Financial Market report for the week ending Friday March 1, 2013
1) … Nation stocks and commodities traded lower on falling currencies, as political crisis stalked Greece and Italy.
The very linchpin of ECB sovereign debt support, as well as the capstone of Liberalism’s Banker Regime of Credit Stimulus, has collapsed, as Greece, GREK, traded 8.2% lower. The nation that defines Clientelism, Barriers To Competition, Unionism, and Corruption, as well as Italy, EWI, which defines trading in European Treasury Debt, led the World into Investment, Economic and Political Failure.
The Japanification of the entire world has commenced on the monetization of debt by the world central banks.Nation Investment, EFA, was led lower by Greece, GREK, and Italy, EWI, and the other Eurozone Nations, EWP, EWG, EIRL, as well as by the Nordic Countries, EFNL, EWN, NORW, EWD, and Russia Small Caps, ERUS, as well as the US Small Caps, IWM. Stock sectors trading lower induced COPX, KWT, IEZ OIH, PSCE, FLM, XSD, CARZ, IGN, PICK, REMX, KOL, URA, SLX,and XME.
Transports, IYT, traded 2.2% lower and Industrials, IYJ, 2.0% lower, giving Dow Theory confirmation that a bear market is underway. Industrial producers trading lower included, E, MKTAY, NOK, FLS, FWLT, TSM, MHK, LYB, EMN, CE, ABB, EMR, ARG, BA, MTW, IR, JOY, TEX, CNH, GE, NSANY, TTM, HMC, ALV, F, GM, OC, EXP, USG, NCS, BECN.
In the US, VTI, the S&P 500, SPY, traded 1.9% lower, and the Russell 2000, IWM, 2.2% lower.
World Banks, IXG, were led lower by The National Bank of Greece, NBG, -7.4%, Banco Santander, SAN, -5.8%, European Financials, EUFN.
The All Important Yield Bearing Stocks trading lower today included DTN -1.3%, VIG, -1.6%, VNQ -1.9, and DBU -2.6%. These together with the most toxic of debt that is the Distressed Investments held by the US Federal Reserve, and traded by Fidelity Mutual Fund, FAGIX, as well as Senior Bank Loans, BKLN, and Junk Bonds, JNK, have been the credit basis for Liberalism grand finale risk-on Euro Yen Currency Carry Trade Rally, EUR/JPY, which was supported by PBOC Monetary Injections, as well as by BOJ Unlimited Quantitative Easing.
The Currency Demand Curve, the ratio of the Small Cap Value Stocks relative to the Small Cap Growth Stocks, RZG, manifested strongly lower, communication that competitive currency deflation is underway. Small Cap Value Stocks, RZV, traded 2.8% lower, while the Small Cap Growth Stocks, RZG, traded 1.3% lower.
The US Dollar, $USD, UUP, rose, to 81.67, as Major World Currencies, DBV, traded 0.7% lower, and Emerging Market Currencies, CEW, 0.5% lower. Business Insider reports It looks like the dollar is about to surge. Reuters reports James Saft sees a coming Dollar bull run.
Commodities, DBC, traded lower being led so by Base Metals, DBB, Agricultural Commodiites, JJA, and Oil, USO. Gold, GLD, rose.
Mike Mish Shedlock writes Beppe Grillo’s Five Star Movement on verge of being largest political party in Italy; its Stock Market futures plunge 3.5%. The center-left coalition of four political parties has 29.7% of the vote, but Bersani’s party, Partito Democratico (Pd), has 25.5% of the vote. Beppe Grillo has no coalition. His MoVimento 5 Stelle (M5S) party is in a dead tie with 25.5% of the vote.
On an Actual Party, Not Coalition Basis:
Pier Luigi Bersani – Partito Democratico (Pd) – 25.5%
Beppe Grillo – MoVimento 5 Stelle (M5S) 25.5%
Silvio Berlusconi – Il Popolo della libertà (Pdl) – 21.4%
Ambrose Evans Pritchard writes Euro debt crisis looms again as Italians defy EU austerity demands. The eurozone’s debt crisis strategy was in chaos on Monday night after anti-austerity parties appeared on track to win a majority of seats in the Italian parliament, vastly complicating efforts to forge a government able to carry through EU-imposed reforms. And The NYT reports Split Vote Sends One Clear Message in Italy: No to Austerty Italy vote shows backlash against political establishment:
Bloomberg reports Italy renews market jitters as voters reject Monti austerity. Italy’s inconclusive election triggered renewed market jitters over Europe’s debt crisis as recession-scarred voters repudiated budget rigor and established former comedian Beppe Grillo as a political force. In the four-way race, pre-election favorite Pier Luigi Bersani led for control of the lower house by less than a half percentage point. Silvio Berlusconi, the former premier fighting a tax-fraud conviction and charges of paying a minor for sex, called for a recount and won a blocking minority in the Senate. In its first national contest, Grillo’s group got 25 percent support and was probably the most-voted party in the lower house. “The political situation across Europe is effectively a race between austerity and reforms on the one hand and the rise of populist movements on the other.” said Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc. “Austerity is painful, and if reforms are not implemented in time, you run the risk of social unrest and populism. It hasn’t happened so far in Greece, it hasn’t happened in Portugal or Spain, but we are very close in Italy.”
Bloomberg reports: Grillo’s anti austerity wave crashes into Italian Parliament. Beppe Grillo, the comic banned from Italian television two decades ago for ridiculing a corrupt cadre of ruling lawmakers, had his political satire rewarded yesterday with about 180 seats in Parliament. Grillo’s parliamentary list filled with political neophytes amassed enough votes in yesterday’s election to deny a majority to front-runner Pier Luigi Bersani and a comeback to three-time Premier Silvio Berlusconi. As his competitors seek to cobble together a make-shift alliance, the 64-year-old Grillo is keeping his distance and preparing for a new vote. “They can’t hold us back any longer,” Grillo said late yesterday in a video posted to his website. “They might go on another seven or eight months and produce a disaster, but we will be watching and working to keep it under control.”
CNBC reports Silvio Berlusconi rules out an alliance with former Italian prime minister Mario Monti saying the election results reflected popular discontent with austerity measures. Speaking in a TV interview after the Italian elections created a political stalemate, Berlusconi said it was time to reflect on the results.But he also added that a return to polls wouldn’t be “useful”.
John Rubino of Dollar Collapse writes Why we’re ungovernable, Part 7: Italy does chaos with style
As an Italian-American I’m allowed to say it: Italians are an amusing mess. They go on about “la dolce vita,” the sweet life of long lunches and short work days and pretty girls on little scooters – without acknowledging or apparently even realizing that the whole show is based on other people’s money.
Robert Stevens of WSWS in Social counterrevolution in Greece, describes the humanitarian crisis in that nation.
2) … On Wednesday February 27, 2013, stocks rallied on Bernanke comments
Bloomberg reports Bernanke says Fed sees reduced risk of Japanese style deflation; and WSWS reports Bernanke said “I don’t see much evidence of an equity bubble,” Bernanke said of the near record surge in stock values and in response the Transports, IYT, led the Industrials, IYJ, bouncing higher. Sectors rising included, XTN, WOOD, ITB, PKB, FDN, PPA, XLE, and XRT. Silver, SLV, traded 1.4% lower and Gold, GLD, 1.0%, lower. Japan, EWJ, rose strongly, and Japan Small Caps, JSC, blasted to a new rally high. The Russell 2000, IWM, Turkey, TUR, China, YAO, China Small Caps, CHII, ECNS, China Industrials, CHII, Taiwan, EWT, South Korea, EWY, and New Zealand, ENZL, rose strongly; and the Phillippines, EPHE, climbed to a new rally high, which stimulated Small Cap Nation Investment, IFSM, and Nation Investment, EFA higher, but these remain below their rally high.
The NYT reports Split vote sends one clear message in Italy: No to austerity. And Bloomberg reports Italy confronts vacuum as leaders seek to avoid election. Italian party chiefs began jockeying to forge a coalition of rivals and head off a second vote as a political vacuum of at least a month loomed, threatening to whipsaw financial markets. In the aftermath of an inconclusive election, Democratic Party leader Pier Luigi Bersani and resurgent ex-Premier Silvio Berlusconi may be seeking to avoid a ballot that would favor populist Beppe Grillo, whose movement was the top vote-getter in its first national contest. No formal steps can be taken until a new parliament convenes March 15. “If they don’t change strategy and go vote again with similar candidates, the risk is a Grillo landslide,” Giovanni Orsina, a history professor at Luiss Guido Carli University in Rome, said in an interview today. Reuters reports Italy must reduce unsustainably high level of debt – EU Commission Says. And Bloomberg reports EU Chiefs tell Italy there’s no alternative to austerity And Ambrose Evans Pritchard writes ECB bond plan in jeopardy as Italy’s voters reject conditions. Italy’s electoral earthquake is “a catastrophe for the euro and the European Union”, according to Luxembourg’s foreign minister, Jean Asselborn.
Economic Times reports Italy Faces Worst Six Months in 50 Years: Giorgio Squinzi. The head of Italy’s main business federation warned in an interview today that the next six months will be the worst for the country in 50 years as the economic crisis reaches its peak. “The next six months will be terrible, the worst in 50 years,” Giorgio Squinzi, the head of the Confindustria lobby, told La Repubblica daily. “The situation is very serious,” Squinzi said. “GDP ( gross domestic product) has shrunk 8.1 percent since 2007 and 3.2 million people have been out of work,” he said. “Politicians have to create the conditions for growth. This is a last chance,” he warned. Asked about the political situation, Squinzi suggested a grand coalition government to deal with urgent issues. “The real economy cannot wait for political machinations,” he said. Squinzi called for “shock therapy” for Italy, with tax cuts and immediate payment of debts that the state has accrued with the private sector. He also dismissed the idealistic economic proposals made by the anti-establishment Five Star Movement led by former comedian Beppe Grillo, which had a shock electoral success. “If we applied Grillo’s programme, Italian industry would be finished. We would become a rural and bucolic country,” he said.
3) … On Thursday March 28, 2013, India Stocks fell sharply lower.
India Small Caps, SCIN, literally collapsed, falling 5.3%; and India, INP, 3.5%. Argentina, ARGT, traded 2.8%, South Africa, EZA, 2.1% and Russia, RSX, 1.3% lower. Business Insider reports India’s new budget plans won’t bring the economic growth the country desperately needs. India Banks are required to purchase India Treasury debt. Finally , monetization of this India’s treasury debt has enabled currency traders to sell the India Rupe, ICN, causing investors to derisk out of India Banks, HDB, and IBN, Automobile Manufacturers, TTM, and Drug Manufactures, RDY. India’s continued deficit spending, coupled with slower growth, has turned the tide on nation investment in India, INDY.
Silver, SLV, traded 1.8%, lower, Gold, GLD, 1.2%, Oil, USO, 1.0%, Copper, JJC, 0.9%, Base Metals, DBB, 0.7% all lower; as Agricultural Commodities, JJA, rose 1.1% higher.
Reuters reports Italy’s Grillo rules out voting for center-left government. Bloomberg reports With Italy In disarray, Berlusconi emerges anew as a power And also reports Italy investors will force Bersani Berlusconi deal, Polillo says
The Telegraph reports EU Troika rule in Ireland worse than British Empire. Ireland’s trade union chief has accused the EU-IMF troika in charge of Irish austerity policies of tipping the economy into downward spiral and acting as an imperial oppressor.
Open Europe Events asks Is Ireland the poster child for the eurozone crisis response? Open Europe hosted an event in Brussels yesterday titled, “Ireland: the poster child for the Eurozone’s crisis response?” Dublin-based economic commentator Constantin Gurdgiev argued that Ireland remained subway below where it should be, and warned that positive headline GDP figures are distorted by multinationals which transfer money out of Ireland. Zsolt Darvas, of the Bruegel think tank, offered similar warnings on the need for significant reform in Ireland but highlighted a lack of alternatives to the current path and stressed the depth of the crisis must be kept in mind. Open Europe’s Head of Economic Research Raoul Ruparel suggested that while export growth has been positive, it is the only driver of growth in Ireland, with domestic demand collapsing. This leaves Ireland exposed to faltering trading partners and a strengthening euro. Raoul also warned that the banking sector remains shaky and unprofitable as well as being a massive burden on the state.
Open Europe reports via WSJ FT Bloomberg European Voice Slovenia’s Prime Minister, Janez Jansa, has become the latest casualty of European public anger at austerity measures and alleged government corruption, as he was ousted in a no-confidence vote last night. Alenka Bratusek, the head of the largest opposition party, will become interim Prime Minister with new elections expected in early 2014.
Please consider investing in the Euro Intelligence Daily News Briefing which reports the European Commission will force a valuation of Bankia shares at 1 cent a share, thus wiping out existing shareholders.
Euro Intelligence continues We are quite surprised to see the number of news organisations yesterday who took the Bersani-Grillo option seriously – even advocating it as a way out of Italy’s crisis. Grillo’s Movimento 5 Stello supports a PD minority government in Sicily – but national politics is very different, especially as in this case Grillo’s agenda is much more radical than it is on regional level. Grillo is effectively campaign for a withdrawal from the EU – not just the euro – with his demand to reopen all European treaties.
That silly phase of speculation ended abruptly yesterday Grillo hilarious he called Pier Luigi Bersani a dead man talking – morto que parla in his blog. He then heaped a series of insults on Bersani, calling him a political stalker, and said he should have resigned like any normal person would have done under his circumstances. This is quite a blog entry. He lists Bersani’s insults against the M5S in his election campaign, and concludes that the M5S will not support him in a confidence vote in the Senate, which is what Bersani needs to become prime minister. Il Fatto Quotidiano adds a remark by Grillo according to which Italy will be the new headquarter of revolt against Germany’s austerity and the bankers’ conspiracy.
Having been so rudely rebuffed by Grillo, Pier Luigi Bersani is now open to alliances with other political forces to rule out instability, as La Repubblica reports. The Partito Democratico is ready to begin talks to create a new government, while his key ally Nichi Vendola, the SEL (Sinistra, Ecologia e Libertà) leader ruled out every deal with other parties. According to Bersani, the relationship with Vendola is not at risk and there are no plans to create a grand coalition government. Bersani also said the first priority of the country is to reverse the austerity measures and boost the Italian economy.
(That would suggest that Berlusconi would support a minority Bersani government. Bersani is going to great length to avoid a Grand Coalition – naturally because it would have a different leader than him.)
Silvio Berlusconi warns over possible instability over Italian elections and urges a stable coalition before mid March, as Il Corriere della Sera reports. He remarks that Italy would otherwise risk paying a very high price on financial markets. Italy will have a stable government until March 15, Berlusconi says. He said the hung Parliament was less of a problem in the long term than in the short term. The PDL will reach an agreement to give Italy a government, Berlusconi affirms.
4) … On Friday March 1, 2013, Greece, Italy, and the European Financials traded lower again as the US started down the road of automatic budget cuts with The Sequester.
Reuters reports The US starts down road of automatic budget cuts under The Sequester. The US government hurtled on Friday toward making deep spending cuts that threaten to hinder the nation’s economic recovery, after Republicans and Democrats failed to agree on an alternative deficit-reduction.
Again I encourage that one purchase a subscription to Euro Intelligence which relates Renzi ready to take on Bersani and lead Grand Coalition. Corriere della Sera reports this morning that Matteo Renzi, the mayor of Florence, has stepped into the fray and said that he is ready to become prime minister of a Grand Coalition of the PD, PdL, and Grillo’s party; Corriere rites that a coalition under Renzi, a PD moderniser who lost to Pier Luigi Bersani in the primaries, would offer the best chance for a stable, pro-European government; Bersani, meanwhile, has ruled out a coalition with the PdL, and wants to run a minority government with an agenda of 7 or 8 reforms; the European Commission and the IMF yesterday called on Italy to continue the path of reforms; Tito Boeri and Luigi Guiso have the solution for Italy: another technical government.
After the economic crisis, now comes the political crisis. Tito Boeri and Luigi Guiso write on Lavoce that the return of Silvio Berlusconi, linked to rise of Beppe Grillo, is the signal of an increasing rage against political institutions and Italian ruling class. It is a destructive situation that may have a solution: a grand coalition government led by a technician like Mario Monti, but not Monti, obviously. According to Boeri and Guiso, there is room for reform of electoral law as well as the country should not disperse the efforts on structural reforms of 2012.
(We agree on that a Grand Coalition could work, but only a political grand coalition, not one run by another remote professor. The problem in Italy is the disconnect between the economic policies pursued and their political legitimacy. Government is by definition political, not technical.)
Euro Intelligence adds that a confidential troika report shows that the Greek record on tax collection remain catastrophic – only 10% of assessed taxes are collected. Thousands of Greek company owners and self-employed professionals routinely contest their assessments through the courts waiting for the finance ministry to grant tax amnesty settling for a tax bill cut by at least 30%.
Mike Mish Shedlock writes 84% of Greeks, 90% of Greek businesses have difficulty repaying loans. Think Greece has been “saved” by the Troika? A quick look at some loan repayment stats may help you think clearly. Please consider ekathimerini More than 80 pct of Greeks are having difficulties repaying loans. That loan data highlights what any clear-thinking person already knows: Greek banks are insolvent and will be in need of still more recapitalization
Greece, GREK, and Italy, EWI, led Nation Investment, EFA, lower. Countries trading lower included, EWG, EIRL, EWP, EWN, EFNL, EWU, and INP. Small Cap Nation Invesment, IFSM, trading lower included SCIN, EPHE, GERJ, EWZS, and KROO. Nations trading higher included THD and TUR.
Austrian economist Benson Te covers the Philippine Stock Market, that is the Phisix stock Exchange PSEi, and writes in More signs of manic phase in The Phisix, ASEAN and the US Finally a much needed reprieve for the Philippine Phisix. Yet this week’s .34% loss can hardly be seen as the required “correction” or “profit-taking” phase following EIGHT successive weeks of advances that has brought about a magnificent 14.27% of returns in 2013. This week’s marginal profit-taking has barely changed the parabolic phase and near vertical picture which the local bellwether has transitioned to. Going back to the Philippines, the manic phase of bubbles—which I described as last week as yield chasing phenomenon that are essentially underpinned by voguish themes unquestioningly embraced by the public and most importantly enabled, facilitated and financed by credit expansion  seems to be well intact. The Philippine central bank, the Bangko Sentral ng Pilipinas (BSP) reports that for January  systemic credit continues to be vigorous, albeit at a slightly lower pace on a month to month basis, 15.6% December and 16.6% for January. The pace of credit expansion undergirding the supply side growth is almost three times the rate of economic growth. This is the tooth fairy from the populist “Aquinomics”: a credit bubble that will soon be unmasked along with the other central planning fantasies masqueraded as economic policies
Sectors trading lower included KWT, XSD, SLX, XME, PSCE, IEZ, OIH, CARZ, FLM, IGN, PICK, COPX, URA, REMX, and KOL.
European Financials, EUFN, traded lower.
A new financial crisis is coming as the result of sovereign insolvency and Eurozone banking insolvency.
Soon there will be no democracies in the Eurozone. Sovereign nations, their banks, and European Socialism are all creatures of treasury debts that cannot be repaid. European countries are insolvent and thus they have no sovereign authority. EU countries and their banks are being sustained by the monetary authority of the ECB, which is rising as a regional sovereign body.
This week investors derisked out of Europe’s insolvent nations, Greece, GREK, Italy, EWI, Spain, EWP, and Ireland, EIRl, and their insolvent national banks, NBG, SAN, IRE, as insolvent countries cannot provide seigniorage, that is moneyness, to investors, or provide fiscal spending resources to citizens.
New regional sovereign authority is coming.out of the European Sovereign Debt Crisis, where those living in Euroland will no longer be citizens of any nation, but rather residents living in a region of fascist economic governance where nannycrats manage the factors of production and oversee regional resources under the direction of a monetary pope and a regional king.
5) … German President Joachim Gauck calls for German Led More Europe; it will be the leading example of regional governance as Liberalism shifts to Authoritarianism.
Dr. Worden writes Solidarity as a shared value in European identity. Speaking at the Schloss Bellevue palace in Berlin, German President Joachim Gauck uses major speech to call for More Europe, where he makes the case for more European integration,
At the time, calling for “more Europe” in terms of shifting still more governmental sovereignty from the state governments to that of the Union was not a very popular task. Further limiting the power of his message is the fact that the German presidency is largely ceremonial , unlike the office of governor in an American state. Nevertheless, Gauck was determined to put the contemporary condition of the “European project” in favorable perspective.
The most striking—and even effective—aspect of his speech is his repeated references to “European citizens.” Had he used “Germans” instead, he would have subtly undercut his own message.
Acknowledging the fiscal and structural imbalances that gave rise to the debt crisis in several E.U. states and the problems entailed in “patching up” the problems by emergency measures, Gauck nonetheless pointed to non-economic elements of the European project that were also in crisis. “It is also a crisis of confidence in Europe as a political project. This is not just a struggle for our currency; we are struggling with an internal quandary too.” This problem is predicated on the point that the strengthening of a European identity comes out of a recognition of shared values, rather than in differentiation from other cultures outside of Europe.
Too often, Europeans artificially delimit their values to their particular state. Typically, Europeans will preface a self-referential remark with, “In my country,” only to describe a custom or value that is by no means limited to, distinctive in, one particular state. Even in saying “more Europe means a European Germany,” Gauck risked falling into this trap, at least in terms of keeping Europe as secondary. More in line with his thesis would have been the expression, more Europe means more European. More European in turn means more of a consciousness of values that European citizens (and residents) share, whether or not people in Africa, Asia, or America happen to esteem those values too. So the question facing European citizens is this: What values do you share?
From an American perspective, I notice the salience of the value of solidarity held by Europeans because it is such a recessive value in America. Ironically, World War II was perhaps the last time solidarity in terms of “we’re all in it together” was explicitly pushed and acknowledged in America. Even then, the value was more in terms of sacrificing for a common purpose rather than seeing to it that the most vulnerable among us do not fall through the cracks in terms of sustenance. In Europe, solidarity has more of a social welfare quality.
Moreover, whereas Americans tend to apply human rights only to the harm caused by tyrants abroad, Europeans tend naturally to extend to the value to covering the basic sustenance rights of one’s own fellow citizens as well. The shift needed for a stronger European identity involves becoming aware of the duty to apply the value domestically to other Europeans rather than merely to people in one’s own state, or “country.” So “European Germans” would feel solidarity with starving “European Greeks,” for example. This is the element that was largely missing from the austerity response of E.U. finance ministers to the debt crisis from 2010 to 2012.
Accordingly, “more Europe” involves not only a stronger value-fueled-identity, but also more fiscal redistribution at the federal, or E.U., level. Put another way, Europeans surely have more shared values than that of austerity.
6) … Liberalism’s great Banking Schemes produced Peak Sovereignty and Peak Seigniorage, that is Peak Moneyness, to produce Peak Prosperity. The Age of Credit and the Age of Prosperity is over, and the Age of Debt Servitude and the Age of Austerity is commencing on the traded lower in major world currencies and emerging market currencies.
Sovereignty begets seigniorage, that is moneyness, and trust in the debt of the sovereigns, that is in the US, VTI, Germany, EWG, Spain, EWP, Italy, EWI, Greece, GREK, Germany, EWG, China, YAO, Australia, EWA, Japan, EWJ, Norway, NORW, Sweden, EWD, Denmark, EDEN, Finland, EFNL, India, INP, and others produced Peak Commodities, DBC, on September 14, 2012, Peak Credit, BND, on December, 6, 2012, Peak Wealth, VT, on January 28, 2013, Peak Nation Investment, EFA, February 1, 2013, and Peak Currencies, DBV, and CEW, and thus Peak Seigniorage, and Peak Prosperity on February 11, 2013.
Matthew Leising Bloomberg reports “Jim Casey, co-head of global debt capital markets at JPMorgan Chase says 2012 was so spectacular that it deserves a moniker: the Year of Refinancing. The cost of borrowing for companies fell to a record low of 3.24% last year, spurring the flood of deals. With rates so depressed, corporations, which typically refinance debt that matures in one or two years, issued replacement bonds for credit that’s due in four years. Casey says that doubled the potential number of clients for bankers. Corporate and sovereign borrowers issued $3.69 trillion in debt in 2012, generating $19.2 billion of fees for banks, both records. Investor demand for debt was so strong that banks were able to revive collateralized loan obligations, the bundles of securities that helped inflate the credit bubble that burst in 2008. About $55 billion in CLOs were sold last year compared with $13 billion in 2011.”
The sovereigns of Liberalism, nation states and their central banks gave seigniorage to money, that is wealth, producing the seigniorage of investment choice. Asset Managers such as BLK, WDR, EV, STT and WETF, Investment Bankers such as JPM, the World’s Leading Banks such as SAN, NBG, RBS, LYG, BCS, HDB, IBN, and UBS, The Too Big To Fail Banks such as BAC, and C, the Regional Banks such as SNV, HBAN, and RF, coined Liberalism’s money, consisting of fiat investments; some of which were given more seigniorage than others, such as Gaming Stocks, BJK, Leveraged Buyouts, PSP, Small Cap Growth Companies, such as CSL, Global Producers, IP, and GE, Dig And Dirt Equipment Manufacturers, MTW, Agricultural Companies, MON, and Small Cap Revenue Companies such as LAD, to name just a few.
Where seigniorage exists, that is where moneyness manifests, there exists a sovereign producing it.
New seigniorage, that is new moneyness, is coming on the death of the fiat money system, that is on the death of the Milton Friedman Free To Choose Floating Currency Regime. The sovereigns of the Era of Credit and the Epoch of Fiat Asset Appreciation and the Age of Prosperity are dying on the exhaustion of the world central banks’ monetary authority and on the death of of currencies. Kayla Tausche of CNBC reports JPMorgan to slash 4,000 staff, $1 Billion in costs. And Bespoke Investment Group reports Euro Spreads widen out. Bloomberg reports Bank credit risk surges in Europe amid Italian election deadlock. The cost of insuring against default on European bank debt surged to the highest in three months on concern deadlock in Italy’s elections will trigger a flight from risky assets as a political vacuum roils markets. Gridlock in parliament means gridlock in the economy, Alberto Gallo, the head of European macro credit research at Royal Bank of Scotland Group Plc in London, wrote in a client note. The longer the instability lasts, the more the recession can deepen, pushing up unemployment, defaults and bad loans.” The Markit iTraxx Europe Index of swaps on investment-grade companies rose seven basis points to 120, the highest since November 30, 2012.
Operating through Destiny, Revelation 1:1, Jesus Christ is replacing the Banker Regime of Liberalism with the Beast Regime of Authoritarianism, and with that, Crony Capitalism, in America, European Socialism, in France, and Greek Socialism, in Greece, is being replaced by Regional Governance, Totalitarian Collectivism, and Debt Servitude, in Euroland, in fulfillment of Revelation 13:1-4.
Christ began by unleashing the First Horseman of the Apocalypse, to transfer the baton of sovereignty from nation states to the sovereigns of Authoritarianism, these being regional leaders, regional bodies, and soon coming regional public private partnerships, as presented in Revelation 6:1-2, in May of 2010, with the First Greek Debt bailout, led by Herman van Rompuy and Angela Merkel.
And Christ is producing from the crumbling two iron legs of global hegemony, these being the British Empire and the US, a Ten Toed Kingdom of regional governance, where toes of a miry mixture of iron diktat and clay democracy, rule in the world’s ten regions, as foretold in Daniel 2:25-45. Jordan Michael Smith writes Lessons from the British Empire. Cecil Rhodes comprehended the magnificence of the British Empire; he once remarked that “to be born an Englishman is to win first prize in the lottery of life.”
The first of two iron legs of global power, that being Britain, ceased, so that the second of the two legs of global power, as foretold in bible prophecy of Daniel 2:25-45, could begin its rise to global dominance, establishing the rise of Liberalism that began in 1913 with the establishment of the Creature From Jekyll Island. Further banking schemes strengthened Liberalism. These included the establishment of the State of Israel in 1948, the ceding of the Suez Canal and the ceding of Hong Kong, which decimated British global hegemony
The world is at Peak US Hegemony. US Hegemonic thought leaders are Frederick Kagan, who came out of Yale Law School, and became a neocon who served with the US Defense Department as Adviser to General Stanley McChrystal. And also Danielle Pletka, American Enterprise Institute VP, strong advocate for the Iraq War and defender of Ahmed Chalabi. US Hegemony is coming under threat. AP reports Military leaders say Congress must stop Sequester. The billions of dollars in defense budget cuts scheduled to begin at the end of the week will have a swift and severe impact on military readiness and Congress needs to take fast action to stop them, members of the Joint Chiefs of Staff said. An inquiring mind asks one, will Britain, Canada, Italy, Turkey, Denmark, Netherlands, Australia, and Norway continue to support the F-35 program, where the contractor is Lockheed Martin, LM, and Pratt & Whitney, a unit of United Technologies, UTX, supplier of the engines?
It’s as Peter Schiff relates in Yahoo Breakout America is becoming the United States of Britain. The President & CEO of Euro Pacific Capital says the near-term fate of the colonies is being foreshadowed across the pond as its sovereignty is crumbling.
Germany will be the hub of all economic production in Europe for ever. The PIGS will be desolate, hollow moons, revolving around Planet Germany, existing as colonies of Brussels and Berlin technocratic government. Germany will be the epicenter of a revived Roman Empire, exercising regional governance over vassal peripheral Eurozone states. Handelsblatt reports Germany is liable for EU134b of bailout money, citing Finance Ministry calculations it obtained. Liability risk for credits paid out to Greece, Ireland, Portugal and Spain amounts to EU112b. Hat Tip to Between the Hedges.
The introduction of the Euro did a number of things, it created the Euro, FXE, as a Commodity Currency, CCX, which drove up the price of Commodities, DBC, and created European Socialism, and the most extreme form of Socialism, that being Greek Socialism, and it created Export Germany, based upon what is fiat asset deflation in Germany, as is indicated by Germany’s low unit labor cost, by the failure of its housing prices to soar like in Spain and France, and by the depression of German Treasury Debt. In The Economist Magazine Print Edition Long After The Party, How Italians are going to vote is not clear; but the vote will matter both to the future of their country and to the Euro, page 26, the chart of Eurozone Unit Labor Costs from 1999 through 2011, shows that Spain, followed by Italy and then France have labor costs in excess of 128, compared to Germany with 102. There is no amount of restructuring or rebalancing that can be done in the periphery to stabilize the European Union. Like oil and water, the core, being Germany, and the periphery, being the PIIGS, cannot mix; one will rise to the top, and the other settle to the bottom.
Not only will Germany be the epicenter and hub of economic activity in Euroland, it will also be the head of hegemonic military and spiritual attention as well. Johannes Stern of WSWS writes The return of German imperialism. Germany is making intensive preparations to wage new wars to secure resources. Wolfgang Weber of WSWS reports German Government decides on military deployment in Mali. Veit Medick of Der Spiegel reports Germany lans to deploy armed drones in combat. Tyler Durden reports German lawyer to head Vatican Bank A German pope may be vacating the Vatican but a German lawyer is about to head its bank, an institution some say is as important if not more, and whose shady dealing some say may have been the reason for the pope premature departure. Per Reuters, The Vatican appointed German lawyer Ernst von Freyberg to be the new president of its bank filling a post left vacant when the previous head was ousted from the scandal-tainted institution.
As it grows in prominence, Germany will transition from being a One Euro Government to being a One World Government as foretold in Daniel 7:7, the fourth beast, and in Daniel 7:23.
The first beast is presented in Daniel 7:4 as being, “Like a lion; it has eagles wings”. This beast was Babylon, whose emblem was a lion with eagle’s wings.
The second beast is presented in Daniel 7:5, “Then behold! Another beast, a second one, similar to a bear; it was placed on one side, and there were three ribs in its mouth between its teeth; and this is what they said to it, ‘Arise, devour much flesh!’” The second beast was Medo-Persia.
The third beast is presented in Daniel 7:6, “After this I was watching and behold! Another beast, like a leopard, with four bird’s wings on its back; the beast had four heads, and it was given dominion”. The third beast was Greece. When Alexander the Great died in 323 C.E., his empire was divided between and ruled by four of his generals.
The fourth beast, is presented in Daniel 7:7-8, “After this I was watching in night visions, and behold! A fourth beast, exceedingly terrifying, awesome and strong. It has immense iron teeth, and it was devouring and crumbling, and trampling its feet what remained. It was different from all the beasts that had preceded it, and it had ten horns. As I was contemplating the horns, behold! Another horn, a small one, came up among them, and three of the previous horns were uprooted before it. There were eyes like human eyes in this horn, and a mouth speaking haughty words”.
The fourth beast, Empire Germany, will manifest as a revived Roman Empire, that is an authoritative kingdom from today’s EU Debt Crisis, whose Emperor, The Sovereign, seemingly one of little authority, Daniel 7:8, will rule a One Euro Government, and eventually conquer three of the world’s other ten regional kings as he rises to rule the world, and sets up his world headquarters in Jerusalem, Daniel 9:25.
And Daniel 7:23, relates, “Thus he said, the fourth beast shall be the fourth kingdom upon the earth, which shall be diverse from all kingdoms, and shall devour the whole earth, and shall tread it down, and break it to pieces.” The coming European Empire will eventually rise to govern the world as a one world government, which will precede the coming of Christ to establish his World Wide Kingdom.
Most definitely new sovereignty, new sovereigns, and new sovereign wealth will be coming from two agents of Destructionism, these being first, the unwinding of the Euro Yen Currency Carry Trade, that is the EUR/JPY, and the second, competitive currency devaluation. Zero Hedge reports Why Central States/Banks inflate asset bubbles, and why they implode.
The economic and political shift from Liberalism to Authoritarianism is foretold in Daniel 2:25-45, as a Ten Toed Kingdom, that is a global empire, existing with toes, that is regional zones, of a miry mixture of iron diktat and clay democracy
The Banker Regime of nation states and their central bankers, is being replaced by the Beast Regime of Fascist Regional Governance, Totalitarian Collectivism, and Debt Servitude, as presented in Revelation 13:1-4, an event that is unseen by practically everyone, as it has a coat of a leopard, whereby it blends in with all of mankind’s media, technology, banking, educational, banking, government and religious and think tank institutions; the feet of a bear which enables it to stand its ground as well as root out its enemies, and the mouth of a lion to make authoritative governing statements; this minotaur, is the ultimate predator, devouring all who it chooses to consume.
Please consider that a German centric EU will attempt to spread Christian Religion, not genuine Christianity, through military power in the Age of Regionalism. Yet it will come head on to Mystery Babylon, described as a whore who rides the Beast Regime, as it rises to govern in all the world ten regions and ia all the world’s seven regions, Revelation 17:3-5. Mystery Babylon is the combined political, economic and religious experience that will unify mankind, when the Sovereign, Revelation 13:5-10, and the Seignior, Revelation 13:11-18, come to rule from Jerusalem, Daniel 9:25; at that time the world’s leader will command and receive worship as God.
Regionalism is replacing globalism. The dynamos of Liberalism, corporate profitability and global growth, are winding down on the exhaustion of the world central banks’ monetary authority and resulting inability to stimulate global growth and corporate profitability, as well as on the dynamic that the monetary policies of the US Fed, the ECB, the BoJ, and the PBOC, to monetize debt, have crossed the rubicon of sound monetary policy, and have turned “money good” investments, bad.
Both Major World Currencies, DBV, and Emerging Market Currencies, CEW, crested on February 22, 2013, turning the value shares, RZV, JKI, JKF, which have been the backbone of Liberalism’s Finance since QE1, lower. The dynamos of Authoritarianism, regional security, stability and sustainability, are winding up regional diktat on unwinding currency carry trades, such as the EUR/JPY, and falling currencies such as the British Pound Sterling, FXB. Gold Money reports UK downgrade knocks British Pound Sterling.
Major World Currencies, DBV, traded 0.5% lower, and Emerging Market Currencies, CEW, 0.7% lower, and Small Cap Pure Value Shares, RZV, traded 1.5% lower this week, communicating that competitive currency devaluation is underway. The US Dollar, $USD, traded up 1.0% to close at 82.31, as the Indian Rupe, ICN, -1.6%, the Norwegian Krone, -1.6%. the New Zealand Dollar, -1.6%. the British Pound Sterling, FXB, -1.5%, the Swiss Franc, FXF, -1.4%, The Danish Krone, -1.3%, the Euro, FXE, -1.3%, the Australian Dollar, FXA, -1.2.%, the Canadian Dollar, FXC, -0.6%, the Brazilian Real, BZF, -0.4%, the Japanese Yen, FXY, -0.2%, and Emerging Market Currencies, CEW, -0.6%
Investors deleverage out of Commodities, DBC, which traded 2.4% lower.
Italy, EWI, traded 5.3%, lower, Greece, GREK, 4.0%, Spain, EWP, 1.9, Germany, EWG,1.1%, taking Nation Investment, EFA, 0.7%. European Financials, EUFN, traded 2.0% lower. Investors have been derisking strongly out of The Netherlands, EWN, specifically, UN, LYB, PHG, AEG, and ENL, as the Euro, FXE, turned lower on February 13, 2013. Investors sold out of the other Nordic Nations, Finland, EFNL, Norway, NORW, and Sweden, EWD, as well as out of India, INP, India Small Caps, SCIN, Russia, RSX, Russia Small Caps, ERUS, The UK, EWU, and Argentina, ARGT.
Sectors trading lower included Solar, KWT, 7.2%, Uranium Mining, URA, 4.1, Metal Manufacturing, XME, 4.2, Copper Mining, COPX, 2.7%, Rare Earth, REMX, 3.0, Coal Mining, KOL, 2.7%, Semiconductors, XSD, 2.5%, Networking, 2.1%, Steel, SLX, 2.2%, Mining 1.1%, Energy Service, OIH, IEZ, -1.7, Design Build, FLM 1.3%. Small Cap Gold Mining, GDXJ, 3.1, Gold Mining, GDX, 2.1, Small Cap Silver Mining, SILV, 3.6. Silver Mining, SIL, 2.6
Soon World Stocks, VT, VSS, will have an inflection point where “risk on” succumbs to “risk off”. Risk on is definitely still on in Nasdaq Biotech, IBB, which traded 2.4% higher and Paper And Timber, WOOD, 2.0% higher.
Doug Noland writes in Italy and “Ro, Ro” The Italian electorate essentially voted against EU imposed “austerity” they believe is being dictated by Berlin. Berlusconi and Grillo ran campaigns critical of both the loss of sovereignty to European mandates and the euro currency more generally (Grillo has called for a public referendum on the euro). Friday from Bloomberg: “CDU [Merkel’s party] lawmaker Klaus-Peter Willsch says if majority of Italians cannot be convinced to stand by EMU rules, the country must be allowed to return to its own currency, Handelsblatt says… Monetary union will only survive if it benefits all its members.” Napolitano cancelled a scheduled meeting with the candidate running against Chancellor Merkel in Germany’s September elections, after Peer Steinbrueck was quoted as saying he was “horrified that two clowns won the election.” One can ponder the outcome if Germany’s Bundestag is ever called upon to vote for what would be a very large bailout package for Italy.
There are serious long-term ramifications for the rise of anti-European integration populism in Italy and throughout Europe. For now, the pressing issue is whether Italy can cobble together a functioning government. Grillo’s independent Five Star Movement actually received the most votes of any individual party. He has nothing but acrimony for the establishment – essentially calling for the downfall of the traditional dominating political parties. Grillo has had particularly harsh words for Bersani, while stating that he will not join a coalition with either Bersani or Berlusconi. Meanwhile, Bersani and Berlusconi despise each other. And new corruption charges against Berlusconi have his supporters livid. New elections may be necessary, although it doesn’t appear Bersani, Berlusconi or Grillo prefer that route for now. Complicating matters, the term of Italy’s President (Giorgio Napolitano) – who has a traditional role dissolving parliaments, calling for new elections and brokering alliances – ends next month. Some type of “loose” – and likely dysfunctional – coalition government seems likely.
I envision a dysfunctional “loose” coalition as well, out of which will come total chaos, as Ambrose Evans Pritchard writes Comedian Beppe Grillo repeated his vow to “bring down the old system” and dismissed the latest talks as cattle market trading by a depraved political class trying to circumvent the will of the people. “I repeat for the umpteenth time, the Five Star Movement will not back any government. It will vote law by law in keeping with its platform,” he said. “We’re not a political party, we’re a civic revolution. This country is in ruins with two trillion in debts and we have to rebuild it from scratch,” he told a scrum of journalists. In a rhetorical play on the slogans of 1789 and 1917 he exhorted “all citizens” to descend on parliament.
7) … Summary, The world has attained Peak Democracy, Peak National Sovereignty and Peak Prosperity under the Banker Regime which has provided the Milton Friedman Free To Choose Floating Currency Regime.
In Europe, the Nordic Latin cultural and economic divide is striking and widely known. Norway, Sweden, Denmark, and Finland, have debt loads significantly below those of the eurozone. Sweden’s government spending as a percent of GDP has fallen from 55% to 50% since the introduction of the Euro. And the Nordics have high rates of female labor force participation.
On all international metrics of competitiveness, entrepreneurship, innovation, creativity, responsible government, and human development, the Nordics consistently rank at the top, as the Economist Magazine reports on pages 14 to 16, of the February 2, 3013 print edition, that relates that Nordic countries pride themselves on the honesty and transparency of their governments; citizens pay their taxes and play by the rules. This has led Norway, Sweden, which have national currencies, and Denmark and Finland which use the Euro, to being ranked as the world’s four most prosperous nations. The Nordic people are a creative, innovative, industrious, corruption free, and socially responsible people, which contrasts sharply with the Latin people, that is the Portugese, Italian, Greek and Spanish people, who rank at the bottom of prosperity.
Investors have rewarded the Norwegian cultural superiority by investing in oil & gas, energy service, maritime, and aquaculture, particularly in Bergen Norway, but have disinvested out of debt laden and economically inefficient Athens Greece. Currency carry trade investment has had the consequence of driving consumer prices higher: $7.69 for a Big Mac vs $4.37 in the America.
An example of Swedish ingenuity is Linas Matkasse, a Vällingby, Sweden-based e-commerce weekly food delivery service providing subscribers with a bag of groceries, recipes and ingredients for five dinners for four people. The company currently has a customer base of over 50,000 registered customers and the service is also available via iPhone reports FinSMEs, The NewsBlog about Financing for Small and Medium Sized Enterprises.
Denmark is a global competitive leader in Drugs, Pharmaceuticals, and Biotechnology with Novo Nordisk … in Hearing Aids with Oticon … in Toys with Lego … in Beverage with Carlsberg … and in Wind Power, having more than 200 companies that account for a third of the world’s wind turbine market according to The Economist Magazine February 2, 2013 page 9 print edition, which also relates Denmark is the world’s eighth biggest food exporter thanks to its obsession with productivity.
And the Economist goes on to relate that Finland based Rovio Entertainment struck gold with Angry Birds, a game that involves catapulting irascible avians at elaborate fortresses constructed by evil pigs.
Ludwig von Mises writing in Inflation III. Inflation and credit expansion; Interventionism an economic analysis warned “The boom cannot continue indefinitely. There are two alternatives. Either the banks continue the credit expansion without restriction and thus cause constantly mounting price increases and an ever-growing orgy of speculation, which, as in all other cases of unlimited inflation, ends in a “crack-up boom” and in a collapse of the money and credit system. Or the banks stop before this point is reached, voluntarily renounce further credit expansion and thus bring about the crisis. The depression follows in both instances.”
The crack up boom that has created prosperity has ended, and a collapse of the money, that is wealth, and credit system, coming from unwinding currency carry trade investment, such as the Euro Yen, EUR/JPY, as well as competitive currency devaluation, will result in Financial Apocalypse, as foretold in bible prophecy of Revelation 13:3- 4
An inquiring mind asks, is it really to hard to believe that Jesus Christ is at the helm of the economy of God, Ephesians 1:10, effecting The Great Paradigm Shift from Liberalism to Authoritarianism, where political governance will change from the rule of sovereign nation states to sovereign regional leaders and regional bodies in regional governance; and economic experience from investment choice and prosperity to debt servitude and austerity; as leaders meet in summits to renounce national sovereignty and pool sovereignty regionally, a concept that has been presented by Herman van Rompuy for a long time.
Regional leaders and diktat, will replace sovereign nation states and investment choice; these will provide the seigniorage of diktat, replacing the seigniorage of investment choice. Ambrose Evans Pritchard writes EU ‘Troika’ rule in Ireland worse than British Empire. Ireland’s trade union chief has accused the EU-IMF troika in charge of Irish austerity policies of tipping the economy into downward spiral and acting as an imperial oppressor. And Robert Stevens of WSWS writes Greek military prepares for mass repression. Politicians have been in contact with military personnel over how to respond to an “explosion” of social unrest against government austerity measures. “Paper money no more”, will be Authoritarianism’s banner. The Banker’s fiat money system will soon be replaced by the Beast’s diktat money system, where diktat serves as currency, credit, power and wealth.
Please consider the horror, revulsion and anger that the Nordics will experience, especially the Euro using Danes and Finns, being a creative, innovative, industrious, corruption free, and socially responsible people, realize, when their prosperity is decimated by a soon coming Financial Apocalypse, and that have to share in a European gulag of regional governance, totalitarian collectivism and debt servitude, that has arisen through the insolvency of their Latin peers, as is foretold in bible prophecy of Revelation 13:1-4 and Daniel 2:25-45.
Regionalism will be born out of a credit bust and financial system breakdown: democracies, national sovereignty, and prosperity will be epitaphs on the tombstone of the former era of Liberalism.
Doug Noland writing in Italy and “Ro, Ro” reports on International Reserve Assets, that is the wealth of Liberalism’s Sovereigns, and M2, that is the wealth of the people. Peak Money, that is Peak Wealth, is being achieved
Federal Reserve Credit jumped another $14.2bn to a record $3.078 TN. Fed Credit expanded $292bn in 21 weeks. Over the past year, Fed Credit jumped $169bn, or 5.8%. And Global central bank “international reserve assets” (excluding gold) – as tallied by Bloomberg – were up $748bn y-o-y, or 7.3%, to a record $10.987 TN. Over two years, reserves were $1.646 TN higher, for 18% growth.
M2 (narrow) “money” supply dropped $23.7bn to $10.413 TN. “Narrow money” has expanded 6.6% ($641bn) over the past year. For the week, Currency increased $3.6bn. Demand and Checkable Deposits fell $26.6bn, while Savings Deposits gained $4.7bn. Small Denominated Deposits declined $2.0bn. Retail Money Funds fell $3.5bn.
In Authoritarianism, diktat and physical wealth either in bullion form or at Internet Trading Vaults such as Bullion Vault, will be the two forms of sovereign wealth Gold, $GOLD, rose at the beginning of the week, but then traded lower to close at $1575.