The Dispensationalist Manifest Rises In Importance As The Congressional Testimony Of Ben Bernanke And The Failure Of Kuroda Abenomics Pivots The World From The Age of Investment Choice To The Age Of Diktat

A report of the failure of nation state sovereignty and seigniorage and the rise of regional sovereignty and regional seigniorage, for the week ending May 25, 2013.

1) … The dispensationalist manifest comes of age.

1A) … The final phase of the Business Cycle got fully underway on Monday 20, 2013, with the trade lower in Electric Utilities, XLU, and Mortgage REITS, REM, such as IVR, on the rise of the US Interest Rate, ^TNX, to 1.97%, the steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening. and the trade lower in Greece, GREY, and its bank, NBG, as well as the trade lower in the US Dollar, $USU, UMP.

The end of Global ZIRP, as well as the termination of the world central banks’ monetary authority is confirmed with the parabolic trade lower in China’s Electrical Utility, HNP.  Investors derisking out of Biotechnology, IBB, such as AMGN, SGEN, ALXN, REGN, CELG, RGEN, and BRMN, as well as out of US Homebuilding, ITB, such as DHI, PHM, and LEN, reflects that the monetary policies of the US Federal Reserve are no longer stimulative, but rather have crossed the Rubicon of sound monetary policy, and have made “money good” investments, bad.  Yes, another bust just like 2008, has commenced, only much, much worse this time.

Earlier in the month, with the commencement of competitive currency devaluation on Friday May 10, 2013, specifically with the world’s individual currencies excluding the US dollar, trading lower, and with not only Aggregate Credit, AGG, trading lower, but also the highly indebted Electric Utilities, XLU, as well, the world pivoted from Liberalism’s age of investment choice, to Authoritarianism’s age of diktat; the epoch of inflationism ceased, and the epoch of Destructionism commenced.

In compliment of the currency traders, who have started a sell of the world currencies, the bond vigilantes have gained a nascent control of interest rates, as is seen in their call of the Interest Rate on the US Ten Year Note, ^TNX, higher to 1.95%, and a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening.

And then during the week ending Friday May 17, 2013, the coordinated intensification by the central banks throughout the world for the reduction of interest rates, established Global ZIRP, with Benton te writing 511 Interest cuts and sluggish economic growth, causing a blow off stock market top, seen in the chart of World Stocks, VT, rising 1.2%, and seen in the chart of the S&P 500, $SPX, SPY, closing at 1,667, up 2.1% for the week; it has risen 1,000 points from the March 2009, 667 low, in 50 months.

A look back in time reveals that beginning with stock market confidence in Mario Draghis’ OMT in August 2012, currency carry trade investment from a rising Euro Yen, EUR/JPY, Currency Carry Trade, seen in the chart of FXE:FXY, as well as a rush of toxic credit, seen in the chart of Junk Bonds, JNK, coupled with a sale of Gold, GLD, to close at $1,306, started a risk-on rally, flow of funds in the S&P 500, SPY, as well as the Russell 2000, IWM.

Alexis Xydias of Bloomberg reports The most-indebted U.S. companies are rallying more than any time in almost four years compared with the rest of the stock market amid the broadest rally since at least 1995. Federal Reserve interest rates near zero and the expanding economy are allowing Standard & Poor’s 500 Index companies with the lowest working capital, smallest earnings and highest debt ratios to reduce borrowing costs and avoid default. The stocks surged 27% this year, almost double the gains for businesses with the most cash and least borrowing. I comment that such companies include International Paper, IP, and Next Era Energy, NEE.

The world central banks’ monetary policies of Global ZIRP, especially coming on strong since April 18, 2013, have finally started to turn “money good” investments, bad. A case in point is Australia’s Westpac Banking, WBK; in contrast, currency carry trade endowed, Lloyds Bank, LYG, US Too Big To Fail Bank Citigroup, C, and Regional Bank, RF, rose strongly in a Global ZIRP grand finale finish of investment mania. Failing of Global ZIRP, stimulated investors to derisk out of Nation Investment in Australia, EWA; in contrast Malaysia, EWM, and the Philippines, EPHE. rose strongly on Global ZIRP cool aid. And souring Global ZIRP, in particular the debt dynamics of Australia Dividends, AUSE, turned this investment lower, while investors pursued Pharmaceuticals, PJP, Small Cap Value, RZV,  and Premium REITS, KBWY,  Another example of investors derisking on excessive credit policies, is the trade lower in Japanese Treasury Bonds, as seen in their inverse, JGBS, trading higher, in contrast Japan, EWJ, rose strongly. The ongoing Yahoo Finance chart of the Philippines, EPHE, together with Small Cap Nation Investment, IFSM, reflects the terrific investment mania that has been at work in that nation.   

It is sovereignty that provides order and begets seigniorage, that is moneyness. The rule of Liberalism’s democratic nation states provided a moral hazard, toxic credit, and global carry trade financed seigniorage, via the genius of the Milton Friedman Free To Choose fiat money system.

Financial institutions, IXG, European financials, EUFN, Far East Financials, FEFN, Emerging Market Financials, EMFN, Too Big to Fail Banks, RWW, Chinese Financials CHIX, Regional Banks, KRE, will no longer be transmitting seigniorage; rather they will be integrated into the government, and be known as Gov Banks, or Government Banks, and in Europe be part of a regional diktat union.

Seigniorage, that is moneyness, will no longer come from democratic nation states, which supported economic growth, global trade and corporate profitability; but rather from the word, will and way of sovereign regional leaders such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as nannycrats in statist public private partnerships, and the ECB, as they invoke mandates for regional security, stability, and sustainability.

As revealed in the last book of the Bible, The Revelation of Jesus Christ, the sovereign Lord God, is

pivoting the world from Liberalism which featured the Banker Regime’s, Milton Friedman Free To Choose, fiat money system … to Authoritarianism which features the Beast Regime’s, regional governance, totalitarian collectivism, debt servitude, and austerity, diktat money system.

1B) … Sound and beneficial ideas are in scarce, that is in the general sense of the word in limited supply … Sound and beneficial ideas help one understand reality and make sound and beneficial decisions.

One’s ideology is based upon either the fiat of philosophy or religion which is basically will worship, that is, the worship of one’s own will. On the other hand, one’s idea are based upon Scripture, that is the Gospel, or Good News of the objective reality of Christ, Ephesians 4:21-24, which provides Grace and Truth, John 1:17.

Unfortunately, much of today’s Christian religion is based upon the false premise that one chooses Jesus.  However, sound doctrine is both reformed based, along the lines of John MacArthur, John Gill, and John Calvin, as well as restored based, along the lines of Witness Lee and Watchman Nee; and presents that God chose the believer in Christ from eternity past, predestined him, appointed him, and made him accepted in The Beloved.

Isms are processes that produce states-of-beings from ideas.

Dispensationalism is the concept that Jesus Christ is exercising administrative management of all things in each of mankind’s epochs, eras, eras, and time periods, to make them full, Ephesians 1:10, Ephesians 3:2, Ephesians 3:9, Colossians 1:25.

Dispensationalism comes from Strong’s Greek word oikonomia, #3622, dispensation, and means household dispensing, household stewardship, household management and economic oversight of property for the completion of every age, era, and epoch and time period. Dispensations are time of mercy and judgment.

Dispensationalism produces both the “saints” and the “aints”.

MB-Soft relates Dispensational theology grows out of a consistent use of the hermeneutical principle of normal, plain, or literal interpretation. This principle does not exclude the use of figures of speech, but insists that behind every figure is a literal meaning. Applying this hermeneutical principle leads dispensationalism to distinguish God’s program for Israel from his program for the church. Thus the church did not begin in the OT but on the day of Pentecost, and the church is not presently fulfilling promises made to Israel in the OT that have not yet been fulfilled.

1C) … The dispensationalist manifest is the foundation for a life of virtue and ethics, establishing the elect as separate from the fiat who live in carnality and iniquity; it comes from an understanding of dispensationalism, serves as the basis of dispensationalist economics, and is a creed for a dispensationalist economist.

As revealed in the last book of the Bible, The Revelation of Jesus Christ, the sovereign Lord God, is establishing a new order consisting of fifteen New Things.

The New Things of Christ establish the Dispensationalist’s Manifest which is based upon Ephesians 1:10, the biblical revelation that Jesus Christ is operating in dispensation, that is the household management plan of God to complete and fulfill all things in every age, epoch, era and time period.

The New Things of Christ that come by the Economy of God are:

1) a New Paradigm, (from liberalism to authoritarianism. Under liberalism bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and the legislators of economic life. Under authoritarianism, currency traders, bond vigilantes and nannycrats working both in public private partnerships and in regional governance, are the legislators of economic value and are the legislators that shape one’s means and one’s ends),

2) a New Sovereignty, (from the Milton Friedman Free to Choose floating currency Banker Regime of democratic nation states, to the Nannycrat Diktat Beast Regime of regional governance),

3) a New Seigniorage, (from the seigniorage of investment choice, to the seigniorage of diktat),

4) New Dynamos (from the dynamos of corporate profit and global growth, to the dynamos of regional security, stability and sustainability),

5) a New Trust (from trust in bankers, carry trade investing and credit, in particular Treasury debt, to trust in nannycrats, totalitarian collectivism, public private partnerships and debt servitude),

6) a New Age, (from the age of investment choice, to the age of diktat),

7) New Economic Action (from Inflationism, to Destructionism),

8) New Schemes (from free trade agreements, financial deregulation, leveraged buyouts, to regional framework agreements, bank deposits bailins, levying of additional taxes, public private partnerships, austerity measures, capital controls, and sale of a country’s central bank’s gold reserves),

9) New Economic Experience (from wealth and prosperity, to poverty and austerity),

10) a New Economic Life (from crony capitalism, European Socialism, and Greek socialism, to regionalism),

11) New Leaders (from Milton Friedman, Phil Gramm, and Robert Rubin, to Angela Merkel, Jörg Asmussen, Klaus Regling, Werner Hoyer, Olli Rehn, Jens Weidmann, Jeroen Dijsselbloem, and Michel Barnierm),

12) a New Religion (from religions and philosophies based upon the worship of one’s own will, to eventually a mandatory one world religion consisting of emperor worship, yet for the elect, faith in Christ),

13) a New Money System, (from the fiat money system, to the diktat money system),

14) a New Reality, that is a new experience, (from human experience, to the experience of the divine nature; where the elect are called to live in godliness, 2 Peter 1:6, manifest in the fruits of the spirit, and experience Christ as one’s life, Colossians 3:3-4, as well as one’s all inclusive life experience. Colossians 3:11.  In the spiritual life of Christ, Colossians 3:3-4, the elect live grow in virtue and ethics. Whereas, the fiat remain in the carnal life, Romans 7;14, Romans 15:27, and 1 Corinthians 3:3, and devolve in carnality and iniquity.  The elect keep the word of His endurance, and shrink not from His Name, and thereby live in His presence and authority, Revelation 3:8-10. They live a life of biblical separation. They practice the New Man in Christ, mortifying, that is putting to death the carnal desires that come up through temptation, so as to prevent the pain and dislocation that comes from stumbling and falling in sin. And they live a life of ethical regard for others; for example, they pursue peace with all men, defraud no one, and do not make merchandise out of others),

15) a New Way (from carnality and iniquity to virtue and ethics. New vessels for the new way. The elect are vessels of righteousness who keep Christ’s word of endurance and do not deny his name, Revelation 3:8-10, and maintain their vessels in purity and holiness.  In contrast, vessels of iniquity exist for the old man and the old way. The fiat have experience in the mandates of philosophy, religion, and regional governance, are vessels of iniquity, and have ever increasing experience in the mystery of iniquity; these exercise their vessels in poneros speech and behavior).

2) … This week’s trading reflects that the final phase of the Business Cycle got fully underway on Monday May 20, 2013: An Elliott Wave 5 Top has been achieve in World Stocks, VT, and in the S&P 500, SPY. .

2A) …On Monday May 20, 2013, the world definitely entered into Kondratieff Winter with the trade lower in Electric Utilities, XLU, and Mortgage REITS, REM, such as IVR, on the rise of the US Interest Rate, ^TNX, to 1.97%, the steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening. and the trade lower in Greece, GREK, and its bank, NBG, as well as the trade lower in the US Dollar, $USU, UUP.

The end of Global ZIRP, as well as the termination of the world central banks’ monetary authority is confirmed with the parabolic trade lower in China’s Electrical Utility, HNP.  Investors derisking out of Biotechnology, IBB, such as AMGN, SGEN, REGN, CELG, RGEN, and BMRN, as well as out of US Homebuilding, ITB, such as DHI, PHM, and LEN, reflects that the monetary policies of the US Federal Reserve are no longer stimulative, but rather have crossed the Rubicon of sound monetary policy, and have made “money good” investments, bad. Yes another bust just like 2008, has commenced, only much, much worse this time.

Bloomberg reports Gold rebounds after Moody’s says U.S. may face downgrade. Gold, GLD, and silver, SLV, rebounded after Moody’s Investors Service said U.S. policy makers must address debt woes to avoid a credit-rating downgrade this year, boosting the appeal of the metals as a haven. “More needs to be done on the policy front to address this rising debt ratio,” said Steven Hess, a senior vice president at New York-based Moody’s.

Liberalism featured the pursuit of yield bearing equity and credit investments; but authoritarianism features the abandonment of fiat wealth, and the acquisition of physical wealth, in particular gold.

Liberalism was the epoch of the use of currencies; but authoritarianism is the age of the destruction of currencies.  Financial market trading on Monday May 20, 2013, reflects an epoch change, as the bond vigilantes called interest rates higher, and the currency traders called the US Dollar lower, resulting in debt deflation of interest rate sensitive investments, these being the Electric Utilities, XLU, such as   AEP, DTE, NEE, D, CMS, PNW, and WEC, as well as the Mortgage REITS, REM, such as IVR.

Today’s pivotal changes in the equity and credit markets reflects that Jesus Christ is the master mind and engine of operation of the economy of God, as He is working in dispensation, for the completion an the fulfillment of every age, era, epoch and time period, a bible doctrine presented by the Apostle Paul in Ephesians 1:10.   Liberalism was an epoch where trust in sovereign authority of democratic nation states flourished; that trust diminished again Monday May 20, 2013, as Aggregate Credit, AGG, traded lower.

With the exhaustion and failure of the world central banks’ monetary authority, the dynamos of corporate profitability, global growth and nation state investment are winding down crony capitalism, European socialism and Greek socialism, as is seen in Greece, GREK, Turkey, TUR, and Mexico, EWW, turning lower. Now the dynamos of regional security, stability, and sustainability, are winding up regionalism, where people trust in regional leaders, and in regional bodies such as the ECB.

Most definitely Liberalism’s Milton Friedman Free To Choose Floating Currency Banker Regime died when Electric Utilities, XLU, and individual currencies, such as the Australian Dollar, FXA, traded lower the week ending May 10, 2013.  Further evidence of the dissolution of the fiat money system, comes from Moody’s announcement of downgrade of the US Dollar in 2013.  It has served as the international reserve currency since the Breton Woods Agreements, and has thus been the basis for Liberalism’s fiat money system.

Jesus Christ, through dispensation, Ephesians 1:10, is introducing Authoritarianism’s diktat money system.

Diktat Money was born out of the Cyprus Bank Deposit Bailin, and is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, and the austerity measures that are experienced, such as heavy losses on large bank deposits via bailins, levying of additional taxes, and sale of a country’s central bank’s gold reserves, when sovereign regional leaders such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as the ECB, invoke mandates for regional security, stability, and sustainability. CNBC reports Eurogroup Chief says France must speed up reforms. Jeroen Dijsselbloem, the president of the 17-nation euro bloc of nations, said France needs to accelerate its reform program after the country was given a two-year extension to meet European Union budget-deficit targets. I comment, most assuredly, God has put, and is putting Liberalism’s leaders, such as Milton Friedman, Phil Gramm, and Robert Rubin, out to pasture, and bringing in Authoritarianism’s new leaders. Yes, new leaders for a new age.

Authoritarianism’s Beast Regime of regional governance, totalitarian collectivism, debt servitude, and austerity, is rising out of the failure of the monetary policies of the world central banks. This monster will rise first to rule in the Eurozone, serving as the very experience and model for economic and political life in each of the world’s ten regions, and in all of mankind’s seven institutions, as is foretold in bible prophecy of both Revelation 13:1-4, and in Daniel 2:25-45, which foretells that the Ten Toed Kingdom, where toes of iron diktat and clay democracy, will replace the two great empires that have ruled the world since the late 1700s, these being the British Empire, and the US. This as Stephen Walt of Antiwar writes Top 10 warning signs of Liberal Imperialism

Liberalism featured investment schemes which greatly rewarded investment choice; these included,

  • Speculative investment in biotechnology, IBB, such as AMGN, SGEN, REGN, CELG, RGEN, and BMRN.

  • Leveraged buyouts, PSP, such as MRO, DLPH,

  • Currency carry trade investment, PHI, PT, LUX, EEFT, IX, MFG, KUB,TLK, NTL, NTT, BT, TEL, CRH,

  • Nation investment, EPHE, EIRL, VTI,

  • Yield chasing, ROOF, REZ, SUN,

  • IPOS, FPX, such as FB, MPC, HCA,

  • Spin Offs, CSD, such as TAXI, FRGI, FBSI, HII, TRIP, AMCX, LMOS,

  • Regulatory capture via Big Pharma, PJP, such as JNJ,

  • Creation of moral hazard by Mortgage REITS, REM, such as ACAS, IVR,

  • Money Center Banking, IBN, LYG,

  • Too Big To Fail Banking, C, BAC,

  • Securitization and financialization of investment vehicles by Asset Managers, BLK,

  • Real estate speculation, DRW, IFGL, FNIO, such as BX,

  • Money printing by the US Federal Reserve, PKB, XRT, IYC, CARZ

  • Investment in debt laden companies, IP, NEE

  • Investment in vice, BJK, such as PM.

Authoritarianism features schemes of regional governance; these include

  • Bailouts of countries, GREK,

  • Bank Deposit Bailins, such as in Cyprus.

Charles Gave writes in Zero Hedge Get Out Of Banks, Get Out Of France – Get Out Of The Euro.

The Economist provides Interactive overview of European GDP, debt and jobs

Andre Damon of WSWS writes Euro zone contracts for sixth consecutive quarter. The euro area economy contracted by 0.2 percent in the first quarter of this year, which was followed by further calls for austerity.  And Job Market Monitor reports EU in recession for 1.5 years as France double dips.

Ambrose Evans Pritchard writes Italy’s industrial output falls back to 1970s. Italy’s president Giorgio Napolitano has called for immediate measures to combat a “dramatic crisis” after the country’s industrial output fell back to levels reached in 1979. The plea came after fresh data showed industrial production in March fell 7.6pc from a year earlier, dropping for the 15th consecutive month. New orders fell 10pc.

Robert Wenzel write The Eurozone economies: it’s not pretty The Eurozone is in the down phase of the business cycle and government regulations make it difficult for startups in most EZ countries to launch, regulations in most EZ countries also make it risky for established firms to hire. Further, unemployment packages make it attractive for most to stay unemployed once they are laid off. Thus you have economies that look like this. Unlike the European Central Bank, which has been doing only very modest money printing, the Fed has been flooding the markets, which has caused, yet another manipulated boom in the housing sector and stock market, that will, soon experience another bust.

I comment that the chart labeled “sustained pain” shows divergence between the US and the Eurozone economic GDP, reflecting recession in the EU, commencing in the third quarter of 2011, largely due to anti-competitiveness, national wage contracts, banking insolvency, as well as socialist clientelism. On the other hand, in the US, Federal Reserve money printing operations successfully stimulated M2 money growth in the US, which in turn greatly rewarded investors in Retail, XRT, Homebuilding, ITB, Biotechnology, IBB, IPOs, FPX, Dynamic Media, PBS, Pharmaceuticals, PJP, US Infrastructure, PKB, and Consumer Discretionary, IYC, as is seen in their ongoing combined Yahoo Finance chart.

Bloomberg reports China small cap bubble seen bursting by UBS analyst Chen. Chen Li, the UBS AG strategist who predicted the tumble in China’s smallest shares two years ago, says the companies are poised to retreat again after valuations rose to the biggest premium over larger stocks since 2010.

Zero Hedge reports Crushed by soaring energy costs, Japan prepares to reactivate its nuclear plants.

Business Insider relates The UK has just had one lost decade, and it’s about to enter a second.

Declan Walsh of the NYT writes Pakistan rusts in its tracks, a journey on a crumbling railway provides a picture of a nation’s troubles. Ruk Station, in the center of Pakistan, is a dollhouse-pretty building, ringed by palm trees and rice paddies. Once, it stood at the junction of two great Pakistani rail lines: the Kandahar State Railway, which raced north through the desert to the Afghan border; and another that swept east to west, chaining cities from the Hindu Kush mountains to the Arabian Sea.

Now it was a ghost station. No train had stopped at Ruk in six months, because of cost cutting at the state-owned rail service, Pakistan Railways, and the elegant station stood lonely and deserted. At every major stop on the long line from Peshawar, in the northwest, to the turbulent port city of Karachi, lie reminders of why the country is a worry to its people, and to the wider world: natural disasters and entrenched insurgencies, abject poverty and feudal kleptocrats, and an economy near meltdown. Chronic electricity shortages, up to 18 hours per day, have crippled industry and stoked public anger. The education and health systems are inadequate and in stark disrepair. The state airline, Pakistan International Airlines, which lost $32 million last year, is listing badly (The article was reported and written before Declan Walsh’s expulsion from Pakistan by the Interior Ministry on May 10, 2013.)

There be many who have no knowledge that Jesus Christ, is at the helm of the economy of God, and that He in dispensation, Ephesians 1:10, has brought Liberalism to fulfillment and completion and is now introducing Authoritarianism as the world ‘s paradigm for economic and political experience. Such include Brigitte Granville, a professor of international economics and economic policy in the School of Business and Management at Queen Mary University of London … and … Hans-Olaf Henkel, a professor of international management at the University of Mannheim and a former president of the Federation of German Industries … and …  Stefan Kawalec is chief executive officer of Capital Strategy and a former vice minister of finance in Poland … are the authors of the European Solidarity Manifesto; these write Save Europe: Split the Euro.

Steve James writes in WSWS Mining jobs in Scotland in danger, following the collapse of Scottish Coal, the largest surviving mine operator in Scotland.  Scottish TV News reports A taskforce set up after the collapse of Scottish Coal is meeting in an effort to reduce job losses made during the liquidation of the company. The group will hold its second meeting after KPMG was appointed as liquidators of the coal firm in April.

CBS reports Minnesota national guard launches new $3.9 million drone facility

Concomitant with the Destructionism in economic and political life, I experience Jesus Christ dispensing himself into me, Ephesians 1:10, as the very element of life, Colossians 3:3-4, whereby I grow in the grace and truth of His word, am filled daily with the riches of his virtuous presence, and grow in ethical regard for others.  I experience spiritual satisfaction in the New Man, Colossians 3:8, who replaces the carnal self, and experience mental satisfaction knowing His will in motivation, speech and behavior, as Christ becomes my all inclusive life experience, Colossians 3: 11.

2B)  … On Tuesday May 21, 2013, Reuters reports Stocks advance as Home Depot, JPMorgan rise. World Stocks, VT,  and US Stocks, VTI, rose to new highs,  after Home Depot , HD, raised its profit outlook, while JPMorgan, JPM, rose after its chief executive won a vote of confidence from shareholders. The chart of the S&P 500, $SPX, SPY, shows a trade higher to $1,669.

Hedged Japan, DXJ, and Japan, EWJ, traded to new highs as the Wall Street Journal reports The Bank of Japan, BoJ, raised its assessment of the economy once again and stood pat on Kuroda Abenomics policy, showing confidence in its drastic easing program despite recent volatility in the bond market.

Automobile Parts Retailers, ORLY and AAP, rose taking Automobiles, CARZ, Retail, XRT, and Global Consumer Discretionary, RXI, to new rally highs; other sectors rising included, Clean Energy, PBD, Spin Offs, CSD, Small Cap Value, RZV, Global Producers, FXR, Pharmaceuticals, PJP, and Industrials, IYJ.

Yield bearing sectors rising included Residential REITS, REZ, US Real Estate, IYR, Premium REITS, KBWY, Shipping, SEA, North American Energy Partnerships, EMLP, and Energy Partnerships, AMJ.

Mexico, EWW, India, INP, India Small Caps, SCIN, traded lower, with the latter two trading lower on competitive currency devaluation, as the India Rupe, ICN, traded lower.   Homebuilders, ITB, and Manufactured Housing leader, Cavco Industries, CVCO, traded lower. Yield bearing Mortgage REITS, REM, Far East Financials, FEFN, Emerging Market Financials, EMFN, and India Earnings, EPI, traded lower.

Bespoke Investment Blog reports More bulls than bears for third week in a row. The weekly chart of closed end equity fund, CSQ, shows a topping off trade lower, as the weekly chart of closed end debt, PFL, shows a topping off rounded top trade lower. The combined chart of CSQ relative to PFL, CSQ:PFL, shows that equity has run its course leveraging higher now for three weeks, and that the latest gains in stocks cannot be sustained.

John Rubino writes Click on the next chart for a video from gold dealer Bullion Vault showing just how short the hedge funds are now (“managed money short futures” refers to hedge funds). Note that the last time they were really short (though nowhere near as short as today) was in the depths of the 2008 gold price correction – which was followed by an epic bull market in precious metals.

Reuters reports The Irish loophole behind Apple’s low tax bill.  Apple’s ability to shelter billions of dollars of income from tax has depended on an unusual loophole in the Irish tax code that helps the country compete with other countries for investment and jobs. The Exchange reports Here’s who pays the bill for Apple’s tax avoidance.

LA Times reports Anthrax drug brings $334 million to Pentagon advisor’s biotech firm

2C)  …  On Wednesday May 22, 2013, all forms of fiat wealth, Stocks, VT, Commodities, DBC, Major World Currencies, DBV, Emerging Market Currencies, CEW, and Credit, AGG, traded lower, as the WSJ reports The Fed leaves market guessing. Bernanke signals cautious track on bond buying; Meeting minutes blur picture. The Fed could take a first step toward reducing the program at one of its “next few meetings,” Mr. Bernanke said, but he cautioned that he was reluctant to move prematurely or aggressively. The comments, given at a congressional hearing Wednesday, gave markets a dose of clarity for a few hours, though a subsequent release of minutes from the Fed’s April 30-May 1 Fed policy meeting added to investor anxiety about the Fed’s plans. The minutes disclosed that some officials were prepared to start pulling back the program as early as the Fed’s next meeting in June, though the group as a whole, too, expressed hesitance.

There be many who have no knowledge that Jesus Christ, is at the helm of the economy of God, and that He in dispensation, Ephesians 1:10, has brought Liberalism to fulfillment and completion and is now introducing Authoritarianism as the world ‘s paradigm for economic and political experience.

The final phase of the Business Cycle got fully underway on Monday 20, 2013, with the trade lower in Electric Utilities, XLU, and Mortgage REITS, REM, such as IVR, on the rise of the US Interest Rate, ^TNX, to 1.97%, the steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening. and the trade lower in Greece, GREK, and its bank, NBG, as well as the trade lower in the US Dollar, $USD, UUP.

The end of Global ZIRP, as well as the termination of the world central banks’ monetary authority is confirmed with the parabolic trade lower in China’s Electrical Utility, HNP.  Investors derisking out of Biotechnology, IBB, such as AMGN, SGEN, ALXN, REGN, CELG, RGEN, and BRMN, as well as out of US Homebuilding, ITB, such as DHI, PHM, and LEN, reflects that the monetary policies of the US Federal Reserve are no longer stimulative, but rather have crossed the Rubicon of sound monetary policy, and have made “money good” investments, bad.  Yes, another bust just like 2008, has commenced, only much, much worse this time.

Earlier in the month, with the commencement of competitive currency devaluation on Friday May 10, 2013, specifically with the world’s individual currencies excluding the US dollar, trading lower, and with not only Aggregate Credit, AGG, trading lower, but also the highly indebted Electric Utilities, XLU, as well, the world pivoted from Liberalism’s age of investment choice, to Authoritarianism’s age of diktat; the epoch of inflationism ceased, and the epoch of Destructionism commenced.

In compliment of the currency traders, who have started a sell of the world currencies, the bond vigilantes have gained a nascent control of interest rates, as is seen in their call of the Interest Rate on the US Ten Year Note, ^TNX, higher to 1.95%, and a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening.

A see saw destruction of fiat money, that is currencies, credit and stock wealth, has commenced as the world central banks’ monetary policies have crossed the Rubicon of sound monetary policy, making “money good” financial assets bad.  In the age of Authoritarianism, the only forms of genuine wealth, will be diktat and physical possession of gold, that is gold bullion or bullion in online trading vaults such as Bullion Vault.

Wednesday May 22, 2013, was a pivotal day in economic and political life.  With all forms of fiat wealth, Stocks, VT, Commodities, DBC, Major Currencies, DBV, Emerging Market Currencies, CEW, and Credit, AGG, trading lower, on the Congressional testimony of US Federal Reserve Chairman Ben Bernanke signaling a cautious track on bond buying, and minutes of the Fed Meeting providing a blurred picture of Federal Reserve policy, the world fully pivoted from the old economy to a new economy; that is 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, and 3) from the banker regime of US Dollar hegemony to the beast regime of regional governance, totalitarian collectivism, debt servitude and austerity, also known as the ten toed kingdom of regional governance.

Under liberalism bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and were the legislators of economic life. On the other hand, under authoritarianism, currency traders, bond vigilantes and nannycrats working both in public private partnerships and in regional governance, are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

Investors deleveraged and derisked out of stocks. World Stocks, VT,  traded 1.1%  lower; these included:

VTI -1.0

VGK -1.0

EPP -1.6

EFA -1,.0

IFSM -0.3

EEM -1.1

EMIF, -1.0

IWM -1.5

The chart of the S&P 500, $SPX, SPY, shows a 0.8% trade lower.

Yield bearing sectors traded lower; these included:

ROOF -2.6%

AUSE -2.6

REZ -2.5

KBWY -2.6

IYR -2.5

DRW -2.1

IST -2.0

FNIO -1.9

DLS -1.8

XLU -1.7

FNIO -1.6

EPI -1.6

SEA -1.6

KBWD -1.5

REM -1.5

DBU -1.5

PSP -1.0

Banking sectors traded lower; these included:

Asset Managers, AssetManagers, -2.4% with BLK, WDR, EV, STT, WETF, AMG, IVZ, CNS, AMP, PFG, LM, BX, FNGN, and BEN, seen in this Finviz Screener trading lower.

EMFN -2.1

KCE -1.8

KRE -1.7

CHIX -1.4

IAI -1.3

FEFN -1.3

RWW -1.1

EUFN -1.0

IXG -1.1

Sectors trading lower included:

PBD -2.3%

XSD -2.3 with MCHP -5.8, NVDA -3.5, ALTR, -3.2

IGN -1.9

IGV -1.9

PBS -1.9

BJK -1.8

FDN -1.8

MTK -1.8

PSCI -1.6

RZV -1.6

RZG -1.6

WOOD -1.6 with LPX -4.7 and IP, -2.6

FXR -1.4 with WHR -1.7

PSCI -1.4

CARZ -1.3

PKB -1.2

Energy sectors trading lower; these included:

PSCE -3.0%

XOP -1.5

XLE -1.6

IEZ -1.9

OIH -1.7

Nation Investment, EFA, traded 1.0 % lower; these included:

GREK -2.4%

EGPT -2.3

EIS -2.2

EPOL -2.1.

EWA -2.0, KROO -2.1

EFNL -1.8

EIRL -1.8

THD -1.8 ThaiStocks.com reports

ARGT -1.8

EWW -1.7, EWUS, -1.7

YAO -1.6, ECNS -2.2

EWP -1.5

EZA -1.5

IWM -1.5

EWI -1.4

ENZL -1.2

EWM -1.1

EWJ -1.1, JSC, -1.5, DXJ, -0.6,

INP -1.1, SCIN -3.1

EPHE -0.3

The style loss leaders of the day included both Small Cap Revenue, RZV -1.6%, with LOV -8.7; and

Small Cap Growth, RZG -1.6 %, with ADNC -6.5, PKRK -4.6, AXLL -4.3, PLCM -3.2, PLT, -1.6

Commodities, DBC, traded 0.5% lower; these included Timber, CUT -1.5%, Oil, USO, -1.9, North Sea Oil, BNO -1.4, Unleaded Gasoline, UGA -0.7, Gold, GLD -0.7, Silver, SLV, -0.5. Base Metals, DBB 1.2, and Agricultural Commodities, JJA, 0.7.

Major World Currencies, DBV, and Emerging Market Currencies, CEW, traded lower as follows: FXA -1.1%, FXC -1.0%, FXF -0.8%, FXB 0.7%, BZF -0.6%, FXY -0.5%, CEW -0.5%, FXE 0.4%, IGN -0.2%. The chart of the US Dollar, $USD, shows a 0.50% rise to close at 84.35

The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the chart of the Steepner ETF, STPP, steepening; the Interest Rate on the US Ten Year Note, ^TNX, rose to 2.02%.

Aggregate Credit, AGG, traded 0.35%, lower; this included, BWX -0.7%, ZROZ -2.1, EDV -1.8, TLT, -1.5, MBB -0.3, MUB -0.1, BLV -1.1, LQD  -0.8,  PICB, -0.6

Some definitions are necessary.

All people have values. Values are defined as the foundation, building blocks and framework for one’s life; they define one as being elect having values and ethics, or fiat having carnality and iniquity; these are grouped into seven categories, as people have 1) commitment to work and experience its rewards or are involved in clientelism and dependency and experience its fruits, 2) activities, 3) affiliations, 4) associations, 5) mode of transportation, a Lexus, or the bus, or a bicycle, or walking, 6) plans, 7) public way or a private way; either biblical separation or worldly involvement.

When planning, the elect set aside time, a place and a spiritual space for reflection on Christ, and purpose for virtue, which is defined as God’s noble attributes; and purpose for ethics which is defined as praiseworthy relations with others; and develop a good conscience which is defined as the ability to discern right from wrong speech and behavior.

The motivation for a life of virtue, ethics and good conscience comes from Paul’s desire presented in Colossians 1:9-10, that the believer be filled with the full knowledge, that is the full experience of God’s will in all spiritual wisdom and understanding, to walk worthily of the Lord, to please Him in all things, bearing fruit in every good work and growing by the full knowledge of God, that one manifest as fully grown in Christ, Colossians 1:28.  Thus one escapes the corruption that comes from living in carnality and iniquity.

Spiritual wisdom is defined as the ability to accumulate and organize divine principles and is also  defined as the ability to live within virtue by partaking of the divine nature. As God breathes spiritual life in one’s soul, on receives it in ones’ Spirit, and enjoys its life giving presence. This contrasts with the carnal nature, where one has life experience and satisfaction coming from living within bad, evil and wicked things, or from living in iniquity towards others.   A fundamental life virtue is the attribute of truth and truthfulness, where truth is defined as a trustworthy promise or that which is reliable for belief, which in turn enables one to define the genuine meaning of a thing.

Witness Lee relates in commentary of Colossians 1:9-10, on page 923 of the New Testament Recovery Version of the Bible. Bearing fruit refers to living in Christ in every respect; this is the real essence of every Christian good work; not knowledge in letters in the mind, but the living knowledge of God in the Spirit, whereby we grow in life.

The apostle Paul writing in Ephesians 1:10, reveals that Jesus Christ is at the helm of the economy of God. Economy is defined as the rule of 1) a paradigm (liberalism or authoritarianism), 2) a money system (the fiat money system or the diktat money system), 3) a regime (the banker regime of US Dollar hegemony or the beast regime of regional governance, totalitarian collectivism, debt servitude and austerity, also known as the ten toed kingdom of regional governance)

Credit is defined as trust.

Wealth is defined as the accumulation of value.

Capital is defined as money.

Money is defined as resource.

Currency is defined as the means of exchange where worth is based upon a nation’s or region’s credit.

2D)  … On Thursday, May 23, 2013, Breakout Videos, reports Japan fuels global sell-off but Wall Street pares losses.  After rising 80% in the past seven months, Japan’s benchmark Nikkei 225 stock index finally blinked: a staggering 7% single-day decline rocked Tokyo’s market in ways not seen since the Earthquake Tsunami disaster of 2011. And Digital Look Sharecast reports Pressure on EU stocks mounts.

Investors deleveraged and derisked out of stocks again today. World Stocks, VT,  traded 0.5% lower; these included:

VTI  -0.2%

VGK -.5

EPP  -.8

EFA -1.4

IFSM -3.1

EEM -.7

EMIF -.3

IWM —

SPY -.3

Yield bearing sectors traded lower; these included:

BRAF -2.6

EPI  -2.0

REZ -2.1

FNIO -2.1

KBWY -1.7

ROOF  -1.2

IYR -1.2

DRW -1.1

DSL -1.1

IST -1.0

XLU -1.0

SEA -1.0

PSP -1.0

Banking sectors traded lower; these included:

Asset Managers, AssetManagers,

FEFN -5.1 with WBK -2.5 and X -9.5, NMR -8.3, MTU -6.4, SMFG -4.4, MFG -3.5,

CHIX -1.9

EMFN -1.0

EUFN -1.7

RWW -1.0

IXG -1.2

Sectors trading lower included:

CARZ -2.8

PICK -2.3

FLM -1.5

RXI -1.2

Nation Investment, EFA, traded 1.4% lower and IFSM, traded 3.1%, lower,  these included:

EWJ  -4.2, CSJ, -4.2, JSC -5.4 as IX -9.5, NMR -8.3, MTU -6.4, SMFG -4.4, MFG -3,5, and Mike  Shedlock asks Is this the start of the great reflation unwind? I don’t know, but we should all hope so.

VNM -2.7

EWSS -2.1

RSX -2.2 ERUS -2.1

EPHE -2.1

INP -1.7 SCIN -2.9

EWT -1.6

EWD -1.5

THD -1.2 ThaiStocks.com reports Thai stocks are on fire

EWY -1.0

ARGT -1.0

EWU -1.0, EWUS, -1.0

EWA -1.0, KROO -1.0

IDX -1.0, IDXJ -1.4

EWM -1.0

GREK -1.0

EWP -2.0

EWG -2.0

EWI -1.0

The style loss leader of the day was Large Cap Growth, JKE, -0.3%.

Commodities, DBC, traded higher gaining 0.5%. GLD 2.0, SLV 1.7, UNG 1.7, yet DBB -1.1.

The chart of the US Dollar, $USD, shows a 0.6% trade lower to close at 63.67; this forced Major World Currencies, DBV -0.4% lower.  Currencies rising include FXY, 1.1, FXF 1.0, FXC 0.7, FXE 0.6, BZF 0.6, FXF 0.7, FXE 0.6, FXA 0.5, FXB 0.5, and CEW 0.2.

The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the chart of the Steepner ETF, STPP, steepening 1.2%, establishing a breakout in the destruction of US Government Debt by the bond vigilantes. The Inerest Rate on the US Ten Year Note, ^TNX, traded unchanged.

Aggregate Credit, AGG, traded unchanged; yet Junk Bonds, -0.3, and Ultra High Yield Bonds, UJB -0.3.

Bloomberg reports Kuroda struggles with communication as Japan rates rise Haruhiko Kuroda may need to talk his way out of a paradox he helped create. Installed as head of the Bank of Japan in March, Kuroda aims to unlock borrowing and spending by lifting inflation expectations and wages after 15 years of deflation.

Bloomberg reports Asia goes on a debt binge  In the heart of Kuala Lumpur Malaysia, lies the abandoned foundation of Plaza Rakyat, a never-built skyscraper and shopping mall. Rusty rebar jutting from concrete pilings and fetid green pools of rainwater serve as an unintended monument to the debt crisis that ravaged Asia in the late 1990s. Today, less than a half mile from the abandoned project, the next boom is under way. Construction has begun on a new subway line, and next to one station plans call for a 118-story zigzagging skyscraper that would be the third-tallest building in the world. Cheap credit is fueling the building spree.

The Telegraph reports Veteran fears ‘beginning of the end’ for Japan as bond market buckles. Global markets face a witches’ brew of new risks as Japan’s monetary adventure wobbles.

Robert English of Economic Policy Journal writes Snapple founder dies at age 80; A non-crony capitalist. I wonder if he ever stepped foot in Washington D.C. WSJ reports: Leonard Marsh transformed a tiny fruit-juice supplier into Snapple, a national brand of fruit-flavored beverages and iced tea powered by quirky marketing and bold flavors. So successful was the brand that Snapple inspired dozens of imitators and prompted major soft-drink companies to introduce their own fruit and tea beverages to compete. Mr. Marsh, who died Tuesday at age 80, launched Snapple in New York with two friends in the early 1970s to supply natural fruit juices to health-food stores. After introducing lemonade and fruit-flavored ice tea in distinctive wide-mouth bottles, the company went public in a much-ballyhooed initial public offering in 1992. Mr. Marsh and his brother-in-law Hyman Golden originally ran a Brooklyn-based window-washing and office-maintenance business. In 1972, they teamed up with Arnold Greenberg, who operated a health-food store in Manhattan’s East Village, to create Unadulterated Food Products Inc. The company made juices and sold eggs and produce. After renaming the company after one of their early products, carbonated apple juice, the founders became known collectively as the “Snapple Guys.” They built up the brand one cooler at a time in New York City’s pizzerias and bodegas.

I comment not only has Leonard Marsh, passed away, but the very paradigm of economic and political experience has transitioned from Liberalism to Authoritarianism, as Wednesday May 22, 2013,was a pivotal day in economic and political life, with all forms of fiat wealth, Stocks, VT, Commodities, DBC, Major Currencies, DBV, Emerging Market Currencies, CEW, and Credit, AGG, trading lower, on the Congressional testimony of US Federal Reserve Chairman Ben Bernanke signaling a cautious track on bond buying, and minutes of the Fed Meeting providing a blurred picture of Federal Reserve policy … Under liberalism bankers, corporations, government, entrepreneurs, such as Mr. Marsh, and citizens of democracies were the legislators of economic value and were the legislators of economic life … But, now, under authoritarianism, currency traders, bond vigilantes and nannycrats working both in public private partnerships and in regional governance, are the legislators of economic value and are the legislators that shape one’s means and one’s end.

Peter Schiff writes in Economic Policy Journal writes Strong currencies produce strong economies. over the last decade Australia, New Zealand, and Switzerland, three of the world’s strongest economies, have produced strong currencies. Since 2001, all three have had generally appreciating currencies, accompanied by steadily rising exports, strong economic fundamentals, and low unemployment. From 2001 to 2012, the Kiwi Dollar appreciated by 98% against the U.S. dollar, but its exports in local currency terms increased by 40% (170% in U.S. dollar terms). Over the same time frame, the Aussie dollar appreciated by 103% and exports increased by 102% in local currency (and 305% in U.S. dollar terms). In Switzerland the story was the same, currency up 82%, exports up 53% in local terms and (and 175% in U.S. terms).

At the same time, the strengthening currencies made few negative impacts on other aspects of economic performance. At the time when the Swiss bankers caved to international pressure in September 2011 and pegged its previously surging franc to the euro, their economy had shown some of the best economic performance on the Continent. More recently, Australia and New Zealand reported stunning job creation figures. Adjusted for population, the U.S. would have had to create more than 600,000jobs per month to keep pace with Australia, and 900,000 jobs per month to match New Zealand (U.S. job creation has averaged about 169,000 per month over the last year).

These lessons have been wholly lost on the Japanese who are frantically trying (and succeeding) in severely devaluing the yen. Although Japan’s export machine had not suffered from the yen’s appreciation from 2001-2012 (up 30% in local currency exports and 98% in dollar terms), newly installed prime minister Shinzo Abe and his minions at the Bank of Japan believe a weaker yen is the key to renewed economic strength. But the collapse of the yen has helped push up both the Aussie and Kiwi dollars, which has spurred bankers in Australia and New Zealand into taking unneeded and ultimately self-destructive actions. In April they threw in their lot with the interventionists and cut interest rates to stop the rise of their currencies. But the moves fly in the face of the modern playbook which states that policy should be tightened during periods of full employment, strong growth, and surging real estate prices. The misplaced fear of a strong currency seems to trump all other concerns.

The falling yen is creating a clear and present danger in Japan’s enormous bond market. In less than one month, yields on 10 year Japanese Government Bonds have more than doubled, approaching nearly 1%. While those rates may sound manageable for most countries, Japan has the highest debt to GDP ratio in the developed world. If they had to pay 2% (the same rate as its inflation target), the country would need to devote more than half of its tax revenue just to service its debt! Clearly this possibility is dawning on stock investors who pushed down the Nikkei by more 7% today.

Never in the course of history has a country’s economy failed because its currency was too strong. It’s a pathology that simply does not exist. On the other hand, the list of those ruined by weak currencies is extensive. The view that a weak currency is desirable is so absurd that it could only have been devised to serve the political agenda of those engineering the descent. And while I don’t blame policy makers from spinning self-serving fairy tales (that is their nature), I find extreme fault with those hypnotized members of the media and the financial establishment who have checked their reason at the door.

A currency war is different from any other kind of conventional war in that the object is to kill oneself. The nation that succeeds in inflicting the most damage on its own citizens wins the war. The only real way to win is not to play.

I comment that with Jesus Christ at the helm of the economy of God, Ephesians 1:10, pivoting of the world’s economic and political paradigm from liberalism to authoritarianism, specifically from Crony Capitalism, European Socialism, and Greek Socialism, to Regionalism, countries are now at the mercy of currency traders and bond vigilantes. Authoritarianism will not be marked so much by countries acting to force their currencies lower, as it will be the case that currency traders are acting, together with bond vigilantes, to declare war on the world central banks, with the aim of destroying the value of nation state currencies, as well as national treasury debt.

Competitive currency devaluation commenced on Friday May 10, 2013, as the currency traders forced  world’s individual currencies, such as the Australian Dollar, AUD, and the New Zealand Dollar, NZD, lower.

In compliment of the currency traders, the bond vigilantes have gained a nascent control of interest rates, as is seen in their call of the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.02%, and a steepening of the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening.  In fact the chart of Steepner ETF, STPP, shows a breakout, which is now commencing a destruction of US Government Debt, GOVT, such as ZROZ, EDV, and TLT, by the bond vigilantes. Other evidence that the bond vigilantes have gained a nascent control of interest rates, is seen in the weekly chart of the inverse of the Japanese Government Bonds, JGBS, rising in value.

Most definitely a war on the central banks is shaping up. The currency traders are attempting to call the Yen, FXY, higher, and the bond vigilantes are attempting to call the Interest Rate on the Japanese 10 Year Treasury bond higher.

Benton te writes Japan’s Nikkei crashes on rioting Japanese Government Bonds. a riot in Japan’s Governments Bonds has sent the Yen in a spike and simultaneously a crash in her stock markets. The Nikkei dived by 7.3%.  First the upheaval in the JGBs. From Bloomberg, Japanese government bonds fell, with 10-year rates touching 1 percent for the first time in a year, on speculation the Federal Reserve will curb stimulus and the Bank of Japan will tolerate an increase in yields. Japan’s five-year note rate matched the highest in two years after Fed Chairman Ben S. Bernanke said yesterday the central bank may trim bond purchases if policy makers see indications of sustained economic growth. The BOJ injected 2 trillion yen ($19.4 billion) into the financial system to stem volatility following a circuit breaker in JGB futures trading. The reality is that this has little to do with Ben Bernanke’s latest statement but has everything do with the much touted elixir called “Abenomics”.

The Bloomberg chart of JGB’s 10 year yield has been climbing since the BoJ’s Kuroda announcement to double her monetary base last April. In other words, the yields has remained lofty even when Japan’s government has tried to calm her down by buying them. Today the BoJ bought a record number of yields in an attempt to assuage the markets, from another Bloomberg article, The Bank of Japan injected 2 trillion yen ($19.4 billion) into the financial system today to stem volatility, as benchmark JGB yields swayed the most since the day after the central bank announced unprecedented bond buying.

I keep repeating that Abenomics is bound for failure for the simple reason that such policies have been founded on economic inconsistencies and premised on hope on the supposed magic of doing the same thing over and over again and expecting different results: Abenomics operates in an incorrigible self-contradiction: Abenomics has been designed to produce substantial price inflation but expects interest rates at permanently zero bound. Such two variables are like polar opposites. Thus expectations for their harmonious combination are founded on whims rather from economic reality.

The Japan’s stock market crash has sent almost the entire Asian region in a sea of red. It isn’t the yen or Japan’s stock markets that will be the primary concern rather it is the JGB or Japan’s bond markets that will act as the driving force.  The bond markets has been in a parallel universe or in patent disconnect with the stock markets, where we just saw today the realization of a Wile E Coyote moment. Previous soaring stock markets amidst unstable bond markets has finally led to a regression to the mean. As today has shown, stock markets are the last to know.

The increasing prospects of a Japan debt crisis could herald a return of a global Risk Off conditions. On the other hand, if the BOJ continues to massively inflate; such crisis may metastasize into a currency or a yen crisis or a combo of both. Everything now will depend on the how Japanese policymakers react and how the global financial markets will respond to them. Remember this isn’t just a Japan affair, but given the immense build up of global bubbles, including the Philippines, all it needs is a trigger for all of them to pop. Japan could play such a role. Today’s rout in the Japanese financial markets is a taste of the blowback from populist unsustainable inflationist policies.

And Benson te wrote on March 17, 2013, Philippine banks to withdraw some of their funds parked in the BSP, thereby increasing money circulating in the economy.  Last week, they lowered interest on Special Deposit Accounts (SDA)[8]. SDAs are fixed-term deposits by banks and trust entities of BSP-supervised financial institutions with the BSP [9]. The BSP have used SDAs as a policy tool to “mop up” or sterilize liquidity in the system.

The lowering of SDA rates has been implemented allegedly to discourage the inflow of foreign portfolio investments that will likewise “temper” the appreciation of the local currency the peso. Moreover, lowering SDA rates has been supposedly meant to encourage “banks to withdraw some of their funds parked in the BSP, thereby increasing money circulating in the economy”. BSP’s Tetangco further dismissed the threat of inflation risks from such actions [10].

So by redefining inflation as hardly a consequence from additional supply of money, the BSP thinks that they can wish away inflation through mere edict. Yet if “inflation is always and everywhere”, according to the illustrious Nobel laureate Milton Friedman [11], “a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output”, then the BSP’s policies will backfire pretty much soon.

Unleashing or emancipating part of the record holdings of 1.86 trillion pesos (as of mid February) of SDAs will intensify the inflation of the domestic credit bubble, fuel and exacerbate the manic phase of “bubbly behavior” of property and equity markets and subsequently prompt for a possible spillover to price inflation. Thus political efforts to attain “financial stability” will lead to the opposite outcome: price instability and the risks of greater financial volatility. Such policies, in essence, underwrite bubble cycles and stagflation. In short, BSP actions on SDAs can be analogized as playing with fire, and those who get burned will be the public. And today’s correction phase in the PSE will likely be ephemeral. And the potential shift from SDAs to the market will serve as another enormous force that will underpin the coming rally in the Phisix that would lead to the 10,000 levels.

I comment that as it turned out, since March 17, 2013, the time of the writing of the article, the chart of Philippines, EPHE, showed a strong rise from 38.02, to a market high on May 15, 2013 at 43.47, to trade lower on May 23, 2013 at 41.88.

A see saw destruction of fiat money, that is currencies, credit and stock wealth, has commenced as the world central banks’ monetary policies have crossed the Rubicon of sound monetary policy, making “money good” financial assets bad.

The ongoing monetization of debt by the world central banks over the years, with injection of Trillions of liquidity into international securities markets. and now with Global ZIRP, having come about through the announcement of Kuroda Abenomics, and with the recent interest rate reduction by the ECB, the tipping point of the inflationary benefits of monetary expansion, if they can be called that, has been reached.

Debt deflation, that is currency deflation, is underway, and is responsible for the strong sell of Australia Dividends, AUSE, Westpac Banking, WBK, Australia, EWA, and most significantly the Australian Small Caps, KROO, as well as New Zealand, ENZL.

The Risk Off ETN, OFF, is now increasing in value, communicating that risk appetite is turning to risk aversion.

The word scheme is not a pejorative word; the word scheme is defined as a plan, design, or program of action to be followed.  Liberalism was the age of investment choice, and was marked by a number of investment schemes.  Nation investment, EFA, and Small Cap Nation Investment, IFSM, as well as Global Industrial Production, FXR, were investment schemes; another for example was leveraged  buyouts, PSP.  Now, with the currency traders and bond vigilantes calling the world central banks to account, these schemes are starting to fail.

Authoritarianism is the age of diktat, and its schemes include bank deposits bailins, levying of additional taxes, public private partnerships, austerity measures, capital controls, and sale of a country’s central bank’s gold reserves.

Authoritarianism’s schemes come by diktat of sovereign regional leaders, such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as the ECB, all for regional security, stability, and sustainability.

In the age of Authoritarianism, the only forms of genuine wealth, will be diktat and physical possession of gold, that is gold bullion or bullion in online trading vaults such as Bullion Vault.

2E)  … On Friday, May 24, 2013

Investors deleveraged and derisked out of stocks again today. World Stocks, VT,  traded 0.6% lower; these included:

VTI —

VGK —

EPP  -2.5 Asia Stocks, excluding Japan turned parabolicaly lower the week ending May 24, 2013.

EFA -1.2

IFSM

FXR —

with WHR -1.3

EEM -1.0

EMIF -1.0

IWM —

SPY  —

Yield bearing sectors traded lower; these included:

AUSE -3.8

AMJ -2.0

KBWY -1.0

ROOF  -1.0

IYR -1.0

DRW  -1.0

DLS -1.0

IST -1.0

XLU -1.0

REM -1.0

REZ -1.0

Banking sectors traded lower; these included:

Asset Managers, AssetManagers,  —

CHIX -2.0

EMFN -1.2

EUFN  -1.6

FEFN -1.0

IXG -1.2

Sectors trading lower included:

CHII -4.3

ITB -1.2

BJK -1.0

XRT -1.0

MTK -1.0

FLM -1.0

FCN -1.0

IGV -1.0

IGN -1.0

Nation Investment, EFA, traded 1.0% lower and IFSM, traded 1.0%, lower as well; these included:

DXJ -3.1, EWJ -1.8, JSC -1.0

EWA -3.3, KROO -2.4

ENZL -2.2

EPU -2.0

ECH -1.6

YAO -1.6, ECNS,

EWW -1.0

EWZ  —, EWZS —

INP -1.0, SCIN —

RSX -1.0 ERUS -1.0

EWS -1.0, EWSS -1.0

EWM -1.0

THD -.1.0

EPHE -1.0

GREK -1.0

EFNL -1.0

IDX -1.0 IDXJ —

EWU -1.0 EWUS -1.0

EWG -1.0

EWI -1.0

EWP -1.0

The style loss leader of the day was JKF -0.17

Commodities, DBC, -1.0, with Silver, SLV, -1.2, Agricultural Commodities, JJA  -1.0, Base Metals, DBB -1.0, Gold, GLD, -1.0.

The chart of the US Dollar, $USD, shows a 0.2 trade lower on the day to close down, 0.8%, for the week at 83.69.

Currencies trading higher lower included the Australian Dollar, FXA, -1.0, the Brazilian Real BZF, -0.6,, Emerging Market Currencies, CEW -.0.4, and the Canadian Dollar, FXC -0.4. And Currencies trading lower included the Swiss Franc FXF, and the Japanese Yen, 0.7%.

This week, the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the chart of the Steepner ETF, STPP, establishing a breakout, resulting in the destruction of US Government Debt, GOVT,  by the bond vigilantes as they called the Inerest Rate on the US Ten Year Note, ^TNX, higher to 2.01%.

Aggregate Credit, AGG, traded unchanged for the day.

Mike Mish Shedlock writes Greek debt unchanged since 2010; EU to ive Greece still more time; More time is useless. Greece was supposed to get it’s debt to GDP ratio to 100% by 2012, then 100% by 2013, then 110% by 2014. Now Jeroen Dijsselbloem, president of the Eurogroup finance ministers, says Greece may get still more time to meet fiscal targets. And the alleged level of debt sustainability keeps rising all the while. Greek Debt remains unchanged after massive bailouts and haircuts. Note that the sustainable level of debt is now 124% of GDP, ratcheted up numerous times in the past couple of years. By now it should be readily apparent the situation is totally and completely hopeless. Greece will not reduce debt to 124 percent of GDP by 2020 from an estimated 173 percent this year, unless of course Greece defaults.

Marcus Day of WSWS reports Poverty skyrockets in US suburbs. According to a new report by the Brookings Institution, poverty rose more than 64 percent in US suburbs from 2000 to 2011.

Suburban Poverty in America, a new book by Elizabeth Kneebone and Alan Berube, explores the growth of suburban poverty and offers unique policy solutions for revitalizing struggling communities. Montgomery County, Maryland, is one of the spotlight suburbs, whose plight has also been recognized by NPR. One can learn more about the book and other suburban communities at Confrontingsuburbanpoverty.org.

Emily Badger of The Atlantic Cities writes Kneebone and Berube have built individual profiles of suburban poverty for each of the country’s 100 largest metros, underscoring that a problem many keep at arm’s reach is closer than people expect. These are really shared challenges,” Kneebone says. “The more people can recognize that their community is a part of this trend, that maybe their neighbor is affected by growing poverty, that hopefully would help galvanize some action around this.

Many suburbs, for instance, don’t have the kinds of public transit networks that can connect impoverished neighborhoods to job opportunities. And it’s significantly harder to address poverty through transportation when low-income households in need of it live dispersed over larger areas. Suburbs also simply lack the built-in networks of service providers that have grown up over decades in inner-city communities.  All of this means that if the geography of poverty has dramatically changed over the last decade, we’ll have to spend the next decade (and likely more) thinking about how to address it in its newest forms.

Lornet Turnbull of The Seattle Times reports Poverty hits home in local suburbs like South King County. For the first time, there are more poor people living in American suburbs than in the nation’s big cities, according to new findings by the Brookings Institution. South King County is particularly “eye-opening,” the researchers say. Nowhere is suburbanization of poverty more evident than in South King County, where affordable housing has drawn immigrants and refugees coming here from across the globe as well as low-income families forced from Seattle by skyrocketing housing costs.

The findings are contained in a new book: “Confronting Suburban Poverty in America,” which examines this trend in the 100 largest metropolitan areas across the country, including the Seattle metro area, where 3.5 million people are spread across King, Snohomish and Pierce counties.

Incredible diversity. Classrooms in schools across South King County teem with a mix of cultures and in many of the area’s school districts, more than 100 languages are spoken. Cities face increased need for interpreter services, and schools for specialized language classes. Some city leaders bemoan the high costs of diversity and grapple with how to engage this new population. “You have this incredible refugee population coming from all corners of the earth and landing in Tukwila and communities next door, joining longtime middle-class families that have been there for decades …” Berube said. “There’s incredible diversity that comes with that and challenges for a small community to assist with integration.” Some community leaders are trying to understand and address the challenge, Berube said.

But “there are others who might have thought: ‘all these immigrants come into our communities, stressing our schools

3) … Summary

The week ending Friday May 24, 2013, was a pivotal day in economic life and political life.  With all forms of fiat wealth, Stocks, VT, Commodities, DBC, Major Currencies, DBV, Emerging Market Currencies, CEW, and Credit, AGG, trading lower, on the Congressional testimony of US Federal Reserve Chairman Ben Bernanke signaling a cautious track on bond buying, and minutes of the Fed Meeting providing a blurred picture of Federal Reserve policy, Jesus Christ, in dispensation, Ephesians 1:10, has fully pivoted the world from the old economy to the new economy; that is 1) from the paradigm of liberalism to the paradigm of authoritarianism, 2) from the fiat money system to the diktat money system, and 3) from the banker regime of US Dollar hegemony to the beast regime of regional governance, totalitarian collectivism, debt servitude and austerity, Revelation 13:1-4, also known as the ten toed kingdom of regional governance, Daniel 2:25-45.

It is sovereignty that provides seigniorage, that is moneyness. Fiat money has become a warped and twisted thing, and it follows that democratic governance has failed and can no longer provide a trustworthy basis for investment choices. Diktat money is rising to replace to fiat money; it was born out of the Cyprus Bank Deposit Bailin, and is defined as the compliance required, as well as the trust that is engendered, the debt servitude that is enforced, and the austerity measures that are experienced, such as heavy losses on large bank deposits via bailins, levying of additional taxes, and sale of a country’s central bank’s gold reserves, when sovereign regional leaders such as Olli Rehn, Jeroen Dijsselbloem, and Michel Barnierm, as well as sovereign regional sovereign bodies, such as the ECB, invoke mandates for regional security, stability, and sustainability.

Doug Noland writes in Kuroda’s Gambit, Playing With Fire. The Bank of Japan has appeared to support a much weaker yen, while believing its aggressive bond purchases would place an ongoing ceiling on bond yields. But with debt approaching 240% of GDP and its financial institutions large (leveraged) holders of low-yielding government debt, a spike in market yields would both impair Japan’s financial system and thrust its fiscal position into precarious debt trap dynamics.

Initially, the global speculators were not too concerned with eventual outcomes. Their focus was on the BOJ’s massive liquidity injections, yen weakness and prospects for Japanese institutions and retail investors to flee Japan in search of higher returns elsewhere. Suddenly, another $80bn or so was combined with the Fed’s $85bn monthly quantitative easing for liquidity injections unlike anything ever experienced by booming global markets. Global equities went into melt-up mode, global sovereign yields in melt-down and risk premiums generally collapsed to multi-year lows – in the face of a weakening global economic backdrop and mounting fragilities. Corporate debt issuance, already at record pace, inflated to even further extremes, including deteriorating quality at record low yields! Well, Financial Euphoria too often proves fleeting.

The current bout may have already begun to dissipate. Monetary policy that was to propel securities prices higher is suddenly viewed in somewhat different light. Japan’s Nikkei equities index was hammered 7.3% on Thursday. After trading as high as 15,943 mid-week, the index briefly touched 14,000 on Friday before ending the week at 14,612. Notably, the Japanese government debt market has of late made their equity market appear relatively stable. Trading as low as 55 bps early in the month, Japan’s 10-year JGB yields traded briefly at 1.0% Thursday before aggressive BOJ buying forced yields back down to 82 bps by week’s end. When a fledgling central bank chief – in the midst of a radical and untested experiment in monetary inflation – promises to stabilize a nearly $14 TN bond market, well, it’s time to begin worrying.

And my guess is that’s exactly what some of the hedge funds and sophisticated leveraged players began to do this week. Time to begin taking some chips off the table.

The Kuroda Gambit was seen unleashing enormous amounts of liquidity upon global markets. At least this perception was spurring a collapse of sovereign yields and risk premiums around the globe. Those caught short melting up risk markets were forced to run for cover – virtually everywhere. Those hedging various risks were forced to throw in the towel, while those cautiously underinvested in rapidly rising markets had little choice but to throw caution to the wind (“capitulate”).

Radical BOJ measures pushed already over-liquefied, speculation rife and highly unsettled markets over the edge into speculative blow-off type dislocations. During Thursday’s and Friday’s sessions, Italy CDS surged 32 bps and Spain CDS jumped 31 bps. Portugal CDS jumped 37 bps in two sessions. In similarly sharp reversals, bank and financial CDS prices jumped sharply to end an unsettled week. Italian stocks, EWI, were hit for 3.7% in two sessions and Spanish stocks, EWP, 3.7% for the week.

And after spiking to record highs on Wednesday, Germany’s DAX equities index, EWG, reversed course and sank 2.6% in two sessions. Thursday and Friday sessions saw the yen rally 2% against the dollar.

Generally, the emerging currencies continue to trade poorly. The Colombian peso fell 2.0% this week, with the Chilean peso and Mexican peso 1.5% lower. The Indian rupee fell 1.4%, the South Korean won 0.9%, the Philippine peso 1.0% and the Peruvian new sol 1.4%. The so-called commodities currencies remained under pressure. The South African rand was hit for another 1.8%. The Brazilian real fell 0.8%, the Australian dollar 0.8% and the Canadian dollar 0.4%.

Commodities prices generally remained under pressure. The Goldman Sachs Commodities index fell 1.2% this week, increasing 2013 declines to 3.4%. Crude oil dropped 2.2%. Curiously, Lumber futures declined another 2% this week, having now dropped about a third from March highs. Nickel, Soybeans, Cocoa, Palladium and Coffee all declined this week.

Here at home, the stock market was resilient, while other indicators pointed to tinges of heightened risk aversion. Ten-year Treasury yields jumped above 2.0% for the first time since March. Curiously, benchmark MBS yields jumped 13 bps to the highest level in a year. After beginning the month at 2.28%, MBS yields ended the week at 2.82%. And after dropping to the lowest level since 2007, junk bond CDS prices jumped 19 bps in two sessions.

Doug Noland goes on to relate M2 (narrow) “money” supply increased $12.7bn to a record $10.553 TN. “Narrow money” expanded 6.6% ($656bn) over the past year. For the week, Currency increased $2.5bn. Demand and Checkable Deposits added a billion, and Savings Deposits gained $9.8bn. Small Denominated Deposits slipped $1.8bn. Retail Money Funds rose $2.1bn.

And he relates Money market fund assets jumped $19.5bn to $2.601 TN. Money Fund assets were up $37bn from a year ago, or 1.4%

And he relates The U.S. dollar index slipped 0.7% to 83.70 (up 4.9% y-t-d). For the week on the upside, the Japanese yen increased 1.9%, the Swiss franc 1.2%, the euro 0.7%, the Danish krone 0.7%, the Swedish krona 0.7%, the New Zealand dollar 0.4%, the Norwegian krone 0.4% and the Taiwanese dollar 0.2%. For the week on the downside, the South African rand increased 1.8%, the Mexican peso 1.5%, the South Korean won 0.9%, the Australian dollar 0.8%, the Brazilian real 0.8%, the Singapore dollar 0.4%, the Canadian dollar 0.4%, and the British pound 0.3%.

And he posts that Lisa Abramowicz of Bloomberg reports Wall Street banks are expanding holdings of speculative-grade bonds as prices fall from record highs with investors retreating from exchange-traded funds that buy the debt. The 21 primary dealers that do business with the Federal Reserve increased their net positions in junk-rated debt by 37% to $7.7 billion in the two weeks ended May 15, 2013.

Under liberalism bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and were the legislators of economic life. Under authoritarianism, currency traders, bond vigilantes and nannycrats working both in public private partnerships and in regional governance, are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

A see saw destruction of fiat money, that is currencies, credit and stock wealth, has commenced as the world central banks’ monetary policies have crossed the Rubicon of sound monetary policy, making “money good” financial assets bad.  In the age of Authoritarianism, the only forms of genuine wealth, will be diktat, and physical possession of gold, that is gold bullion or bullion in online trading vaults such as Bullion Vault.

Gold Mining Stocks traded higher this week, GDX +4.3, GDXJ +6.5.

The trade lower in Major World Currencies, DBV, -1.2%, and Emerging Market Currencies, CEW, -0.7%, communicates that competitive Currency Devaluation is underway.

Aggregate Credit, AGG -0.4 %, with JNK -0.7, EMB -1.5 and UJB -1.7.

World Stocks, VT, -1.8 %

Transports, XTN -1.6

Industrials, XLI -1.0

Global Industrial Producers, FXR -1.0

Asia Excluding Japan, EPP -4.5

Nation Investment, IFSM -3.9

Small Cap Nation Investment, EFA -2.5

Emerging Markets, EEM -2.5

US Stocks, VTI -1.2

European Stocks, VGK -1.0

The Russell 2000, IWM -1.2.

The chart of the S&P 500, $SPX, SPY, shows a 1.1% trade lower for the week.

European Nations

GREK-12.6

EWP -2.8

Financial Sectors, IXG ,-3.0

FENF -7.1

EMFN -3.2

EUFN -3.5

EMFN -3.2

IAI -2.9

KCE -2.5

RWW -1.7

KRE -0.7

Sectors

CHII -3.3

IGV -3.4

BJK -3.3

IGN -2.8

WOOD -2.7

Yield Bearing Stocks

AUSE -6.1

EPI -5.5

REM -4.5

DRW -4.1

KBWY -4.1

IYR -3.8

XLU -3.1

Nation Investment, EFA, -2.5

DXJ -6.3

EWJ -5.8

EWA -5.6

INP -5.1

EZA -3.8

THD -2.9

EWT -2.8

YAO -2.6

Small Cap Nation Investment, IFSM, -3.4

JSC -7.5

SCIN -7.6

KROO -5.7

EWW -4.6

EWSS -3.5

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