A financial market report for the week ending January 17, 2014, from the dispensation economics viewpoint … this post is available in Google Documents format here.
1) … Introduction
An inquiring mind asks, what is money? Money is defined as the credit and trade that comes from the administration of a household or stronghold; and interest is defined as the cost of money.
Economics is defined as the life experience between a person and another, a corporation, and the state, that is government; either it be ethical or pathological; economics manifests either in life or in death.
As communicated in Ephesians 1:10, dispensation economics is a theory of providence: it describes how God the Father, established Jesus Christ to provide for a world lost to sin, that is doubt.
An economy is defined as the experience that comes from the administration of the credit and trade that comes from a household or stronghold; an economy exists for the experience of life or the experience of death; this life and death experience is determined by the prevailing interest rate of the existing monetary regime and its monetary policy. The beast regime of regional governance and totalitarian collectivism emerged on October 23, 2013, replacing the democratic nation stage and banker regime, when the bond vigilantes in calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.48%, PIVOTED the world from the paradigm and age of liberalism into that of authoritarianism.
2) … The stock market performance of the publicly traded Shipping Companies will likely be a leading economic indicator.
One can follow the publicly traded Shipping Companies with the use of this Finviz Screener. The market performance of this yield bearing investment an economic indicator, leading lower, as the world progressively moves out of inflationism into destructionism.
Jesus Christ, through dispensation, that is the administration of all things economic and political, produced peak liberalism the week of January 13, 2013, to January 17, 2013, which came via currency carry trade investing and debt trade investing.
Liberalism’s peak investment experience is seen in the ongoing six month Yahoo Finance chart of Shipping SEA, Global Financials, IXG, Nation Investment, EFA, World Stocks, VT, Greece, GREK, The Eurozone, EZU, and Denmark. EDEN.
3) … Economic Destructionism is the new normal replacing Economic Inflationism.
Jesus Christ acting in dispensation, a concept presented by the Apostle Paul, in Ephesians 1:10, and meaning the oversight of all things economic and political, for the completion and perfection of every age, commenced the terminal phase of Liberalism with Ben Bernanke’s QE1. The years 2009 through 2103, was the zenith of the paradigm and age that featured the economic action of increasing inflationism, where there was a Great Swell in balance sheet of the US Federal Reserve, fiat wealth, such as World Stocks, VT, and M2 Money, as well as Total Credit, where the goal of monetary policy was investment gain, pursued and achieved by the world central banks acting in Global ZIRP and QE.
Yet as Econometer author Satyajit Das relates Low rates also highlight the increasing risk of deflation and a severe contraction in economic activity. Low rates encourage mispricing of risk and create asset bubbles; low interest rates distort currency values and encourage volatile, short term, cross-border capital flows as investors seek higher returns.
Economic life centered around the investor and investment choice, and carried impact in economic metrics such as Housing Starts, GDP Reports, Industrial Production, ADP Payroll, Construction Spending, Purchasing Manager’s Index, etc; the latter were not goals, but rather statistical attributes, that is metrics, associated with risk-on investing.
On October 23, 2013, Jesus Christ opened the first seal of the Scroll of end time events, and released the Rider on the White Horse, as seen in Revelation 6:1-2, to affect a global economic and political coup d etat. His ride over the world PIVOTED the world from paradigm and age of liberalism into that of authoritarianism.
With the bond vigilantes calling the Benchmark Interest Rate, ^TNX, higher from 2.48%, economic action changed from one of inflationism to one destructionism, where there is the “dreaded experiences”. These consist of the death of fiat money, the death of fiat wealth, economic deflation, economic recession, nation state default on Treasury Debt, disregard for personal property and personal property rights, and disregard for people as persons.
Michael Hudson posts D is for Debt. End time events are manifesting in the news. These events have prefixes such as “de”, as well as “dis”; these words do not have prefixes such as “in”.
As destructive “prefix name action” increases in society, endurance is required on the part of the saint, where one keeps Christ’s word, and shrinks not from his Name, that is his presence and authority, as presented in Revelation 3:8.
The Great Economic Transformation came with the failure of fiat wealth, that is World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, on the week ending January 17, 2014, and it pivoted economic experience from the paradigm and age of liberalism into that of authoritarianism,
There was a regime change from the banker regime with its rule of bankers and democratic nation states, where economic life centered on the investor and investment choice, to the beast regime with its rule of diktat of nannycrats in regional governance and totalitarian collectivism, where economic life is centered around the debt serf and debt servitude. Nannycrats, not investors, are the legislators of economic value, as well as the legislators that shape one’s means and one’s ends.
The Benchmark Interest Rate, ^TNX, that is the cost of US Treasury Debt, TLT, was formerly the Means of Economic Inflationism. But, with its rise from 2.48%, on October 23, 2013, it commenced the failure of trust in the monetary policies of credit stimulus of the Creature from Jekyll Island, and the economic policies of investment choice of democratic nation states. Now, The Interest Rate on the US Ten Year Note, ^TNX, is the Means of Economic Destructionism, establishing economic deflation and economic recession, terminating economic inflation and economic growth, and thus terminating the paradigm and age of liberalism, and birthing that of authoritarianism.
Investment fear has turned the two spigots of investment liquidity completely off; these being debt trade investing, and currency carry trade investing, thus depowering liberalism’s dynamos of economic activity: creditism, corporatism, and globalism; the new normal is OFF not ON, and now Regionalism is the singular dynamo of economic activity under authoritarianism.
The tremendous leverage of debt trade investing is seen in Ultra Junk Bonds, UJB, Leveraged Buyouts, PSP, and Distressed Investments, FAGIX, trading higher to its January 17, 2014 zenith.
And the tremendous leverage of currency carry trade investing is seen in M&G Investment chart article The year of the Snake – 2013 returns in fixed income markets which shows that currency traders drove Euro, FXE, and the British Pound Sterling, FXB, strongly higher, while strongly short selling the Japanese Yen, FXY, which drove Nation Investment, EFA, such as Greece, GREK, higher.
As investors become entrenched in their new role of debt serfs they will be derisking out of debt trades such as Global Telecom, IST, like France’s, ALU, Finland’s, NOK, and Leveraged Buyouts, PSP, like the UK’s, DORM, and deleveraging out of currency carry trade investments like the UK’s, PRU, LYG, the Netherland’s, ING, and Ireland’s COV, CRH, STX, ACN, IR, MNK, PRIA, TRIB, and IRE.
The result of investment derisking will be a global whirlwind of economic deflation and economic recession, like the world has never seen; something far disastrous than the financial bust of 2008, where all previous economic life ceased. The Financial Crisis of 2008 is likened to a fatal automobile crash that killed all the occupants. Jesus Christ, acting in the economy of God, seen in Ephesians 1:10, constituted a new vehicle, the Speculative Leveraged Investment Community, and a new driver, the investor who drove the investment based economy to spectacularly unsustainable heights.
Liberalism’s peak wealth experience is seen in the chart of World Stocks, VT, relative to Aggregate Credit, AGG, that is VT:AGG, as well as Nation Investment, EFA, relative to World Treasury Bonds, BWX, that is EFA:BWX, both topping out in value. Under liberalism, fiat wealth leveraged up on fiat money which is defined as the combination of Aggregate Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW. The periphery-to-core dynamic of funds that flow into Japanese Stocks, NKY, US Stocks, VTI, UK Stocks, EWU, and Eurozone Stocks, EZU, came to completion on January 17, 2014, on the death of Major World Currencies, DBV, as investors derisked out of Retail Stocks, XRT, and Citigroup, C. The Great Swell, seen in the Downtown Josh Brown ReformedBroker tweet of Jan 17, 2014, Chart Of 16 years of asset accumulation by fund category, is history.
Now that greed has turned to fear, the tail risk of Global ZIRP will be economic deflation and economic recession.
A bust always follows a boom. The Apostle Paul presents in Ephesians 1:10, that Jesus Christ, has been tasked with dispensation, that is the oversight and administration of all things economic and political, for the completion and perfection of every age, epoch, era, and time period, bringing all things therein to their full maturity, where He produces empires, with kings, to rule over the peoples, this being seen in the prophet Daniel’s Statue of Empires prophecy of Daniel 2:25-45. The rule of king Obama over the US Dollar Hegemonic empire, the final iron leg, which accompanied the British empire, was financially dissolved the week ending January 17, 2014, with with the sell of Citigroup.
Liberalism’s 100 year reign of the Creature from Jekyll Island, is history. Jesus Christ did what Ron Paul could not do, He being in full control of all things, “Ended the Fed”, beginning with the sell of Retail Stocks, XRT, and Citigroup, C. It is gone forever, relegated to the dustbin of history. This creature exists no more. Although there be a new Fed Chairman, Janet Yellen,who takes office February 1, 2014, there is a much more terrible monster inside the Eccles Building, that is the Beast of Revelation 13:1-4, and this monster will one day rise up and destroy all of liberalism’s fiat money and fiat wealth, utterly pulverizing it, as is seen in bible prophecy of Daniel 7:7.
On Monday, January 13, 2014, fiat wealth started to die, as greed turned to fear; specifically fear that the economic policies and monetary policies of the world central banks have passed the rubicon of sound monetary policy, and will in the future, make “money good” investments, such as Retail Stocks, XRT, bad. Yes, immediately in front of the the Census Bureau’s December Retail Sales report, as reported by Numbernonics, and as reported by CME Group, Risk-on investing, ON, turned to Risk-off investing, OFF, as reflected in Retail Stocks, XRT, tumbling strongly lower in value. The stock bubble is starting to burst, beginning the week of January 13, 2014.
Investment fear has turned the two spigots of investment liquidity completely off; these being debt trade investing, and currency carry trade investing, thus depowering liberalism’s dynamos of economic activity: creditism, corporatism, and globalism; the new normal in investing is OFF, not ON.
The US Ten Year Note, ^TNX, was The Means of Economic Inflationism, but now, through the rise in the cost of money, rising from 2.48% on October 23, 2013, the nature of the Benchmark Interest Rate, $TNX, has changed, to be The Means of Economic Destructionism.
The monetary authority of the US Federal Reserve and its interventionism established safety of investing under the banker and democratic nation state policies of credit creation and investment choice. The Fed’s QEs provided a monetary policy that underwrote a riskless investing environment.
A new monetary authority and new monetary policy is emerging. Now with US Ten Year Note, ^TNX, rising above 2.38%, the US Dollar, $USD, UUP, has traded up to strong resistance at $81.50, and has established the end of the sovereignty and the seigniorage of the US Dollar Hegemonic Empire, and birthed that of the beast regime of regional governance and totalitarian collectivism.
The beast regime’s sovereignty is Deutungshoheit in nature. The monetary authority of authoritarianism’s beast regime features the security, stability and sustainability of the diktat of nannycrats, not bankers, in regional governance, and in the debt servitude of totalitarian collectivism.
There is only one sovereignty, and it provides only one life experience. Deutungshoheit is defined as interpretational sovereignty and connotes supremacy in all things, the result being German economic, banking, credit, and military supremacy, over all of the Eurozone. German linguist Thorsten Pattberg relates Deutungshoheit is a German word meaning “having the sovereignty over the definition of thought,” sometimes also called “the prerogative of final explanation.”
Authority now longer resides in democracy; now Obrigkeit, as the Germans say, resides in beast regime’s policies of diktat in regional governance in all of the world’s ten regions, and has affect in schemes of debt servitude in totalitarian collectivism in each of the world’s seven institutions, as presented by the Apostle John in presenting The Constitution of endtime rule in Revelation 13:1-4.
The only rule of law that exists under authoritarianism is the diktat of nannycrats, and the word, will and way, of the Sovereign, Revelation 13:5-10, and his partner, the Seignior, Revelation 13:11-18, meaning top dog banker who in minting money, takes a cut. These provide diktat money for the singular life experience of debt servitude.
Under democracy one was an investor knowing life in a variety of investment choices via a strong use of credit; now under authoritarianism one is a debt serf, experiencing an ever increasing debt servitude.
Under liberalism, monetary transmission of fiat money went to the investor, this is seen in The Economic Collapse Blog post The number of working age Americans without a job has risen by almost 10 million under Obama. And in The LA Times post US wealth gap grew during recession, Stanford report finds. And in The SCPI report National Report Card on Poverty and Inequality.
God’s Sovereign Man, another title for Jesus Christ, has not been concerned about social justice, and liberal economics, such as that of Mark Thoma’s, with concerns about income inequality. Christ’s sole focus has been perfecting liberalism, and its systems such as Greek Socialism, Chinese Communism, US Crony Capitalism, and Clientelism, such as Social Security Disability. Christ’s perfection of liberalism came on January 17, 2014, when He produced peak moral hazard fiat wealth, as is seen in World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, trading lower in value.
Regionalism is now the singular dynamo of economic activity under authoritarianism, replacing liberalism’s three dynamos of creditism, corporatism and globalism. Monetary transmission under authoritarianism will become quite effective for a number of people, as bible prophecy reveals “they worshiped and followed after the beast, saying who can make war against it”.
4) … On Thursday, January 16, 2014, the great economic transformation, from liberalism where capitalism ruled, to authoritarianism where regionalism rules, began with a trade lower in Retail Stocks, XRT, and Citigroup, C.
Aggregate Demand will be tumbling lower as a number of black swan events, such as a China Swan, will cause Short Term Interest Rates to rise, resulting in Financial Apocalypse, that is a global credit bust and worldwide financial system breakdown foretold in bible prophecy of Revelation 13:1-4; these will be the genesis factors for the rise of regional governance and totalitarian collectivism.
Reuters reports Bond trading stings Citigroup in 4th quarter. World Stocks, VT, traded unchanged, yet the very lynchpin of the paradigm and age of liberalism, that is Global Financials IXG, traded lower, as The Too Big To Fail Banks, RWW, were led lower by Citigroup, C. Regional Banks, KRE, were led lower by the Top Performing Regional Banks, HBAN, SNV, FIBK, SIVB, OZRK, GBCI, PACW, FFIN, and UCBI. The European Financials, EUFN, were led lower by the National Bank of Greece, NBG. China Financials, CHIX, Japan’s Sumitomo Mitsui, SMFG, South Korea’s Shinhan, SHG, the UK Lloyd’s Banking, LYG, all traded lower. Credit provider, Visa, V, led Credit Services, lower. Insurance company, Prudential, PUK, and ING, ING, led life insurance companies lower.
Competitive currency devaluation, is active in producing debt deflation.
Monetization of debt is bearing its fruit. Japan’s Nikkei, NKY, led Nation Investment, EFA, lower. The Australian Dollar, FXA, led Major World Currencies, DBV, and Australia, EWA, and Westpac Banking, WBK, and Australia Dividends, AUSE, lower, as International Treasury Bonds, BWX, traded lower. Emerging Market Currencies, CEW, led Turkey, TUR, Malaysia, EWM, Indonesia, IDX, and Mexico, EWW, led the Emerging Markets, EEM, lower, as Emerging Market Local Currency Bonds, EMLC, traded lower.
Greece, GREK, and the National Bank of Greece, NBG, led the Eurozone Nations, EWI, EWG, EFNL, EWN, EWQ, EIRL, EWP, EWO, and PGAL, lower, as Eurozone Debt, EU, traded lower.
Best Buy, BBY, Big Lots, BIG, Kroegers, KR, Ulta Salon, ULTA, GNC Holdings, GNC, and Michael Kors, KORS, led Retailers, XRT, lower. As seen in ongoing Yahoo Finance Chart, of XRT, and PNQI, RXI, IYC, FDN, PBJ, PSCC, IHF, KXI,and PSCD. The sell of Retailers, XRT, have gone viral, and are leading all consumer spending stock sectors lower; this despite a strong Census Bureau’s December Retail Sales report, reported by Numbernonics, and by CME Group.
Said another way, increasing disinvestment out of Retail Stocks, XRT, is having a domino affect in causing disinvestment out of similar stock sectors, these include, Small Cap Consumer Discretionary, PSCC, Small Cap Consumer Discretionary, PSCD, Consumer Staples, KXI, Food And Beverage, PBJ, and Consumer Services, IYC. And related sector, Advertising Agencies, IPG, OMC, LAMR, WPPGY, DECK, tumbled. And also related sector, Apparel Manufacturers PVH, RL, FNP, ZQK, GIL, VFC, UA, HBI, NKE, ICON, SKX, WWW, and DFZ, tumbled as well. A break in the stride of the Retail Juggernaut, XRT, is causing disinvestment out of a broad spectrum of consumer related stock sectors.
Building Supply Company Masco, MAS, led US Infrasturcture, PKB, lower. And General Holding, GNRC, ITT Corp, ITT, IDEX Corp, IEX, Babcox and Wilcox, BWC, Pall Corp, PLL, Siemens, SI, Flowserve, FLS, General Electric, GE, and 3M Co, MMM, led Global Industrial Producers, FXR, lower. Alcoa, AA, led Industrial Miners, PICK, higher.
Truckers, ODFL, SAIA, PTSI, CNW, UHAL, R, as well as Railroads, UNP, KSU, CNI, CSX, NSC, and CP, led Transportation Stocks, XTN, lower. Foreign Airlines, ASR, PAC, CPA, and RYAAY, tumbled.
News reports present a number of economic deflation triggers, which include the Bloomberg report of China credit tightening China Money Rate jumps most this year as PBOC skips injections; and the Bloomberg report of currency deflation coming from a weak employment report, Australia Dollar tumbles after weak jobs; and the Ambrose Evans Pritchard report of economic dislocation caused by resource nationalism. Nickel jumps as Indonesia bans key metal exports. Resource nationalism alive and well as Indonesia bans key metal exports; and the recession stimulating news of corporate restructuring, as Crain’s Detroit Business report Flagstar S&L to cut 700 jobs in restructuring move.
5) … On Friday, January 17, 2014, The Great Economic Transformation, that is the pivot from liberalism into authoritarianism, was fully established with the failure of fiat wealth.
Global Financials, IXG, Nation Investment, EFA, and World Stocks, VT, traded lower as currency traders sold the Euro Yen, EUR/JPY, carry trade, and the Australian Dollar Yen, AUD/JPY, carry trade, causing derisking out of Eurozone Stocks, EZU, European Financials, EUFN, and Eurozone Nations, EWI, EWG, EFNL, EWN, EWQ, EIRL, EWP, EWO, PGAL, as well as deleveraging out of Eurozone Debt, EU, and likewise derisking out of Australia, EWA, and Australia Dividends, AUSE. New Zealand, ENZL, traded lower from its rally high.Turkey, TUR, continued lower. Investment trading reflects that the Major World Currencies, DBV traded lower.
Both ETF Channel reports, and Finviz reports, investment derisking and deleveraging. Major ETFS trading lower included, XRT, IYC, PSCD, PBJ, PBS, TAN, SOXX, ITB, SOCL, PNQI, PWB, BRAF, GREK, EWP, EIRL, EFNL, EWN, PGAL, EWG, EDEN, KROO, DFE, EUFN, INP, SMIF, and CHNA; and Other ETFs trading lower included GMFS, GEMS, NIB, UNG, WEAT, and CORN.
Global Industrial Producer, FXR, leader, General Electric, GE tumbled as Bloomberg reports GE reports after profit-margin forecast trails forecast. And Transportation leader United Parcel Service, UPS, tumbled as Fox reports Shipping giant slashes FY view. Industrial Miners, PICK, traded higher. Despite the WSJ report that IBM commits $1.2 billion to cloudstack; investing in cloud computing stocks, seen in this Finviz Screener, has peaked out.
The Emerging Markets, EEM, traded lower. The India Rupe, ICN, traded lower, forcing India’s Banks, HDB, and IBN, India, INP, and India Small Caps, SCIN, lower. The Brazilian Real, BZF, traded lower, forcing Brazil Financials, BRAF, and Brazil, EWZ, lower. And Chinese Financials, CHIX, traded lower as Bloomberg reports ICBC won’t repay troubled Chinatrust Product, official says.
Despite the trade higher in the US Dollar, USD, UUP, to close at strong resistance at 81.40, Gold, GLD, and Silver, SLV, traded higher, taking Gold Miners, GDS, and Silver Miners, SIL, higher. Spot Gold, GOLD, closed at the highest level in five weeks at $1250, as investors seek the safe haven of hard assets. Needless to say, fiat wealth now being unstable, cannot sustain wealth.
In the age of authoritarianism, one should be invested in, and take possession of, and safely store gold bullion and silver bullion, as in the new epoch, the diktat of nannycrats and precious metals will be the only safe and sustainable form of wealth.
Aggregate Credit, AGG, traded higher, both for the day and the week.
The Fear Gauge, Volatility, ^VIX, traded by XVZ, has bottomed out at 12.14, and has been rising for seven trading days, confirming that the financial markets have pivoted from a bull market to a bear market.
6) … Life in Christ, is the greatest economic experience possible; here one experiences Christ as the Element of Life, which produces genuine economic life.
Life in Christ begins when one confesses Christ as one’s Life and as one’s Lord; the receives His life, and journeys onward, growing in the attributes of His life. The old self, which in reality is death in Adam, is crucified with Christ, so that one can live the exchanged life, where Christ is the all inclusive life experience, and where one knows the economy of God, that is the dispensation of Christ in all things, as presented by the Apostle Paul in Ephesians 1:10.
Either one be elect in Christ, or one be fiat in philosophy and religion. One could listen to the 30 lectures that will help you to become a more knowledgeable libertarian (Part 2 as presented by Robert Wenzel; but being fiat runs the risk of becoming psychopathic through the events of the harsh natural economy, and through exposure to anomic breakdown, that is to social breakdown.
The elect purpose for ethics, that is regard for the person and property of another; whereas the psychopaths, the elect’s polar opposite, purpose for intrusiveness, such as gossiping, busybodyness, and preeminence; such seek to be lord of their turf; community overlords, and community sheriffs enforcing their rule in whatever they think to be right; these be chameleons, that is shapeshifters, who have the ability to deceive and persuade by presenting personas to become more acceptable as needed.
And the elect purpose for virtue, that is having the moral attributes of God; whereas the psychopaths purpose for carnality, such as alcohol abuse, smoking, and promiscuous sex; any two of these combined “liberates” the psychopath, sending him on a blast of interpersonal abuse targeting any available person in his turf in a bout of preeminence in speech and/or behavior.
Residing at the bottom of affluence and population density in Prizm 65, Big City Blues, and Prizm 66 Low-Rise Living, I see this cycle of psychopathic degeneration and activity going on continually.
Living in the Spirit of Righteousness produces life; on the other hand living in the Spirit of Iniquity produces death. The elect, having the Jesus Christ the Element of Life, know the economy of life. Whereas the fiat and the psychopaths, being dead in Adam, know the economy of death.
While there are not any hoodlums, that is gangsters here; there are hooligans, that is psychopaths, who manifest mischievously as well as just plain mean and crazy. They know right from wrong, but speaking lies in hypocrisy; having their conscience seared with a hot iron, as communicated in 1 Timothy 4:2, they continually act out in the wrong because it gives them pleasure to do so; from such I have a no contact order from God, I must withdraw, yes I must turn away from such individuals.
I feel sorrow for women who come to live here at the Sea Breeze Apartments, and who decide to move on, living here-and-there with acquaintances. I see these about town; they have lost their femininity, and have a hardened guy look. Larry DeVore communicates that living loose hardens an individual; and I add, can easily transform one into a psychopath.
Perhaps those who might benefit most from a good reading of the EconomicReview Journal are the Millennials, that is Generation Y, as they have no fiat money or fiat wealth, and thus the resource of Christ, and the truth of Christ, might appeal to them more than to those of other generations who have and are invested in fiat money and fiat wealth.
7) … Numerous authors relate that a higher Benchmark Interest Rate, ^TNX, beginning in May 2013, then intensifying on June 20, 2013, and again on October 23, 2013, has been destroying capital; this presents systemic risk.
Capital is defined as the combination of money and wealth.
Capitalism is defined as the application of money and wealth in the pursuit of invesment gain. A rising cost of money, that is a rising Benchmark Interest Rate, has been destroying the basis of the economy, and has destroyed capitalism.
Capitalists were made extinct by the Extinction Event of Jesus Christ of October 23, 2013, where He opened the first seal of the Scroll of end time events, and released The Rider on The White Horse, to effect a global coup d’etat, which enabled the bond vigilantes to call the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.48%, which destroyed fiat money, and which on January 17, 2014, destroyed fiat wealth. The Extinction Event of October 23, 2013, PIVOTED the world from the paradigm of liberalism into that of authoritarianism, and commenced regionalism, where there are no capitalists, only nannycrats and debt serfs.
John Butler of The Amphora Report, takes a closer look at proposed liquidity regulation as a response to the growing use of ‘collateral transformation’ (a topic often discussed here) in the shadow banking system and wrote on June 28, 2013, in Zero Hedge The stability of the financial system is at risk in the event that there was a drop in securitised collateral held by banks.
Time marches on and with lessons learned harshly comes a fresh resolve to somehow get ahead of whatever might cause the next financial crisis. For all the complacent talk about how the “recovery is on track” and “there has been much economic deleveraging” and “the banks are again well capitalized,” the truth behind the scenes is that central bankers and other economic officials the world over remain, in a word, terrified. Of what, you ask? Of the shadow banking system that, I believe, they still fail to properly understand.
In the present instance, so the thinking behind liquidity regulation goes, prior to 2008 the regulators were overly focused on capital adequacy rather than liquidity and, therefore, missed the vastly expanded role played by securitised collateral in the international shadow banking system. In other words, the regulators now realise, as I was arguing back in the mid-2000s, that the vast growth in shadow banking liquidity placed the stability of the financial system at risk in the event that there was a drop in securitised collateral values.
In 2007, house prices began to decline, taking collateral values with them and sucking much of the additional, collateral-based liquidity right back out of the financial system, unleashing a de facto wave of monetary+credit deflation, resulting in the subsequent financial crisis. But none of this was caused by ‘market failure’, as Governor Stein contends. Rather, there is another, simpler explanation for why banks were insufficiently provisioned against the risk of declining collateral values, yet it is not one that the regulators much like to hear, namely, that their own policies were at fault.
In one of my first Amphora Reports back in 2010 I discussed in detail the modern history of financial crises, beginning with the 1980s and concluding with 2008.
Notwithstanding this prominent pattern of market-distorting interest-rate manipulation, guarantees, subsidies and occasional bailouts, fostering the growth of reckless lending and other forms of moral hazard, the regulators continue their self-serving search for the ‘silver bullet’ to defend against the next ‘market failure’ which, if diagnosed correctly as I do so above is, in fact, regulatory failure.
Were there no moral hazard of guarantees, explicit or implicit, in the system all these years, the shadow banking system could never have grown into the regulatory nightmare it has now become and liquidity regulation would be a non-issue. Poorly capitalised banks would have failed from time to time but, absent the massive systemic linkages that such guarantees have enabled, encouraged even, these failures would have been contained within a more dispersed and better capitalised system.
As it stands, however, the regulators’ modus operandi remains unchanged. They continue to deal with the unintended consequences of ‘misregulation’ with more misregulation, thereby ensuring that yet more unintended consequences lurk in the future.
Might collateral transformation be the crux of the next crisis? An obvious consequence of such collateral transformation is that it increases rather than decreases the linkages in the financial system and thus in effect replaces firm-specific, idiosyncratic risk with systemic risk, exactly the opposite of what the regulators claim they are trying to do by increasing bank regulatory capital ratios.
Liquidity regulation is an attempt to address this accelerating trend and the growing systemic risks it implies. Those financial institutions engaging in the practice probably don’t see things this way.
From the perspective of any one institution swapping collateral in order to meet changing regulatory requirements, they see it as necessary and prudent risk management. But within a closed system, if most actors are behaving in the same way, then the net risk is not, in fact, reduced. The perception that it is, however, can be dangerous and can also contribute to banks unwittingly under provisioning liquidity and undercapitalization against risk.
Viewed system-wide, therefore, collateral transformation really just represents a form of financial alchemy rather than financial engineering. It adds no value in aggregate. It might even detract from such value by rendering opaque risks that would otherwise be more immediately apparent. So I do understand the regulators’ concerns with the practice. I don’t, however, subscribe to their proposed self-serving remedies for what they perceive as just another form of market failure.
Already plagued by the ‘Too Big to Fail’ (TBTF) problem back in 2008, the regulators have now succeeded in creating a new, even more dangerous situation I characterise as MAFID, or ‘Mutual Assured Financial Destruction.’ Because all banks are swapping and therefore holding essentially the same collateral, there is now zero diversification or dispersion of financial system risk. It is as if there is one massive global bank with thousands of branches around the world, with one capital base, one liquidity ratio and one risk-management department. If any one branch of this bank fails, the resulting margin call will cascade via collateral transformation through the other branches and into the holding company at the centre, taking down the entire global financial system.
Am I exaggerating here? Well, if Governor Stein and his central banking colleagues in the US, at the BIS and around the world are to be believed, we shouldn’t really worry because, while capital regulation didn’t prevent 2008, liquidity regulation will prevent the scenario described above. All that needs to happen is for the regulators to set the liquidity requirements at the right level and, financial crises will be a thing of the past: never mind that setting interest rates and setting capital requirements didn’t work out so well. Setting liquidity requirements is the silver bullet that will do the trick.
Sarcasm aside, it should be clear that all that is happening here is that the regulators are expanding their role yet again, thereby further shrinking the role that the markets can play in allocating savings, capital and liquidity from where they are relatively inefficiently utilized to where they are relatively more so. This concept of free market allocation of capital is a key characteristic of a theoretical economic system known as ‘capitalism’. But capitalism cannot function properly where capital flows are severely distorted by regulators. Resources will be chronically misallocated, resulting in a low or possibly even negative potential rate of economic growth.
The regulators don’t see it that way of course. Everywhere they look they see market failure. And because Governor Stein and his fellow regulators take this market failure as a given, rather than seeking to understand properly how past regulatory actions have severely distorted perceptions of risk and encouraged moral hazard, they are naturally drawn to regulatory ‘solutions’ that are really just plagiarised copies of an old playbook. What is that definition of insanity again, about doing the same thing over and over but expecting different results?
On June 24, 2013, John Rubino reported, During the night, emerging market stocks tanked again, led, ominously, by China. This morning the carnage has shifted to the US, where stocks are down hard but, more important, interest rates are still rising. 10-year Treasuries, the key to mortgage rates and pretty much everything else, now yield nearly twice what they did a year ago. That means losses for a whole world of risk averse investors who thought they were parking their money in the safest-possible asset. The rest of their capital is in riskier places, like stocks and junk bonds, which means they’re losing across the board. This is a global story, since Treasuries have been everyone’s safe haven of choice for decades. But painful as a 40% haircut for the world’s pension funds might be, it pales next to the impact on growth. US interest rates are, with a few notable exceptions like Japan, the base of the global yield curve. Everything else, being riskier, has to have a higher yield. So a doubling of US rates means a commensurate ratcheting up of everyone else’s rates.
Since equities are valued in part in relation to the yield on available bonds, rising interest rates mean lower stock prices, everywhere. And real estate, which is generally leveraged, has just gotten a lot more expensive (which means the other group obsessively staring at screens these days is the new generation of flippers who recently joined the Southern California and Florida bubbles).
This is the nightmare scenario that keeps central bankers and institutional investors up at night because, based on Japan’s experience with hyper-aggressive monetary ease, there might not be a fix. If even easier money is met with dramatically higher bond yields, as in Japan, then there’s nothing left to do but to let the system unravel.
M&G Investments posted Emerging market debt: 2013 returns post-mortem. Within the asset class, EM corporate bonds outperformed EM sovereign debt, with the former returning -0.6% and the latter -5.3% in 2013. This sub-asset class benefited from its shorter duration and tangential spill-over (or higher correlations?) from the stronger performance in global investment grade and high yield credit. EM corporate bond spreads, measured by the JP Morgan Corporate EMBI index, are now flat to hard currency sovereign debt which translates into a narrowing of 66 bps since the beginning of 2013.
Therefore, the asset allocation between EM sovereigns in both hard and local currency and EM corporates was one of the key calls for performance in 2013. Sovereign bonds underperformed over the year, with hard currency debt delivering a negative return of -5.3%, also due to the fact that it has the longest duration of all three sub-asset classes. However, local currency debt faced a particularly challenging year, delivering a negative total return of -9.0% which can be mostly attributed to the foreign exchange component of the bond, while the carry, i.e. the additional return due to higher local interest rates, compensated for the back-up in yields.
The ongoing Yahoo Finance Chart of EMLC, and EMB, illustrates the failure of Emerging Market Investing, EEM, coming through debt deflation, that is currency deflation, CEW, caused by the bond vigilantes calling the Benchmark Interest Rate, $TNX, higher beginning in May 2013.
Sober Look posts Currencies of natural resource exporters under pressure. Some of the largest natural resource exporters with floating exchange rates have seen their currencies come under significant pressure over the past year. (And relates demand destruction) is seen in slower economic expansion in China as Bloomberg reports China’s factory output and investment growth probably weakened in December, adding to signs the world’s second-largest economy is losing momentum as analysts forecast 2014 expansion at the lowest in 24 years.
The weekly chart of Commodity Currencies, CCX, comprised of MXN, NOK, CAD, RUB, BRIL, AUD, and ZAR, shows that the sell off in these began in February, 2013, and intensified in May 2013, and then again on October 23, 2013, when the bond vigilantes gained control of the Benchmark Interest Rate, $TNX, causing disinvestment out of Mexico, EWW, Norway, NORW, Canada, EWC, Russia, RSX, with the strongest disinvestment coming out of Brazil, EWZ, Australia, EWA, and South Africa, EZA, as is seen in combined Yahoo Finance Chart.
M&G Investments also posted Tomlins’ guide for getting the best from High Yield. The year 2013 was another decent year for returns in the high yield market. The US market returned 7.4%, with Europe a little way ahead at 10.3%. I add that Wisdom Tree Small Cap Europe, DFE, was an outstanding equity investment, returning 40%, and 2.4% yield.
Debt deflation is already aggressively underway worldwide, and is a leading trigger of economic deflation and economic recession. The bond vigilantes, in calling the Interest Rate on the US Ten Year Note, ^TNX, higher, since May 2013, have caused the greatest investment destruction in the Emerging Markets EEM, Turkey, TUR, Peru, EPU, Chile, ECH, Indonesia, IDX, Thailand, THD, Philippines, EPHE, and Malaysia, EWM, as is seen in combined ongoing Yahoo Finance Chart. Danske Bank posts in PDF Document Two very different headaches for the Emerging Markets, deflation and external imbalance.
Zero Hedge posts Tracking Bubble Finance risks in a single chart. And ReadTheTicker posts in Safehaven Buyer exhaustion approaching, The chart of the Morgan Stanley Cyclical Index, $CYC, which is traded by FXR, manifests as topped out.
The periphery-to-core dynamic of funds that flowed into Japanese Stocks, NKY, US Stocks, VTI, UK Stocks, EWU, and Eurozone Stocks, EZU, came to completion on January 17, 2014, on the failure and utter death of Major World Currencies, DBV, terminating the Milton Free To Choose Regime. The Great Swell, is history, beginning with the trade lower in Retail Stocks, XRT, and Citigroup, C.
The tail risk of Global ZIRP is economic deflation and economic recession, she is presented in bible prophecy of Revelation 17: 1-5; she is going to be a bad bitch, as she is the scarlet beast, full of names of blasphemy, having seven heads and ten horns, and upon her forehead a name written, Mystery, Great Babylon, the mother of the harlots, and of the abominations of the earth. Kind of bad, right?!
Of which Christine Lagarde the Managing Director of the International Monetary Fund to the National Press Club in Washington DC, said, “With inflation running below many central banks’ targets, we see rising risks of deflation, which could prove disastrous for the recovery. If inflation is the genie, then deflation is the ogre that must be fought decisively”.
The great economic transformation out of the economic paradigm and age of liberalism, and into that of authoritarianism, features the feared economic deflation, coming largely through investment derisking and deleveraging. Economic deflation is defined as a vicious circle of falling demand, prices, wages, and output.
A metric of economic deflation is the fall in consumer prices. Brad Delong posts in Equitablog the Stephen Fiddler chart article Where deflation risks stir concerns, where he communicates falling consumer prices for the southern periphery, less economically productive, EU nations.
Barry Popik of The Big Apple web site posts the Mark Thornton definition of Apoplithorismosphobia: the fear of deflation. Needless to say Christine Lagarde has it to the max.
In the soon coming economic deflation and economic recession, there will be lots of price deflation, which reflects falling aggregate demand coming from increased unemployment, which stems from a number of factors, such as productivity imbalances, corporate reorganizations, and currency deflation, that is where one’s currency buys less economic goods.
Johnna Montgomerie writes in London School of Economics of the pain of economic deflation that comes from asset based wealth The shortcomings of the debt safety net. While debt has been an acceptable component of economic life for many decades, the bubble of the early 2000s and the subsequent financial crash took debt burdens to entirely new levels. The contemporary model that social protection will come from asset-based welfare and easy credit has led to massive financial insecurity, especially for the young and old, who have found rising debts to have far outpaced their incomes. Already high debt levels for young people and senior citizens mean that any falls in income through unemployment or rising healthcare costs will leave them to face debt repayments of 25 to 49 percent of their income.
8) … The Apostle Paul presents the concept of dispensation in Ephesians 1:10; dispensation underwrites all life, as well as all death.
The idea of dispensation conveys that Jesus Christ rules the political economy to produce economic life or economic death within each of mankind’s epochs, eras, time periods and ages, and this according to the Prophet Daniel is through empires, Daniel 2:25-45.
Michael J. Mazarr, a professor of National Security Strategy at the National War College, posts in the CFR publication Foreign Affairs The rise and fall of the failed-state paradigm. And Nature economist Elaine Meinel Supkis continually complains bitterly about the current monster; the reality is that God purposed for it from eternity past.
According to the Apostle Paul in Ephesians, 1:10, Jesus Christ matures each empire in its epoch, that is in its time period. He perfected, that is completed the US Dollar Hegemonic Empire, as the greatest kick-ass, and might make right empire of all time, by first causing the destruction first of fiat money on October 23, 3013, and then secondly by the destruction of fiat wealth on January 17, 2013, with the trade lower of World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, all being led lower by Retail Stocks, XRT, and Citigroup, C.
In her article, Elaine Meinel Supkis writes “The looming race/religious wars that will break out here will destroy the US”. This is true, this was foretold by the Great Illuminati Prophet Albert Pike who wrote of Three World Wars.
Now, Jesus Christ operating through the constitution of end time rule, presented in Revelation 13:1-4, is bringing forth the Beast System, to rule the world as a singular world wide empire establishing the monetary policy of diktat in regional governance in all of the world’s ten regions, and providing the experience of schemes of debt servitude in every one of mankind’s seven institutions. Thus establishing a total panopticon for all of ones life experience, where one serves the beast regime, as a debt serf in debt servitude.
The trade lower in sovereign debt globally since May 20, 2013, seen in the ongoing Yahoo Finance Chart of US Ten Year Notes, TLT, World Treasury Bonds, BWX, and European Debt, EU, together with interest rate sensitive Utilities, XLU, and Emerging Markets, EEM, gives confirmation to the death of fiat money and fiat wealth.
Two Major Banks post that the bond vigilantes are calling Eurozone Interest Rates higher. First, in PDF Document Nordea Bank posts Short Eurozone rates are on the rise once again, only unlike the December movements, there’s nothing obvious in the calendar to reverse it. The ECB was firmer than usual, but still vague in terms of pre-commitment. However, unwarranted increases in short rates were explicitly highlighted by Mr. Draghi last week. The Euribor 3M fixing now prints 30.2bps, the highest since August 2012 , and the 1M EONIA swap traded just 3bps below the refi earlier today. And secondly, in PDF Document Danske Bank posts Despite a dovish ECB and a cut by the Riksbank, long-end rates have moved slightly higher in both Europe and Sweden
Mike Mish Shedlock writes Greece will default in May without another bailout or change in terms. The major point of the Greek primary current account surplus is that Greece now obtains as much in tax revenues as it needs to finance current debt (not counting interest and debt repayments to the Troika). If Greece can remain in a state of surplus, it can tell the Troika to go to hell, declare the bailout debt null and void, and shed its onerous debt burden. I suggest Greece should do just that.
The Greek Reporter posts SYRIZA Killing New Democracy, PASOK in Attica, a critical Athens region of Greece. SYRIZA leader Alexis Tsipras, who opposes the austerity measures and said his party wouldn’t repay the $325 billion in loans granted by the Troika has predicted the Leftists will come to power. He has promised a return to Utopia by restoring pay, cutting taxes, returning pensions to their previous level and no public worker firings as demanded by the Troika. He didn’t say how he would do it without the loans or if Greece continues to be locked out of the markets.
To understand the economic situation in Greece, it is critical to do a rewind in time to May 30, 2013, as it was at this time that the Troika saved Greece from default by providing it with yet another bailout, which Jean-Pierre Abboud of Economic Updates describes as a Mini Marshall German Plan.
Greece is going to default; and furthermore Greece is going to default within the EU. Its default is likely to be the genesis event of the formation of a One Euro Government, that is a Euroland Super State. There will be no escaping for the Greeks as it has been God’s plan from eternity past to bind those in southern Europe, together with the Germans, as well as all those in northern Europe, in a regional gulag of economic fascism, where nannycrats are the legislators of economic value, as well as the legislators that shape one’s means and one’s ends; the focus of which is debt servitude.
Political capital will grease the wheels of the economy. Sovereign nation states will be replaced by sovereign leaders and sovereign institutions, such as the ECB, which will work in regionalism to produce Daniel’s Two Foot and Ten Toed Kingdom presented in Daniel 2:25-45, with its ten toes, that is ten regions, of iron dikat and clay totalitarian collectivism.
In the paradigm and age of authoritarianism, regionalism replaces liberalism’s creditism, corporatism and globalism, as the singular dynamo of economic activity. Regional economic and tracking blocs replace the global economic paradigm of nation state trade, as investment capital is restricted by capital controls, and is flat out replaced by political capital, where leaders meet in summits to renounce national sovereignty and announce regional pooled sovereignty, to establish regional security, stability and sustainability, as foretold in bible prophecy of Revelation 13:1-4.
This is why one should dollar cost average into gold bullion and a very limited amount of silver bullion for bartering, and take physical possession of these and trade a portion of them in Internet trading vaults such as Bullion Vault and Gold is Money.
Gold began rising in value on January 1, 2014; through investment demand, it is being established as the sovereign currency, and storehouse of investment wealth, and is being established as the only form of “money good” anywhere in the world.
Under liberalism, utility has been produced almost entirely by capital; now under authoritarianism utility is produced by debt servitude. The New Europe will see a new power structure of public private partnerships, where nannycrats oversee credit, economic production, as well as human, industrial, commercial, and natural resources.
Under authoritarianism, economic fascism is the way of life, as the structural reforms of monetary cardinals and the austerity measures of budget commissioners replace liberalism’s investors choice, establishing diktat to enforce the deft serf’s debt servitude.
Bible prophecy of Revelation 13:1-4, Revelation 17:12, Daniel 2:25-45, and Daniel 7:7, foretells that after a soon coming Financial Armageddon, that is a credit collapse and global banking breakdown, manifesting as Complete Systemic Insolvency, as Ty Andros writes in Safehaven, the diktat money system will replace the fiat money system, where nannycrats rule in policies of regional governance and in schemes of totalitarian collectivism, where economic life is centered around the debt serf, and debt servitude is the way of life.
Economic fascism will replace all current economic systems, such as capitalism, European socialism, Greek socialism, and Chinese Communism, and clientelism, as nannycrats will be the legislators of economic value, as well as the legislators that shape one’s means and one’s ends.
The libertarian hope for a free society, as presented by Robert Wenzel of Economic Policy Journal, and for a free market money system, built upon something of sound value, whether it be gold or hazelnuts, or whatever, is a wild dream of people who perceive themselves to be sovereign individuals; such things do not exist, and never will exist, as there only exists a Sovereign Lord God, Ephesians 3:1-21, and 2 Corinthians 5:17-18, who has appointed all things, and determined all things from eternity past, and who does not base his decisions upon any meritocracy, but rather upon divine mercy, as presented in the doctrine of the election of grace.
Through dispensation, that is the administration of all things economic and political, a concept presented by the Apostle Paul in Ephesians 1:10, Jesus Christ produced peak liberalism the week of January 13, 2013, to January 17, 2013, which came via currency carry trade investing, such as the Euro Yen, EUR/JPY, as well as by debt trade investing in investments such as Junk Bonds, JNK, Leveraged Buyouts, PSP, BlackRock, BX, and Distressed Investments, FAGIX.
The Apostle Paul communities in Ephesians 1:10, that the economy of God, according to His desire, is planned and purposed in Himself, to head up all things economic and political, in Christ to produce the very fullness of each age, before pivoting that age into another.
This was achieved with the perfection of liberalism on January 17, 2014, with the trade lower in Retail Stocks, XRT, Citigroup, C, World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG; and then God pivoted the world into authoritarianism.
9) … The nature of The Great Economic Transformation is profound.
On October 23, 2013, Jesus Christ PIVOTED ….. through the ride of the First Horseman of the Apocalypse, seen in Revelation 6:1-2, beginning with bond vigilantes calling the Benchmark Interest Rate, $TNX, higher from 2.48% ….. the world from the paradigm and age of liberalism into that of authoritarianism ….. as investors deleveraged out of currency carry trade investments, such as the CEW/FXY driven Emerging Market Bonds, EMB, and the Emerging Market Local Currency Bonds, EMLC ….. and as investors derisked out of debt trade investments such as Emerging Market Financials, EUFN, Emerging Market Mining, EMMT, and Emerging Market Infrastructure, EMFN, as well as the interest rate sensitive Electric Utilities, XLU.
The Great Economic Transformation commenced the week ending January 17, 2013 ….. with investors derisking out of debt trades in Retail Stocks, XRT, and out of Citigroup, C, ….. and with investors deleveraging out of currency carry trades, such as the Euro Yen, EUR/JPY, in European Financials, EUFN, specifically the National Bank of Greece, NBG, and the nation of Greece, GREK, ….. with the result that all three major investment areas, that is World Stocks, VT, Global Financials, IXG, and Nation Investment, EFA, traded lower ….. beginning the new normal of economic deflation and economic recession.
With investors derisking out of stocks, it may be as Zero Hedge posts, It’s time for yields to correct lower. As the Fed’s stimulus program appears to have “peaked” Citi warned investors yesterday to be cautious with the Equity markets; and recent price action across the Treasury curve suggests lower yields can be seen and US 10 year yields are in danger of retesting the 2.40% area.
The Transformation is termed Great, because of its epic economic change, from the investment choice policies of democratic nation states, and credit provision monetary policies of banks … to diktat policies of regional governance, and debt servitude policies of totalitarian collectivism.
Liberalism was characterized by the economic action of the dynamos of creditism, corporatism, and globalism, which established economic inflationism. Authoritarianism is characterized by the singular dynamo of regionalism, which establishes economic destructionism.
The Great Economic Transformation is defined as the morphing of liberalism’s investor into authoritarianism’s debt serf. Under liberalism one was a citizen of a democratic nation state as well as an investor. Under authoritarianism, one is a resident and debt serf of a region of economic goverance and totalitarian collectivism.
The Great Economic Transformation was produced in two parts, first the Rider on the White Horse, presented in Revelation 6:1-2, enabled the bond vigilantes to call the Benchmark Interest Rate, $TNX, higher from 2.48%, on October 23, 2013, thus destroying fiat money; and second, the same, stirred up investment fear terminating investment greed, causing derisking out of Retail Stocks, XRT, Citigroup, C, World Stocks, VT, Nation Investment, EFA, and Global Financials, on January 17, 2014, thus destroying fiat wealth.
Liberalism was a life experience in fiat money and fiat wealth. Authoritarianism is a death experience in diktat money and poverty. These experiences come out of the dispensation of Jesus Christ as He completes and perfects ever age, epoch, era and time period, as presented by the Apostle Paul in Ephesians 1:10.
The Financial Crisis of 2008 is likened to a fatal automobile crash that killed all the occupants; the global economy was regenerated by the monetary policy of the Alan Greenspan Put of the Creature from Jekyll Island, and the democratic nation states policy of investment choice. The investor became the focus of the economic life, which was regenerated by Ben Bernanke in providing QE1, through trading out “money good” US Treasuries, for distressed investments of all types, as well as through ongoing currency swaps, to support failing currencies world wide to provide dollar liquidity to assure ongoing fiat asset investing. Economic growth, that is economic development, was largely the outcome of investment activity.
A result of the banker regime’s monetary policy was the tremendous growth of Excess Reserves residing at the US Fed; these will not be reclaimed by the banks; they are captive investment of the US Fed, and thus cannot be and will not be used in any inflationary way. As short term interest rates rise, the value of US Short Term, that is 1 to 3 Year US Treasuries, SHY, will fall in value causing money market funds, MMF, to lose their constant one dollar value, increasing system risk. This will be the genesis factor for unifying all banks everywhere in the government, and these will be known as the government banks or “gov banks” for short; this is especially the case in the EU, where the sovereign bank link is so strong, that Eurozone nation states and their banks, are already essentially one.
Macronomics posts The Sleepwalkers The recent surge of the EONIA and Euribor, seems to point to some additional concerns when it comes to credit supply in the Euro area as shown in this Bloomberg graph highlighting the rise of the EONIA index and Euribor: “The decline in excess liquidity in the euro region, driven by a decision by southern European banks to repay LTRO cash early, is raising key short-term interest rates, threatening the supply and cost of credit to Europe’s struggling small- and medium-sized companies. A near doubling of one-month Euribor and EONIA since late November poses a growing threat, even though the ECB has pledged to do whatever necessary, including further rate cuts, to defend the euro zone’s recovery.” – source Bloomberg. And Macronomics concludes Let’s hope Mario Draghi is not sleepwalking towards the deflationary slippery slope.
Marc to Market posts Both China and the euro area are currently experiencing liquidity squeezes. In part, what is happening is the decline in excess liquidity in the euro area. It was the excess liquidity that kept the EONIA near the floor of the ECB’s rate corridor
Out of both a soon coming solvency crisis, and liquidity crisis, the Eurozone’s insolvent financial institutions, and their insolvent nations, will all by nannycrat mandate, be unified in a One Euro Government, that is a European Superstate, which will be the defining example of One, that is One People, One Government, One Fiscal Bond, One Banking Union, and One Economy, as the beast regime of Revelation 13:1-4, unifies all, with its rule of diktat of nannycrats in regional governance and script of totalitarian collectivism, where economic life is centered around the debt serf and debt servitude. All those living in Euroland will be One; there will be no monetary freedom for anyone; there will only be debt servitude for all. The new power structure consists of public private partnerships, where nannycrats oversee credit, economic production, as well as human, industrial, commercial, and natural resources.
In response to Austrian economists, I respond that there is no “human action”, and there are no “unintended consequences” anywhere, as Jesus Christ, according to the Apostle Paul in Ephesians 1:10, has been, is now, and will forever be, in active active administration of every age, maturing it, and completing it, and overseeing all economic and political activity therein, unto its perfection.
Glenn Jacobs, who wrestles as Kane, posts in Lew Rockwell Libertarianism is based on the idea that individuals own their bodies and their lives. Building upon the ideas of John Locke and others, libertarian property theory states that individuals have a natural right to life, liberty, and property.
I respond that Christianity presents the concept that Jesus Christ owns the believer’s body and life; and dispensation economics of Ephesians 1:10, presents that that one’s economic life experience comes out of Him, and that He on January 17, 2014, provided the beast regime of Revelation 13:1-4, the constitution of its rule in regional economic fascism, where regional property rights of nannycrats collectivise all personal property, to the point where all of liberalism’s fiat money and fiat wealth experience will ultimately be utterly pulverized, as is seen in Daniel 7:7; such be the economics of Jesus Christ as He completes and perfects authoritarianism, both as a paradigm and an age.
And in response to Timothy Taylor’s post The moral significance of economic life: Aristotle vs. Locke, I relate that moral reasoning comes out of a sound understanding New Testament doctrine, of which Witness Lee and John Macarthur are heralds. All economic activity comes through the person of Jesus Christ. He is always establishing the right order of things. The moral significance of economic life comes from the presentation of the Apostle Paul in Ephesians 1:10, that Jesus Christ is continually in active oversight of all economic and political things, and that beginning with the destruction of fiat money on October 23, 2013, and the failure of fiat wealth on January 17, 2014, is bringing forth the beast regime of regional governance to rule in every one of the world’s ten regions and to occupy in all of mankind’s seven institutions, so as to reveal His person and His Kingdom, and that He is dispensing himself to provide ethical economic experience in the elect, as they keep His commandments, and shrink not from His name, that is His presence and authority, as communicated in Revelation 3:8. The constitution of human experience is found in the person of Jesus Christ, specifically in Grace and Truth, where one manifests faithful to the Word of God, which is the only right there is.
Perhaps, one might refer to The Dispensation Economics Manifest for a christian economics, ongoing economic way of thinking.
As for me, anticipation of The Great Economic Transformation is quite profound. I’ve cut a number of things from my budget. I know the “all gone experience”. Gone is the fitness club membership, the buss pass, the television subscription, the internet subscription, and the dental insurance; they are “all gone”.
Perhaps for encouragement one might read the Blessed Economist’s post Whose Shoulder.
And perhaps for encouragement one might read From Living To Him, A Brief Overview of the Economy of God (Part II) — Major Steps of Christ in God’s Economy In a previous post we saw that God has a divine arrangement, an economy, to dispense Christ with His unsearchable riches into His believer.
Given that the world is pivoting into the age of authoritarianism, for ongoing credit and economic insight, one might consider subscribing to Distressed Debt Investing.