has been artfully abandoned recently but only so that countries ravaged by WWII and revolutions could recover via trade mainly with the US and mainly with the US running deficits with defeated nations or countries which flirted with no-currency of value lifestyles.
The Germans are getting nervous. They will keep some of their hoard in the US so they can use it as collateral to buy (GUESS WHAT???) dollars if there is some ‘currency problem’ which translates as ‘the euro is too STRONG and exports are a problem’ more than anything. Europe doesn’t want a strong euro, their entire problem these days is, like with Japan, the weak dollar. Neither Europe nor Japan can buy up enough dollars to make their currencies weak enough to flood the US with their exports

The currency demand curve, that is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Pure Growth Shares, RZG, RZV:RZG,  is now trading for the first time below 50 day support, communicating that competitive currency devaluation has commenced.  Confirmation of such comes from the Proshares 200% Inverse ETF, YCS, falling parabolically lower. The Yen, FXY, is now the first currency driven, lower the others will follow, weaker Major World Currencies, DBV, and fainter Emerging Market Currencies, CEW, will be coming simply as investors derisk out of national Sovereign Debt, BWX, Emerging Market Bonds, EMB, and International Corporate Bonds, BLV.

The seven month risk on rally, has come by seigniorage, that is moneyness, of the toxic debt held by the world central banks, such as Distressed Investment, FAGIX, which was taken in by the US Fed under QE1, Junk Bonds, JNK, Bank Loans, BKLN, and Leveraged Buyouts, PSP; and has been currency carry trade investing propelled, by the sell of the Yen, FXY, as is documented by the rise in the Small Cap Value Shares, RZV, rising more strongly than, their peers, the Small Cap Growth Shares, RZG, as is seen in the ongoing Finance chart of RZV, RZG, JKE, VTV,  IXG, and EFA.

Doug Noland relates How Crazy Equity fund inflows have commenced 2013 at the strongest pace in recent memory. The “equities always outperform over the long-run” crowd again play prominently on the airways. Market watchers will closely monitor developments to see if 2013 finds the retail investor jumping aboard the equities bandwagon. And while Treasury and MBS prices have been under modest pressure, there is no indication that the corporate debt Bubble is in jeopardy. Flows into the “bond” fund complex have remained strong. Debt issuance this week was super strong. Financial conditions? Couldn’t be looser.

I appreciated a Friday Forbes headline: “The World’s Bubble Economy Getting Bubblier.” An important part of my thesis holds that current Bubble manifestations increasingly permeate throughout the asset markets – financial and real. Evidence is mounting that select U.S. real estate markets have begun overheating. From Bloomberg, “San Francisco Bay Area Home Prices Surge Most Since at Least ’88,” with median prices up 32% year-over-year. From the Los Angeles Times: “December Home Prices Jump 19.6% in Southern California.” Eye-opening data are not limited the Golden State. From Bloomberg, “Brooklyn Home Prices Jump Most Since ’06 as Supply Drops.”
There’s clearly a “mix issue” at work, with a jump in upper-end transactions skewing median price data. Yet it’s also apparent that there are, not surprisingly, indications of mounting housing market excesses. Indeed, the Fed’s determination to reflate housing markets generally has reflated Bubbles particularly in “upper-end” markets across the country.
The monetary policy-induced housing recovery is at this stage poised to boost both the economy and the Credit system. At 954,000, December Housing Starts were much higher-than-expected (890k) and ended 2012 at the strongest level since June ’08. So long as financial conditions remain ultra-loose, 2013 should see the first increase in Total Mortgage Credit since 2008. “Fitch: Strong Starts a Sign That U.S. Housing Now Firing On Most Cylinders.”
I have argued against “New Normal” analysis. I have referred to deleveraging as largely a myth. I’ve theorized “Bubble, Bubble, and more Bubble” – and have seen confirmation and more confirmation of this thesis. It’s almost indisputable that the system is now deeply into a re-leveraging cycle. Five years of unprecedented reflationary policymaking have spurred rejuvenated “animal spirits” throughout the markets and, increasingly, in parts of the real economy

There’s a lot of disagreement about what role monetary policy plays in creating asset bubbles. It’s not a settled issue. There are some people who think that it’s an important source of asset bubbles, others who think it’s not. Our attitude is that we need to be open-minded about it and to pay close attention to what’s happening. And to the extent that we can identify problems… we need to address that. The Federal Reserve was created about 100 years ago now – in 1913. It was the law. Not a new monetary policy, but rather to address financial panics. And that’s what we did for us in 2008 and 2009. And it’s a difficult task. But I think going forward the Fed needs to think about financial stability and monetary economic stability as being in some sense the two key pillars of what the central bank tries to do. And so we will obviously be working very hard on our financial stability. We’ll be using our regulatory supervisory powers. We’ll be trying to strengthen the financial system. And if necessary, we’ll adjust monetary policy as well. But I don’t think that’s the first line of defense.”

Last week, I delved a little deeper into the thesis that the current Bubble phase is uniquely precarious, specifically because Bubble effects have turned so systemic and, ironically, also much less conspicuous. I was reminded by Bernanke’s comments that I had failed to address a key analytical point: the government finance Bubble these days inflates largely outside of the private lending markets – outside the purview of traditional bank supervision and regulation. And while I would contend that the Fed remains uninformed in the nature of Bubble Dynamics, it is also clear that when it comes to Bubbles the Fed is at best fighting the last war.
From my point of view, the Federal Reserve System has essentially made no progress on the Bubble issue. Largely absolving responsibility, the Fed explains the “housing Bubble” as predominantly a failure in mortgage lending supervision and regulation. There is no recognition that Fed monetary policy had a profound impact on the pricing and trading of mortgage-related debt instruments – and that accommodation of a securities market speculative Bubble was a prevailing force behind the mortgage finance Bubble episode. There has been no recognition of the profound role the Fed plays in distorting risk perceptions throughout the marketplace, in the process encouraging leveraged speculation. There is no appreciation for how “activist” monetary policy has so impacted incentives throughout the securities markets and financial industry overall.
Apparently, the Bernanke Fed fails to recognize that its policies to this day foment even greater market distortions and Bubble excesses. And, clearly, “supervision and regulation” have not – and will not – protect the system from market-based excesses, whether it be over-issuance of suspect marketable debt instruments, speculative excess or destabilizing financial leveraging. Where are the supervisory and regulatory frameworks working to restrain the unprecedented issuance of federal debt? How about the hedge fund industry or leveraged speculation more generally? In general, where is the apparatus today working to restrain excess throughout global risk markets? The answer should be sound and properly functioning market pricing systems – markets that would boost yields (lower demand/prices) for over-issued non-productive debt. Chiefly because of Fed and global monetary policies, the world’s securities market pricing systems have been rendered largely dysfunctional.
While Q4 data won’t be available for a couple months, I expect total U.S. non-financial debt to have expanded about $1.60 TN in 2012. This would be up from 2011’s $1.35 TN, the strongest Credit expansion since 2008’s $1.9 TN.

And considering what I suspect has been unfolding in the bowels of securities financing/leveraging, I can confidently posit the “System Re-leveraging” thesis. Recall that in responding to the 2008 crisis, policymakers enjoyed the capacity to aggressively reflate systems through the massive issue of government debt, aggressive use of government guarantees, and the unprecedented reliance on central bank monetization (“money printing”).
I contend that this Re-Leveraging/Bubble cycle poses extreme system risk. Importantly, fiscal and monetary excess are instrumental to the current Credit inflation (the boom cycle). This ensures that excesses are more systemic, while creating the potential for the scope of excesses to surpass those of previous Bubble periods. From my analytical perspective, this greatly increases the likelihood of a very problematic future bust and attendant crisis of confidence.

I comment, with the death of the Banker  Regime of Crony Capitalism and European Socialism, people will eventually come to trust in the Beast Regime of Totalitarian Collectivism and Regionalism.

Question to the Fed chairman at the University of Michigan: “…You came to your position with a real expertise as one of the world’s experts on the Great Depression and how policymakers should react in the midst of a crisis. Now that you have actually lived through a major global crisis, I wonder if you could tell us what surprised you most?”
Chairman Bernanke: “The crisis. I was very engaged, very interested in financial crises as an academic. I worked on the Great Depression. I did theoretical work on the role of financial crises in macroeconomy, and I was very interested when I came to the Fed in addressing issues related to potential crises. But obviously this was a very large and complex crisis that was more severe than I anticipated certainly… I think it would be fair to say that most people anticipated. But we did learn some things from history. And I think there’s a lot of value to studying history, particularly from our perspective economic history, because it helps you see what your predecessors did wrong and did right. Two things we learned from the Great Depression. One was not to let monetary policy get too tight. In the 30s, the Federal Reserve did not actively try to expand monetary policy accommodation. And as a result, there was a deflation of about 10% a year. Deflation, falling prices. Very damaging. The Fed also did not do very much in the 30s to try to stabilize the banking system, which about a third of all the banks in the country failed. So those were two lessons that we really tried to learn from. We of course have been discussing very aggressive on the monetary policy side, and we took strong actions to try to stabilize our financial system because we understood that if the financial system collapses then the economy is likely to collapse as well. So we took those actions learning from what had happened in the 30s. A couple of other things I think that were useful. During the 30s, in part because obviously the world was still recovering from World War I, there was a lot of international enmity. Cooperation among central banks, among governments was not very good. In fact, you may know – your audience may know – about the Smoot-Hawley tariff and the tariff wars and all the other things that happened during the 30s.”
Noland comment: “The current U.S. and global current backdrop is regrettably more late-1920’s than 1930’s. Repeatedly, policymakers’ ill-advised aggressive “post-Bubble” (“Keynesian”) policy measures have unwittingly worked to perpetuate history’s greatest Credit Bubble and financial mania. With the eventual bursting of today’s global Bubble, there will surely be ample “international enmity.” Cooperation and coordination will not be so abundant. In general, policy solutions and flexibility will be in depressingly short supply. Policy doctrine – actually, economic analysis in general – will be discredited. And today’s unfolding battle in support of free market capitalism will seem like a trivial little skirmish. But, once again, I get somewhat ahead of developments.”

Mr Noland reports Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $748bn y-o-y, or 7.3%, to a record $10.933 TN. Over two years, reserves were $1.688 TN higher, for 18% growth.

And he relates M2 (narrow) “money” supply rose $8.8bn to a record $10.485 TN. “Narrow money” has expanded 7.4% ($727bn) over the past year

5) … A review of the Haller Lake neighborhood, North Seattle, 98133.
If I lived in Seattle, I would consider living in North Seattle, 98133. This is the Haller Lake neighborhood which is near the intersection of Aurora and North 130th Street, as there is a Fitness Evolution and a LA Fitness Club in the neighborhood. The high school for the area is Ingraham High School.  Puget Sound Christian Clinic provides health care to low-income uninsured people in King and Snohomish Counties. I would visit the North Seattle Alliance Church, to see if I could worship there.

6)  The Top Performing Metro Areas in 2012
Stacy Curtin of the Daily Ticker provides the Milken Institute Report The Best Performing Cities in 2012

Top 5 Large Performing Metros

  1. San Jose, CA
  2. Austin, TX
  3. Raleigh, NC
  4. Houston, TX
  5. Washington, D.C.

Top 5 Small Performing Metros

  1. Logan, UT
  2. Morgantown, WV
  3. Bismarck, ND
  4. Odessa, TX
  5. Fargo, ND

And Sohrab Ahmari, a Robert L Bartley Fellow, reports How Utah avoids the national funk.
Logan, Utah, sometimes looks as though it was preserved in a time capsule. The small city of 50,000, home to Utah State University, is surrounded by the towering, tree-dotted peaks of the Wasatch Range. “Downtown” is a single main street where you can find a movie theater, a bookstore, a few eateries and stores, and a Mormon tabernacle.
Beneath Utah’s Mountain West pastoral, preserved in places like Logan, roars an economic engine that—thanks to a combination of smart policy and local culture—continues to create jobs even as the national economy stagnates. As Ashok Khandkar, a material scientist who has launched successful medical-technology ventures in Utah, recently told me, “It’s a very lucrative place if you have the idea and the talent.”
I returned to Logan last month for my 10-year high-school reunion expecting a prosaic trip down memory lane. (I immigrated to Utah from Iran at age 13.) But Logan and much of the state had undergone great change. I was particularly struck by the number of new businesses and housing developments clustered in and around Logan and Ogden—the historic midway point on the First Transcontinental Railroad. The feel of economic vitality was unmistakable.
That anecdotal impression is backed by economic data. Utah’s official unemployment rate in July stood at 6%—more than two points below the national average. Between May 2011 and May 2012, the Beehive State added nearly 29,000 jobs, a 2.4% increase. Meanwhile, both the state’s total personal income ($96.6 billion in the last quarter of 2011) and average annual pay (almost $40,000 last year) are on the rise.
Economic growth has been accompanied by positive demographic shifts. Utah’s population grew by about half-a-million, or 23.8%, to 2.76 million over the past decade or so. And the state is becoming more ethnically and racially diverse. “In Utah, minorities are 17.4% of the adult population and nearly one-fourth of the youth,” noted a 2011 study by the University of Utah’s Bureau of Economic and Business Research (BEBR). That’s in stark contrast to a population that 12 years ago wast 90% white.
As the 2010 Census showed, Utah remains the country’s youngest state, with a median age of 29.2—eight years younger than the national median. “It’s because of the dominance of the Mormon culture [in the] region and the high value placed on having children,” BEBR economist Pamela Perlich told the Salt Lake Tribune last year. “We’re younger because we’re an in-migration state. . . . Those coming are young people, and young people have babies. And the people who are having babies are having them at higher rates than other states.”
Businesses are taking note of these trends and going West. Mining and natural resources are staple industries that continue to thrive. But now information technology, along with financial and professional services, are emerging as growth industries. New arrivals include Goldman Sachs—the firm has its second-largest Americas site in Salt Lake City—and tech heavyweights like Adobe, which is planning a 1,000-employee campus south of Salt Lake.
“The overriding factor working in our favor is that Utah is seen as an island of stability in a chaotic context,” says Jeff Edwards, head of the state’s Economic Development Corporation. Thanks to a conservative state legislature, Utah’s 5% corporate-tax rate has remained unchanged for 15 years. Compare that to, say, New Jersey, where the corporate-tax structure has been overhauled no fewer than four times since 2000—and where the top bracket pays a whopping 9%.
“The companies we talk to with money to invest are asking themselves where to go,” says Mr. Edwards. “If you invest in Utah, you know what you’re going to get.”
State business leaders echo these sentiments. “We’ve been fortunate to have a positive business climate here,” says Jeff Nelson, president and CEO of Nelson Laboratories, a family-owned pharmaceutical and medical-products testing company. “There aren’t a lot of policies that get in your way—not a lot of trouble from the government.”

Mr. Khandkar, the medical-technology entrepreneur, agrees. “The most important reason is an appropriate tax level,” he says, “and government that makes it easy to start companies.”
Utah’s flat, 5% corporate-tax rate is 1.6 points below the 50-state average, according to the Tax Foundation, and it is one of the lowest among states that levy corporate taxes. Barriers to business creation are minimal. No wonder Utah ranked fourth among states in the Pacific Research Institute’s last U.S. Economic Freedom Index (from 2008).
The Beehive State’s fiscal house is also in order. “We have eliminated all structural imbalances in our budget,” says Spencer Eccles, executive director of the Governor’s Office of Economic Development, somewhat immodestly. “In the first two years of the downturn, we cut two billion dollars out of the budget. We did it by eliminating programs and cutting the size and staffing of government down to 2000 levels.”
State-agency budgets were trimmed by 19%, on average, during this period. “We did all of that,” Mr. Eccles boasts, “while virtually not increasing taxes, except for a small tobacco-tax increase.”
Then there are the quality and culture of the Utah workforce. “Our secret sauce is our ability to work together,” says Mr. Eccles.
“We’ve been able to find a quality workforce that’s sustainable,” explains Mr. Edwards. “It’s a young state with young people who want to stay here. So we know where our workers are coming from 20 years down the road.”
But what about Utah’s supposedly puritanical ethos and straight-laced cultural atmosphere? With the influx of out-of-state businesses, things are changing, says Mr. Daniels. Even so, he cautions, “Utah is not for everybody. If you’re looking for an intense urban lifestyle, Salt Lake may not be for you.”
Still, you’ll find transplants around from New York and San Francisco. And the easy proximity of dozens of marvelous outdoor sites—among them Bear Lake, Zion National Park and skiing destinations across northern Utah—has many new arrivals choosing to stay for the long haul. Says Mr. Nelson: “If that’s dull then I like that kind of dull.”

7) …. Precious Metals report from Dollar Collapse
1/18 The significance of $1650 – MineSet
1/18 Precious metals touch 1-month highs – BullionVault
1/18 “Gold will prove a haven from currency storms” – GoldCore
1/18 A new Gold Standard is being born – The Telegraph
1/18 U.S. Mint sold out of silver eagles again – GATA
1/18 Platinum market illustrates silver manipulation – The Telegraph
1/18 The Germans don’t trust Obama with their gold – and can you blame them? – The Telegraph
1/18 Gold … buy the dips! – Daily Reckoning
1/17 To recover a small part of Germany’s gold, Bundesbank will need 7 years – Casey Research
1/17 Mine closure a silver lining for platinum – The Australian

8) … Faith can be a great comfort in the coming Second Great Depression
To deal with the adversity I see coming, I desire to have an ever improving relationship with God, where I live in His Spirit and experience sound thought of His Word, so that I can have a vibrant spiritual resource within, virtues which reflect his character, ethics which uphold respect for others, and a conscience which reflects the peace of sacrifice provided for my sins.

One could believe the Reuters report Geithner says U.S. “in fourth quarter” of crisis recover, WSJ relates. The US economic recovery is entering the home straight, though unemployment is still very high and may only come down gradually, outgoing U.S. Treasury Secretary Timothy Geithner said.

Yet, the Business Cycle is complete and Kondratieff Winter is on the way, resulting in the Second Great Depression.

The three major causes of the First Great Depression were speculative investing, high levels of municipal debt, and loose credit. The Second Great Depression will be even greater than the First.

News of the leveraged speculative investment community comes from Whitney Kisling of Bloomberg who reports Hedge funds are borrowing more to buy equities just as loans by New York Stock Exchange brokers reach the highest in four years, signs of increasing confidence after professional investors trailed the market since 2008. Leverage among managers who speculate on rising and falling shares climbed to the highest level to start any year since at least 2004, according to Morgan Stanley. Margin debt at NYSE firms rose in November to the most since February 2008, data from NYSE Euronext show. The rising use of borrowed money shows that everyone from the biggest firms to individuals is willing to take more risks after missing the rewards of the bull market of  2009.

News of investment in municipal debt comes from Brian Chappatta of Bloomberg who reports Investors are pouring the most money since 2009 into U.S. municipal debt, putting the $3.7 trillion market on a pace for its longest rally versus Treasuries in three years.  Investors added $1.6 billion to muni mutual funds in the week ended Jan. 9, the most since October 2009. The renewed appetite has propelled city and state debt to a 0.7% gain this month, beating a 0.4% loss for Treasuries.

The ECB’s LTROs and OMT, has loosened credit in Europe. Abigail Moses of Bloomberg reports Ardagh Group, the packaging company buying Cie. de Saint-Gobain SA’s U.S. glass bottle unit, is selling the most high-yield bonds from a European issuer in two years as junk debt risk falls to an 18-month low. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield ratings fell for a fifth day to the lowest since July 2011.

The US Federal Reserve’s QE4 establishes unlimited easing and effects unlimited money printing.   Sarah Mulholland of Bloomberg reports What’s old is new again on Wall Street as banks tap into soaring demand for commercial real estate debt by selling collateralized debt obligations, securities not seen since the last boom. Sales of CDOs linked to everything from hotels to offices and shopping malls are poised to climb to as much as $10 billion this year, about 10 times the level of 2012, according to Royal Bank of Scotland Group Plc.

Julia Leite of Bloomberg reports The market for corporate borrowing through commercial paper expanded for a 12th week as nonfinancial short-term IOUs rose to the highest level in four years. The seasonally adjusted amount of U.S. commercial paper advanced $27.8 billion to $1.133 trillion outstanding. That’s the longest stretch of increases since the period ended July 25, 2007, and the most since the market touched $1.147 trillion on Aug. 17, 2011.

Craig Torres of Bloomberg reports Federal Reserve officials are voicing increased concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases. Investors have been snapping up riskier assets since the Fed boosted its bond buying to reduce long-term borrowing costs after cutting its overnight rate target close to zero in December 2008. Enthusiasm for speculative-grade bonds is at unprecedented levels, driving a Credit Suisse index that tracks the yield on more than 1,500 issues to a record-low 5.9% last week. Now, as central bankers boost their stimulus with additional bond purchases, policy makers from Chairman Ben S. Bernanke to Kansas City Fed President Esther George are on the lookout for financial distortions that may reverse abruptly when the Fed stops adding to its portfolio and eventually shrinks it. ‘Prices of assets such as bonds, agricultural land, and high-yield and leveraged loans are at historically high levels,’ George said. ‘We must not ignore the possibility that the low-interest rate policy may be creating incentives that lead to future financial imbalances.’”

Aki Ito and Michael McKee of Bloomberg report Federal Reserve Bank of Dallas President Richard Fisher said the Fed needs to continually assess the costs and benefits of pushing forward with record accommodation. ‘We don’t want inflation to raise its ugly head,’ Fisher said adding he doesn’t ‘see that prospect right now.’ The Dallas Fed president said he is concerned that monthly Fed purchases of Treasury notes and mortgage-backed securities may create a price bubble in the bond market. ‘It’s something we need to constantly analyze.’”

The charts of Aggregate Credit, AGG, and Government Bonds, GOVT, and World Treasury Bonds, BWX, Emerging Market Bonds, EMB, show that the global bond bubble burst in 2012, and that it is only the most toxic of debt, such as FAGIX, JNK, BKLN, and PSP, that is trading higher. The ongoing Yahoo Finance chart of closed end equities, CSQ, relative to closed end debt PFL communicates that stocks began to be unable to leverage higher over debt in September 2012.

Investment Banker JPMorgan, JPM, has led its competitors, Goldman Sachs, GS, Morgan Stanley, MS, higher over the last two years, yet over the last six months, the other two have rallied more strongly as is seen in their ongoing Yahoo Finance chart.

Chris Rossini relates in Economic Policy Journal, Following the stock market crash of 1929, there was a short period of calm before the government and Fed would deliver a Great Depression. During that short period of calm, the establishment and authorities did their best to assure everyone that things were ok. I don’t doubt that they even believed what they were saying. Here are some examples of what was said during the calm period.

Nature Economist Elaine Meinel Supkis wrote in August 2008, What Lola Wants, Lola Gets…No More.  The liquidity crisis and the lending crisis are not due to technology nor is it caused by a shortage of money. It is due 100% to the inability of the West to take on much more debt because we are now at the point.  And she currently writes Fed Reserve Releases Highly Censored Minutes From 2007 Pre-crisis Meeting The Federal Reserve was engineered by JP Morgan himself and his buddies very secretively and it is secretly run and the participants belong to more than one secret organization all of whom pretend there are no secrets, no societies run by themselves in total secrecy and no collusion from rich owners of media here to hide all of this from us. End the secrecy! Stop the magical banking bosses and replace them with people who can accurately predict future events.

I comment Deja Vu, once again, the world cannot take on any more debt, as humanity passed through Peak Credit on December 6, 2012, when Total Bonds, BND, turned lower in value. Now investors will be deleveraging out of
1) Currency Carry Trade Darlings, EFA, seen in this Finviz Screener …  http://tinyurl.com/a8cw3b7
EPHE, EPOL, EWW, THD, TUR, ECNS, EWO, VNM, GREK, URTY, EWY, ARGT, EIRL, EWP, CAF,

2)  Global Producers, FXR, seen in this Finviz Screener  …  http://tinyurl.com/b6y6qr6
ARMH, MAT, HAL, XOM, NOK, QCOM, MSI, FMX, IP, REGN, BHP, AA, SCCO, ABB, SAP, TEL, ITW, PHG, IR, ROP, FLS, EMC, DE, ITB, CAT, BA, ERIC, WHR, EXP, LYB, ARG, DIS, MKTAY, WOR, LPL, HNP, TSM, TTM, PPG, KUB, MHK, SYT, CELG, FBR, ASML, PFE, FWLT, E, MON, FXR,  … Of note, Neowin reports Nokia slashes another 1000 jobs in Finland

3)  Liberalisms’ Beloved Investment Sectors, in this Finviz Screener …  http://tinyurl.com/az4gxfk
PSP, IBB, RZV, FAA, CARZ, BJK, KWT, FXR, TAO, COPX, WOOD, IGN, ITB, FEMS, SEA, FAN, REM, JJT, CHII, FLM, AUSE, XPH, DLS, VIG, EMLP, IHF ,IYZ, FDN, XRT, ZIV,

4)  the Speculative Bankers which underwrote Liberalism’s Final Risk Rally, seen in this Finviz Screener …  http://tinyurl.com/ap8uk9d
BAC, C, BCS, LYG, RBS, SAN, DB, IBN, HDB, NMR, MTU, UBS, WF, CS, GGAL, BFR, BMA, BPOP, IRE, CHIX, SMFG, MFG, BSMX, NBG, JPM … Of note The Telegraph reports Lloyds and RBS need billions more capital, BoE says.  Britain’s bailed-out banks need billions of pounds more capital to shore up their balance sheets and support the economy, senior Bank of England officials have warned.

With the deleveraging, Great Depression II will commence. Perhaps one might enjoy a reading in my blog EconomicReview Journal, where I present that bible prophecy of Daniel 2:25-45, and Revelation 13 is unfolding, with a result that a Ten Toed Kingdom of Regional Governance, as well as a Beast Regime of Totalitarian Collectivism and Regionalism, is rising out of the financial and banking insolvency of the Mediterranean nation states, specifically the PIGS, Portugal, Italy, Greece and Spain.
Perhaps, the week beginning Monday, January 20, 2013, will be the beginning of The Second Great Depression, as Mike Mish Shedlock writes Massive fraud in Spain threatens entire government of Prime Minister Rajoy. Eventually the lid off the pressure cooker in Spain is going to blow sky-high. Whether or not this story is the spark remains to be seen.

One should consider dollar cost averaging into a physical possession of gold, that is in gold bullion, as well as an investment in trading at BullionVault as the Telegraph reports A new Gold Standard is being born. The chart of the gold ETF, GLD, shows that it is entering into a consolidation triangle, from which it will break out higher very soon.

The short URL for this article The Debt Doom Loop Closes In On Europe … A Financial Apocalypse Is Coming Soon … is …  http://tinyurl.com/a3xs7ob

Shanghai Shares Top Out Completing Liberalism’s Peak Prosperity

January 15, 2013

Financial Market Report for Monday January 14, 2013, and Tuesday January 15, 2013

1) … Shanghai Shares top out completing Liberalism’s Peak Prosperity
On Monday, January 14, 20123, The National Bank of Greece, NBG, and Greece, GREK, traded lower; while Turkey, TUR, New Zealand, ENZL, and Shanghai, CAF, traded higher.

Bespoke Investment Group asks Has a New China Bull Market Begun? The Shanghai Composite is currently stuck in the longest bear market it has ever seen (going back to 1990). From 11/08/2010 to 12/3/12 the $SSEC, CAF, fell 38%. Should the Shanghai gain another couple percentage points, a new bull market will be at hand.

The Shanghai Shares, ^SSEC, began to trade lower as QE1 came on line and the US Shares, VTI, and the S&P, SPY, started their current rally. The Shanghai shares fell lower as Liberal Finance, specifically the  value of US 30 Year Government Bonds, EDV, and 10 Year US Government Notes, TLT, propelled VTI, and SPY, higher.  But, in December 2012, as the value of Aggregate Credit, AGG, traded lower on a steepening yield curve, as seen in the Steepner ETF, STPP, steepening,, the Shanghai shares, $SSEC, CAF, traded higher, so as to participate with all the World Carry Trade Markets, EFA, in Liberalism’s final risk-on global debt, and currency carry trade, rally with the monthly chart of Chinese Yuan, CYB, showing a strong rise beginning in November 2012, coming from an Elliott Wave 4 of 5 bottom, to complete an Elliott Wave 5 High. The Shanghai, $SSEC, CAF, is at its market top, trading in completion of its up cycle, with all the World Carry Trade Markets, EFA, at their market tops.

All the Major World Currencies, DBV, the Emerging Market Currencies, CEW, and the Chinese Yuan, CYB, will be falling lower in value as investors derisk and deleverage out of World Socks, VT, and World Carry Trade Stocks, EFA, on the exhaustion of the world central banks’ monetary authority.

Competitive currency devaluation, will induce a see saw destruction of World Stocks, VT, and Bonds, BND,  LIberalism’s Peak Prosperity has arrived with World Stock, VT, Major World Currencies, DBV, and Emerging market Currencies, CEW, topping out.

Gold, GLD, is on the verge of breaking out. Soon physical possession of it, either in Bullion form, or in Internet trading vaults, such as Bullion Vault, and Diktat, will be the only two forms of sovereign wealth, as the fiat money system breaks down, and the diktat money system comes online, as national leaders meet in summits and renonce regional sovereignty, announce regional framework agreements which pool sovereignty regionally, and as regional sovereign bodies, and regional sovereign leaders replace nation states, to produce seigniorage, that is moneyness, where the word, will and way of authoritarians serves as credit money and wealth. Authoritarianism’s seigniorage of diktat will replace Liberalism’s seigniorage of choice.

And on Monday, January 14, 2013, a number of the World Banks, IXG traded to new rally highs, including LYG, RBS, BSMX, BAP,CIB, CS, SAN, IRE, which took European Financials, EUFN, only to trade lower from a hanging man candlestick rally high on Tuesday, January, 15, 2013.

Yet, on Tuesday, January 15, 2013, Major World Currencies, DBV, led by the Swiss Franc, FXF, and the Swedish Krona, FXS, as well as the Chinese Yuan, CYB, and Emerging Market Currencies, CEW,  led by the Indian Rupe, ICN, traded lower, and the Brazilian Real, BZF, rose on short sell covering forming a hanging man candlestick. All of which induced International Corporate Bonds, PICB, to trade lower from its rally high.  The currency demand curve, that is the ratio of the Small Cap Pure Value Shares, RZV, relative to the Small Cap Pure Growth Shares, RZG, RZV:RZG, traded for the first time below 50 day support, communicating that competitive currency devaluation has commenced. Confirmation of such comes from the Proshares 200% Inverse ETF, YCS, falling parabolically lower.

Perhaps today, Tuesday January 15, 2013, with a small trade lower in currencies is the termination of the rally in stocks, and the beginning of a global bear market.

On Tuesday, January 15, 2013, Country Stocks, EFA, trading lower included the following:
Greece, GREK,
South Africa, EWA
Ireland, EIRL,
Egypt, EGPT,
Poland, EPOL,
Taiwan, EWT
Norway, EWN,
Sweden, EWD,
South Korea, EWY,
Germany, EWG,
Netherlands, EWN,
Austria, EWO,
Argentina, ARGT,

On Tuesday, January 15, 2013, Global Producers, FXR, trading lower included the following:
SAP, Germany
ARMH … UK
LPL and MX … South Korea
REGN and AMGN …. US
ERIC …  Sweden
ASML and ASMI …. Netherlands
TSM … Taiwan
ABB and LOGI ….  Switzerland
CX … Mexico
SLT … India
BHP … Australia

On Tuesday, January 15, 2013, World Banks, IXG, trading lower included the following:
Argentina Banks, BMA, BFR, GGAL,
India Bank, HDB,
Brazil Banks, BBD, BSBR, ITUB,
UK Banks, RBS, LYG, BCS,
South Korea Bank, KB,
Peru Bank, BAP,
Japanese Banks, NMR, MFG, SMFG, MTU
Spain Bank, SAN,
German Bank, DB,
Greek Bank, NBG,
Mexico Bank, BSMX
Ireland Bank, IRE
European Financials, EUFN,
Emerging Market Financials, EMFN,

An example of debt deflation causing stocks to turn lower is that of Germany’s software giant SAP. SAP falls short of expactoins. Quarterly earnings from SAP AG fell short of expectations on Tuesday, showing the German business software maker failed to keep up with arch-rival Oracle Corp and sending its shares sharply lower.

Zero Hedge reports Hedge funds most levered and long since 2004. Yet, I believe that World Stocks, VT, World Carry Trade Markets, EFA, have topped out on the topping out of Major World Currencies, DBV, and Emerging Market Currencies, CEW, and that these will be falling lower on the exhaustion of the  world central banks’ monetary authority, as bond vigilantes, have called the Interest Rate on the US Ten Year Note, ^TNX, higher from 1.70%, as well have induced the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, higher, as reflected in a steepening of the Steepner, STPP.

Bespoke Investment Group writes US 10-Year Yield: Breakout or Fake Out? While equities have been the place to be so far in 2013, some of the gains have come at the expense of US Treasuries where yields have been on the rise. Less than two weeks ago, the yield on the 10-year US Treasury broke out above significant resistance and traded as high as 1.97% on January 4th. At the time, it looked as though the yield was staging a textbook breakout. That breakout in yield, however, is quickly beginning to look like a fake out. As shown in the chart below, after the last few days the yield on the 10-year has now drifted back below its breakout point. Commentators have been quick to write the obituary of the bull market in treasuries, but based on the 10-year yield in the last few days, the market may be saying not so fast.

As World Stocks, VT, trade lower, it is likely that the Interest Rate on the 10 Year Note,  ^TNX, will decline for a while higher, before it trades higher, and then rises first above 1.85%, and then above 1.90%, as bond vigilantes call a steeping of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, which will be seen in a steepening to the Steepner ETF, STPP.  At that time, the 10 year US Government Note, TLT, and All US Government Debt, GOVT, will be falling lower in value, and be participating in a see saw destruction of fiat wealth. Currencies, DBV, CEW, Stocks, VT, and Bonds, BND, will all be falling lower into the Pit of Financial Abandon together, on the exhaustion of the worlds central banks’ monetary authority. An investment demand for Gold, GLD, is coming as physical wealth replaces fiat wealth.

Mortgage Backed Bonds, MBB, have turned lower from their September 2012 highs reflecting a growing aversion to real estate investing, and a growing risk aversion the implied underwriting of Freddie Mac and Fannie Mae by the US Congress.  Mortgage REITS, REM, saw a sharp sell off in November only to participate in a risk-on recovery with a blow off top in the US Stock Market, VTI, and the World Stock Market, ACWI.  Total Bonds, BND, have turned lower on lower US Government Debt, especially lower 30 Year US Government Bonds, EDV, and lower 10 Year US Notes, TLT.

The monetization of debt by the US Federal Reserve has caused debt deflation in Aggregate Credit, AGG.  Overall US Treasury Bonds, GOVT, are trading at the edge of a massive head and shoulders chart pattern, which will in time progress to a turn lower in all US Debt.  Interest Rates on Sovereign Debt began rising globally in January 2013, forcing World Treasury Bonds, BWX, and Emerging Market Bonds, EMB, lower

Municipal Bonds, MUB, started their fall lower in December 2013, only to participate with Mortgage REITS, REM, in a recover; these were literally drawn up by Liberalism’s final risk-on rally. The only debt that has risen consistently has been is the most toxic of debt, Distressed Investments, FAGIX, which is held by the US Federal Reserve, and serves as the basis of what has been unlimited quantitative easing, Leveraged Buyouts, PSP, Senior Bank Loans, BKLN, Call Write Bonds, CWB, and Junk Bonds, JNK.

2) … Inflationism will be turning into Destructionism on the exhaustion of the world central banks’ monetary authority, and as a result Liberalism will be pivoting into Authoritarianism.
Nature economist Elaine Meinel Supkis writes Desperate Fed Reserve copies Bank of Japan while US pundits still think the US is strong. The Federal Reserve has completely changed its formative activities since the banking collapse. It is now the capital holding tank for international speculators and banks.

From today’s news, Bloomberg reportsFed’s Little-Noticed Escape Clause Allows for U.S. Growth.  He’s made his third round of quantitative easing open-ended, meaning the program doesn’t have a set time frame, and signaled he may adjust its pace if needed. In December, the policy-setting Federal Open Market Committee added outright Treasury purchases to its mortgage-bond buying, saying it would acquire U.S. government debt “initially” at a pace of $45 billion a month on top of $40 billion in home-loan debt. “The extra flexibility will work both ways: They can stop sooner or keep going longer” than if they had set out parameters from the start, said Dana Saporta, U.S. economist at Credit Suisse Group AG in New York … See? This is an ETERNAL change, not a temporary emergency action. This is a radical departure, not more of the same thing but bigger. This is new. And where was the debate? I didn’t see it much. This sailed through without so much as a peep. The same people who yell nonstop about government spending are silent about this for the most part. That is, Congress seems pretty unconcerned.
The Banking community loves this, people who want infinite government spending love this, people who want eternal war with no tax hikes love this, who hates this aside from the old guard ‘gold standard’ people and a few libertarians?
The need to make the Fed the funding machine for war is paramount and never mentioned except by maybe Ron Paul. This machine funded WWI, WWII, the European debts from both mega-wars, the Cold War, the Vietnam War and the War on All Muslims. And it is also responsible for the collapse of our financial welfare system as all systems break down more and more.

Here is a ‘liberal’ editorial supporting the debt state that never mentions our huge trade deficit but does recognize the need to stop the madcap wars: E.J. Dionne: America is not in decline or retreat – The Washington Post
Obama’s harshest critics are essentially charging that he has accepted American decline. They are convinced he wants to pull back from the world and slash the Pentagon budget to make room for more domestic spending. He’s often accused of making the Western European choice: less for the military, more for the welfare state.
News to E.J. Dionne: the US is in decline, severe decline. All data points to the obvious. Our industrial base has nearly vanished. Our natural resources are being sucked dry. The middle class is disappearing. Our children do worse in school than foreign rivals. Our trade deficit is horrendous. Our debts are the biggest on earth, bar none. We have the least sovereign wealth of all nations and the most expensive military, healthcare system on earth. When Reagan talked merrily about morning in America, what he brought was doubling and quadrupling the national debt, trade deficits, inflation and wars. We have been on the wrong road since Reagan and we are very much still on the wrong road.
Our country wasn’t really weak after Vietnam, it was in fiscal trouble due to war spending while tax cutting and this caused inflation which was fixed by killing the unions, offshoring our industries and above all, using the stupid floating fiat currency which caused our immense trade deficits

And we are perched on the edge of the Congressional Fiscal Cliff but that is all about cutting social services and denying the Northeast the sort of hurricane aid the South has enjoyed for the last 60 years: Obama Says G.O.P. Won’t Get ‘Ransom’ to Lift Debt Limit. He is digging in his heels because the average American wants this spending. But NONE of the leaders in DC are at all concerned with the core problem which is how our floating fiat currency has caused us to lose all our sovereign wealth via this floating fiat currency system we are using today.

The Fed kept Wall Street and the City of London’s traders alive via this rescue operation which dwarfed anything that ran before. What was a ‘spare change’ business of rescuing people from their own follies turned into a gigantic scam to capitalize Wall Street gnomes who were being gored by the Derivatives Beast. It shot up from being less than $5 billion to a quarter trillion. Zero gratitude from the gnomes when they were rescued from their deep Cave of Wealth and Death disaster.

The sudden huge mountain of securities held by the Fed still remains, this was ‘only’ nearly $200 billion.

(I remark that the sudden surge of securities held by the Fed is comprised of toxic debt like those traded by the Fidelity Mutual Fund FAGIX.  This so called investment came at the bequest of JPMorgan’s James Dimon)

And this is hideous and amazing and ignored: the $3.2 TRILLION in securities held in custody from those noxious and utterly evil foreign banks and bankrupt countries in the EU system.
And the Fed used to hold only a handful of Treasury securities but began buying it up rapidly exactly the same time the Bush Jr. tax cuts, so beloved by the entire GOP and which the GOP still wants to keep, began screwing up things while we went into two very expensive, privatized wars. It is now at $75 billion and going up.
Same here, a sudden shoot upwards of repurchase agreements which continue high. There were virtually none before the Bush tax cuts. Now on to Krugman again: Paul Krugman: Jon Stewart Is ‘Ruining His Brand’ By Belittling The Trillion Dollar Coin (VIDEO). Stewart mocked the idea on his show last week, saying “we don’t need some trillion-dollar coin gimmick, we need a way to get the world to take the U.S. dollar seriously again.”…
“Obviously neither he nor his staff did even five minutes of looking at the financial blogs,” Krugman said of Stewart in the web interview. “Lots of people think it’s a bad idea. Lots of people think it’s a good idea. But it’s not just, ‘Oh, those idiots.’”
Krugman has defended the coin as a “silly, but benign” way of preventing Republicans from taking the nation’s economic health hostage by demanding spending cuts in exchange for raising the country’s borrowing limit. As usual, Krugman is all defensive yet he, himself, calls the coins scam ‘SILLY’. Yes, it is silly. But NOT ‘benign’. It is an end run around our political system with dire consequences. The world doesn’t hate the US dollar, they all want it as strong as possible and this is where the silly man, Jon Stewart, is being stupid. Both men don’t understand how money works and why our trade rivals torment themselves in order to make the dollar stronger. They do this to eat up our industrial base, take our sovereign wealth and to become the owners of America. Duh. Because neither man wishes to understand this salient and obvious fact that all our foreign trade partners understand perfectly well shows us how hubris works.
They all think the US is strong, special and smart. This is foolish and sad.

Mike Mish Shedlock writes German economy shrinks most in three years German economy shrinks most in three years. Germany is in recession. It’s not a “technical recession”, no matter how anyone labels it. And the recession will pick up steam as the year progresses.
Please consider the Financial Post article Germany’s economy shrinks most in 3 years as crisis hits eurozone powerhouse. The German economy was hit hard by the eurozone crisis in the final quarter of last year, shrinking more than at any point in nearly three years as traditionally strong exports and investment slowed, the Statistics Office said on Tuesday. Economists expect Germany to bounce back after forecasts for weak growth in the first quarter but Europe’s largest economy will be less of a pillar of support for the rest of the currency bloc, where many of its peers are deeply in recession. Gross domestic product shrank by 0.5% in the final three months of 2012, the worst quarterly performance since Germany fell into a recession during the global financial crisis in 2008/2009 and only the second contraction since it ended. The 2012 figure was a tad below a Reuters consensus forecast for growth of 0.8%. The government is due to publish an estimate for 2013 growth on Wednesday. An official from the Economy Ministry said growth would be 0.4% this year, less than half the government’s existing forecast of 1.0%.
Note the GDP downgrade from 1.0% to .4% for 2013. Expect another and another. The only thing that Europe has going for it is a recovering bond market but don’t expect that to last either. Italy and Spain are known basket cases. More importantly, France, the Hidden Zombie in Europe, is about to take a deep plunge. Finally, the recent pickup in China is not sustainable, and the US is clearly weakening. Since Germany cannot export to itself, its export machine will grind to a halt as I said well over a year ago.

A European Superstate will emerge out of a soon coming Financial Apocalypse which will introduce the Ten Toed Kingdom Of Regional Governance replacing British Hegemony and Dollar Hegemony that has governed the world since the late 1700s. There has been two iron legs of global hegemonic power that have underwritten Liberalism since the late 1700s: British Hegemony and Dollar Hegemony.

The City of London, is the government and policing services for the financial and commercial heart of Britain, known as the Square Mile. The City of London is the black shrouded reality of British Hegemony. The Washington Post article reveals a truth, the City of London Financial District, is the Sovereign UK, while the Parliamentary UK, is simply a mirage sovereign nation state. The Economist wrote describing the City of London’s global hegemonic power, “In continental Europe, the City is viewed with a mixture of loathing. London, is by many measures the world’s biggest financial centre, and weakening it is in nobody’s interest, least of all Britain’s. Better regulation of banks is certainly needed, especially to protect British taxpayers. And so far the City bashing has been mainly rhetorical. But running down one of the world’s most successful, and mobile, commercial clusters is folly, and it is surely not the legacy Mr Cameron would wish to leave his successors.”

British Hegemony together with Dollar Hegemony, has governed the world as Two Iron Legs of power since the late 1700s. This is the objective truth foretold by the Prophet Daniel in Daniel 2:25-45, where he interprets Nebuchadnezzar’s Dream as a Statue of Empires that would govern mankind until the arrival of the end times. There has been, and will continue to be a succession of beastly and fearsome world empires or kingdoms; these are

  1. Head of gold – Babylon
  2. Breast and arms of silver- Medo-Persia
  3. Belly and thighs of brass- Hellenistic Greece
  4. Two legs of iron – Rome flowing out into British Hegemony and Dollar Hegemony
  5. Feet partly of iron and partly of molded clay – A Ten Toed Kingdom of Regional Governance, which is presented in Revelation 13:1-4 as the Beast Regime of Regionalism, Totalitarian Collectivism and Authoritarianism, that will come to rule in the world’s ten regions and in mankind’s seven institution, replacing the Banker Regime of Crony Capitalism, European Socialism and Liberalism, that was based upon the sovereignty of nation states.

Jesus Christ is at the helm of the economy of God, Ephesians 1:10, and is pivoting the world from British Hegemony and Dollar Hegemony, and into the End Time, Ten Toed Kingdom of Regional Governance, through the prolificacy and related banking and debt crises of the PIGS, that is the Mediterranean countries of Portugal, Italy, Greece, and Spain.

Greece is an insolvent sovereign, and its banks are insolvent financial institutions; at the bottom of all of this is the fact that it cannot make good on its Treasury debt.  Greek Socialism is the most extreme form of European Socialism.  It cannot exist having huge numbers of employees on the public payroll, having no viable tax collection system, and having a high levels of public corruption, and having immense legal barriers for private corporations to enter the economy.  The Telegraph reports Greek opposition warns bail outs are a ‘bottomless pit’. Greece’s left wing opposition leader has warned Germany that his country is a “bottomless pit” for European taxpayers and claimed Berlin’s austerity drive was “inhuman”.   It is no wonder that in Revelation 13:1, that the Apostle John, saw the Beast Regime of Regionalism, Totalitarian Collectivism rising from the Mediterranean Sea. In other words, what the Economist Magazine calls Greek “pork and patronage” in its article What have we become, will be the springboard for the rise of Regionalism and Diktat to replace Crony Capitalism and European Socialism.

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 to deal with an impending Financial Apocalypse, that is a credit bust and financial system breakdown.

3) … The short selling opportunity of a lifetime has arrived
The monthly chart of World Stocks, ACWI, shows an Elliott Wave 2 of 2 High in December 2012, at 48.08. And the monthly chart of S&P 500, SPY, shows an Elliott Wave 5 High in September 2012, at 142.96.

Mike Mish Shedlock writes Consumers cut back on toilet paper, Pampers, Huggies. While one could short sell the Consumer Staples, KXI, seen in this Finviz Screener, more attractive short selling opportunities exist.

Given a stock market top, I see short selling opportunities in the following:

.. Sector ETFs .. such as PSP, IBB, RZV, FAA, CARZ, BJK, KWT, FXR, TAO, DRW, XRT, COPX, VIG, WOOD, ROOF, IGN, ITB, FEMS, SEA, FAN, REM, JJT, PXR, FLM, ICLN, AUSE, XPH, EWX, SOIL, ZIV
.. Country ETFs .. such as EPHE, EPOL, EWW, THD, TUR, ECNS, EWO, ENZL VNM, EWZS, GREK, URTY, EWY, EWX, ARGT, EIRL, EWP
.. and Banks .. such as BAC, C, BCS, LYG, RBS, SAN,DB, IBN, HDB, NMR, MTU, UBS, WF, CS, GGAL, BFR, BMA, BPOP, IRE, CHIX, SMFG, MFG, BSMX, IRE

I see opportunities in going long in the following:

.. Proshares 200% Inverse ETFs .. such as BIS, FXP, SQQQ, SMK, SDD, EEV, EFU,
.. Direxion 300% Inverse ETFs .. such as EDZ, YANG, RUSS, DPK
.. Metal Based ETFS .. such as FSG, UGL, AGQ, NUGT.

These financial instruments can be viewed on my public chart site http://stockcharts.com/public/1270699

4) … In today’s news
Christoph Dreier writes in WSWS article Greek SYRIZA leader meets with German finance minister, Alexis Tsipras met with the German finance minister to discuss the credit agreements between the European Union and Greece.

MarketWatch.com reports Animal spirits in full stride: investor appetite for risk rises to 9-year high, survey finds.

CNBC reports First shots are fired in global currency war

Zero Hedge reports Pictet’s Four Horsemen of The Euro-pocalypse.

Retail Sales, XRT, blasted 2% higher to a new high. Scott Grannis provides the chart article Retail sales recovery.  Retail sales have now staged a complete recovery, both in nominal and real terms. No sign of any impending recession here, that’s for sure. Indeed, the recovery in sales is impressive given that there are 4 million fewer people working today than there were at the peak in early 2008. Yet I relate that many of the Retail Shares, seen in this Finviz Screener have fallen sharply. Retailers which have not fallen more than their peers constitute reasonable short selling opportunities; these include TUES, CRI, DDS, KORS, COH, as is communicated by their combined ongoing Yahoo Finance Chart.

A European Superstate Will Emerge Out Of A Soon coming Financial Apocalypse

January 14, 2013

Financial Market report for the week Friday January 11, 2013

1) … On Wednesday, January 9, 2013
Jeremy Warner of The Telegraph writes Central banks must switch off the printing presses before it’s too late. Only a year to go now. Ben Bernanke, chairman of the US Federal Reserve, has let it be known that he won’t be seeking a third term once his present one expires in January 2014, and few can blame him.
It is really quite hard to justify further rounds of money printing given the evident recovery that is now taking place. Even so, Mr Bernanke has indicated he’ll keep the printing presses at full throttle at least until unemployment sinks below 6.5pc. This is a mistake, with some possibly quite malign unintended consequences for both the US and world economies.
Like others, I was a strong supporter of the initial burst of “quantitative easing”, both in the US and the UK, when it seemed a very necessary tool for combating the collapse in the financial system and the accompanying, violent, contraction in credit.
And by targeting the “toxic” loans of failing banks for asset purchases, the Fed seems to have practised a rather more effective form of it than we saw in either Britain or Europe. As Bluford Putnam, chief economist of CME Group, has argued in a paper for the Review of Financial Economics, buying up these assets has helped the US banking system rebuild capital and liquidity much more rapidly than has occurred in either the UK or Europe, enabling a return to balance sheet growth.
In Britain, by contrast, QE has almost exclusively targeted government debt, which has been very helpful to the Government in helping to fund a still burgeoning fiscal deficit at very low interest rates, and in keeping the bankers in bonuses, but has failed to restore health to the banking system and seems increasingly ineffective in stimulating demand in the real economy. We’ll reserve judgment on “funding for lending”.
Meanwhile, the European Central Bank largely spurned asset purchases altogether and instead focused on long-term liquidity facilities. Solvency issues in the European banking system have therefore remained substantially unaddressed, preventing meaningful economic recovery.
Even so, the injection of central bank liquidity seems to have done a relatively good job in preventing catastrophe. Yet whether QE can continue to be justified after the financial system has been stabilised is much more questionable. The trouble is that today the purpose of QE is no longer really that of depressing interest rates or preventing a collapse in the money supply, but that of attempting to support aggregate demand.
Growing concern over mountainous public debt has left governments increasingly reliant on the supposed miracle remedies of monetary policy to restore economic growth. Monetary policy has become the only game in town, so much so here in Britain that the Government has elevated faith in the easy money policies of the Bank of England to cult-like status. Britain has blazed the trail, the Prime Minister once boasted, as “fiscal conservatives but monetary activists”. Regrettably, and perhaps predictably, the cult of QE has failed to deliver the goods.  Of course, it is possible that things might have been even worse without it, but the longer it goes on, the less likely this seems, and meanwhile some quite counterproductive long-term consequences are starting to emerge.
Some of the wider adverse consequences of QE have been brilliantly elucidated in a paper for the Dallas Federal Reserve by William White, former economic adviser at the Bank for International Settlements. Since Mr White was one of the few monetary gurus to have accurately highlighted the dangers of the credit bubble when it was still possible to do something about it, his analysis deserves some attention. His main conclusion is that there are limits to what central banks can do, and that monetary stimulus has essentially already hit the buffers. The consequences of persisting are therefore quite likely to be negative from here on in.
These negatives include misallocation of capital likely to prove quite harmful to growth in the long run. For instance, easy money encourages banks to keep existing debtors afloat even though they might be insolvent, thus denying credit to new businesses and younger households. This “evergreening” of long standing debtors creates an army of weak, zombie-like customers.
What’s more, QE results in some very undesirable distributional effects. Those able to afford it are charged higher interest rates than otherwise, while debtors are constantly favoured over creditors. The previously profligate are rewarded, and the thrifty are punished, creating moral hazard on a grand scale. Easy money in response to a crisis can also generate serial bubbles, with each action setting the stage for a later crisis. But perhaps worst of all, it encourages governments to do nothing. One possible defence of QE is that it at least buys time for governments to engage in debt reduction and structural reform to redress imbalances and increase potential growth.
Unfortunately, this time is not being well used. To the contrary, QE has become an excuse for doing nothing and carrying on as before in the Micawber-like hope that something will turn up. By allowing governments to borrow more cheaply, it also positively encourages irresponsible spending. Oh, what a tangled web we weave.

A review of bonds, BND, reveals that its already too late for sound and responsible monetary policy; and that a fincial catastrophe is just around the corner.  US Government Debt across the board, began losing its value on the exhaustion of the world central banks’ monetary authority beginning in December 2012. The monthly chart of Municipal Bonds, MUB, shows a loss of 2.6% in December, 2012; and High Yield Municipal Bonds, HYMB, 1.7%. The closed end Michigan Municipal Bond Fund, MIW, is one of the debt investment that is leading Bonds lower; it lost 9.0% in December 2012. And in related news Michigan Radio reports 500 layoffs looming for Detroit employees.  The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened in December 2012, as reflected in the Steepner ETF, STPP, steepening 3.5%. The benchmark Interest Rate on the US Ten Year Note, ^TNX, closed in December 2012, at 1.76%. The 10 Year US Government Note, TLT, lost 2.7% and The 30 Year US Government Bonds, EDV, lost 4.2%, in December 2102. The Federal Reserve’s monetary policies have crossed the rubicon of sound monetary policy and have resulted in making “money good” investments, unreliable and untrustworthy.

Bond vigilantes are calling interest rates higher, beginning with US Government Debt, on the exhaustion of the World Central Banks monetary authority.  Rising interest rates are highly destructive to dividend paying stocks. Vanguard Appreciating Dividend ETF, VIG, S&P Pharmaceuticals, XPH, S&P International Telecom, IST, and Dow Telecom, IYZ, despite their participation in Liberalism’s blow off rally top, as is seen in their ongoing combined Yahoo Finance chart.

The chart of Mortgage Backed Bonds, MBB, the lynchpin of QE4, shows that they dropped sharply lower in value today, Wednesday, January 9, 2013. This as Distressed Investments, FAGIX, like those taken in by the US Federal Reserve under QE1, Call Write Bonds, CWB, Leveraged Buyouts, PSP, Junk Bonds, JNK, Senior Bank Loans, BKLN, and Spin Offs, CSD, traded higher with World Stocks

Zero Hedge reports Fed now pre- monetizing: Bernanke buys $300 million of Treasuries

Morningstar reports Riskiest subprime auto bonds shift into higher gear.  Santander Consumer USA on Wednesday sold $1.25 billion in asset-backed securities at record low yields for the subprime auto lender, as investors bet eroding loan quality wouldn’t produce losses on their bonds, while paying relatively higher yields. Demand was strongest on some of the lowest-rated debt, where investor orders for more than seven times what was available let dealers cut yields during a two-day marketing period.
(Hat Tip to Gary of Between The Hedges)

Liberalism’s seven month risk-on, global toxic debt based, currency carry trade rally, continued on with World Stocks, VT, and EFA, trading slightly higher today, as the Major World Banks, IXG, traded to a new high, being led higher by many of Liberalism’s most speculative banks, that is those seen in their Finviz Screener, with BCS, LYG, RBS, SAN, DB, IBN, HDB, NMR, MTU, UBS,  CS, GGAL, BMA, BPOP, IRE, BBVA, BAP, and CHIX trading higher; but, BAC, BFR, WF, trading lower.  It has been the City of London banks, BCS, LYG, RBS, that have been leaders underwriting the QE4 and OMT rally, as is seen in their ongoing Yahoo Finance Chart.

Of note, Reuters relates Ex-UBS CEO Rohner says “shocked, ashamed” at Libor rigging. And Bloomberg reports California cities sue banks over Libor rates, law firm says. Eight California counties and public entities sued UBS AG, UBS, Barclays Plc, BCS, and 20 other banks alleging they lost millions of dollars because the financial institutions manipulated the benchmark Libor rate. The plaintiffs claim they were cheated out of higher interest payments on investments such as interest rate swaps and corporate bonds tied to Libor. And the WSJ reports German Bank made huge bet, and profit, on Libor. Deutsche Bank, DB, made at least €500 million in profit in 2008 from trades pegged to the interest rates under investigation by regulators world-wide, internal bank documents show. The German bank’s trading profits resulted from billions of euros in bets related to the London interbank offered rate, or Libor, and other benchmark rates

Most all sectors rose today. Solar, KWT, Gaming, BJK, Home Building, ITB, US Infrastructure, PKB, and Biotechnology, IBB, XBI, seen in their Finviz Screener, rose to a new rally highs. Global Real Estate, DWX, and Real Estate, IYR, traded higher, on a slight flattening in the 10 30 US Treasury Debt Yield Curve, $TNX:$TYX, as the Steepner ETF, STPP, traded lower, and as the Interest Rate on the US Ten Year Note, ^TNX, traded below 1.90% to 1.85%.  Natural Gas, UNG, plummeted, inducing Commodities, DBC, lower. Gold, GLD, traded slightly lower, just below its 200 day moving average, inducing Gold Mining, GDX, slightly lower.

Bloomberg reports Iron ore seen set for bear market. Iron ore, which posted the biggest quarterly climb on record in the final three months of 2012, may extend gains from a 14 month high as Chinese mills restock, then tumble into a bear market, according to Deutsche Bank AG.  Ore with 62 percent content delivered to Tianjin rose to $158.50 a dry ton yesterday, the highest since October 2011, according to data from the Steel Index Ltd.  The steelmaking raw material rallied 39 percent in the three months through December, the biggest gain since at least 2009, as demand in China rebounded on optimism the world’s second largest economy is recovering.  Gross domestic product is poised to expand 8.1 percent this year, from 7.7 percent in 2012, according to the median estimate of economists surveyed last month by Bloomberg.  Baoshan Iron & Steel, China’s largest steelmaker, said on January 7, 2013, that it will raise product prices. Iron ore swaps for January fell 0.7 percent to $151 a dry ton, according to GFI Group Inc.  That’s the highest for the coming month since October 2011, according to data from SGX Asiaclear, the largest clearer of the contracts. The forwards anticipate prices retreating to $125.50 a ton by September, GFI’s figures show.  The spike in iron ore prices is likely to be temporary, the Australian newspaper said January 3, 2013, citing Sam Walsh, Rio Tinto Group’s iron ore and Australia chief executive officer.  Rising Chinese demand has created conditions for a last run up in prices, Credit Suisse Group AG said January 3, 2013, forecasting an average $130 a ton in the first quarter and $125 in the second. “The theme for iron ore in 2013 could be a tale of two halves in our view: strength in H1 and weakness in H2,” Deutsche Bank analysts Daniel Brebner and Xiao Fu said in the report dated yesterday.  Inventories of steel and iron ore have fallen “considerably within China over the past two quarters.”  Inventories of ore held in Chinese ports declined for four straight months through to December, touching 70.54 million tons on December 28, 2012,  the lowest level since September 2010, according to data from Beijing Antaike Information Development Co.  The reserves were at 72.97 million tons as of the week to January 4, 2013. Baoshan Iron & Steel said on January 7. 2013, that it will raise hot-rolled product prices by 160 yuan ($25.70) per ton for February delivery.  Jiangsu Shagang Co raised its rebar prices January 1, 2013, according to Shenyin Wanguo Futures Co Further increases in Chinese steel prices are needed to sustain iron ore above $150 a ton,  Commonwealth Bank of Australia said yesterday. Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.

A spectacular blow off top is being made in Major World Currencies, DBV, of which the rise in the US Dollar, $USD, UUP, is a component. Iron ore prices have climbed more than 50% since the beginning of December and that has helped sustain the Australian Dollar, FXA, at a multiple top high. The Brazilian Real, BZF, is at strong resistance.  The Canadian Dollar, FXC, is at strong resistance in a downward channel. The British Pound Sterling, FXB, fell strongly today. The Swedish Krona, FXS, traded lower today. Emerging Market Currencies, CEW, is hitting very strong resistance. The Chinese Yuan, CYB, rose strongly to a new high. The US Dollar, $USD, UUP, traded up; it will be going higher, as investors deleverage out of carry trade investments in stocks, VT, EEM, and EFA; and disinvest out of commodities, DBC, on the soon coming failure of Liberalism’s Central Bank Finance to sustain global growth, corporate profitability and sovereign nation states’ sovereign debt, BWX, EMB. Peak Currency, DBV, CEW, is being achieved.  Competitive currency devaluation is imminent.

US iron ore producer CLF, traded lower and Coal Miners, BTU, and KOL, traded lower today, and China Minerals, CHIM, manifested bearish engulfing, portending a decline.

China Daily Mail reports The danger of Chinese overproduction.  Coal, KOL, iron ore, BHP, steel, SLX, PKX, cotton, BAL, clothing, MHK, heavy equipment, KUB, ship-building, SFL, solar cells, KWT, LEDs, CREE, and property, TAO, all of these commodities at one point or another in the last year have been a hot topic due to overstocks caused by government-influenced overproduction. Falling prices and decreased global demand have crippled many in these industries, and many bankruptcies and collapses have occurred. They are emblematic of the problems that China is going to continue to face in the future.
China’s economic growth has been based significantly on a rapid expansion of government stimulus through monetary expansion over the past several years. This policy has borne fruit. GDP is up, and growth rates, although not always meeting expectations, regularly exceed the growth rates being achieved in the rest of the world. But this growth comes with a price,  an instability in the very markets it seeks to develop and grow.
Monetary stimulus injects liquidity into the markets in an effort to circumvent the natural processes and operation of the markets.
Government stimulus has been great for boosting production rates and GDP growth across the country. All sorts of ore and steel and agricultural products have been produced by the massive expansion of productive capacity of the Chinese economy. But this monetary stimulus has only managed to result in the Chinese economy overproducing in all sorts of sectors, and has not managed to create sufficient demand for these projects to keep the market cleared.
Normally, the markets would penalize overproduction through losses, and production would only be expanded to fit the projected actual needs of the public. But these restrictions have been circumvented by the rules and regulations businesses in China have to face. Instead of cutting back on production in the simulated fields, incentives are given to the industries they feed, the buyers of those products, to expand their own production in order to clear the increased supply. But this only succeeds in pushing the day of reckoning further into the future.
It does not succeed in correcting the initial economic instability, which continues unabated, and, in fact, continues to expand under the previous incentives. Moreover, it succeeds in creating a second instability, in that the newly stimulated production areas eventually face their own problem of overdevelopment.
Overproduction of iron ore leads to stimulation of and overproduction of the steel industries, which lead to stimulation of and overproduction of ships, heavy equipment, and buildings. Overstimulation of cotton leads to stimulation of and overproduction of textiles which leads to the same in clothing.
Overstimulation of solar cells leads to overstimulation of and overproduction of the solar industry. Eventually all sectors of the economy are promoted beyond the ability of the public to consume.
All this stimulation by government leads to a wild euphoria of participants in these industries. People feel liberated with the new incomes they have and the fresh money in their pockets. This leads to wild spending habits and speculation in all sorts of areas. Lately, it has been reported that speculative bubbles in wine, apples, property, and even graves have grown up all over China. Some cities, such as Changsha, are even reporting how people are “releasing their spending power” by borrowing against paychecks in order to keep up their newfound lifestyle. Many of these bubbles have already burst, such as in the mining town of Ordos, while others are showing the early stages of a collapse.
Chinese efforts to contain the oversupply through government buying programs are only going to make things worse. Many such efforts were attempted in the United States during the Great Depression, only to be rejected as failures. Government buying programs only succeed in transferring ownership of the supply to the government without curbing, and even sometimes encouraging, through creation of a guaranteed buyer, the habits of the producers.
Eventually this stock must be liquidated, either by direct destruction and loss by the government, or by dumping programs, which will only succeed in bringing about price swings on the markets as prices are initially depressed from the dumping before rising back to the rate at which the Chinese government continues to buy. All of these policies end up destroying wealth by simultaneously attempting to encourage and discourage production. Clearly, the Chinese government has a serious problem on its hand of what to do with the monster they have created. To let the markets correct is to allow a liquidation and correction to occur, revealing the error of their ways. But to let the process continue is to run a race against reality, with the magnitude of the problem, the size of the economic instabilities, growing greater every day. Related articles include Business Insider report The worst Chinese stimulus projects of 2012 and Business Insider report Can China’s new leader prevent an economic crisis?

Bloomberg reports China throws Gillard a lifeline as iron ore revives. The determination of China’s new Communist leadership to guard against slower economic growth could throw a political lifeline to Australia’s first female prime minister as she bids for re-election.
China’s growth is forecast to accelerate this year, helping spur a 78 percent rebound in the price of iron ore that led Perth-based Fortescue Metals Group Ltd, FMG,  to resume work at a project suspended four months ago. A revival of the mining boom would boost tax revenue and bring Prime Minister Julia Gillard’s budget surplus goal within reach as she seeks to come from behind in polls in an election later this year.
“It does put a surplus back in play,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which manages more than A$126 billion ($132 billion).“That’s important for the government politically as the debate has come down to ‘in surplus good, in deficit bad,’ which is unfortunate because it ignores the fact that Australian finances are in good shape.”
Gillard’s minority government has been criticized by the opposition after the prime minister reneged on a 2010 election pledge not to introduce a carbon tax and backpedaled last month on a promise to deliver a surplus this year. Her administration trails in opinion polls even as the nation entered its third recession-free decade that’s yielded contained inflation, low unemployment and higher growth than other developed economies.
“Voters would respond very well to the government running a surplus,” said Zareh Ghazarian, a political analyst at Melbourne’s Monash University.
Reflecting the surge in iron-ore prices, the 10-year yield on Australian government bonds is at 3.41 percent, above the central bank cash rate. The local dollar has stayed above parity with the U.S. currency for more than six months, its longest stretch on record. BHP Billiton, BHP, the world’s largest miner, has advanced 21 percent since Sept. 5.
Iron ore is Australia’s biggest export in dollar terms.
Another key commodity  coking coal that’s used in blast furnaces may also rebound from the lowest prices since 2009 as China rebuilds steel supplies, Barclays nvestment-banking unit said in a Jan. 3 report. The destocking of steel has been more pronounced than usual and restocking typically begins in late December, weeks before the Chinese New Year, the London-based bank said.
Treasurer Wayne Swan said last month Australia is unlikely to deliver the surplus this fiscal year as weaker growth and a strong local currency curb tax receipts.
“What we’ve seen is a sledgehammer hit our revenues,”Swan said in a Dec. 20 news conference in Canberra. Rather than find spending cuts that further slow the economy, he said the government would concentrate on supporting job growth.
Gillard had staked her economic credibility partly on delivering the first surplus since the 2009 global recession. The government, in a midyear review released in October, forecast a budget surplus of A$1.08 billion in the 12 months ending June 30. It recorded a A$44 billion deficit last fiscal year.
Returning the federal budget to surplus was rated as a high priority by 35 percent of voters surveyed by Newspoll for the Australian newspaper on Oct. 26-28, while 56 percent said it was either not a priority or a low one. The telephone survey of 1,218 people had a margin of error of plus or minus three percentage points.
Joe Hockey, the opposition’s treasury spokesman, said Swan’s Dec. 20 announcement that a surplus was unlikely vindicated his stance on the government. “They’ve been fudging the numbers and we said they’re never going to deliver a real surplus and we’ve been proven right,” he said in a Dec. 21 interview with Australian Broadcasting Corp. television.
The government relies on the support of Greens and independents to maintain a majority and Gillard’s popularity fell last month. Support for the ruling Labor party dropped four percentage points to 32 percent, with Tony Abbott’s Liberal-National opposition rising three points to 46 percent, according to a Newspoll survey published in the Australian on Dec. 11.
Increased confidence provided by a rebound in prices is reflected in the decision by Fortescue, Australia’s biggest iron ore producer after Rio Tinto Group, RIO, and BHP Billiton, BHP, and a bellwether for the industry, to resume work on its Kings deposit in the Pilbara region
Fortescue announced Dec. 27 it will resume development that will increase production capacity by 40 million metric tons a year once the mine starts in December 2013, taking total capacity to 155 million tons a year. Macquarie Group Ltd, MQG, said last month the company will account for about 50 percent of the growth in global iron ore supply this year.

2) … On Thursday, January 10, 2013
World Stocks, VT, and World Small Caps, VSS, rose to blow off top highs, as Market Watch reported China’s December trade surplus jumped to $31.6 billion, well above economists’ expectations for a $19.6 billion surplus, as exports climbed 14.1% from a year earlier. During the day, Vietnam, VNM, China, YAO, Chinese Industrials, CHII, Chinese Materials, CHIM, Chinese Infrastructure, CHXX, Chinese Small Caps, ECNS, and Shanghai, CAF, traded higher. Taiwan, EWT, and South Korea, EWY, traded higher

Italy, EWI, Spain, EWP, Ireland, EIRL, Germany, EWG, led Europe, VGK, higher. Doug Noland reports Spain’s 10-year yields dropped 16 bps this week to 4.86% (down 34b ps y-t-d) and 10-yr yields fell 13 bps to 4.12% (down 36 bps), low market yields since November 2010 . Angeline Benoit of Bloomberg reports Industrial output in Spain dropped for a 15th straight month in November and almost twice as much as economists predicted as the recession in Europe’s fourth largest economy deepens; output at factories, refineries and mines fell 7.2% from a year earlier.  I relate that it is the ECB’s monetary authority, and not the traditional marketplace acknowledgement of Spain’s national sovereignty and economic capability, which has reduced the yield on Spain’s Treasury Debt and provided seigniorage, that is moneyness, to Spain’s stocks, traded by the ETF EWP.  The reality is that Spain is an insolvent sovereign, and that its banks, such as Banco Santander, SAN, are insolvent financial institutions, which are simply given credit liquidity by Mario Draghi’s LTROs, and OMT. Insolvent sovereigns and insolvent banks cannot sustain Liberalism’s dynamos of economic growth and corporate profitability.  It is clearly evident that Authoritarianism’s dynamos of regional security, stability and sustainability are powering up regional authority.  After a soon coming global financial collapse, EU leaders will meet in summits, renounce national sovereignty, and announce regional framework agreements which pool sovereignty regionally. In this manner, a Federal Eurozone Super State will emerge out of economic crisis, where a Sovereign, that is a European ruler, and his partner, the Seignior, the top dog banker who takes a cut, will provide diktat through regional public private partnerships that oversee economic production and manage the factors of production.

Poland, EPOL, Norway, NORW, Netherlands, EWN, Austria, EWO, Sweden, EWD, and Switzerland, EWL, traded higher.  The United Kingdom, EWU, Mexico, EWW, Australia, EWA, and Canada, EWC, traded higher.  Peru, EPU, Argentina, ARGT, New Zealand, ENZL, and the Emerging Markets, EEM, traded higher.

World Banks, IXG, rose parabolically higher, definitely establishing a blow off top, IRE, DB, NBG, SAN, led EUFN, higher. SMFG, MFG, MTU, NMR, rose higher. RBS, BCS, LYG, rose higher. CS, UBS, rose higher. BBVA, GGAL, rose higher. C, and BAC, led RWW higher.  Kristina Peterson of the Wall Street Journal writes The Federal Reserve sent a record $88.9 billion in profits to the Treasury Department in 2012 as it reaped gains from the unconventional programs it launched to spur economic growth. Last year’s remittance to Treasury topped the previous record of $79.3 billion in 2010. Since the financial crisis and ensuing recession, the Fed has initiated a host of bond-buying programs and other efforts. In the process, the Fed has expanded its portfolio of securities and loans to $2.9 trillion at the end of 2012 from less than $900 billion before the crisis. The stimulus efforts for now are generating large profits as the central bank earns interest on the assets.

Automobiles, CARZ, Airlines, FAA, and high dividend paying stocks, Shipping, SEA, and International Real Estate, DRW, traded higher.

Cement, EXP, rose higher on Commodities, DBC, Small Cap Energy, PSCE, Energy Service, OIH, IEZ, rose on higher Oil, USO.   Global Miners, PICK, Copper Miners, COPX, rose on higher Copper, JJC.  Gold Miners, GDX, rose on higher Gold, GLD.  Silver Miners, SIL, rose on higher Silver, SLV.  And Global Producers, FXR, seen in this Finviz Screener traded unchanged, at their blow off top high, as NOK, PHG, LYB, LPL, CELG, TSM, IP, CAT, ABB, FMX, SAP, ERIC, FWLT, ITW, ARMH, ASML, EXP, MKTAY, SYT, FBR, PPG, traded higher; and as AA, IP, EMC, ITB, traded lower.

Bonds, BND, traded unchanged as the most toxic of debt, FAGIX, PSP,  BKLN, CWB, JNK, CSD, rose higher, and as all US Government Bonds, that is the 30 Year US Government Bonds, EDV,  the 10 Year US Notes, TLT, Mortgage Backed Bonds, MBB, Municipal Bonds, MUB, Build America Bonds, BABS, traded lower.

Major World Currencies, DBV, Emerging Market Currencies, CEW, and the Chinese Yuan, CYB, traded to  new highs as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, the British Pound Sterling, FXB, the Australian Dollar, FXA, the Brazilian Real, BZF, the Australian Dollar, FXC, traded higher. The Yen, FXY, and the US Dollar, $USD, UUP, traded lower.

Bloomberg reports China Shipyards Set to Spark Price War Among Rigmakers. China’s shipbuilders are set to spark a price war in the oil-rig market. With orders for new ships plunging to an eight-year low in 2012, China Rongsheng Heavy Industries Group Holdings Ltd. (1101) and its local rivals are foraying into the offshore business, lured by a market that will reach about $328 billion in 2017. The new entrants are lowering prices to grab contracts, hurting margins at Singapore-based Keppel Corp. (KEP) and Sembcorp Marine Ltd. (SMM), the world’s two-biggest rig makers. “It’s like moving from one bottomless pit to another,” said Park Moo Hyun, an analyst at E*Trade Securities Co. in Seoul. “Chinese shipyards are competitively trying to get into what they see as a lucrative business. But the consequence of that is they could end up distorting the whole market.”

Bloomberg reports China’s inflation accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery. The consumer price index rose 2.5% in December from a year earlier. That compares with the 2.3% median estimate. ‘With growth momentum firming up and inflation picking up, the likelihood of any further easing has disappeared and the next interest-rate move will probably be an increase,’ which could come as early as the fourth quarter, Zhu Haibin, chief China economist at JPMorgan in Hong Kong, said  Inflation may temporarily accelerate to more than 3 percent next month, Zhu said, reflecting the impact of cold weather on food prices and the weeklong Chinese Lunar New Year holiday, which fell in January last year.  Food prices rose 4.2% in December from a year earlier, the most since May. Vegetable prices increased 14.8% from a year earlier.

3) … On Friday, January 11, 2013,
World Shares, VT, and VSS, DLS, EFA, and Closed End Equity, CSQ, TY, traded unchanged, at their new blow off top highs; while Emerging Markets, EEM, and Emerging Market leaders, EWX, and Emerging Market Financials, EMFN, traded lower, producing Peak Stock Wealth.
Coal, KOL, traded lower and Steel, SLX, which induced China Infrastructure, CHXX, and India Infrastructure, INXX, lower.
Global Miners, PICK, such as BHP, CCJ, WLT, CENX, KALU, ACH, AA, ZINC, GMO, Rare Earth Miners, REMX, and Uranium Miners, URA, traded lower on lower Base Metal, DBB, prices.  Copper Miners, COPX, traded lower on a lower price of Copper, JJC.
Biotechnology, IBB, seen in this Finviz Screener, traded lower
Regional Banks, KRE, seen in this Finviz Screener traded lower.
Boeing, BA, turned Aerospace Companies, PPA, lower.
Gaming Stocks, BJK, and VICEX, traded lower.
Pipelines, EMLP, and Automobiles, CARZ, F, GM, TTM, rose to new highs.
US, VTI, traded unchanged, Europe; VGK, traded higher; but Asia, EPP, traded lower, with Vietnam, VNM, China Industrials, CHII, China Small Caps, ECNS, Shanghai, CAF, China Financials, CHIX, China Real Estate, TAO, and India Small Caps, SCIN, leading lower. Brazil, EWZ, traded lower.

South Africa, EZA, is a market place burse of investments, that as a whole serve as a  weathervane indicating stock market direction.  It’s weekly chart, suggests that a market top has been achieved.  It’s daily chart, shows a parabolic trade lower, suggesting that the seven month risk-on global debt based currency carry trade rally is history.  The rally in Transportation Shares, IYT, especially R, United Parcel Service, UPS, Union Pacific, and Fedex, FDX, seen in their combined chart to outperform the  Global Producers, FXR, also suggests that a market top has been achieve. Specifically, the strong performance of Ryder, R, is another canary in the stock market coal mine warning investors to get out! Zacks reports Ryder Is Bull of the Day.  Pragmatic Capitalism relates Rail Traffic Starting to Show Signs of Weakness.

Bonds, BND, with the exception of Emerging Market Bonds, EMB, rose. The most toxic of debt, Distressed Investments, FAGIX, Leveraged Buyouts, PSP, Bank Loans, BKLN, Call Write Bonds, CWB, and Junk bonds, JNK, rose parabolically higher.  Liberalism’s Global Debt Bubble burst December 6, 2012, when Bonds, BND,  traded lower; it the most toxic of debt that has been the basis for Liberalism’s final risk on stock rally.

The US Federal Reserve’s policies of Quantitative Easing, the ECB’s policies of LTROs and OMT, and now Abe’s Easing as reported by the New York Times in article, Japan approves $116 billion for urgent economic stimulus, have expanded global economic production, and driven International Corporate Bond rates to the lowest on record, and inversely driving the value of International Corporate Bonds, PICB, to their highest level  on record. Scott Grannis gives insight to the amount of Credit injected by the US, Federal debt held by the public (including the debt that has been “purchased” by the Fed, but excluding the debt that is owed to social security and other trust funds) is now $11.6 trillion, or about 72.5% of GDP. Total debt is now $16.4 trillion, about 103% of GDP. At the current rate, the burden of federal debt held by the public (i.e., debt as a % of GDP) will have increased by almost 25% of GDP during President Obama’s first term. That handily eclipses the increased debt burden under the two terms of President G.W. Bush (15.3%) and the two terms of President Reagan (15%).

The Euro, FXE, jumped higher to close at 132.36, in what is likely to be a evening star chart pattern. Mike Mish Shedlock writes Yen falls to lowest level since 2010. The US Dollar, $USD, UUP, traded lower, to 79.56, near 200 day support, which took Major World Currencies, DBV, lower from its rally high; and Emerging Market Currencies, CEW, traded unchanged, at its rally high: the world is passing through Peak Currencies.  Competitive currency devaluation, and a rise in the US Dollar, is imminent.

Doug Noland writes Today, in the midst of the greatest Financial Bubble in history, most contend there’s no Bubble at all.  Bubble excesses have made it to the heart/foundation of the U.S. and global Credit system, while most analysts fail to see problematic asset-price overvaluation (stocks, bonds, real estate, etc.).
“Money” and “money”-like instruments have at this late-stage of the cycle become the core source of monetary inflation for this crowning Bubble. This is critical, as inflationary impacts have evolved to become deeply systemic – and sufficiently all-encompassing to ensure impacts are not readily evident and of a different ilk from previous Bubble manifestations.
Treasury debt has surreptitiously further inflated incomes throughout the economy, spreading inflationary purchasing power in a more balanced – and seductively much less disruptive/alarming – fashion than the previous tech and mortgage finance Bubbles. This has worked to sustain a problematic economic structure and only exacerbate U.S. and global imbalances. Importantly, Treasury and Fed monetary fuel has inflated financial asset prices across equities, bonds and fixed-income more generally. Monetary inflation has inflated real assets, especially anything providing an income stream (i.e. farm land, rental homes, commercial real estate, etc.) more enticing than depressed cash and bond returns. Moreover, the atypically systemic inflation in securities prices has worked to broadly loosen financial conditions and boost perceived wealth throughout the economy, again limiting the degree of conspicuous inflation and associated excess in particular sectors.
one can identify the root forces behind the “risk on, risk off” (“ro, ro”) dynamic that has increasingly taken command of global markets over the past couple years.
I would argue that “ro, ro” is in some ways a microcosm of the overall Bubble environment. “Ro, Ro” will also naturally gain momentum with each successive round of mini market boom/bust and attendant aggressive policy responses. In 2011 and 2012, “ro, ro” market instabilities grew more powerful following each intervention. Global markets rallied strongly after 2011 policy measures (the ECB’s LTRO, the Fed’s “twist,” etc.). Yet global markets were on the verge of a much more serious crisis in the summer of 2012. Acute financial and economic fragilities ensured even more dramatic policy responses (OMT from the ECB, more “twist” and open-ended QE from the Fed, and various stimulus from the BOJ, SNB, PBOC, “developing” central banks, etc.) that provoked much greater price inflation throughout global equities and fixed-income markets.
I tend to believe it’s helpful to think of 2012 as a defining “capitulation year” in terms of global policymaking. Global Bubble fragilities and an increasingly destabilizing “ro, ro” speculative market backdrop compelled policymakers to “go all in” with their commitment to unlimited market backstops and open-ended quantitative easing programs. The “do whatever it takes” Draghi Plan and the Fed’s open-ended $85bn monthly QE program are the poster children for overwhelming policy responses that took almost complete command over unsettled global markets.
Here’s where I see the problem: The increasingly overpowering and unstable “ro, ro” environment incited the “do whatever it takes” capitulation policy response. Global central bankers and policymakers saw the European crisis spiraling out of control, with potentially catastrophic consequences for the global financial “system” and economy. They responded with the overwhelming power they believed necessary to quash “risk off” – only to motivate a runaway “risk on.”

I relate, that it has been trust in the the sovereignty of nation states, and their central bankers, whose balance sheets are saturated with the most toxic of debt, such as Distressed Investments, FAGIX, like those taken in by the US Federal Reserve, under QE1, and their fiat money system that has given seigniorage to create Peak Commodities, DBC, on September 14, 2012, Peak Credit, AGG, on December 6, 2012, and is now producing Peak Stock Wealth, VT, and Peak Currencies, DBV, and CEW, whose charts show a blow off top pattern … A final global debt based, currency carry trade rally, has produced Liberalism’s Peak Stock Wealth, VT, and EFA, as is communicated in the ongoing Yahoo Finance chart of the currency sensitive Small Cap Value, RZV, together with Small Cap Growth, RZG, Large Cap Growth, JKE, and Large Cap Value, DOO, as well as a rise DLS, DGS, DWM, seen in their combine Yahoo Finance chart, and a rise in Inverse Volatility, ZIV, to a new high.

The ongoing Yahoo Finance combined chart of DBV, CEW, UUP, EFA, EEM, FXR, illustrates that it was a sell of the US Dollar, and a purchase of the World’s Major Currencies, such as the Australian Dollar, FXA, and the Emerging Market Currencies, CEW, that produced Liberalism’s final risk-on momentum rally, and drove up the Global Producers, FXR, whose chart shows this week’s grand finale blow off top.

Doug Noland relates M2 (narrow) “money” supply surged $74.9bn to a record $10.506 TN. “Narrow money” has expanded 7.9% ($772bn) over the past year. I believe that inasmuch as the bond vigilantes have called the Interest Rate on the US Government Note, ^TNX, higher to 1.88%, and the 10 30 US Sovereign Debt yield curve has steepened, as reflected in a steepening of the Steepner ETF, STPP, and Aggregate Credit, AGG, has turned lower, that the monetary of the US Federal Reserve is exhausting and that Peak Money has been attained, and the common metric of money, M2 Money Supply, will be falling lower.

The world is passing through Peak Prosperity. As Major World Currencies, DBV, and Emerging World Currencies, CEW, tumble lower in competitive currency devaluation, as investors deleverage out stocks, the fiat money system, based upon national sovereignty, will literally come apart at the seams. A global credit bust and financial system breakdown known as Financial Apocalypse is imminent.  Soon people will come to trust in regional sovereign authority such as Mario Draghi and the ECB, and live under the diktat money system, where diktat serves as currency, wealth and power.

Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, and pivoting Liberalism’s Banker Regime of Crony Capitalism and European Socialism, to Authoritarianism’s Beast Regime of Regionalism and Totalitarian Collectivism.

A new metric of money, such as number of people living under regional governance, should be established to replace M2 Money.

4) … The short selling opportunity of a lifetime has developed.
Zero Hedge relates Tom DeMark says “sell the world” and soon, the US. For the month of January 2013, I am presenting the Stockcharts.com Chart Site ETFs To Short Sell And Bear Market ETFs To Invest In  … http://stockcharts.com/public/1270699 … Where I present a number of short selling ideas, such as Liberalism’s Rally Leading Sectors, seen in this Finviz Screener.

The only mutual fund I would invest in is UKPSX, which has a minimum investment of $15, 000.

Please keep in mind that I am not a registered or licensed investment professional, and that one should always use caution when investing.  If I did have money, I would dollar-cost-average an investment into the physical possession of gold bullion as well as purchase gold on Internet trading vaults, such as Bullion Vault. I live peacefully, and do not advocate gun ownership. I do as the Lord commands, to pursue peace with all men.

5) … A European Superstate will emerge out of a soon coming Financial Apocalypse which will introduce the Ten Toed Kingdom Of Regional Governance replacing British Hegemony and Dollar Hegemony that has governed the world since the late 1700s.
Mike Mish Shedlock writes A California Hotel Setup. UK prime minister David Cameron has promised to renegotiate terms of its membership in the EU and put the measure to a popular referendum.  In response, the Washington Post writes Business leaders warn UK’s David Cameron that leaving the EU would be bad for economy.  Top business executives have warned U.K. Prime Minister David Cameron that he could damage Britain’s economy if he seeks to renegotiate the terms of its membership in the 27-country European Union.

In a letter published in the Financial Times on Wednesday, Virgin Group’s Richard Branson, London Stock Exchange head Chris Gibson-Smith and eight other business leaders challenged Cameron’s plan to renegotiate the U.K.’s EU membership terms and put the matter to a referendum.

However, popular distrust of the EU has grown in Britain — one of the 10 countries in the region that doesn’t use the euro. The British public shows no interest in the EU’s plans to move closer together. Most can’t even seem to stomach the current level of power of the EU, which many Britons see as meddlesome and inefficient.
Though the business leaders urged EU reform in their letter, they argued “we must be very careful not to call for a wholesale renegotiation of our EU membership, which would almost certainly be rejected.”
“To call for such a move in these circumstances would be to put our membership of the EU at risk and create damaging uncertainty for British business, which are the last things the prime minister would want to do,” they said.
But while Cameron wants Britain to remain in the EU and to retain influence in the body, he is also resisting a push by many member states, like France and Germany, to grant central authorities in Brussels greater powers over financial and legal affairs for the whole of the EU.
In the long run, many EU countries want to turn the bloc into a United States of Europe, an idea British politicians, particularly among Cameron’s Conservatives, abhor.
Note that it is not just UK businesses that want their cake and eat it too. So does Cameron.
The irony is that everyone is tired of the nonsensical nannycrat rules of the EU, and those rules will only get worse as time goes on. For example, the nannycrats in Brussels are hell-bent on financial transaction taxes, high VATs, and onerous corporate income taxes. The bureaucrats also have gone along with absurd crop subsidies demanded by France. The result is everyone in Europe overpays for food (and nearly everything else) on account of tariffs that have not saved a single job.
For now, the EU has backed down on a ridiculous airline carbon tax scheme, but rest assured the subject will come up again. Indeed, all the nannycrats did in November was suspend the proposal for a year, hoping for less opposition next time.
One Million Tiny Miseries.  Bureaucrats never give up on stupid ideas, they just set them aside for a while. Proof is in the pudding. In the EU, inane rules, regulations, and fees are everywhere you look.
In case you think I am exaggerating, Pater Tenebrarum has an excellent writeup in his post One million tiny miseries inflicted by Government policy.

Hotel California Setup.  Cameron sees some of those things and wants to renegotiate special rules for the UK. In effect, he wants to have his cake and eat it too, just like the business leaders. His hope is to keep the nannyrules he likes, and toss out a plethora of rules he doesn’t like.
The problem with his approach is this is a Hotel California setup. As with the Euro, you can check in anytime you like, but it is damn hard to leave.

If Cameron commits (or the referendum passes), sometime down the road, after he is gone as Prime Minister (which could be rather soon), some other prime minister is likely to agree to god-knows-what, and without a referendum giving UK citizens any say in the matter.Note that had it not been for that absurd transaction tax idea last December, Cameron may have signed on the dotted line already.

US Voices Concern.  The Telegraph reports US publicly voices concerns over Britain leaving EU. Philip Gordon, the US assistant secretary responsible for European affairs, said that Britain’s membership of the EU was “in the American interest”.
His remarks came as David Cameron prepares to deliver a speech on Europe later this month. The Prime Minister is expected to promise to renegotiate Britain’s membership and then put the new terms to a referendum. Many Conservatives, including some Cabinet ministers, believe that a ‘No’ vote would mean Britain leaving the EU, although Mr Cameron says he opposes an exit.
One Last Chance to Get this Right.  The UK has one last chance to get this right. The way to get this right is simple: Ignore pleas from the US, put the matter to a vote (including an option to leave the EU as opposed to renegotiate terms), openly campaign to exit, then politely tell the EU to go to hell when the result comes in.
Simply put, it is preposterous to expect one nation out of 27 to have significant leverage over a group of dedicated nannycrats, all wanting some inane rule, regulation, or tax.
In the meantime, expect nannycrat proponents to pound the airwaves with threats of Armageddon sometime before the vote.
It will be interesting to see if common sense secures a victory over the nannycrats, the socialists, and the half-baked conservatives expecting to have their cake and eat it too. Don’t count on it.

There has been two iron legs of global hegemonic power that have underwritten Liberalism since the late 1700s: British Hegemony and Dollar Hegemony

The City of London, is the government and policing services for the financial and commercial heart of Britain, known as the Square Mile. The City of London is the black shrouded reality of British Hegemony. The Washington Post article reveals a truth, the City of London Financial District, is the Sovereign UK, while the Parliamentary UK, is simply a mirage sovereign nation state. The Economist wrote describing the City of London’s global hegemonic power, “In continental Europe, the City is viewed with a mixture of loathing. London, is by many measures the world’s biggest financial centre, and weakening it is in nobody’s interest, least of all Britain’s.  Better regulation of banks is certainly needed, especially to protect British taxpayers. And so far the City bashing has been mainly rhetorical. But running down one of the world’s most successful, and mobile, commercial clusters is folly, and it is surely not the legacy Mr Cameron would wish to leave his successors.”

British Hegemony together with Dollar Hegemony, has governed the world as Two Iron Legs of power since the late 1700s. This is the objective truth foretold by the Prophet Daniel in Daniel 2:25-45, where he interprets Nebuchadnezzar’s Dream as a Statue of Empires that would govern mankind until the arrival of the end times. There has been, and will continue to be a succession of beastly and fearsome world empires or kingdoms; these are

  1. Head of gold – Babylon
  2. Breast and arms of silver- Medo-Persia
  3. Belly and thighs of brass- Hellenistic Greece
  4. Two legs of iron – Rome flowing out into British Hegemony and Dollar Hegemony
  5. Feet partly of iron and partly of molded clay – A Ten Toed Kingdom of Regional Governance, which is presented in Revelation 13:1-4 as the Beast Regime of Regionalism, Totalitarian Collectivism and Authoritarianism, that will come to rule in the world’s ten regions and in mankind’s seven institution, replacing the Banker Regime of Crony Capitalism, European Socialism and Liberalism, that was based upon the sovereignty of nation states.

Jesus Christ is at the helm of the economy of God, Ephesians 1:10, and is pivoting the world from British Hegemony and Dollar Hegemony, and into the End Time, Ten Toed Kingdom of Regional Governance, through the prolificacy and related banking and debt crises of the PIGS, that is the Mediterranean countries of Portugal, Italy, Greece, and Spain.

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 to deal with an impending Financial Apocalypse, that is a credit bust and financial system breakdown.

Chris Rossini writes in Economic Policy Journal Nearly every major central bank is buying non traditional assets to resurrect domestic economies in the wake of the worst global recession in 75 years. The U.S. Federal Reserve is buying mortgages; the European Central Bank is making unusually long loans to banks; and the Bank of Japan is buying real-estate investment funds. All risk losing money, but Switzerland’s exposure stands out in character and scale: Its central bank is buying assets from other countries and its holdings of currencies, bonds, stocks and gold,nearly 500 billion Swiss francs, about $541 billion—are nearly the size of the nation’s gross domestic product.  This won’t end well.It’s already obvious that the U.S., Europe, and Japan are headed for financial armageddon. They’re all toast.

God’s Word firmly presents that British Hegemony and Dollar hegemony is coming to an end, and a Ten Toed Kingdom of Regional Governance will rise to govern mankind’s economic transactions.

In this week’s Eurozone News
The Wall Street Journal reports Once lively square is a center of Greek woe. Once the vibrant commercial heart of Athens, the capital’s central Omonia Square now is ringed by shuttered hotels and vacant shops and haunted by drug dealers, addicts and prostitutes, making it a national symbol of despair and social collapse.

Zero Hedge reports 20 facts about the collapse of Europe that everyone should know. And relates, Postponement, Draghi, and accounting.  And writes Zero Hedge Europe’s Scariest Heatmap.

Bloomberg reports Hollande faces having to force labor revamp as talks splutter. President Francois Hollande may be forced to unilaterally overhaul French labor rules as employers and unions struggle to find common ground in final negotiations today and tomorrow.
Hollande wants the parties to find ways to give employers more flexibility when the economy slows while also improving job security sought by unions.
The Socialist president has said he’ll act on the issue if they fail to reach an accord on their own.
The determination of China’s new Communist leadership to guard against slower economic growth could throw a political lifeline to Australia’s first female prime minister as she bids for re-election.
China’s growth is forecast to accelerate this year, helping spur a 78 percent rebound in the price of iron ore that led Perth-based Fortescue Metals Group Ltd, FMG,  to resume work at a project suspended four months ago. A revival of the mining boom would boost tax revenue and bring Prime Minister Julia Gillard’s budget surplus goal within reach as she seeks to come from behind in polls in an election later this year.
“It does put a surplus back in play,” said Shane Oliver, head of investment strategy in Sydney at AMP Capital Investors Ltd., which manages more than A$126 billion ($132 billion).“That’s important for the government politically as the debate has come down to ‘in surplus good, in deficit bad,’ which is unfortunate because it ignores the fact that Australian finances are in good shape.”
Gillard’s minority government has been criticized by the opposition after the prime minister reneged on a 2010 election pledge not to introduce a carbon tax and backpedaled last month on a promise to deliver a surplus this year.
Her administration trails in opinion polls even as the nation entered its third recession-free decade that’s yielded contained inflation, low unemployment and higher growth than other developed economies. “Voters would respond very well to the government running a surplus,” said Zareh Ghazarian, a political analyst at Melbourne’s Monash University. “It would also take out an important attack tool the opposition had.”
Reflecting the surge in iron-ore prices, the 10-year yield on Australian government bonds is at 3.41 percent, above the central bank cash rate. The local dollar has stayed above parity with the U.S. currency for more than six months, its longest stretch on record.
BHP Billiton, BHP, the world’s largest miner, has advanced 21 percent since Sept. 5. Iron ore is Australia’s biggest export in dollar terms.
Another key commodity — coking coal that’s used in blast furnaces — may also rebound from the lowest prices since 2009 as China rebuilds steel supplies, Barclays Plc’s investment-banking unit said in a Jan. 3 report. The destocking of steel has been more pronounced than usual and restocking typically begins in late December, weeks before the Chinese New Year, the London-based bank said.
Treasurer Wayne Swan said last month Australia is unlikely to deliver the surplus this fiscal year as weaker growth and a strong local currency curb tax receipts.
“What we’ve seen is a sledgehammer hit our revenues,”Swan said in a Dec. 20 news conference in Canberra. Rather than find spending cuts that further slow the economy, he said the government would concentrate on supporting job growth.
Gillard had staked her economic credibility partly on delivering the first surplus since the 2009 global recession. The government, in a midyear review released in October, forecast a budget surplus of A$1.08 billion in the 12 months ending June 30. It recorded a A$44 billion deficit last fiscal year.
Returning the federal budget to surplus was rated as a high priority by 35 percent of voters surveyed by Newspoll for the Australian newspaper on Oct. 26-28, while 56 percent said it was either not a priority or a low one. The telephone survey of 1,218 people had a margin of error of plus or minus three percentage points.
Joe Hockey, the opposition’s treasury spokesman, said Swan’s Dec. 20 announcement that a surplus was unlikely vindicated his stance on the government. “They’ve been fudging the numbers and we said they’re never going to deliver a real surplus and we’ve been proven right,” he said in a Dec. 21 interview with Australian Broadcasting Corp. television.
The government relies on the support of Greens and independents to maintain a majority and Gillard’s popularity fell last month. Support for the ruling Labor party dropped four percentage points to 32 percent, with Tony Abbott’s Liberal-National opposition rising three points to 46 percent, according to a Newspoll survey published in the Australian on Dec. 11.
Increased confidence provided by a rebound in prices is reflected in the decision by Fortescue, Australia’s biggest iron ore producer after Rio Tinto Group and BHP and a bellwether for the industry, to resume work on its Kings deposit in the Pilbara region in the north of Western Australia state.
Fortescue announced Dec. 27 it will resume development that will increase production capacity by 40 million metric tons a year once the mine starts in December 2013, taking total capacity to 155 million tons a year. Macquarie Group Ltd, MQG, said last month the company will account for about 50 percent of the growth in global iron ore supply this year.

6) … Investment charts communicate Peak Wealth has been achieved.
Strong rise in Business Services Cognizant Technology Services,  CTSH,

Strong volume in World Bank JP Morgan JPM
Strong volume in Steel Manufacturer Arcelor Mittal  MT
Strong volume in Drug Manufacturer Pfizer PFE
Strong volume in Gaming Stocks, BJK

Evening Star Chart Pattern Drug Manufacturer Forest Laboratories,  FRX
Risk on blow off market top in North American Pipelines EMLP
Risk on market top seen in Premium REITS  KBWY
Spinning Top in risk on World Real Estate Excluding The US DWX
The Cup and Handle chart pattern in Business Services, FIS

Three White Soldiers, in Automobiles, F and a Spinning Top in Automobiles, GM

A Hammer, a Hanging Man Candlestick, and a Spinning Top candlestick in Building Materials, OC
Three White Soldiers, in Building Materials, MIC

A massive Broadening Top and Consolidation Triangle, in Heavy Construction, AGX

Volatility TVIX, and VIXY, bottoming out in their combined ongoing Yahoo Finance chart

The Speculative Investment Community consisting of Asset Managers, Hedge Funds, and Investment Bankers, APO, AINV, BLK, WDR, EV, SEIC, AMG, AMP, IVZ,  BK, JPM, rallied to outperform the World Banks, IXG, beginning in December 2012, as is seen in their combined ongoing Yahoo Finance chart, which suggests that Peak Wealth is being achieved.  These companies have provided the investment cool aid and investment advice that has given seigniorage, that is moneyness, to produce Liberalism’s Peak Prosperity.

Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, pivoting the world through Peak Leverage.  He has completed Liberalism’s age of investment choice and credit, and through the European Sovereign Debt Crisis, is introducing Authoritarianism’s age of austerity and debt servitude.

Liberalism’s grand finale risk-on, global debt, and currency carry trade rally, has been based upon a buy of commodity currencies, CCX, such as the Euro, FXE, and  the Australian Dollar, FXA, and a sell of the Yen, FXY, which is seen in the the ongoing Yahoo Finance chart of YCL, ULE, EFA, and FXR.  The monetization of debt by the world central banks’ has produced a stunning wave of investment gain for the investment savvy.

The dynamos of corporate profitability and global growth will be winding down Liberalism’s Milton Friedman Free To Choose Floating Currency Regime. The dynamos of regional stability, security and stability, will be powering up the Mario Draghi Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, as foretold by John The Revelator in bible prophecy of Revelation 13:1-4. The fiat money system will be giving way to the diktat money system.

I totally reject the Bloomberg report Euro Leaders declare worst is over. European leaders declaring they’ve gained the upper hand in the three-year-old debt crisis are sharpening efforts to channel a rebound in financial markets to an economic recovery to chip away at soaring unemployment. Even as euro-area chiefs call for more time to lock in a bailout package for Cyprus and elections loom next month in Italy, German Finance Minister Wolfgang Schaeuble said Jan. 11 that the single currency is “over the worst of the crisis.”

The Mediterranean insolvent sovereigns, of Spain, EWP, Italy, EWI, and Greece, GREK, no longer enjoy any market place seigniorage for their Treasury Debt, BWX. Rather they rely on the ECB’s regional sovereignty to provide for their fiscal spending needs.

Insolvent sovereigns and their insolvent banks cannot provide either seigniorage or economic stability.

Waves of economic and political instability from the European insolvent sovereigns, VGK, and their banks, EUFN, will stimulate a Global Stock, ACWI, sell off and give rise to the Beast Regime of Revelation 13:1-4, to come to rule in all of mankind’s ten regions and seven institutions.

There is no human action as seen by the Austrian Economists. Rather there is only the reality foreseen by the prophet Daniel, who in Daniel 2:25-45, communicated that the two iron legs of British Hegemony and Dollar Hegemony would collapse, and that a Ten Toed Kingdom of Regional Governance would rise to govern mankind’s economic and political activity.

Bloomberg reports Hedge-Fund leverage most since 2004 in new year as margin grows. Hedge funds are borrowing more to buy equities just as loans by NYSE brokers reach the highest in four years, signs of increasing confidence after professional investors trailed the market since 2008. Leverage among managers who speculate on rising and falling shares climbed to the highest level to start any year since at least 2004, according to data compiled by Morgan Stanley.

Blackrock, BLK, is the world’s largest multinational asset management company; it pays a 2.7% dividend, and is based in New York; it has risen parabolically in value since June 2012.  Blackrock iShares, specifically the currency carry trade ETFS, such as IXUS, with stocks such as NSRGF, RHHVF, and IEFA, and IEMG, have outperformed the market, as is seen in their combined Yahoo Finance chart together with World Stocks.

Apollo Global Management, AINV, Apollo Investment, APO, are New York based hedge funds, paying a 9% dividend which have been at the lead of successful investment activity. The chart of both AINV and APO show a stunning rise in value.

Waddell & Reed, WDR, is an Overland Park, KS, based asset management company, that pays a 3% dividend. Beginning in June 2012, it started to rise parabolically in value. Wikipedia relates that United Income Fund and United Accumulative Fund, were among the first mutual funds in the United States. Finviz relates that it gained 2% after going ex dividend the week ending January 11, 2013. Its stock value began to soar in November 2012, after BizJournals reported Waddell & Reed joins ranks of companies awarding special dividends.  Of note, Bloomberg reported in October 2012, Canada Pension buys $400 million of Formula Ones Bonds and Moodys cuts Formula One as $1 billion bond sale boosts leverage.

Eaton Vance, EV, is a Boston, MA asset management company which pays a 2.4% dividend; its investment chart shows a blow off market top.  It is one of the oldest asset investment management companies in the United States, with a history dating back to 1924; its chart shows a blow off market top.  It provides two of the most toxic Closed End Municipal Bond Funds, these being, MIW, and EIP, whose values have fallen sharply since Peak Credit was achieved on December 6, 2012, as is seen in their combined ongoing Yahoo Finance chart

SEI Investments, SEIC, is an Oaks, PA asset management company that pays a 1.3% dividend; its chart shows a blow off market top.  Wikipedia relates SEI Investments is a global provider of asset management, investment processing, and investment operations solutions. SEI provides products and services to institutions, private banks, investment advisors, investment managers, and ultra-high-net-worth families.[1] SEI was founded in 1968 by its current CEO and President Alfred P. West. Through its subsidiaries and partnerships in which the company has a significant interest, SEI manages or administers $448 billion in mutual fund and pooled or separately managed assets, including $195 billion in assets under management and $253 billion in client assets under administration.[2] Motley Fool reports SEI Investments declares a Double Dividend and InPlay reports SEI Investments selected by Cornerstone Advisors to provide outsourcing services for new mutual fund family and Marketwire relates
SEI Poll: Liability driven investing strategies grow in complexity and sophistication.
SEI named Best Outsourcing Provider and Best Fund Administrator at Buy-Side Technology Awards.  SEI Expands Long-Term Relationship With SunTrust.
SEI extends ETF relationship with Global X Funds.
SEI selected by C8 Investments to provide hedge fund operations outsourcing
SEI Introduces next generation of investing: Objective-Based Funds

Affiliated Managers Group, AMG, is a Boston, MA based asset management company, that does not provide any dividend; its investment chart shows a stunning ascending wedge pattern. Wikipedia relates that since 1997 AMG has grown to have more than $300 billion in assets under management with stakes in at least 27 money management firms spanning U.S. and international equity including some of the best-known alternative investment financial management shops.[5]  A substantial majority of Aston Asset Management, LP, was acquired by AMG on April 15, 2010.[9] In the 1990s, AMG focused on purchasing midsize money management companies. In a shift of strategy in 1997, they purchased the large mutual fund company Tweedy, Browne for $300 million.[10] In 2010, AMG purchased Pantheon Ventures. Pantheon, a British private equity company, was AMG’s largest acquisition since 1993. The company sold for $775 million. That year, AMG also purchased Artemis Investment Management LLP for $400 million.[11]

Ameriprise Financial, AMP, is a Minneapolis, MN asset management company whose chart shows an ascending wedge pattern; it pays a 2.8% dividend. Wikipedia relates subsidiaries include Ameriprise Financial Services, Inc., Columbia Management Investment Advisers, LLC, and RiverSource Life Insurance Company. Threadneedle Asset Management is Ameriprise Financial’s international asset manager and an award winning provider of investment solutions to institutional and retail clients across the globe. The company’s subsidiary in India, Ameriprise India Private Limited, offers holistic financial planning services to upwardly mobile Indian consumers.[4]  Five Columbia Management funds received Lipper Fund Awards as top performing mutual funds in their respective categories.

Invesco, IVZ, is an Wheaton, IL based asset management company, whose chart shows a blow off market top; it pays a 2.5% dividend. Invesco provides the PowerShares ETFs, that is Equity ETFs, such as Leveraged Buyouts, PSP, and Emerging Market Infrastructure, PXR, as well as Debt ETFs, such as BKLN; the former have leveraged up over the latter since Mid November 2012, as is seen in their ongoing Yahoo Finance chart.

The Bank of New York Mellon, traded by the symbol, BK, is an asset management company, which pays a 1.9% dividend, whose chart shows a blow off market top. Wikipedia relates The Bank of New York is a global financial services company, established in 1784 by the American Founding Father Alexander Hamilton.  It existed until its merger with the Mellon Financial Corporation on July 2, 2007.  The company now continues under the new name of The Bank of New York Mellon.

JP Morgan, JPM, is headed up by Liberalism’s Chief Investment Banker, James Dimon.  Daily Ticker reports London Whale Tail Strikes Jamie Dimon’s Bonus? It was the “tempest in a teapot” that turned into a $6.2B trading loss and public relations storm. Now it may sink at least some of JPMorgan CEO Jamie Dimon’s 2012 compensation.

I hope you have enjoyed my review of the leaders of the speculative investment community. The Apostle John, while in exile, in his 90s, living on the Isle of Patmos. was given a dream by angels, which is known as the Revelation of Jesus Christ, it foretells those things which shortly come to pass, Revelation 1:1, meaning those things that are destined to come, will occur like dominoes toppling one upon another. Liberalism’s Banker Regime of investment bears, lions, and leopards, is about to be replaced by the Beast Regime of Revelation, which is described as having the feet of a bear, the mouth of a lion, and the appearance of a leopard.

I’m headed off to lunch today at StrEAT Food. I have to be careful as I reside in the downtown area; it is chock full of people who I consider to be psychopaths, yes those who I believe are criminally insane. I have been emotionally clawed and mauled by these bears, lions, and leopards many times. The bear is the drunk, who lives with his Babuska; the lion is the preeminent one with a mane, who one can hear coming a long ways off with his loud footsteps and intrusive speech; and the leopard is the one who sits outside the espresso cafe, eyeing those who he would like to devour. As for me, I don’t fear these predator, as I believe that Jesus Christ is operating through God’s Divine Plan, Providence, and Protection in my life. I have developed a psychopathic radar that helps me spot these individuals by their characteristic speech, demeanor and appearance. I take out my mental highlighter, and mark them, and then withdraw; I turn away from all who walk disorderly and not according to moral and ethical living; snakes and frogs cannot play together. I know who the predators are; and I know who I am, baah. Best to all who have visited and read

Debt Monetization Turns Stocks Lower, And Is Creating A Federal European Super State

January 9, 2013

Financial Market Report for Tuesday, January 8, 2013

1) … Debt monetization turned stocks lower today January 8, 2013, ending a seven month long currency carry trade and global debt based rally; the Age of Fiat Asset Deflation has commenced
On Tuesday, January 8, 2013, World Stocks, VT, traded lower, being led so by interest rate sensitive and global currency carry trade invested, World Real Estate, DRW, as well as Global Utilities, DBU, SBS, CPL, CIG, ELP, HNP, as is seen in their ongoing combined Yahoo Finance chart.

Investors sold out of the following sectors: Automobiles, CARZ, HMC, WBC, DAN, ALV, SUP, WNC, JCI, GM, MTOR, GNTX, SMP, WPRT, BWA, MPAA, NSANY, TSLA, Computer Peripherals, COMP, PANL, LOGI, ALOT, Networking, IGN, XLS, APKT, JDSU, FFIV, NTGR, AVNW, NTAP, VMW, RNET, JNPR, CSCO, CVLT, AKAM, Dow Telecom, IYZ, CBB, SHEN, V, FTR, T, EQUI, CTL, BCE, Aerospace, PPA, LMT, RTN, NOC, GD, COL, LLL, Semiconductors, XSD, Steel, SLX,, Global Producers, FXR, NOK, BIIB, REGN, BA, KUB, MKTAY, CAT, DE, BHP, SCCO, IP, TSM, MSI, EMC, TEL, LPL, ERIC. And investors sold out of the Small Cap Pure Value Shares, RZV.

This occurred as investors deleveraged out of currency carry trades in countries worldwide, beginning with those in Taiwan, EWT, TSM, AUO, ASX, those in Japan, NKY, JSC, MKTAY, KUB, PC, SNE, ATE, HMC, NSANY, MITSY, CAJ, KYO, those in South Korea, EWY, LPL, PKX, those in Switzerland, EWL, LOGI, TEL, MTD, those in Sweden, EWD, ERIC, ALV, those in Australia, EWA, KROO, BHP, those in Germany, EWJ, GERJ, those in Ireland, EIRL, CX, those in China, YAO, CAF, ECNS, CHII, CHXX, and those in the Emerging Markets, EEM, such as those in Mexico, EWW, ASR, ICA, PAC, and those in Brazil, EWZ, EWZS, BBDO, SBS, CPL, CIG, ELP, PBR, GGB, SID, GFA.

And investors unwound currency carry trade investment in World Banks, IXG, in South Korea, EWY, WF, in India, INP, IBN, HDB, in Japan, EWJ, NMR, MTU, in Argentina, ARGT, BMA, GGAL, BFR,  and in China, FXI, CHIX.

Jason Pye of United Liberty writes of QE4, Federal Reserve to monetize debt.  “In his book, The Fatal Conceit, F.A. Hayek wrote, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” There is no better example of this than Bernanke and the Federal Reserve.”

Most having little knowledge that QE 4 has passed the Rubicon of sound monetary policy, the monetization of debt by the US Federal Reserve, has finally given rise to the US Dollar, $USD, UUP, beginning in January 2013, and a topping off of the Major World Currencies, DBV, and the Emerging Market Currencies, CEW, as well as a peaking of the riskiest of debt, such as Distressed Credit Investments, FAGIX, Junk Bonds, JNK, Bank Loans, BKLN, and debt based, Leveraged Buyouts, PSP, and the Spin Offs, CSD.  Competitive Currency Devaluation has commenced, as evidenced by the Currency Demand Curve, RZV:RZG, trading lower since December 26, 2012, and will accelerate as Major World Currencies, DBV, and Emerging Market Currencies, CEW, fall rapidly lower in value.

An inquiring mind asks, which way now for the Yen, FXY? Bloomberg reports Japan to buy European debt with currency reserves to weaken Yen. Yes, I believe, the Yen, FXY, is going to strengthen, from an oversold position of 111 to 114,  as FX Currency traders, leverage it higher as they sell a number of currencies such as FXA, FXC, FXE, FXF, FXS, FXB, CEW, and CYB.

Daily Ticker asks Top risks in 2013: Emerging markets? According to Eurasia Group’s Top Risks for 2013, emerging markets pose the greatest investment risk this year with the outlook of Asia’s two biggest economies less than certain.

Bloomberg reports Asian stocks drop for second day as Japan exporters fall. Asian stocks fell, with the regional benchmark index heading for its second day of decline, as Japanese exporters dropped after the yen’s advance dimmed the outlook for overseas earnings. Mazda Motor, which gets about 72 percent of its sales outside of Japan, sank. Aozora Bank declined, extending losses for a second day, after the Japanese lender confirmed Cerberus Capital Management will sell most of its holdings. HTC slipped in Taipei after Asia’s second largest smartphone maker posted fourth quarter operating income that missed analyst estimates

Bond vigilantes have successfully called interest rates higher globally, resulting in both World Treasury Debt, BWX, Emerging Market Bonds, EMB, and International Corporate Bonds, PICB, trading lower in value. The global debt trade bubble, BND, has finally burst. Now stocks, VT, are trading lower on the spoiling of Credit, AGG, and exhaustion of the world central banks’ monetary authority.  Higher worldwide interest rates are forcing Utilities, S&P Global Utilities, JXI, Global Utilities, DBU, and Utilities, XLU, lower. The chart of Commodities, DBC, shows that their strong downtrend is likely to continue from their September 14, 2012 high, as well as recent bounces higher in December 2012, and January 2013.

Gold, GLD, rose 0.7%, for the first time in what is likely a double bottom low, stimulating the mid cap gold mining stocks, AEM, EGO, GOLD, ANV, RGLD, FNV, NGD, AUY, KGC, seen in their Finviz Screener, to rise 0.4%; their combined Yahoo Finance chart suggests that they have bottomed out.  In the Age of Fiat Asset Deflation, with Credit, AGG, Stocks, VT, Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading lower, an investment demand for gold will arise taking gold to fantastic levels. Physical possession of gold, in bullion form, or in Internet trading vaults, such as Bullion Gold, is now the safe and sane way to preserve wealth.

Meet your new sovereign. Operating through the decline in the value of credit, AGG, beginning in December 2012, and now with competitive currency devaluation commencing, Jesus Christ is at the helm of the economy of God, Ephesians, 1:10, and is transitioning the world from The Banker Regime of Crony Capitalism, European Socialism and Liberalism, that was based upon the sovereignty of nation states … to the Beast Regime of Regionalism, Totalitarianism, and Authoritarianism, that is based upon the sovereignty of regional leaders and monetary popes, as revealed in a dream given to the Apostle John, while in his 90s, living in exile on the Isle of Patmos.  Specifically in Revelation 13:1-4, he communicates that the Monster of Regional Governance is rising out of the banking insolvency and national insolvency of the Mediterranean nations of Greece, GREK, Spain, EWP, and Italy, EWI. It will come to rule in all of mankind’s ten world regions and in all of mankind’s seven institutions.

Liberalism featured the religion of Keynesianism. Charles Hugh Smith writes in Peak Prosperity The trends to watch in 2013.  Trend #4: The failure of what is effectively the State Religion, Keynesianism, will leave policy makers in the Central State and Bank bereft of policy alternatives. Now that all Keynesian policies have been pushed to the maximum, there is essentially nothing left to deploy. This chart of money velocity, M2V, reflects the endgame of Keynesian stimulus. Money is being printed and dumped into the financial system in size, yet the velocity of that money is trending toward zero.

Authoritarianism will feature the religion of Diktat. Bible prophecy of Revelation 13:4, reveals that the Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, will come to be so highly regarded, that people will come to worship this minotaur, saying who can make war against it; these be labyrinthine, having been intoxicated and tortured by its insurmountable power and authority.

2) … Debt monetization is creating a Federal European Super State.
Protesilaos Stavrou writes On the monetary policy prescriptions of Bundesbank president, Jens Weidmann. Moreover while I repeat that I am against debt monetization, as in terms of principle I am closer to the Hayekean theme on the denationalization of money, I nonetheless find that this shrewd method that European policymakers have adopted, of indirectly financing governments.

On to the first point (all quotes are from this interview which can be found on the Bundesbank’s website and which has been translated into English by their own personnel): Question: The concept of “monetary financing of governments” is controversial. Answer: I believe that we, as a central bank, should not enter an area which could possibly be regarded as monetary financing of governments. Once people begin to fear that we are printing money to fund budget deficits, our credibility as a guardian of monetary stability will quickly go out the window.

Financing governments via the inflationary power of the printing press is an unwise policy; one that engenders perverse incentives and rent-seeking mentalities for politicians and, consequently, for the state’s cronies. Nevertheless I believe that we already have enough experience from the eurocrisis to realize that this kind of discussion is mostly academic. The plain fact is that the ECB’s operations in the secondary markets in conjunction with the reinforcement of the capital adequacy criteria for European banks (soon to be followed up by the mighty macro-prudential powers of the ECB), have in effect succeeded in indirectly financing governments. The Securities Markets Programme (SMP), the Long Term Refinancing Operations (LTRO) and lastly the Outright Monetary Transactions (OMT) were all concocted for the sole purpose of financing budget deficits, litanies to the contrary notwithstanding. Whether this has been and will be achieved indirectly via financial intermediaries so that people are kept with the illusion that their cherished central bankers are the guardians of ‘sound money’, does not alter the fact that monetary policy has at times been used as a substitute for fiscal measures.

Moreover while I repeat that I am against debt monetization, as in terms of principle I am closer to the F.A. Hayekean theme on the Denationalization of money, I nonetheless find that this shrewd method that European policymakers have adopted, of indirectly financing governments, is actually, though perhaps unwittingly, a means of providing sweetheart handouts to entrenched mega-banks. Euro policymakers are getting private banks to do their job, so as to avoid the opprobrium that would, logically or supposedly, arise if they were to violate some rigid rule or mandate on these issues. This however, scrupulous as it undoubtedly is, is in effect a kind of corporatism, since these private corporations will not just deliver the money for free, but will seize the opportunity to make some easy profit on the side out of the money bonanza and the unwillingness of politicians and technocrats to acknowledge their egregious errors and revise their ways accordingly.

Second point on Mr. Weidmann’s interview: Would the euro have suffered any damage if the ECB had done nothing? I don’t think so: policymakers would have then had to take action. I am well aware that these are difficult decisions for policymakers. But it is, after all, the job of policymakers, and not the central bank, to decide on redistributing solvency risks in Europe. By taking action, the central bank takes pressure off policymakers – a risky move.

My impression is that Mr. Weidmann is making a very brave assumption on this one. His argument is that in the absence of ECB action governments would have no other alternative but to proceed with austerity. Even if for argument’s sake we were to agree that the otherwise manifestly ineffective and unjust combination of tax hikes, welfare state deconstruction and bailouts to failed banks or governments, aka austerity, was the right way forward, it would still not justify the degree of confidence projected by Mr. Weidmann. For even if there were no disagreements between member states on what measures to be adopted, it would still be wishful thinking to assert that under the ostensible magic of extreme market duress politicians would have acted in the most rational (‘rational’) and optimal of ways. In fact it would be safer to assume that in the vacuum of the ECB’s inaction, the anti-euro, anti-austerity parties would have appeared much more persuasive in their rhetoric of the disintegration of the euro and of reconstituting national currencies, on the grounds that they would then have a central bank ‘caring’ for their country, instead of some ‘indifferent’ ECB.

The fact that the ECB acted does not mean that it did the right thing or that its policies improved the situation, even if they did. The point is that economic actors and citizens in general, operate in accordance with their “expectations”, their “psychology”, among others; and because in the present case these are anchored on the presumption of central bank activism, of it being the ultimate backstop, the lack of such action would on its own account be a sign of incompetence, fostering uncertainty and a profound uneasiness over the future of the euro tantamount to that of passengers on a plane without a pilot. I repeat this is an issue of perception, not of economic fundamentals.

If the ECB had not acted on the cases where it was expected to, then it would have exacerbated the crisis rather than provide those idyllic conditions for the implementation of the kind of fiscal policy Mr. Weidmann would endorse. The fact that the OMT programme, which in my opinion is not as omnipotent as some ECB cheerleaders suggest, has succeeded in temporarily removing all convertibility risks, i.e. concerns for euro exits, even though it has not been used yet, is a clear sign of how important expectations or the common sense of security are. The particulars aside, I am of the opinion that to ignore the significance of emotional factors in daily economics, is to reduce human beings to mindless automatons and a fortiriori to fallaciously postulate the actual existence of that magnificent phantom of the omniscient homo economicus, which has been plaguing economic reasoning at least ever since the Enlightenment Age.

On to the third and final point: Interest rates on safe investments are already less than the rate of inflation. That is a creeping destruction of wealth, known as financial repression.

I would not refer to the current negative real interest rates as financial repression just yet. Only when the state begins to influence savers’ investment decisions and engages in coercion would I see such a situation as existing. However, negative real interest rates are a consequence of expansionary monetary policy in the crisis which is felt immediately by savers.

Whether Mr. Weidmann would like to call it financial repression or not is mostly a matter of perspective or of willingness to test the limits of euphemistic palaver. In my opinion we do have financial repression on a monumental scale and I would say that apart from what is now happening on the regulatory framework, it is in great part related to the Basel Accords (I recommend Emmanuel Schizas’ analysis on this). As mentioned above the various programmes of the ECB in conjunction with the new rules on capital adequacy effectively channeled funds into state coffers. Besides when all major central banks across the globe are engaging in aggressive monetary easing in an effort to siphon ever-more credit to the otherwise bankrupt sovereigns as well as to preserve the corporate-capitalist status quo, it is rather Orwellian to say that no repression whatsoever occurs. With the iron fists of central bankers manipulating the major economies of the globe it is quite obvious that the market is not “free” in any sense of the term, but that it is heavily distorted in each and every of its parts; and to a great extent this is done to reinforce the symbiotic relationship between states and banks.

As a conclusion I would like to point out that most political controversies in Europe have been dominated by arguments stemming from unexamined shibboleths and deep misunderstandings, while missing the broader picture as well as the specifics of each and every case. It is unfortunate that we came into this crisis with a profound unwillingness to adapt to the rising challenges, but instead we obstinately clung on to dogmas that guided our lives in ages past. We assumed that the change brought upon by this crisis was merely superficial and as such we were not willing to admit that many of our cherished principles were in desperate need of reconsideration. The policy failures resulting from this lack of alertness, from this staunch refusal to be versatile, are already well known to all of us and yet instead of witnessing some effort, even a timid one, to think in alternative ways, we see that integration and European politics in general are still predicated on most of the presumptuous notions that stood as inviolable ‘truths’ in the pre-crisis era.

Towards that end I am of the opinion that Mr. Weidmann, while certainly a very adept central banker, has not been willing to question, even for a moment, the tenets of his institution. He has therefore made his own contribution, though perhaps a minor one, to the preservation of the ideocentric elements that mobilized European integration in recent years, which have been proven to be inadequate in improving the lives of people residing in Europe and which shall bestow upon us a technocratic order that we will have a hard time reforming or rather abolishing.

And Protesilaos Stavrou also writes May 2013 lead us from the Year of Citizens to the Union of Citizens. According to the Commission’s official page for the Year 2013: The European Year of Citizens 2013 is dedicated to the rights that come with EU citizenship. Over this year, we will encourage dialogue between all levels of government, civil society and business at events and conferences around Europe to discuss those EU rights and build a vision of how the EU should be in 2020.

This language certainly engenders a host of ambitions from people across Europe and it seems to succeed in bestowing optimism in the hearts of those who long for a genuine European democracy. Nevertheless judging from the fact that on the economic, fiscal and financial fronts we are already witnessing the rapid formation of a technocratic state encompassing all Euro area member states, I believe it will be a Herculean task to expand democracy in the near future; democracy not in its perverted meaning of “democratic accountability and legitimacy”, not even in this fig leaf of “encouraging dialogue” with authorities, but in the broader and proper sense of actual and effective participation in the levels of power where decisions that influence our lives are being taken.

What the Commission is aiming at with this campaign is certainly a laudable end, given that informed and vigilant citizens are a prerequisite to any demands for further liberty. That which merits criticism nonetheless is the overall ambition of EU policy-makers to establish a so-called Citizens Pillar for the EU architecture. Such a pitiful scaffold is nothing but a suboptimal compromise, considering that the EU, for it to be genuinely democratic and thus sound in its policies, ought to be predicated exclusively on citizens, rather than having them as the de facto cheerleaders and infamous apologists of a technocratic apparatus of power and control.

If the intergovernmental praxis remains the only method of revealing conduits to further and deeper integration, then the pro-citizens campaign is but a healthy exercise in euphemistic palaver, embellished with lofty ideals, but devoid of any substance, as the locus of power will remain in powerful national governments that will always unscrupulously exploit any favorable balance of power they are found in, to propound or effectively enforce their own understanding of what is good and desirable.

To allude Adam Smith’s metaphor, with the inter-governmental method in place it is as if European integration is moved by an invisible iron fist; one that does not hesitate to transcend fundamental democratic norms and practices, and which in the name of mitigating a Eurocrisis that has been exacerbated by inane European policies, will sacrifice to the altars of efficiency and effectiveness any modicum of liberty citizens had gained over the years.

Reformative change requires grassroots action, yet it should not be neglected that the mother of all actions is the painstaking process of thinking and of producing ideas, ambitious ideas, crazy ideas, of how to make the life of each individual better; the collective life, the private life. Activism for its own sake is but a waste of energy, and so are ideas that are not materialized in action but which remain whimsical theories of armchair thinkers who, aloof from the fray, lose sight of the particular task at hand.

The year 2013 can indeed be a first step in expanding European democracy and in progressing towards a bottom-up system of decentralized decision-making. It will however face the headwinds of technocracy on the policy fronts that are among the most cardinal to any modern state, namely the economic, fiscal and financial ones. Judging from the dismal record of the EU, a mere year for citizens is more than welcome, however any praise to European institutions should not escape the pressing need of developing a Union of Citizens out of the present order—and for that we, as citizens, must remain adamant and decisive. Happy new year!

3) … In the news
Daily Reckoning writes Argentina’s “dólar blues”

ZeroHedge relates Greek banks to Merkel:  Please Ma’am, can we haves some moar. Here comes Bailout #4.

Zero Hedge reports Meet Jack Lew: Tim Geithner’s replacement. And Washington Post reports Lew earned $1.1M from Citigroup before State Department job. When President Obama introduced Jacob J. Jack Lew as his top budget officer Tuesday, he praised his work handling finances in the Clinton White House and recently as a deputy secretary in the State Department, but he forgot to mention the lucrative Wall Street job in between.

The Telegraph reports Sterling crisis looms as UK current account deficit balloons. Is the UK heading for a currency crisis?

Bloomberg reports Rajoy Stealth Order adds to off balance sheet debt. Spanish Prime Minister Mariano Rajoy added more than 3 billion euros to his debt load in the closing hours of 2012 with a New Year’s Eve order removing a cap on utilities’ government-guaranteed losses. The decision, announced in the official gazette, added to the snowballing power-tariff debt, which isn’t included in the public accounts. The shortfall exceeded 20 billion euros at year end, according to government filings.

An inquiring mind asks, is the shadow lending system in China, which is collateralized by stockpiles of copper overheating? Bloomberg reports China loan share seen at record low as data shows risks. China’s bank loans as a share of funding in the economy may have fallen to a record low, highlighting the growth of alternative financing channels that have prompted warnings of rising credit risks.

Elaine Meinel Supkis writes Japan LDP giving billions to businessmen so they can buy foreign corporations.  Ms Supkis relates Woman, 2 children found dead in apparent murder-suicide in Saitama.  The bizarre government of Japan continues onwards off a cliff. Just like the US government. In my previous article, I talked about ‘sovereign wealth’ and pointed out that Japan is one of the top ten SW holders except they run a 260 percent bigger than GDP government debt which is nearly triple the US rate. Japan is dying and the desperate people there want to be saved so the government has decided…to fix things by handing over an immense part of this sovereign wealth to very rich Japanese businessmen Economic stimulus plans include Y450 bil for business support.

The government will set up schemes worth nearly 450 billion yen to boost businesses, including helping them buy foreign companies, according to a draft economic stimulus package seen by Reuters on Monday that could be approved later this week.

I recall the US, EU, Canada, Australia and others whined about the government of China using their huge FOREX wealth to buy businesses and wealth producing systems…and along comes Abe doing the exact same thing. Not a peep from our beloved governments about this invasion, right?

Of course not! Japan is not poor. The Japanese people are increasingly poor, but the rich are richer than ever since they get to use the entire sovereign wealth of that nation for private business deals that enrich them and remove jobs from Japan and evades taxes, too. Remarkable, how people are deceived into thinking all of this will save them when there is zero intention of saving anyone.

Saitama, Japan is part of Tokyo. It is relatively poor and is a very depressing place to live and has a high suicide rate as we see in the above news story of a woman who strangled her small children and then hung herself. The fabled ‘Japanese family’ that never divorces is increasingly a fiction.

As I predicted when Japan decided to play Imperial Japanese Invasion Politics, this would backfire badly in China and elsewhere in Asia as it has: Japanese car sales fall in 2012 amid island spat. But never fear!

The buying of US corporations by politically powerful Japanese continues! Toshiba boosts Westinghouse stake to 87%.  The Japanese technology conglomerate said it paid about 125 billion yen ($1.42 billion) for a 20% holding in Westinghouse held by U.S.-based engineering firm The Shaw Group. The deal announced Monday finalized an option that Shaw exercised in October to sell its entire stake in Westinghouse to Toshiba.

And of course, just like Big Banks love to run DC and ruin us, ditto in Japan: Big business lobbies back Abe.  The endorsement is the latest vote of confidence in Abe by Japan’s business community. Stocks have soared since his victory last month and the sky-high yen has tumbled as investors back his tough talk on forcing aggressive monetary easing measures from the Bank of Japan. Like Krugman of NYT fame, they want money printing. They want a cheap yen so they can…not worry about buying foreign businesses even if the yen is weaker because the money will be a massive New Year’s gift from Abe so they won’t have to use a single personal yen to do this! HAHAHA.

4) … There are many different types of psychopaths; bible prophecy highlights three.
The Apostle John in describing the Beast Regime of Regionalism, Authoritarianism and Diktat, in his prophetic vision for the last dispensation of mankind, highlights three types of predators: the bear, the lion and the leopard of   Revelation 13:2.

The bear is an omnivore and has a wide variety of dietary interests; people are only consumed occasionally. The feet of the bear provide stability in adversity, and enable him to root out his meal.

The lion has a mane; it is his pride and glory; his preeminence is displayed for all to see. The mouth of the lion loudly announces his presence; and it is with this, he bites, crushes, rips, and tears apart his meal.

The leopard has a coat of transparency, which helps him blend in with the environment so he cannot be seen; he hunts by stealth, and operates in the shadows; he is opportunistic, and watches his prey before he consumes them. He feeds only at dusk and springs from the shadows after eyeing his meal for a long time. He often hunts and destroys simply for the satisfaction of seeing his prey maimed.

All three have no regard for others; the leopard has the worst conscience of all, as he has seared his through mischievousness, as well as mean and crazy speech and behavior. He is the most dangerous of all because he cannot be seen coming; he literally comes out of nowhere to devour those of his liking.

Living in the inner city, I encounter the leopard frequently, as it is here, that they predominate. Society has a social contract with veterans, and as for the most skilled of killers, it provides a monthly mental disability check, food stamps, and a Section 8 voucher, or an apartment in a public housing project, which becomes the hunting and preying territory for this predator.

As for the lion, he seeks out silly and or disabled women, wins their confidence, enters their homes, and consumes them.

As for the bear, he is often found in church pastorship; earns a good salary for peddling the Word of God, making merchandise out of the believer; and holds forth “people pleasing doctrine”, such as Free Choice in choosing Jesus, as opposed to the doctrine of the Election of Grace, which presents that one is saved by the intervention of God’s Soveign Will.

The best defense against these predators is to develop a psychopathic radar, spot them before they devour, mark them out in ones mind, turn away, withdraw, and avoid them. Its a lesson that I have learned many times over after having been left dazed and wounded by these animals.

5) … God’s Word governs all things and Bible prophecy foretells the future
An inquiring mind asks What is a dollar? The US Dollar is the remainder, specifically that which is left over, from cary traded investing in countries throughout the world.

The fiat money system is based upon floating currencies. It was recommended by Milton Friedman and adopted by President Nixon in 1971, to fund the Vietnam war and to facilitate speculative investing in debt and stocks worldwide. The plan was to let the US Dollar sink and currencies float. But beginning in January 2013, the US Dollar, $USD, UUP, has been rising, as Major World Currencies, DBV, and Emerging Market Currencies, CEW, are topping out. Now, these will be rapidly falling in value on competitive currency devaluation.

The fiat money system is literally going to come unhinged on the decline in credit and the trade lower in currencies. The result will be a soon coming Financial Apocalypse. Out of the chaos, the diktat money system will rise to govern mankind’s economic activities, where diktat serves as credit, currency, wealth and power, so communicates bible prophecy of Revelation 13:1-4.

The risk-on momentum debt based and currency carry trade rally that began in June 2012 is over. The Bear Market Of All Time has commenced. Risk appetite is turning to risk avoidance and a number of the Proshares 200% Bear Market ETFs, as well as a number of the Direxion 300% Bear Market ETFs, are starting to rise in value, with Dow Theory confirmation of a Bear Market coming from both Transports, IYT, and Industrials, IYJ, trading lower from recent rally highs. The Put Call Ratio, provided by YCharts, has been increasing from 0.71 on December 17, 2012 to 0.96 today. The Advance Decline Line, provided by Master Data, has been weakening since December 17, 2012, indicating that market breadth, that is market strength, is weakening, and the rally in the S&P, SPY, cannot be sustained.

With investors derisking out of Stocks, ACWI, and deleveraging out of Major World Currencies, DBV, and Emerging Market Currencies, CEW, together with ongoing loss of trust in Credit, AGG, Liberalism is going to suffer an agonizing death; and Authoritarianism is going to rise to govern mankind’s economic and political activity.

The dynamos of corporate profit and global trade are winding down, and as a result the national sovereignty of countries is ebbing away. Now, the dynamos of regional security, stability, and security are powering up the sovereignty of regional bodies such as the ECB, as presented in Revelation 6:1-2.

The Bible reveals that all things are of God 2 Corinthians 5:17-18; all things coalesce in Christ, Colossians 1:17; and Christ is sovereign over all things, Colossians 1:18. Furthermore His Word reveals that God has predestined all things, Ephesians 1:5; He has made the saints accepted in the Honey Be, that is the Sweet Spot, of His Love, Ephesians, 1:6; He is making His Wisdom known, Ephesians 1:7-8; He is effecting His Sovereign Will for the purpose of establishing fullness in the dispensations, that is mankind’s epochs and periods, and has appointed Jesus Christ as Dispensation Manager, that is manager of economic cycles and political empires, Ephesians 1:9-10.

Christ has brought about the fullness of choice, and credit based prosperity, that began with Inflationism picking up after World War II and which has increased exponentially with Liberalism

Now Christ is introducing Destructionism, and is pivoting the word into the fullness of diktat and debt servitude based austerity under Authoritarianism, Ephesians, 1:10, so that He can be revealed for who He is, the Sovereign One of the entire universe, Revelation 1:1.

The tinyurl for this document is http://tinyurl.com/b6p8yam

Wall Street Edges Off Five Year High, Awaits Earnings

January 7, 2013

A review of World Stocks, VT, reveals  … in the long term view, a market top has been attained  … in the medium term view, the market is at a pivot point to turn lower …and in the short term view, the market is indecline.

Reuters reports Wall Street edges off five-year high, awaits earnings Stocks lost ground as investors drew back from recent gains that lifted the S&P 500, SPY, to a five-year high, in anticipation of sluggish growth in corporate profits.

Zero Hedge reports Speculators rush into risk by most since 2007. And Zero Hedge also reports More central bank gimmicks exposed as European collateral shortage deteriorates.

Cato’s Domain writes Spanish sovereign debt.

Sectors trading lower included Retail, XRT, led lower by Home Furnishing Stores, LOW, PIR,

Global Producers, FXR, trading lower included MKTAY, DIS, BA, ETN, LPL, AA,  IR, WHR, TSM, GT, TEL, VALE, TEL, MAT.

Toyota, TM, led Automobiles, CARZ, lower.

Cable Companies, VIA, DISH, led Consumer Services, IYC, lower

Scientific Instrument Manufacturer, FEIC, led Nanotechnology, PXN, lower.

LED Manufacturer, CREE,  and Taiwanese Semiconductors, TSM, AUO, ASX, led Semiconductors, XSD, and Taiwan, EWT, lower.

Major Countries trading lower included Taiwan, EWT, Russia, RSX, Russia Small Caps, ERUS.

Egypt, EGPT, and Mexico Regional Airline, ASR, led Emerging Markets, EEM, lower.

Small Cap Pure Value Shares, RZV, was the style loss leader of the day, with the Automobile Retailers, LAD, ABG, KMX, SAH, KMX, trading lower.

The 300% Inverse ETFs, EDZ, TECS, YANG, SOXS, FAZ, RUSS seen in this Finviz Screener, rose.

The 200% Inverse ETFs, FXP, EEV, SKF, REW, SMK, SDD, seen in this Finviz Screener, rose

Precious Metal Mining Stocks, seen in this Finviz Screener, traded lower today, January 7, 2013, making for a buying opportunity.  In a bull market one buys into dips, and in a bear market one sells into rallies. The chart of Gold Mining Stocks, GDX, shows that they broke out December 20, 2012, and traded 1.8% lower today on a 0.6% trade lower in Gold, GLD.  Nine Mid Cap Gold Mining Stocks, seen in this Finviz Screener  having strong growth potential include AEM, EGO, GOLD, ANV, RGLD, FNV, NGD, AUY, KGC; as a group these traded 1.6% lower today.

The Peace That Came Through The World Central Banks’ Monetary Easing, Which Began With QE1 Will Shatter ….. As A Global Credit Crisis ….. Causes Competitive Currency Devaluation And A Global Financial Breakdown

January 7, 2013

Financial Market Report for the week ending January 4, 2013

1) … On Tuesday January 2, 2013, World Stocks, VT, VSS, VTI, EPP, VGK, EEM, rose strongly on the US Fiscal Deal.

Sophie Quinton of the National Journal reports Winners and losers from the Fiscal Cliff deal.
Middle and lower-income taxpayers are the main beneficiaries of the Fiscal Cliff deal, but there are other winners, and losers, of the last-minute scramble to avert scheduled tax increases and spending cuts. The gridlock leading up to the deal dimmed the country’s already dim view of Congress. Lawmakers aren’t going to get the grand deficit-reduction bargain they had hoped for. And although an economic crisis may have been averted, the final deal sets the stage for another debt-ceiling showdown.

Fiscal Cliff winners include:
Middle-Class Taxpayers. With the Bush tax cuts set to extend for individuals making less than $400,000, middle- and upper-middle class taxpayers can breathe a sigh of relief. The Alternative Minimum Tax will be permanently lifted to reflect inflation, sparing close to 30 million taxpayers from a tax increase. The tax relief isn’t total, however: The payroll tax cut won’t be extended for another year, meaning that working Americans will see their paychecks reduced in 2013. But it could have been worse.
President Obama and Vice President Biden. President Obama made the fiscal cliff negotiations all about taxes, repeating the call for tax increases on the rich and tax cuts for the middle class that helped him win reelection. Although the final deal is less than the president had hoped for, he gets to say he kept his campaign promise to protect middle-class Americans. He also gets to renew key tax cuts passed as part of his 2009 stimulus package and to extend unemployment insurance. Meanwhile, Vice President Joe Biden can revel in the crucial role he played in last-minute discussions with Senate Minority Leader Mitch McConnell.
Senate Minority Leader Mitch McConnell. The wily legislator who once pledged to block President Obama at every turn has proved, once again, to be a crucial deal-maker between the White House and Congress. Initially sidelined as negotiations focused on President Obama and Speaker John Boehner, McConnell stepped forward at the last minute to help craft legislation that Republicans could support.
AARP. Seniors—and the lobbyists who represent them—won’t be feeling the pain of entitlement cuts come January, despite initial insistence from Republican lawmakers that significant cuts to Medicare or Social Security be part of a fiscal cliff deal. The battle to prevent a switch to chained CPI, a metric that would reduce the growth of Social Security payments, has been won, at least for now.

Fiscal Cliff losers include:
Deficit Hawks. Going over the fiscal cliff would have significantly reduced the deficit, combining cuts to domestic and military spending with tax hikes on pretty much everyone. The last-minute deal reached by Washington negotiators lifted taxes on the wealthiest Americans and didn’t do anything to cut spending.
Speaker Boehner’s Plan B. Speaker Boehner’s attempt to rally his caucus behind an alternate cliff deal, dubbed “Plan B,” failed miserably: a bad sign of the Ohio Republican’s ability to put forward an alternative that his caucus could take seriously. Boehner’s plan included too many tax increases and not enough spending cuts for Republicans to stomach—and it seemed to temporarily stall negotiations.
The U.S. Treasury. The United States hit its borrowing limit on Monday, and lawmakers failed to include raising the limit as part of the cliff deal. The Treasury Department will enact what it calls “extraordinary measures” to avoid a government default, but it can only protect the nation’s credit for so long. Stay tuned in the coming months for another Washington fight over whether, and how, to raise the debt ceiling.
The 1 Percent. Wealthy Americans who make their money from investments, rather than paychecks, were losers in the fiscal-cliff deal. In addition to higher income taxes, those who make above $400,000 will now be subject to a 20 percent tax rate on their capital gains and dividends. The fiscal cliff wasn’t all bad news for the wealthy, however: They can still bequeath up to $5 million tax-free, with any additional money taxed at 40 percent. That’s greater than the current 35 percent estate tax rate, but less than the 55 percent rate on assets over $1 million that would have gone into effect without a deal.
Holiday Cheer.  From senators who had to fly back to Washington two days after Christmas to Hill staffers who canceled New Year’s Eve plans in anticipation of a late night hammering out a deal, the fiscal-cliff negotiations cast a pall over the holiday season. And it wasn’t just Washington: Americans spent the holidays wringing their hands over pending tax increases.

The 50 Global Stocks Sectors seen in this Finviz Screener, rose strongly; Liberalism’s most favored  stock sectors seen in this Finviz Screener, led the rally; these include
Solar, KWT 6.1%
Copper Mining, COPX 4.4
Networking, IGN 4.3
Biotechnology, XBI 3.8 seen in this Finviz Screener
Gaming, BJK, 3.8 AP reports Macau casino revenue in 2012 rose to $38 Billion
Steel, SLX 3.7
Small Cap Industrial PSCI 3.6
Paper Producers, WOOD 3.3 seen in this Finviz Screener
Nasdaq Biotechnology, IBB 3.2
Global Producers, FXR, 3.2, seen in this Finviz Screener
Metal Manufacturing, XME, 2.8 seen in this Finviz Screener
Airlines, FAA,  2.5
Small Cap Real Estate, ROOF, 2.5
Homebuilding, ITB, 2.4
Vanguard Increasing Dividend, VIG, 2.2
US Infrastructure, PKB, 2.2% seen in this Finviz Screener
World Banks, IXG, 2.1 seen in this Finviz Screener
Global Real Estate, DRW, 1.7%, was near the bottom of the list
Automobiles, CARZ, and Retail, XRT, 0.7 each were at the bottom of the list.

Countries rising strongly included
CHIM 6.6
CHII 4.6
CHXX 4.0
ECNS 2.9
CAF 2.7
INXX 4.0
INP 3.6
SCIN 3.6
RSX 2.6
ERUS 2.5

EWU, 1.5

NKY 2.8  Bloomberg reports Japanese 30-Year Yield is Highest Since 2011. Thirty-year yields climbed to levels unseen since December 2011, tilting the so-called yield curve to the steepest level in 17 months.  Japan’s newly installed Prime Minister Shinzo Abe said in a New Year’s statement that “bold” monetary policy is one of the three prongs of his economic measures.  The yield on the 30-year bond touched 1.995 percent, the most since December 2, 2012, before trading at 1.99 percent from 1.975 percent on December 28, 2012,  according to Japan Bond Trading Co.  Japan’s Nikkei 225, NKY, jumped 2.8 percent after the S&P 500 rose reaching its highest close since September. The Yen, FXY, fell lower to its weakest value since July 28, 2010, extending its longest series of weekly declines since 1989.  I comment that Abe’s Easing have sent Industrial Producer, KUB, and Japanese Small Cap, MKTAY, soaring in value. Mike Mish Shedlock comments The yield on the 30-year bond is only 2%, which is nothing to get that excited over. For now, the bond market is not treating Abe’s inflation threat that seriously. If and when the bond market does react, Abe will not like the state of affairs one bit

Investors gave strong seigniorage to Liberalism’s Republics of Carry Trade Investing, Investors plowed money heavily into the Emerging Markets, EEM, seen in this Finviz Screener. and seen in the ongoing Yahoo Finance Chart of EEM, TUR, ECNS, THD, EWW, ENZL, SCIN, and EPHE
SCIN 3.6
ECNS 2.9
EWY 2.6
THD 2.0
EWW 1.9
EPHE 1.6
TUR 1.6
EIRL 1.5
ENZL 1.4
EWO 1.3
EPOL 1.0

EMFN 4.9
EMMT 3.5
EEM 2.0
EWX 1.8 investors favored FMX, TTM, FBR, TSM, SCCO, Operadora de Infraestructura,
DLS 1.3

World Banks, IXG, rose 2.1%; Liberalism’s leading speculative banks seen in the following seen in this Finviz Screener led the way higher.
IRE, DB, SAN, led European Financials, EUFN,and Europe, VGK, higher.
GGAL, BFR, BMA, BBVA led Argentina, ARGT, higher.
IBN, HDB led India, INP, higher.
WF led South Korea, EWY, higher.
NMR, MTU, led Japan, NKY and Japan Small Caps, JSC higher
BAC, C, led the Too Big To Fail Banks, RWW and The US, VTI, higher
UBS, CS led Switzerland, EWL higher
BPOP, BAP, CIB led EMFN, and the Emerging Markets, EEM, higher.
BCS, LYG, led The UK, EWU, higher.

The leading style was Small Cap Value, RZV, rising 3.2%; it took the Currency Demand Curve, RZV:RZG, higher, but below its December 20, 2012 high.

2) … On Friday, January 4, 2013, World Stocks, VT, traded to a new seven month rally high, producing Peak Stock Wealth.
In Thursday overnight trading, Marc Jones of Reuters reports Global shares, oil slip on Fed stimulus nerves. World shares, oil and copper edged lower on Friday and the dollar rose after U.S. Federal Reserve officials raised concerns about possible side effects of its stimulus program. Minutes from the Fed’s December policy meeting unsettled financial markets as some policymakers raised the longer-term impact of its efforts to stimulate the U.S. economy. European shares echoed their Asian peers to open lower. But following a sharp jump on Wednesday after the United States edged back from the “fiscal cliff”, they were on track for weekly gains of almost 2.7 percent.
Euro zone PMI and inflation figures plus the U.S. non-farm payrolls report due through the day will be closely scrutinized by investors looking to assess the health of the global economy.
“The Fed has made it clear that it will keep policy loose until unemployment drops to 6.5 percent or below, so strong jobs data will undoubtedly raise expectations of a more hawkish Fed,” analysts at Tradition brokerage said in a note.
The Fed comments gave fresh momentum to the recent slide by low-risk bonds including U.S. and German debt. Bund futures slipped half a point in early trading to 143.07, having already fallen steeply from last week’s close of 145.64.
Benchmark U.S. Treasury yields continued their climb, hitting an eight-month high around 1.93 percent in Asia, while 10-year Japanese government bond yields touched a 3-1/2-month high of 0.83%.

And Pedro Nicolaci da Costa of Reuters reports Fed becoming worried about stimulus side effects.   Federal Reserve officials are increasingly concerned about the potential risks of the U.S. central bank’s asset purchases on financial markets, even if they look set to continue an open-ended stimulus program for now. In a surprise to Wall Street, minutes from the Fed’s December policy meeting, published on Thursday, showed a growing reticence about further increases in the central bank’s $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.
“Several (officials) thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet,” the minutes said, referring to the narrower group of voting Fed members. Investors picked up on the report’s hawkish tone, with stock prices drifting lower after the announcement, while the U.S. dollar extended gains against the euro. Yields on the 30-year Treasury bond hit 3.12 percent, their highest levels since May. “The minutes of the Federal Reserve’s December monetary policy meeting revealed a somewhat surprising level of concern among the ranks of central bankers regarding the long-term impact of the bank’s asset purchase program, or quantitative easing,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Still, the Fed appeared likely to continue buying assets for the foreseeable future, having announced in December it was extending monthly purchases of $40 billion in mortgage securities and also buying $45 billion in Treasuries each month.
A few of the voting members on the central bank’s policy-setting Federal Open Market Committee thought asset buying would be warranted until about the end of 2013.
A few others highlighted the need for further large-scale stimulus but did not specify an amount or time frame. Fed officials generally agreed that the labor market outlook was not likely to improve without further nudging from the monetary authorities.

The U.S. economy expanded a respectable 3.1 percent in the third quarter on an annualized basis, but growth is believed to have slowed sharply to barely above 1.0% in the last three months of the year.
Data on Thursday showed a solid gain of 215,000 new private sector jobs for December, while analysts polled by Reuters last week were looking for a rise of 150,000 new jobs in the Labor Department’s official survey, due out on Friday. Still, the minutes indicated worries about quantitative easing policies were spreading beyond the usual regional Fed hawks who, like Richmond Fed President Jeffrey Lacker, have opposed additional Fed easing.
“What’s clear from these minutes is that there is little consensus among the members of the FOMC on how long asset purchases should carry on,” said Jason Conibear, trading director at Cambridge Mercantile.
“Some members want more accommodation for as long as it takes, some want more but to start winding it down while others have got the heebie-jeebies about the size of the balance sheet.”
In the December meeting, the Fed also launched a new framework of policy thresholds, numerical guideposts that are supposed to give markets and the public a clearer idea of how policymakers will react to incoming economic data. Officials say they will keep interest rates near zero until the unemployment rate falls to 6.5 percent for as long as estimates of medium-run inflation do not exceed 2.5 percent. The minutes suggested it took officials some time to build a consensus around the idea. U.S. unemployment has come down steadily after hitting a peak of 10 percent in late 2009, but remains elevated at 7.7 percent.

During the day, Friday, January 4, 2013, World Stocks, VT, traded to a new seven month high, producing Peak Stock Wealth. The Currency Demand, RZV:RZG, Risk On, ONN, Distressed Investment, FAGIX, Junk Bonds, JNK, Senior Bank Loans, BKLN, Leveraged Buyouts, PSP, and Spin Offs, CSD, maintained their January 2, 2013 highs.

Rally leaders, Airlines, FAA, Solar, KWT, Gaming, BJK, and Small Cap Industrials, PSCI, seen in their combined chart gave grand finale to the end of the age of credit based prosperity and introduction to the age of debt servitude based austerity.  Manufactured Housing, CVCO, traded up near its recent rally high, as is seen in the ongoing Yahoo Finance chart of CVCO, ITB, RZG, RZV, and FXR.  Motley Fool reports Here’s why Cavco Industries’ earnings are worse than they look. Regional Banking, KRE, rose, which took the Russell 2000, IWM higher.  JP Morgan, JPM, led Investment Bankers, KCE, and Global Economic Producers, FXR, seen in their Finviz Screener, to new rally highs, as global carry trade darlings LPL, MKTAY, TTM, QCOM, BIIB, PHG, traded lower. Transportation, IYT, continued higher.  The ongoing Yahoo Finance chart of Creditors, MA, V, DFS, EFX, AXP, COF, and SLM shows a topping out, averaging a six percent gain for the group this week. Peak Retail Credit has been achieved.

The US Dollar, $USD, rose to 80.50 on January 4, 2013, on a plunge down lower in the Yen, FXY.  The Dollar’s rise is strikingly seen in the chart of its 200% ETF, UUP, which places an end to its ongoing decline, that has occurred since 1971, when America went off the gold standard and went with  the Milton Friedman Free To Choose Floating Currency Regime, which has supported Inflationism under Liberalism, whereby stocks, VT, have leveraged up over credit, AGG, in bouts of risk on momentum rallies.

The cresting rise of the US Dollar, plus the strong rally into fiat stock wealth, created strong short selling of Gold, GLD. Of note, a market reversal Base Metals, DBB, drove commodities, DBC, lower.

The seven month long global debt based, currency carry trade rally, that began in June 2012, has ended.  First with Commodities, DBC, trading lower September 14, 2012 and now once again trading lower on January 4, 2013.  Confirmation of the end of Liberalism’s final currency carry trade rally comes from the currency demand curve, the ratio of Small Cap Pure Value Shares to Small Cap Pure Growth Shares, RZV:RZG, turning lower, from its December 20, 2012 high.

US Federal Reserve  and ECB, unlimited quantitative easing, opened ended policies, have finally turned “money good” US Ten Year Notes, TLT, and German Bunds lower.  The Fiscal Cliff Rally, enabled bond vigilantes to call the Benchmark US Ten Year Note Interest Rate, $TNX, higher, from 1.60% to 1.90%, as well as to call a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the chart of the steepner ETF, STPP, steepening and breaking out higher.

The combination of the turn lower in the EUR/USD, traded by the ETF FXE, which finished the week lower, the fall lower in Commodities, DBC, from strong resistance, the steepening of the 10 30 US Soveign Debt Yield Curve, $TNS:$TYX, and the strong fall lower in World Treasury Bonds, BWX, as well as International Corporate Bonds, PICB, means an end to Liberalism as an economic paradigm, where Daniel Wagner of the AP, reports US service firms grew by the most in ten months; the most successful service companies being seen in this Finviz Screener.  Scott Grannis writes in chart article Service sector looks healthy.

And Scott Grannis writes Jobs and the economy continue to grow.  December’s jobs report provides yet more evidence that the economy continues to grow, probably at a 2-2.5% pace. That’s a only little less than its long-term normal growth rate of 3%. The private sector has increased the number of jobs by about 2% over the past year, and that is similar to the growth we saw during the the growth phase of the last economic cycle (2004-2007). The problem with the economy is not a lack of growth, but a lack of recovery to previous levels of activity. It should have been growing much faster.

Full seigniorage, came to Utilities, XLU, on August 1, 2012, Commodities, DBC, on September 14, Bonds, BND, on December 6, 2012, World Currencies, DBC, Emerging Market Currencies, CEW, Stocks, VT, and Distressed Investments, FAGIX, JNK, BKLN, as well as Spin Offs, CSD, and Leveraged Buyouts, PSP, on January 4, 2013, resulting in the climax of the Milton Friedman Free To Choose Floating Currency Regime and Liberalism. One can expect a sharp reversal from the parabolic rise in Emerging Markets, EEM which rose strongly in the seven month risk-on, global debt based, currency carry trade rally.

Leading Sectors And Styles for the week ending January 4, 2013 included
KWT, 18.2%, rose to a new high
FAA, 8.7, rose vertically to a new high, manifesting a three white soldier finale.
XBI, 7.1
XME, 6.8
BJK, Vice Stocks, traded by VICEX, gained 32% in the last two years.
FXR, 6.4 trades like the Morgan Stanley Cyclical Index, ^CYC, which is a measure of the health of the Milton Friedman Free To Choose Floating Currency Regime.
ITB 6.1 rose to a new rally high
XSD, 6.0
SLX, 5.8
IBB, 5.6
PSCI, 5.4 rose to a new rally high
PICK, 5.1
PKB, 5.1
XRT 4.9 pushed up to a multiple top high
QTEC, 4.7
IGN, 4.7
WOOD, 4.7 rose to a new rally high
IYC, 4.7, soared above a double top high

PSCE, 6.8
XLE, 5.7
IEZ, 8.2
OIH, 7.8

KRE, 6.5, with JPM 6.4 as the world’s premier investment banker, rose to a triple multi-year high
RWW, 6.4
IXG, 4.5
EUFN, 3.8
RWJ, 5.8

Styles traded as follows
VTV, 4.7
JKE, 4.5
RZV, 6.7
RZG, 5.8

Regions traded as follows
VTI, 4.8, VT, 3.1, VSS, 3.1
EEB, 3.9
VGK, 2.8
EPP, 2.9
EWX, 4.2, EEM 3.0

IYT, 6.2 and IYJ, 5.1

VTI,  4.8% was IWM, 5.7%; DIA 3.9; SPY, 4.5.  Reuters reports S&P 500 finishes at 5-year high on economic data. I comment that the reason for the high is found in Scott Grannis’ chart article Check out these rapid growth sectors.  The M2 measure of money is up over 8% in the past year, and has jumped at a 12.8% annualized rate in just the past 3 months. On a nominal basis, the M2 money supply has increased by over $3 trillion in the past 5 years. That works out to $1.6 billion per day. Most of the increase in M2 has come from bank savings deposits. Despite the fact that they pay almost nothing in interest, the public has added almost $3 trillion to their bank savings accounts in the past four years. That translates into growth of over 10% per year. The huge increase in savings deposits is the flip side of the public’s confidence in the future: low confidence and extreme risk aversion have persuaded households to sock away massive amounts of money in bank deposits.  Banks are lending by the bushel.  Commercial & Industrial Loans are a good proxy for bank lending to small and medium-sized businesses. These types of loans are up 13% over the past year, and have now posted a net increase of over $300 billion in just the past two years.  Car sales are up at a 13% annualized pace since their recession low.  This is now the most incredible recovery in auto sales on record.  U.S. crude oil production is up 40% in the past four years  and up 20% in just the past year, thanks to new fracking technology. And the boom is just getting underway. These two charts could be the most bullish of all.  Natural gas production (top chart) is up by one-third in the past six years. The huge increase in natural gas production has caused the price of natural gas to decline by about two-thirds relative to crude prices (bottom chart). The U.S. now enjoys a huge advantage over other countries because it has easy access to the world’s cheapest source of energy (natural gas). The huge change in relative prices is almost certain to cause monumental changes throughout all the industries that are energy intensive, as companies switch from crude to natural gas. This dramatic change in the type of energy we use and its price could have a major impact on U.S. growth in the coming years.After four years of a devastating collapse, housing starts are now up 58% in just the past two years!

Scott Grannis adds Thanks to three rounds of Quantitative Easing, the Federal Reserve has purchased a net $1.5 trillion of MBS and Treasuries, and has created a similar amount of bank reserves in the process. Almost all of the increase in reserves is still sitting idle at the Fed, which means that banks are content to hold a huge portion of their balance sheets in reserves paying only 0.25%. And Mr Grannis concludes Where there’s a lot of smoke, as these charts show, there is bound to be some unexpected fire. As a supply sider, I am as gloomy as anyone when it comes to the outlook for the economy at this juncture. The fiscal cliff deal will cause taxes to rise on almost everyone, especially risk-takers and small businesses, and that adds up to a drag on growth. Regulatory burdens and costs associated with the implementation of Obamacare are just beginning to have an impact, with much more to come. Higher taxes are in effect validating a higher level of government spending, and that reduces the economy’s overall efficiency, and that in turn translates into slower growth than could otherwise be possible. But when I look at these charts and realize the enormous changes that are occurring beneath the surface of what most believe is a very sluggish and calm economy, I come away thinking that optimism is more likely to be rewarded than pessimism, even though the drumbeat of news is depressing. Special Kudos to Scott Grannis for his chart articles presenting sound economic statistics.

Dividend Payers traded as follows
SEA, 6.7%
REM, 5.8
XPH, 4.8
AMLP 4.8 rose vertically high to a triple top high.
IYZ, 4.4
VIG, 4.2 blasted vertically higher pushing through upper channel resistance to a new high.
DTN, 4.2 rose to a double high.
XLU, 3.8
AUSE, 3.7
KWBY, 3.5
DWX, 3.4
BRAF 3.2
DLS, 2.8
RWR, 2.7
CWB, 2.5
DRW, 2.1,
IST, 2.4
PGF, 1.0

TAO, 5.6
ROOF, 4.1
IYR, 3.1
REZ, 2.3
DRW, 2.1

Charts show US Stocks, VTI, rising the week ending January 4, 2013
The Nasdaq 100, $NDX, traded by QTEC,  gained 3.7%
The Russell 2000, $RUT, traded by IWM, rallied 3.0%
The Dow Jones Industrial Average, $INDU, traded by DIA, rose 2.6%
The chart S&P 500 Index, $SPX, traded by SPY, shows a 2.6% climb to close the week of January 4, 2013 at 1466, the best level since October 9, 2007.

Nikolaj Gammeltoft & Alexis Xydias of Bloomberg report The S&P 500 rallied 13 percent in 2012, adding almost $1.9 trillion to the value of stocks in the best increase since 2009. Stocks started off 2013 with a bang, as the S&P 500 climbed 4.6 percent to 1,466.47 last week, the highest since December 2007.  Equities had the biggest two-day rally in a year on Dec. 31 and Jan. 2 as U.S. lawmakers agreed on a plan that averted tax increases even as Obama fell short of reaching a larger deficit-reduction bargain with Republicans. They extended gains after the Labor Department said the U.S. added 155,000 workers last month, compared with the 152,000 median estimate of 82 economists surveyed by Bloomberg.  Estimates of how much American companies earned in 2012 are falling. Combined S&P 500 profits were probably $103.40 a share, according to more than 10,000 forecasts compiled by Bloomberg on Dec. 31. That compares with $105.20 a share on Oct. 15. Alcoa, AA,  the largest U.S. aluminum producer, is due to begin the fourth-quarter earnings-reporting season.

Iin December 2012 investors went all in with rally leading stocks. The S&P 500 has formed an Elliott Wave 2 High from its 1,565 on October 9, 2007; it will enter an Elliott Wave 3 Down commencing the week ending January 11, 2013; this 3rd Wave Down, will wipe out virtually all of previously accumulated fiat wealth; one’s only protection is to invest in and take physical possession of gold in bullion coins or in Internet Trading Vaults such as Bullion Vault.

Peak Currencies was achieved early in the week of January, 2, 2013, as World Major Currencies, DBV, and Emerging Market Currencies, CEW, jumped to a seven month rally high,
The US Dollar, $USD, UUP, traded slightly higher to $79.85. as the Indian Rupe, ICN, rose, taking Emerging Market Currencies, CEW, higher. The Australian Dollar, FXA, and the Canadian Dollar, FXC, jumped higher, taking Commodity Currencies, CCX, higher, taking Major World Currencies, DBV, higher. The Swiss Franc, FXF, the Euro, FXE, and the Japanese Yen, FXY, traded lower.

Peak Credit was achieve when Total Bonds, BND, traded lower on December 6, 2012.
The 30 Year US Government Bonds, EDV, US Ten Year Notes, TLT, Build America Bonds, BABS, World Treasury Bonds, BWX, and International Treasury Bonds, PICB, traded lower again January 2, 2013.

Distressed Investments, FAGIX, Leveraged Buyouts, PSP, Junk Bonds, JNK, Bank Loans, BKLN, and Spin Offs, CSD, jumped higher. Emerging Market Bonds, EMB, rose on Emerging  Currencies, CEW.

Peak Commodities, DBC, was achieved September 14, 2012; Commodities, DBC, traded unchanged for the week, while its components traded as follows:
USO 2.5%
Timber, CUT, 4.3%
Copper JJC, 3.3%; it was pulled up by Global Producers, FXR, 6%, and Copper Miners, COPX, 7%
DBB 0.5%
RJA -1.9%, and JJA -2.4%
UNG, -5.3; it fell strongly through trend line support.

A see saw destruction of FIat Wealth is underway.
World Stocks, VT, World Currencies, DBV, and Emerging Market Currencies, CEW, rose to new highs, yet Commodities, DBC, Sovereign Debt, BWX, and Business Credit, PICB, have turned lower in value, leaving the most toxic of credit trading such as Junk Bonds, JNK, trading higher with stocks.  The global debt trade bubble, BND, burst earlier on December 2, 2012, while stocks, VT, and the world major currencies, DBV, and emerging market currencies, CEW, rose to a 7 month rally high.

Nationalism and investment choice that underwrote Liberalism, is being replaced by Regionalism and diktat to establish Authoritarianism, as the economic standard bearer.
While Stocks, VT, and Currencies, DBV, CEW, have traded higher, their underlying base of credit, AGG, has been eroded, on the exhaustion of the worlds central banks’ monetary authority, leaving the paradigm of nationalism and investment choice both unstable and unsustainable.  The rubicon of sound monetary policy has been crossed with the provision of unlimited Quantitative Easing and OMT; these have made “money good” investments, bad, specifically they have made “money good” debt unreliable. Trust is evaporating in the US Fed and the ECB to continue to be able to stimulate global growth and corporate profitability. MarketWatch reports Prepare for zero real growth in the U.S. in 2013.

A new paradigm of regional economic governance and diktat, is developing in the Eurozone, and will transition the world from Liberalism to Authoritarianism; regional framework agreements will provide economic stability, security and sustainability, establishing true European economic governance.

Investment choice, which was based upon the sovereignty of nation states, is being replaced by diktat of sovereign regional leaders, such as Mario Draghi, and sovereign regional sovereign bodies, such as the ECB.

An oversupply of credit, through the world central banks’ monetary policies of unlimited easing within  Liberalism’s Finance and Floating Currency Regime, has resulted in making money bad, with the result that the fiat money system will be replaced with the diktat money system of the Beast Regime of Diktat, Austerity and Debt Servitude, where diktat serves as credit, money, wealth and power.

Bloomberg reports SM Index of U.S. Manufacturing increased to 50.7 in December. Manufacturing picked up in December, reflecting growth in orders.

CNBC reports US Manufacturing beats estimate; but Construction Spending falls. US manufacturing expanded slightly in December, while a separate report showed that U.S. construction spending fell in November for the first time in eight months.

The Elizabeth Zimmermann and Dietmar Henning WSWS report Massive cuts at German steelmaker ThyssenKrupp, documents the end of corporate profitability and global trade. And the Ulrich Rippert WSWS report The German chancellor’s Christmas message, relates that the European welfare state cannot be sustained.

We are witnessing the rise of Authoritarianism as an economic paradigm, which is commencing out of the Greek and European Sovereign and Banking Debt Crisis, where the dynamos of regional security, stability, and sustainability are powering up Regionalism and Totalitarian Collectivism; as the  dynamos of corporate profitability and global trade are powering down Crony Capitalism and European Socialism.  The Road To Serfdom has now been fully paved with the global debt bubble, AGG, finally bursting on December 6, 2012.

3)  … Outlook For 2013 … The peace that came through the world central banks’ monetary easing which began with QE1 will shatter, as a global credit crisis causes competitive currency devaluation and a global financial breakdown. A Financial Apocalypse, that is a credit bust and fianancial system breakdown, is imminent.

3A) …Introduction
The peace that came through the world central banks’ monetary easing which began with QE1 will shatter …. causing national leaders to announce regional framework agreements for regional security, stability, and sustainability … currencies, stocks, and bonds, will tumble as investors lose confidence in the Fed’s Quantitative Easing and the ECB’s OMT … wealth can only be preserved through physical possession of gold, either by investing in bullion or in reserves on Internet trading vaults such as Bullion Vault..

3B)…The world is passing through the very peak of Liberalism’s prosperity and peace … and into Authoritarianism’s austerity and diktat.
In Ephesians 1:10, the Apostle Paul communicates that Jesus Christ is the Global Administrator of all economic cycles, which he calls dispensations, that is epochs, ages, and times.  We are witnessing the end of the current Quantitative Easing economic cycle, 2008-2012; the Regional Governance economic cycle is commencing.

Throughout all cycles, it is sovereignty that begets seigniorage, that is moneyness.

JPMorgan CEO James Dimon, profiled in EPJ, recognized the precarious position of global economics after the 2008 to early 2009 stock market collapse and the resulting potential of global conflict as Bloomberg Business News and Conde Nast Portfolio reported on January 26, 2009, “Last year, when JP Morgan chief executive Jamie Dimon spoke at the opening press conference at the World Economic Forum in Davos, he opened with this line: ‘Number one on my list is world peace’. ”

Ben Bernanke at the encouragement of James Dimon saw the challenge to peace, and in mid 2009, and acted to trade out “money good” US Treasury Bonds for the Distressed Investments held by banks, which are traded by the Fidelity mutual fund FAGIX, under the QE1 TARP Program.  The Distressed Investments became the backing for the sovereignty of the twin iron legs of US Dollar Hegemony, the first leg being the Wall Street and New York Financial System, and the second leg being the City of London Financial District. US Government military spending now exceeds 1 Trillion Dollars.

The CIA funded World Factbook corroborates reporting To help stabilize financial markets, in October 2008 the US Congress established a $700 billion Troubled Asset Relief Program, TARP. The government used some of these funds to purchase equity in US banks and industrial corporations, much of which had been returned to the government by early 2011. In January 2009 the US Congress passed and President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years – two-thirds on additional spending and one-third on tax cuts – to create jobs and to help the economy recover. In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP.

Wars in Iraq and Afghanistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the budget deficit and public debt. Through 2011, direct costs of the wars totaled nearly $900 billion, according to US government figures. US revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries. In March 2010, President OBAMA signed into law the Patient Protection and Affordable Care Act, a health insurance reform that will extend coverage to an additional 32 million American citizens by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on health care – public plus private – rose from 9.0% of GDP in 1980 to 17.9% in 2010.

Nature Economist Elaine Meinel Supkis provides the following insights about The disparity between US Sovereign Power and US Sovereign Wealth.  I often check out the global Current account balance:
This entry records a country’s net trade in goods and services, plus net earnings from rents, interest, profits, and dividends, and net transfer payments (such as pension funds and worker remittances) to and from the rest of the world during the period specified. These figures are calculated on an exchange rate basis, i.e., not in purchasing power parity (PPP) terms. Here are the nations with no sovereign wealth and lots and lots of debts and red ink spending in trade, etc:
Nearly all of Europe, much of the South American states like Brazil, India and Turkey and then, by far and away, hugely, far, far greater debt is…the mighty world power, the USA. We are not just dead last in sovereign debt but we owe more than the combined deficit of the worst ten nations!
And the cause of this isn’t government spending, it is trade deficits. Here are the top ten sovereign wealth nations:
We see that Germany has overtaken China in the listings. Last year, China was #1. The EU numbers look better than they really are due to this huge sovereign wealth factor of Germany. China is no slacker, either. They are neck to neck now. Japan is up there but has many severe deficits concealed by previous trade surpluses. They now run deficits and will fall down in the rankings very rapidly now which is why Abe is talking about building more nuclear power plants and is raging at China and South Korea very aggressively and said yesterday, he is spending more on the military now.

All the hollering in DC virtually not a peep is about the loss of sovereign wealth. The poorer our nation, the richer our rich become and this is due to offshoring wealth, offshoring our jobs and cutting their own taxes while running foreign wars for profit. This has made them all very much richer and us collectively very much poorer. And with the loss of union jobs and competition from cheap labor overseas, wages have fallen while the top 1% get richer and richer. Meanwhile, our own government runs these insane multimillion dollar lotteries to raise tax funds. These, in turn, encourage people to support no taxes on windfall wealth and strive to buy tickets rather than work honestly for a good wage. Whenever I go shopping, I have to wait behind people in line who are obviously in distress and desperately buying these silly tickets praying they will be ‘struck by lightning’ and be suddenly hoisted high in the heavens above the rest of us to live a life of idle luxury. This undermines the desire to work hard, do well and be sober and sane. It is crazy thinking. Wild thinking. It worships Lady Luck, and she is very fickle. Meanwhile, tax revenues in the US are not made up by running huge lotteries, the old way of taxing caused people to value labor more, now we value property more and even this is failing us with the recent asset bubble collapse.

Chris Rossini in Economic Policy Journal writes Endless War … And where you fit in.

QE1 stimulated global growth and corporate profitability, and investors funded Global Producers, FXR, and Small Cap Value Companies, RZV, as is seen in the ongoing Yahoo Finance Chart of ACWI, EEM, VGK, EPP,VTI, FRX, RZV.  The Small Cap Value Shares, RZV, should be exceptionally fast fallers as they were quickened the most by Federal Reserve and ECB monetary policy; these include general entertainment company, Six Flags, SIX, business services company, FleetCor Technologies, FLT, and rental company, United Rentals, URI.

Through anticipation of Ben Bernanke’s QE 4, and through anticipation of Mario Draghi’s OMT, all forms of fiat wealth expanded dramatically with a risk-on momentum global debt based trade rally from June 1, 2012, through January 4, 2013, which produced Peak Commodities, DBC, September, 14, 2012 … Peak Credit, December 6, 2012 …  Peak World Major Currencies, DBV, Peak Emerging Market Currencies, CEW, Peak Stocks, VT, and Peace Peace, January 4, 2013.

The Cement Industry stock Eagle Materials, EXP, has seen a terrific rise from October 2011. And Paper and container manufacturers as well as wood producers, traded by the ETF, WOOD, seen in this Finviz Screener, rose strongly beginning in June of 2012; these included, DEL, WY, LPX, PCL, UFPI, NP, TIS, UFS, PATK, BLL, PKG, KS, BKI, BZ, GLT, CLW, SEE, SWM, MWV, GPK, IP, and FBR on a rising price of Timber, CUT. which rose 28% in 2012.

The American Association of Individual Investors January 3, 2013 AAII Sentiment Survey for the week ending December 26, 2012, relates bullish sentiment slipped a bit off of its near-2012 high, % Bulls 38.7 -12.8% and AAII % Bears 36.2 +19.8%; this suggests that the seven month risk on global debt based momentum rally is over.

The Age Of Leveraging is history; the Age of Deleveraging will likely commence the second week in January 2013, as World Major World Currencies, DBV, Stocks, VT, have topped out, and Bonds, BND, began trading lower in December 2012, as is seen in their combined MSN Finance chart. Beginning September 14, 2012, closed end stock leader CSQ, has been unable to leverage over closed end debt leader PLF, as is seen in combined ongoing Yahoo finance chart …  http://tinyurl.com/a3szqc

Both Transports, lYT, and Industrials, IYJ, jumped  higher. When both turn lower together, Dow Theory, suggests that a global bear market will have commenced.

The turn from bull market to bear market will be seen in most of the Proshares 200% Inverse ETFs, presented BIS, FXP, SKF, SQQQ, REW, SSG, SMK, SDD, and EEV, seen in this Finviz Screener, and in their Yahoo Finance chart, starting to rise ….. And the rally in Proshares 200% ETFs, SAA, UYG, URTY, TQQQ, EET, UMX, XPP, seen in this Finviz Screener, and in their Yahoo Finance chart, starting to fall …. And the turn from bull market to bear market will see a rise in Gold Mining Stocks, GDX, and GLDX, as the Gold ETF, GLD, rises from its strong support from 160, and as Spot Gold, $GOLD, rises from 200 day moving average of $1650. The investment demand for gold will commence on growing awareness of the exhaustion of the worlds central banks’ monetary authority. In the age of Regionalism, physical possession of gold and diktat will be the only forms of sovereign wealth.

Tulip mania is always present at the end of bull markets. Tyler Durden report Margin Debt Soars To 2008 Levels As Everyone Is “All In”. The NYSE just reported margin debt just soared to a near five year high, with Margin Debt at a whopping $327 billion, surpassing the highest print since the Lehman collapse, and the highest level since February 2008. Not only is everyone all in based on , but they are all in on nearly record amounts of leverage. And, when it comes to high beta, or traditionally the most volatile stocks, those that serves as either leaders or laggards in the market in its year end phases, we take a look at the Russell 2000 Mini speculative exposure as shown by the CFTC’s weekly Commitment of Traders update. The chart needs no explanation: the net non-commercial spec longs in the Russell 2000 have never been more bullish. If the market, which is priced to absolute levered perfection disappoints, the high beta exposure will be annihilated.

Excerpts from The Economic Consequences of the Peace by John Maynard Keynes, 1919. pp. 235-248, as provided by PBS, communicates that debt deflation, coming from soon falling Major Global Currencies, DBV, and Emerging Market Currencies, CEW, will be totally disruptive to peace globally. “Keynes is often viewed as an economist who tolerated and supported mild inflation as an unfortunate byproduct of sustained, managed, economic prosperity. Yet this excerpt from The Economic Consequences of the Peace, written just at the end of World War I, makes clear how fully he understood inflation’s potential to destroy the fabric of society. It is also prophetic regarding the fate of all government attempts to control the price of goods by force of law. Its later passages also illuminate (by analogy) the negative effects on international trade of any currency crisis (such as the devaluation of Thailand’s baht that triggered the Asian economic contagion in 1997). The predicament of the responsible German trader facing rapid fluctuation in international currency values has been reproduced innumerable times across the world in the modern era of floating currency markets.”

Japan declares economic war agenda. Japan plans ‘nationalisation’ of factories to save industry. Japan’s government is to take the unprecedented step of buying factories and machinery directly with taxpayer funds, the latest in a series of radical steps to lift the country out of its deep slump. Finance minister Taro Aso brushed aside warnings that naked intervention would anger trade partners and damage Japan’s strategic alliance with the US. “Foreign countries have no right to lecture us,” he said, accusing the West of failing to abide by a G20 pledge in 2009 to forgo competitive devaluations.
The plan to buy plant involves leasing back the assets to firms in trouble. Analysts say it is a means of funnelling industrial aid, a move sure to raise the hackles of global rivals. It may violate World Trade Organisation rules on subsidies … Yen devaluation is a more complex story. It appreciated by over 25pc against the dollar between mid–2009 and late–2012, causing a slow “hollowing–out” of Japan’s manufacturing base as companies shift plant abroad. The currency has since slid 10pc to 86.4 yen on the “Abe effect”, the weakest in 27 months. But Renault–Nissan chief Carlos Ghosn said it still had further to go. “We are way long from what I consider a neutral territory,” he said. Stephen Jen, from SLJ Macro Partners, said Japan was playing with fire by trying to reflate, warning that this could decimate the bond portfolio of Japanese lenders and set off a banking crisis. The banks hold government bonds worth 900pc of their Tier 1 capital. Mr Jen said the country would be the focus of attention this year as political fireworks shifted from the US and Europe to Asia. “There will be dramatic events in Japan,” he said. And Zero Hedge writes Japan’s patriotic war agenda.

Global competitive currency devaluation will rapidly occur, with the Major World Currencies, DBV, and Emerging Market Currencies, CEW, tumbling, introducing worldwide economic and political chaos. Unfortunately, humanity is unaware that the dissolution of peace is at hand. Investors will be derisking and deleveraging out of both Bonds, BND, and stocks, ACWI, on the exhaustion of the world central banks’ monetary authority and inability to sustain global growth and corporate profitability.

US Government Debt began losing it value on the exhaustion of the world central banks’ monetary authority beginning in December 2012.  The monthly chart of Municipal Bonds, MUB, shows a loss of 2.6% in December, 2012; and High Yield Municipal Bonds, HYMB, 1.7%. The closed end Michigan Municipal Bond Fund, MIW, is one of the debt investment that is leading Bonds lower; it lost 9.0% in December 2012. Michigan Radio report 500 layoffs looming for Detroit employees. The Detroit News reports More layoffs mean fewer city services, unions says. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened in December 2012, as reflected in the Steepner ETF, STPP, steepening 3.5%. The benchmark Interest Rate on the US Ten Year Note, ^TNX, closed at 1.76%. The 10 Year US Government Note, TLT, lost 2.7% and The 30 Year US Government Bonds, EDV, lost 4.2%. Bond vigilantes are calling interest rates higher, beginning with US Government Debt, on the exhaustion of the World Central Banks monetary authority. Rising interest rates are destructive to dividend paying stocks. Vanguard Appreciating Dividend ETF, VIG, S&P Pharmaceuticals, XPH, S&P International Telecom, IST, and Dow Telecom, IYZ, all turned parabolically lower in the last half of December 2012, only to bounce higher January 2, 2013.

Bloomberg in article Egypt to start Dollar auctions as reserves hit critical level communicates the dissolution of peace caused by political and currency turmoil. Egypt’s central bank will start foreign exchange auctions today after appealing to Egyptians to scale back their use of dollars to avert a currency crisis fueled by the country’s political turmoil.

Chuck Watts presents the Ellen Brown, author of Web of Debt, article Fiscal Cliff: Free debt slaves with Jubilee Year American Style, and writes economists Michael Hudson and Steve Keen maintain that the only way out of debt deflation is debt forgiveness. I comment that through unlimited quantitative easing, Liberalism’s Aggregate Credit, AGG, is now a global debt burden that cannot be repaid or forgiven. Inflationism is now pivoting into Destructionism, and peace will evaporate like water in a desert. In Europe, banking insolvency is Spain, is going to be the trigger for more political unrest, this as Pater Tenebrarum writes in Acting Man Bankia shareholders wiped out.

Bible prophecy of Daniel 2:25-45, presents the past, current, and future sovereignty of ruling empires. The sovereignty of the Milton Friedman Free To Choose Floating Currency, Banker and Liberalism Regime, which have supported the US and the UK as twin iron giants of global authority and power, is waning, as the dynamos of corporate profit and global growth are winding down, on rising interest rates, and steeping 10 30 Treasury Debt Yield Curves worldwide. New sovereignty, the sovereignty of the Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, is rising to form a Ten Toed Kingdom of regional authority and power, where regional kings, and their monetary popes, will provide seigniorage, that is moneyness, through diktat.

3C) … There is no personal sovereignty nor human action as perceived by Libertarians; there is only the Sovereign Lord God, acting sovereignly in the affairs of mankind.
God has been acting behind the scenes for centuries, bringing forth global empires, Daniel 2:25-45.
He has appointed His Son, Jesus Christ, as Sovereign Administrator, and placed him in charge of the economy of God, Ephesians 1:10, to pivot the world from the fullness of prosperity and choice in the Age of Sovereign Nation States and Liberalism, to the completion of austerity and diktat in the Age of Regionalism and Authoritarianism.

Jesus Christ is acting with universal authority, and has unleashed the First Horseman of the Apocalypse to effect global political and economic coup d’etat to transfer the baton of sovereignty from nation states to regional leaders, Revelation 6:1-2.  In the coming Age of Crises, Jesus promises peace to his servants, as he said, “Peace I leave with you; My peace I give to you; not as the world gives do I give to you. Do not let your heart be troubled, nor let it be fearful”, John 14:;27.

In Europe, 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 Major World Currencies, DBV, Emerging Market Currencies, CEW, Stocks, VT, and Debt, AGG.

The WSJ reports Spain drains pension fund in borrowing spree  Spain has been quietly tapping the country’s richest piggy bank, the Social Security Reserve Fund, as a buyer of last resort for Spanish government bonds – with at least 90% of the €65 billion ($85.7 billion) fund has been invested in increasingly risky Spanish debt. Of course, this is nothing new, the US (and the Irish) have been using quasi-government entities to fund themselves in a mutually-destructive circle-jerk for years – the only difference being there are other buyers in the Treasury market, whereas in Spain the marginal buyer is critical to support the sinking ship. The Spanish defend the use of pension funds to buy bonds as sustainable as long as it can issue bonds – and yet the only way it can actually get the bonds off in the public markets is through using the pension fund assets.
After the crisis began, some of those countries began using the pension reserves for other contingencies, such covering a drop in foreign demand for their government bonds. Since the collapse of Ireland’s property boom, for example, most of its pension fund has been used to buy shares of nationalized banks and real estate for which no foreign buyers could be found.
Spanish officials defend the heavy investment of the Social Security Reserve Fund in their government’s high-risk bonds. They say the practice is sustainable as long as Spain can continue borrowing in financial markets, and they predict the economy will start to recover late in 2013, easing the debt crisis.
“With foreign investors staying away from the Spanish debt market, you’re going to need all the support you can get from domestic players,” said Rubén Segura-Cayuela, an economist with Bank of America-Merrill Lynch.
Spain’s commercial banks already have increased their Spanish government-bond portfolio by a factor of six since the start of the crisis in 2008, and now own one-third of government bonds in circulation.
The percentage of Spanish government debt held by the Social Security Reserve Fund stood at 55% in 2008, according to official figures; by the end of 2011 it had risen to 90%. Analysts say the percentage has continued to rise, even as international agencies have lowered Spain’s credit ratings. Spain’s continued use of those reserves to buy its own bonds appears to violate a rule set by government decree that mandates their investment only in securities “of high credit quality and a significant degree of liquidity.”

Steve Matthews of Bloomberg reports Federal Reserve Bank of St. Louis President James Bullard said purchases of sovereign debt by the European Central Bank would amount to fiscal policy that is better conducted by democratically elected governments. ‘This is ‘fiscalization’ of monetary policy: Asking the central bank to take actions far outside the remit of monetary policy,” Bullard said… ‘Assistance like this from a central authority to a region is best brokered through the political process in democratically elected bodies.

The purchase of Spain’s Treasury Debt from Spain’s Pension Agency by the government of Spain creates Eurozone Moral Hazard, a condition where a transaction between two parties, creates a cost that eventually will be born by an unrelated third party, that is, all those who use the Euro currency.

Solving a debt problem with more debt and the creation of moral hazard, makes for a collectivization of debt within the EU, where the ECB, with its monetary authority and sovereignty underwrites the fiscal needs of Spain.  In so doing, Spain’s national sovereignty is passing away, and regional sovereignty is coming of age.

Traditional seigniorage, that is moneyness, that has come from global buyers and sellers is history. As a result, regional governance is rising to replace democracy. All those residing in Euroland now live in a debt union and share in Spain’s insolvency, and will share in common austerity and debt servitude to masters in Brussels and Berlin, as foretold by John The Revelator in Revelation 13:1-4, where the Beast Regime of Authoritarianism rises from the profligacy of the Mediterranean nation states.

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, as leaders will be meeting in summits to announce regional framework agreements which waive national sovereignty and pool sovereignty regionally to address a regional banking, credit, and financial system collapse; the accumulated debts of Liberalism will be applied to every man, woman and child in the Eurozone. Most definitely austerity is the way of the future. Alex Lantier of WSWS reports Monti to lead coalition in Italian election. Italian Prime Minister Mario Monti has announced plans to lead an electoral coalition based on a pro-austerity “Agenda Monti for Italy.”

Kathimerini reports Non-performing loans at Greek banks rose 50% in 2012 to EU55b, citing bank officials. NPLs accounted for 23.4% of total loan portfolio at end of Dec. vs. 16% at end of 2011. Out of the Greek and European Sovereign Banking and Debt Crisis, regional constructs will provide diktat, which will establish peace, security, stability and sustainability regionally, and will serve as a model for Regionalism throughout the world. Thus the Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, will rise to govern mankind in all of the world’s ten regions, and throughout all of mankind’s seven institutions.

As the US Dollar, $USD, closed at $80.50 at its 50 day moving average, it should be understood that the Banker Regime of Floating Currencies, Choice and Liberalism, was simply a means for the completion of the age of prosperity, that commenced shortly after World War II.

With the soon coming trade lower in Major World Currencies, DBV, on the exhaustion of the world central banks’ monetary authority, investors will be derisking out of Stocks, VT, and deleveraging out of Bonds, BND.  The world will be entering into the age of austerity, as Liberalism’s final risk-on rally, that began in June, 2012, that has been based upon an expanding global debt trade, and currency carry trade investing, will see a strong reversal. Emerging Market Stocks, EEM, will be falling rapidly in value.

Doug Noland reports Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $631bn y-o-y, or 6.2%, to $10.849 TN. Over two years, reserves were $1.790 TN higher, for 20% growth. M2 (narrow) “money” supply jumped $38.5bn to a record $10.432 TN. “Narrow money” has expanded 8.3% ($795bn) over the past year. The US Federal Reserve money printing machine has had strong economic influence as Julia Leite of Bloomberg reports. A gauge of U.S. corporate credit risk capped the biggest weekly drop in 13 months as employers added more workers in December and the unemployment rate matched a four-year low.

Liberalism’s Fiat Money System is an epitaph on the tombstone of a bygone era.  Jesus Christ is most assuredly bringing forth Authoritarianism’s Diktat Money System, where Diktat will serve as credit, currency, and wealth.  We are achieving Peak M2 Money; it will be turning lower in January 2013 on the exhaustion of the world’s central bank’s monetary authority, as reflected in the US Ten Year Interest Rate, ^TNX, continuing higher from its December 6, 2012, low of 1.6%, and the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepening from its December 6, 2012 low, as is seen in the Steepner ETF, STPP, steepening. A new metric for Money, that is Diktat as Money, should be established.  Diktat Money might consist of number of people living under regional governance.

The expansion of the money supply through endless quantitative easing has pushed Ford on track to sell 2.2 million cars in U.S. this year.  Ford, F, and the Automobiles, CARS, rose strongly the week ending December 28, 2012. It has been the increase in the money supply that has driven Ford F-Series truck sales to their highest level since 2007.

Some are calling for a Debt Jubilee. Chuck Watts writes “The Empathy Surplus Project has been following the work of the Public Banking Institute and feature it’s work under the meme of Ethical Business. Ellen Brown is an attorney and president of the Public Banking Institute. In Web of Debt, her latest of eleven books, she shows how a private banking oligarchy has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites are http://WebofDebt.com, http://EllenBrown.com, and http://PublicBankingInstitute.org.”

Most assuredly, Jesus Christ, is not going to relinquish His sovereignty to Chuck Watts, Ellen Brown, Steven Keen, Michael Hudson, or any liberal, rather, he is introducing, and will produce all those things that were ordained from eternity past, and which are described in Revelation 1:1, as those things “which must, shortly come to pass”, meaning that once that have been set in motion, they fall like dominoes, one upon another, and thus cannot be restrained or abandoned; these things include the destruction of all existing economic and political life.  Jesus Christ has every intention of bringing forth a Beast Regime of Regionalism, Totalitarian Collectivism, and Authoritarianism, Revelation 13:1-4, a Beast Ruler, Revelation 13:5-10, and a Beast Banker, Revelation 13:11-18, to rule the world.

Global Economics which was based upon sovereign nation states, and investment choice is passing away. Regional Economics which is based upon regional sovereign authorities and bodies, and their diktat is rising in its place to govern mankind.

Please contact me via comment, if you are able to help me to be scheduled at and attend the Milken Institute Global Conference, April 28-May 1, 2013, in LA, which purports to provide the insight and expertise to help navigate the troubled waters of global economics, through a unique international agenda and some of the smartest speakers on the planet, the conference will tackle the world’s most difficult challenges in an array of fields, to the environment and education, to government and health.

4) … Dr Housing Bubble writes The disappearing housing inventory – US housing inventory down over 50 percent from 2008. 5 million Americans not paying their mortgage or are in the foreclosure process.
Supply and demand.  A basic fundamental point of any course in introductory economics.  With housing most people go with what they see.  Distressed inventory is a silent issue because you really do not know how deep problems are in a certain area unlike a home that is listed for sale with a big red sign in the front lawn.  Yet we know that over 10,000,000+ Americans are currently underwater on their mortgages and another 5,000,000+ have stopped paying their mortgage or are currently in the foreclosure process.  What people see however, is prices going up, available inventory going down, and their ability to buy more house expand courtesy of mortgage rates.  Today I want to focus on the inventory side of the equation because it has fallen dramatically in the last few years and is causing bidding wars in certain metro areas. (The Dr relates that in Denver, where I use to live; and in Seattle, where I now live, housing prices per square foot have been relatively stable; in Denver they are $149/sq foot and in Seattle $158/sq foot.) What we are really seeing more than anything is the lack of supply on the market plus massively artificial interest rates.  Is this healthy?  The bulk of people only see two things when they look at the housing market. First, What is my monthly payment, and Secondly, What homes are available for sale.

The mania that is unfolding right now has nothing to do with underlying solid economic fundamentals.  In fact, come what may with the fiscal cliff, we will be seeing a combination of cuts and tax increases.  We’re reaching another debt ceiling and we still have big issues to contend with like the large number of baby boomers retiring and a much less affluent younger generation.  How will this impact housing?  Even for the above chart, how will new home sale construction look like?  Many younger Americans have no desire for the giant 2,500 square foot McMansion model that seemed to go hand and hand with cheap energy.  It is amazing how easily people forget history and the reality that 5,000,000 Americans have been foreclosed on (and we have millions more to go with 5,000,000 right now not paying their mortgage or are in the foreclosure process).

Supply has dwindled to incredibly low levels.  Banks have altered the foreclosure process and this has had a short-term gain with a combination of low interest rates.  Short of rates going lower or incomes moving up, we will see this momentum slow.  Flippers and bidding wars are now back in the game.  The lack of new home construction has caused what little inventory that is on the market to increase in price relative to the changes in the interest rate.  How much more power does the Fed have in pushing rates lower than where they are today? (Hat Tip to Dollar Collapse for this article)

5) … Oil Price relates The imperial dream of the Muslim Brotherhood

6) … Hedge fund summary for 2012
6A) … Zero Hedge reports 88% of hedge funds, 65% of mutual funds underperformed the market in 2012. The average hedge fund, traded by HDG, gained 8%, while the S&P 500, SPY, notched a 13%  gain in 2012.

6B) … Bloomberg reports The top 100 performing large hedge funds. Michael Serrill in the February 2012 issue of Bloomberg Markets magazine presents the best performing hedge funds managing $1 billion or more. My personal favorites include the following:

Third Point, is a Guernsey based investment firm. High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article.  FT reports One of the world’s most prominent hedge funds is sitting on a $500m profit after making a bet that Greece would not be forced to leave the eurozone, bucking the trend in a difficult year for the industry.
Third Point, headed by the billionaire US investor Dan Loeb, tendered the majority of a $1bn position in Greek government bonds, built up only months earlier, as part of a landmark debt buyback deal by Athens on Monday, according to people familiar with the firm.High quality global journalism requires investment. The windfall marks out the New York-based firm as one of the few hedge fund managers to have profited from the eurozone crisis. Standard & Poor’s, the rating agency, raised its assessment of Greece’s sovereign debt by several notches on Tuesday, citing the eurozone’s “strong determination” to keep the country inside the common currency area. Mr Loeb is one of only a handful of hedge fund titans to have made big returns this year. The $2tn hedge fund industry has struggled to find its confidence after two years of lacklustre returns The Greek government swapped holdings of its own debt for notes issued by one of the eurozone’s rescue facilities at a value of 34 cents on the euro.

Third Point had scooped up holdings of Greek debt earlier this year for just 17 cents on the euro. The firm has also retained a sizeable position in Greek debt because Mr Loeb believes there could still be a long way for the bonds to rally further next year. Analysts at the firm believe the bonds could rally by a further 40 per cent. A spokesperson for Third Point, which manages assets of $10bn, declined to comment on the trade. Third Point has made its investors a 20 per cent return so far this year, compared with 4.9 per cent for the average hedge fund.

Banco BTG Pactual Global Asset Management, is a Sao Paulo, Brazil based investment firm.

Omega Advisors, is a New York, NY, based investment firm

Seer Capital Partners, is a New York, NY, based investment firm.

Tiger Global Management, is a New York, NY, based investment firm.

Jana Partners, is a New York, NY, based investment firm.

Citadel Advisors, is a Chicago, IL, based investment firm

Man Investments, is a London, UK, based investment firm; listed in the FTSE 250 Index as UK:EMG.

Halcyon Asset-Backed Advisors, is a New York, NY, based investment firm

D.E. Shaw & Co, is a Cupertino, CA, based investment firm.

Blue Harbour Group, is a Greenwich, CT, based investment firm.

Viking Global Investors, is a New York, NY, based investment firm.

DoubleLine Capital, is a Los Angeles based investment firm

QVT Financial, is a New York, NY, based investment firm.

Blackrock Alternative Investments, is a New York, NY, based investment firm.

Greenlight Capital, is a New York, NY, based investment firm

Beach Point Capital Management, is a Santa Monica, based investment firm.

New Mountain Capital, is a New York, NY, based investment firm.

Angelo Gordon & Co, is a New York, NY, based investment firm

Elliott Management, is a New York, NY, based investment firm.

Autonomy Capital, is a UK based investment firm

Bridgewater Associates, is a Westport, CT, investment firm

OxFORD Asset Management, is an Oxford, UK, based investment firm

Hudson Bay Capital Management is a New York, NY, based investment firm

Calamos, is a Naperville, IL, based investment firm

Hayman Capital Management, is a Dallas, TX, based investment firm

King Street Capital, is a New York, NY, based investment firm.

Discovery Capital Management, is a Vancouver, BC, based investment firm

SAC Capital Advisors, is a Stamford, CT, based investment firm

Visium Asset Management, is a New York, NY, based investment firm

Elliott Management, is a New York, NY, based investment firm.

Two Sigma Investments, is a New York, NY, based investment firm.

Pimco Investment Management, is a Newport Beach, CA, based investment firm

Highside Capital Management, is a Dallas, TX, based investment firm.

Senator Investment Group, is a New York, NY, based investment firm

Och-Ziff Capital Management Group, is a New York, NY, based investment firm

Carlson Capital, is a New York, NY, based investment firm

The following are mortgage based, distressed investment based, or credit based, investment firms, and were not included as in the highlighted list:
Metacapital Management
Pine River Capital Management
Structured Portfolio Management
Providence Investment Management
Marathon Asset Management
LibreMax Capital
MKP Capital Management
GoldenTree Asset Management
Fortress Investment Group
York Capital Management
BlueMountain Capital Management
Ares Management
DW Investment Management
GoldenTree Asset Management
Aristeia Capital
Marathon Asset Management
Cerberus Capital Management
Canyon Capital Advisors
Redwood Capital Management
York Capital Management
Vertex One Asset Management
Beach Point Capital Management
GSO Capital Partners
Strategic Value Partners
Avenue Capital Group
Monarch Alternative Capital

7) … Insightful Reading
Zero Hedge Grant’s Interest Rate Observer: Free best articles compilation
Pater Tenebrarum, Acting Man 2013 Outlook, Part One: Global Monetary Conditions

8) …. A personal note.
I am thankful that I have time to reflect and write on the Revelation of Jesus Christ, sovereignty, seigniorage, Liberalism and Authoritarianism.

I reside in Bellingham, the City of Subdued Excitement, and have no financial license, and do not practice financial planning, and that I have no material wealth of any type.

The highlight of the week was a taco from Taco El Tule, and a small thermos of V8 Juice, which I consumed at a park bench at the Marina.

9) … Keywords

hedgefund, hedgefunds