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
Silicon Valley, that is San Jose, CA all the way to San Francisco, CA
Raleigh, NC, corporate home of Red Hat
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
San Bernadino, CA
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”.