Archive for June, 2014

The Trade Lower In Ireland, Greece And The European Financials Terminates The Pursuit Of Yield Investing And Nation State Investing … Eurozone Leaders Appoint Juncker As Regional Sovereign

June 29, 2014

This post is available in Google Documents format here.

Financial Market Report for the week ending June 27, 2014

I.  … Introduction …. Across the Curve posts the Brown Brothers Harriman report EU Summit. The heads of state meet on Thursday June 26, and Friday June 27.

There are two issues, economics and politics.  Fiscal and structural reform plans will be reviewed.  Here, France, Spain and Italy, in what appears to be more a concert of interests rather than a coordinated position (which is why it is difficult to conceptualize this as a bloc), are pressing in different ways for a more liberal interpretation of the fiscal mandates.  Germany may be able to make some concessions on the condition that the Stability and Growth Pact is itself not amended.

The high drama may be seen in the political agenda.  The immediate issue is the European Commission President.  The operative treaty requires the heads of state to take into account the parliamentary election results in naming the new president.  The two main blocs in the European Parliament must choose a lead candidate to represent them.  The center-right (EPP) won a plurality, but not a majority of votes.  About one in four votes were cast for parties that are anti-EU.  Juncker, who was the EPP’s candidate due to his extensive experience in European politics, was identified with the status quo.  Moreover, even though Juncker was a head of state for many years, he is seen as a federalist who seeks greater authority for the European Union.

Juncker may not be very well liked, but the UK’s prerogative and obstructionism is less well liked.  As more decisions are decided on a qualified majority basis rather than unanimity, the value of the UK’s veto is eroded. In the past, it has effectively vetoed EC presidential candidates.  UK Prime Minister Cameron’s public objections may be a part of a principled position (against federalism), but seems poor politics and exposure the UK’s isolation.  If Cameron had been more adept at negotiating and trading horses, as the case may be, he might have been able to have greater influence.

Recall that Cameron took the Tories out of the EPP coalition, in which Merkel’s CDU is a key participant, and recently formed an alliance with the AfP (Germany’s anti-EU party). There are three state elections in Germany in Q3 and the AfP, which did not meet the threshold for participation in the national parliament, will likely win some seats in these state elections.  The AfP campaigns to the right of Merkel and may take votes from the CDU.

Cameron faces his own challenge in the form of the UKIP, which did well in the recent local and EU Parliament elections.  Cameron has promised a referendum on the EU if he is reelected next year.  There is a not very subtle threat:  If there are not concessions forthcoming for the UK, it will withdraw from the EU, for which is accounts for a third of the budget, and this includes the EC President.

Yet, a recent YouGov poll (conducted for The Sun) found that by a 44-36 margin, British people wanted to remain in the EU.  This was the widest margin since the survey began in September 2010.  This dovetails with other reports that suggested that many who voted for the UKIP also want the UK to remain in the EU.  Ironically, the kind of federalism Cameron eschews in Europe, he wants Scotland to accept within the UK.

Jean Claude Juncker, is an elite insider, and the consummate European Federalist, who has a vision for a Federal Europe, specifically who seeks greater centralized authority for the European Union and therefore will very likely be approved to be the next EU President.

The Telegraph reports Italy Will Use Its Six Month Presidency Of The European Union To Push For A “United States of Europe”, Prime Minister Matteo Renzi, said, in a move likely to raise hackles in Britain. Launching an appeal to convince European leaders to show “that a stronger and more cohesive Europe is the only solution to the solve the problems of our time”, Mr Renzi said: “For my children’s future I dream, think and work for the United States of Europe.”

He further called for “courageous leaders” to work towards achieving that goal – something that Britain has always objected to. In 1988 Margaret Thatcher, then prime minister, dismissed the idea that the United States might be a model for the future of Europe and David Cameron is actively trying to prevent the election of a committed federalist, Jean-Claude Juncker, to the head of the European Commission.

Italy takes over the rotating EU presidency from Greece on July 1. Its job will be to steer the EU at a time when the so-called “European Project” is coming under renewed attack, in the wake of an EU-wide surge in support for Eurosceptic parties in the recent European elections.

Mr Renzi, whose country will preside over the EU until December, said the only effective response to the outcome of the European elections is to offer “an idea of Europe that corresponds to an attractive adventure, rather than just a financial or economic exercise.” He said it was vital to show that the EU “is not only a common past but a common destiny.”

Two other pillars of the Italian presidency will be the push for growth over austerity, and greater help with the migration crisis in the Mediterranean. More than 50,000 people have arrived in Italy by boat from North Africa this year.

Mr Renzi’s comments, in a speech in Florence last week, come amid a growing storm over the nomination of Mr Juncker as president of the European Commission. David Cameron will call for a vote from fellow EU leaders at Thursday’s summit in Ypres if there is an attempt to rubber-stamp Mr Juncker in the role. Mr Cameron opposes the candidacy of the former prime minister of Luxembourg, whom he sees as preventing EU reforms and is seen by some as a politician with an instinct for ever-closer European integration.

Meanwhile, the incoming Italian presidency has caused a stir after ruling that its official website will only be published in English and Italian, meaning it will not be translated into French or German for the first time since 2007. In order to save money, it will not be translated into any of the other 24 official languages of the EU.

II … In this week’s trading

On Tuesday June 24, 2014, the see saw destruction of fiat wealth got strongly underway, as Equity Investments, VT, Global Financials, IXG, Nation Investment, EFA, Small Cap Nation Investment, and Yield Bearing Investments, joined Credit Investments, AGG, in trading lower; this coming on the trade lower in Ireland, EIRL, in Greece, GREK, and the European Financials, EUFN.

The loose monetary policies of the world central banks have finally stirred up inflation and have finally resulted in turning investment sentiment from greed to fear, specifically fear that the world central banks’ monetary policies have crossed the rubicon of sound monetary policy, and have “money good” investments bad

Gold Miners, GDX, GDXJ, Silver Mines, SIL, SILJ, Energy Production, XOP, Global Integrated Energy, IPW, FILL, Energy Service, OIH, IEZ, Solar Energy, TAN, Consumer Staples, KXI, Consumer Discretionary, RXI, Consumer Services, IYC, Timber Producers, WOOD, Automobiles, CARZ, Design Build, FLM, Aerospace and Defense, PPA, Semiconductors, SOXX, Global Industrial Producers, FXR, Metal Manufacturers, XME, Transportation, XTN, Coal Miners, KOL, and Copper Miners, COPX, led World Small Cap Stocks, VSS, and World Stocks, VT, lower, with the result that  the world entered into the final phase of the Business Cycle, that is Kondratieff Winter, providing the perfect short selling opportunity of selling from an equity market top, more specifically an Elliott Wave 5 High. Fat Pitch posts Bullish Extremes

Ireland’s Bank, IRE, Greece’s Bank, NBG, Switzerland’s Banks, UBS, CS,  and the UK’s Banks, RBS, LYG, BCS, and Germany’s DB, led European Financials, EUFN, lower; Argentina’s Banks, BMA, GGAL, BFR, traded lower; and Stockbrokers, IAI, Regional Banks, KRE, and Investment Bankers, KCE, traded lower, leading Global Financials, IXG, lower.

Gulf States, MES, Egypt, EGPT, Ireland, EIRL, Greece, GREK, Finland, EFNL, Austria, EWO, Spain, EWP, Portugal, PGAL, Italy, EWI, Argentina, ARGT, Emerging Africa, GAF, The UK, EWU, EWUS, Norway, NORW, Turkey, TUR. Thailand, THD, Canada, EWC, US Small Caps, IWM, IWC, New Zealand, ENZL, and Australia, EWA, KROO, led Nation Investment, EFA, lower.

Yield Bearing Investments, traded lower as Mortgage REITS, REM, and Residential REITS, REZ, traded lower, Industrial Office REITS, FNIO, traded lower, forcing Vanguard REITS, VNQ, lower.

Also, Eurozone Small Cap Dividend, DFE, Gulf Dividend, GULF, Australia Dividend, AUSE, Emerging Market Dividend, EDIV, Global Infrastructure, IGF, International Small Cap Dividend, DLS, Emerging Market Small Cap Dividend, DGS, Shipping, SEA, Smart Grid, GRID, Leveraged Buyouts, PSP, Water Resources, FIW, Global Telecom, IST, International Dividend Dogs, IDOG, Real Estate, IYR, Dividends Excluding Financials, DTN, such as Apple, AAPL, traded lower.

Junk Bonds, JNK, traded to a new all time high, as Aggregate Credit, AGG, was led higher by the 30 Year US Government Bonds, EDV, the 10 Year US Notes, TLT, and the Long Duration Corporate Bonds, LWC, which forced the Interest Rate on the US Ten Year Note, ^TNX, lower  to 2.59%.

Credit Bubble Stocks posts “High Yield” Coal Bonds.  Coal has had some rough times because of competition from cheap natural gas the past few years. Some of the coal companies have had negative income and even operating profit for multiple years in a row. You’d think maybe there’s be some distressed debt opportunities, but the bonds are extremely expensive.

  • Alpha Natural Resources – mines coal in VA, WV, KY (higher cost) in addition to WY. EBIT less than interest expense the past three years. Highest yielding bond 13%.
  • Armstrong Energy – Illinois basin coal (better), but operating income hasn’t covered interest expense  since 2009, yet bond only yields 8.7%.
  • Peabody (BTU) – good coal but highest yielding bond less than 7%.
  • CLD – Powder River Basin (good coal), but highest yielding bond only 5.6%. Is profitable and covering interest expense though.
  • Consol – highest yielding debt 5.5%.
  • Westmoreland – yielding about 5%

This is probably the type of debt thatyield hunger funds have shorted the long bond to buy.

The Bull Flattening continuing, as is seen in the Flattner ETF, FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened as is seen in the Steepner ETF, STPP, trading lower in value.

An inquiring mind asks will inverse bond ETFs such as SAGG, HYND, and AGND, preserve one’s wealth, which can seen in their ongoing combined Yahoo Finance Chart?

Perhaps, but they are dollar based fiat wealth, and will not participate in the increase in wealth that comes from the demand for safe haven hard assets, such as the physical possession of gold bullion, GLD.

Soon the US Dollar, $USD, UUP, will buckle and trade lower with the rest of the World Major Currencies, DBV, as well as the Emerging Market Currencies, CEW, which will invigorate the investment demand for Gold, GLD, whose price will rise from its current range of $1,240 to $1,320.

Gold is in the middle of an Elliott Wave 3 Up, and as such only God knows how high it will go.

Wealth can only be preserved by investing in and taking physical possession of gold bullion.

Doug Noland described money manager capitalism as being characterized by wildcat finance, where bankers waived magic wands of credit creation. The new normal economic experience of regionalism will be one of wildcat governance where regional fascist leaders warn with clubs of debt servitude.

Disinvestment out of debt trade investments such as Coal Mining Stocks, such as ANR, Rental Landlord, Blackstone, BX, Wireless Provider, S, Rental and Leasing Companies, HEES, URI, Rubber and Tire Manufacturer, GT, Leveraged Buyout Company, DLPH, which had underwritten the most risky of debt, and deleveraging out of currency carry trade investments, in particular the European Financials, EUFN, the European Small Cap Dividends, DFE, Gulf Dividends, GULF,  and Water Investments, FIW, brought Pursuit of Yield Investing to an end on Tuesday, June 24, 2014, and in so doing terminated the Banker Regime’s power of Global ZIRP, which has been largely responsible for the dynamos of creditism, corporatism, and globalism, which served to create the investor as the centerpiece of economic activity.

The Tuesday, June 24, 2014, trade lower in the European Financials, EUFN, such as NBG, IRE, RBS, LYG, BCS, terminated Pursuit of Yield Investing, which came via Global ZIRP, and marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude, where the investor and investment gain is no longer the centerpiece of economic activity, but now, the debt serf and debt servitude is the centerpiece of economic activity.

The age of investment choice is over and the age of debt servitude has commenced. There is no amount of reform that can be done to reinvent Ireland, Greece, France, Italy,  or any of the Eurozone nations.

Periphery Europe, that is Portugal, Italy, Greece, and Spain, as well as France, are socialist nations characterized by truly staggering amounts of sovereign and municipal debt; and their banks loaded to the gills with such debt, as well as real estate debt.  For all practical purposes these are insolvent sovereigns and insolvent financial institutions, whose seigniorage, that is whose moneyness, comes courtesy of the Liquidity Announcements of the ECB Chairman, Mario Draghi.

It is disinvestment out of debt traded and currency carry traded Ireland, EIRL, and Greece, GREK, that is leading World Stocks, ACWX, lower. This comes as Gigaom posts Apple’s Irish Tax Avoidance Schemes Come Under Formal European Investigation European authorities want to know if the Irish tax authorities’ deal with Apple, AAPL, unfairly advantages the company or a specific group of companies. If it does, it may constitute illegal state aid.

European authorities have launched a probe into whether Apple’s, AAPL, corporate income tax arrangements in Ireland are legal, or whether they qualify as unlawful state aid.

Ireland is the base of choice for many large tech firms’ international operations, largely because of a low corporation tax rate and favorable laws that enabled complex avoidance tricks like the legendaryDouble Irish arrangement (set to beshut down starting in January 2015 after U.S. lawmakers complained about Apple, AAPL, paying nearly no corporation tax anywhere).

The particular issue here is the “tax rulings” that were issued by the Irish authorities in Apple’s, AAPL, favor, confirming that the iPhone maker could continue with its transfer pricing schemes. If these rulings are found to specifically advantage the company, or indeed a group of companies, then they rulings may be seen as illegal state aid.

In a Statement, The European Commission has also opened similar probes in regard to Luxembourg and the carmaker Fiat, and the Netherlands and coffee peddler Starbucks.

As many know Interest is the cost of money, and its rate is determined by the battle between the bond vigilantes and central banks.

Despite the Credit Bubble Stocks report Treasury Implied Volatility Very Low $TLT, the Creature from Jekyll Island was struck a deadly blow by the bond vigilantes, who tenaciously have yielded the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, calling it higher from 2.49%, and sustaining it at 2.59%, which destroyed Credit Investments, that is Aggregate Credit, AGG, beginning June 2, 2014.

Debt deflation is underway, and it has led to the Euro, FXE, the British Pound Sterling, FXB, and, the Swedish Krona, FXS, trading lower in value. Soon, debt deflation will commence in Emerging Market Currencies, CEW, turning the Emerging Markets, EEM, and the Frontier Markets, EMFM, FRN, lower, making the Bloomberg report Norway’s $880 Billion Wealth Fund to Target Frontier Markets, a most unfortunate thing for the people of Norway.

America’s foreign policy will be shaped by the three factors. First, the dissolution of its Dollar global hegemonic authority and power. Second, the powering up of the dynamo of regionalism, on the powering down of the dynamos of creditism, corporatism, and globalism. Third, the ongoing pull of neocons responding to the security interests of the nation of Israel.

Please consider the bible prophecy of Revelation 13:1-4, which foretells that out of waves of economic recession and turmoil in the Club Med nations, coming largely out of derisking out of debt trade investments, and deleveraging out of EUR/JPY currency carry trade investments, that the Beast Regime will rule in every one of the world’s ten regions and occupy in all of mankind’s seven institutions, as the singular dynamo of Regionalism powers up, when leaders meet in summits to renounce national sovereignty, and to announce regional framework agreements that provide for regional pooled sovereignty which develop regional fascism to establish regional security, stability and sustainability.

Regional fascist leaders will be appointed and announce diktat policies of regional economic governance and schemes of totalitarian collectivism which will develop the debt serf as the centerpiece of economic activity, replacing the investor as the focal point of economic activity.

On Wednesday, June 25, 2014, the see saw destruction of fiat wealth intensified, as World Stocks, ACWX, traded lower, Frontier Markets, FM, and Nation Investment, EFA, traded lower, on the ongoing trade lower in European Financials, EUFN, in advance of the EU Summit; this comes as  currency traders are long Major World Currencies, DBV, such as the Canadian Dollar, FXC, Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, as well as Commodity Currencies, CCX, such as the Australian Dollar, FXA, as investors sought “safe haven” investment in Credit Investments.

Hedged Equity ETFs, Global Hedged Equities, HEDJ, and Emerging Market Hedged Equities, DBEM, were pulled lower by the trade lower in World Stocks, ACWX, and Nation Investment, EFA, despite sovereign currencies trading slightly higher.

Nation states, led by the UK, EWU, Sweden, EWD, and Switzerland, EWL, are losing their investment seigniorage, as leaders are poised to discuss policies for European regional economic sustainability.

The June 25, 2014, trade lower in World Stocks, ACWX, and Nation Investment, EFA, documents the failure of the sovereignty of democratic nation state governance, which is one half on the Creature from Jekyll Island’s investment seigniorage, the other half is Global Financials, IXG, which lost value yesterday.  The global money system is breaking down.

Soon the monster, which through Global ZIRP created the investor as the lynchpin of economic activity, is going to be replaced by the Beast Regime of Regional Economic Governance and Totalitarian Collectivism, presented in Revelation 13:1-4, as investors derisk out of debt trade investments, and deleverage out of currency carry trade investments.

Soon policies of diktat and schemes of debt servitude, will govern economics in an effort to minimize economic deflation and global political instability, replacing policies of investment choice and schemes of credit liquidity which have governed economics for global growth and investment gain.

The trade lower on Tuesday, June 24, 2014, in Yield Bearing Investments, such as the European Financials, EUFN, European Small Cap Dividends, DFE, International Dividend Dogs, IDOG, Global Telecom, IST, and Leveraged Buyouts, PSP, documents the failure of Global ZIRP, to stimulate Dividend Investing, DTN. Risk-on investing has turned to risk-off investing. The peaking out of risk free money, FLOT, confirms the end of risk-on investing.

The trade lower on Tuesday June 24, 2014, in Yield Bearing Investments, was an “extinction event” that terminated not only Fixed Income Investing, DTN, but all forms of investing as well: Nation Investment, EFA, Banking Investment, IXG, and Global Stock Investing, ACWI.

The Eurozone, EZU, was led lower by EFNL, EIRL, GREK, EWO, EWQ, EWG, EWP,  EWI, and EWN.  However, US Stocks, VTI, were the exception to the Nation Investment, ACWX, sell off on June 25, 2014, as the sectors which sold off yesterday, traded higher, as investors clawed back losses from yesterday; these included Solar Energy, TAN, Energy Service, OIH, Social Media, SOCL, Energy Service, XOP, Internet Retail, FDN, Small Cap Pure Value, RZV, Consumer Services, IYC, Transportation, XTN, Medical Devices, IHI,  Automobiles, CARZ, Steel Producers, SLX, Consumer Discretionary, RXI, Homebuilders, ITB, as well as Investment Bankers, KCE, and Regional Banking, KRE; but not Aerospace and Defence, PPA.

Refineries VLO, MPC, PSX, HFC, broke sharply lower, and Global Integrated Energy, IPW, FILL, continue to trade lower from yesterday.

On Wednesday, June 25, 2014, Credit Investments, AGG, traded higher, as investors sought safe investment from falling Nation Investment, EFA, and World Stocks, ACWX, and traded higher in front on the European Summit.

Demand for Credit Investments was so strong that the Benchmark Interest Rate, ^TNX, fell to 2.56%.

It was Eurozone, Credit, EU, trading higher in front of the European Summit, that drew up all Credit Investments; these were led by the Long Duration Corporate Bonds, LWC, 30 Year US Government Bonds, EDV, International Corporate Bonds, PICB, Global Government Bonds, BWX, US Ten Year Notes, TLT, Emerging Market Bonds, EMB, and Mortgage Backed Bonds, MBB, which traded up near its late May 2014 high.

Credit mania is seen in the Bloomberg report China Banks Join Japan’s With 50% Surge in Aussie Loans. China’s banks, expanding overseas to gain the experience they need to compete with global lenders in their domestic market, have boosted loans in Australia by more than 20-fold over six years. Japanese finance providers, flush with low-cost money from the Bank of Japan’s stimulus program, have helped fund companies including Sydney Airport and Newcastle Coal Infrastructure Group Pty.

Banks led by Australia & New Zealand Banking Group Ltd. have syndicated $39.7 billion of Australian loans this year, a 22 percent gain on the same period of 2013, Bloomberg-compiled data show. Sumitomo Mitsui and Mitsubishi UFJ Financial Group Inc. helped to arrange the most after Australia’s four largest domestic banks.

The Australian 10-year yield was 3.59 percent as of 12 p.m. today in Sydney, compared with 0.57 percent for comparable Japanese paper.

Japanese and Chinese lenders were among the 19 banks and five export credit agencies involved with this year’s biggest Australian syndicated loan, a $7.2 billion facility to enable the development of an iron ore project by billionaire Gina Rinehart’s Roy Hill Holding Pty.

But, on June 25, 2014, Junk Bonds, JNK, traded lower, from their June 24, 2014, market top high, confirming that risk appetite has turned to risk avoidance; this at a time when Bloomberg reports Debut Bond Sales Swell in Europe as Risks Mount.  Companies are debuting a record amount of bonds in Europe as investors demanding higher yields show greater tolerance for untested borrowers who are seeking to diversify funding as banks curtail lending.

Bloomberg reports New Zealand’s N.Z. Dollar Approaches Record High. The New Zealand Dollar climbed to within 0.7 percent of a post-float record after stronger-than-expected exports added to the currency’s allure amid signs of an uneven recovery in the U.S. economy.

New Zealand’s currency rose this month after Reserve Bank Governor Graeme Wheeler increased interest rates for a third time in 2014. Borrowing U.S. dollars to buy the kiwi in what’s known as a carry trade has returned 8.4 percent this year, the most among developed-nation peers. A gauge of the dollar against 10 major counterparts was set for the worst first-half performance in three years as weaker-than-expected U.S. economic data supported bets borrowing costs will remain near zero. The yen advanced to a five-week high versus the greenback.

“Given the momentum behind the kiwi at the moment, the prospects are really quite high in the near term that we reach the record,” said Kymberly Martin, a market strategist in Wellington at Bank of New Zealand Ltd. “Interest-rate differentials and low volatility are currently both in favor of the New Zealand dollar.”

The New Zealand dollar was little changed at 87.85 U.S. cents as of 1 p.m. in Tokyo after climbing to 87.94, approaching the high of 88.43 set on Aug. 1, 2011, that was the strongest since exchange-rate controls were scrapped in 1985.

The Bloomberg Dollar Spot Index lost 0.2 percent to 1,005.91 after sliding to 1,005.80, a level unseen since May 9. The gauge, which tracks the greenback against 10 major counterparts, has fallen 1.3 percent since Dec. 31, the first drop within the first six months of any year since 2011.

The demand for New Zealand Dollars is supported by low volatility.

The yen rose 0.4 percent to 101.35 per dollar after climbing to 101.32, the highest since May 21. Implied three-month volatility in dollar-yen fell to 5.64 percent yesterday, the least in data compiled by Bloomberg going back to December 1995. The U.S. currency traded at $1.3623 per euro, down 0.2 percent this week.

Deutsche Bank AG’s FX Volatility Index, (that is currency volatility index) fell to 5.28 percent on June 19, the lowest in figures dating back to August 2001.

The absence of price swings is encouraging investors to borrow in currencies where interest rates are low and use the proceeds to buy assets in economies where they are relatively high, such as in New Zealand, by reducing concern that large exchange-rate movements would wipe out any profits.

New Zealand’s 3.25 percent key rate compares with near-zero benchmarks in the U.S., Japan and the euro area. The nation’s central bank is the only one among advanced economies to have tightened monetary policy this year.

The Bull Flattening continuing, as is seen in the Flattner ETF, FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened as is seen in the Steepner ETF, STPP, trading lower in value.

The Tuesday, June 24, 2014, trade lower in the European Financials, EUFN, such as NBG, IRE, RBS, LYG, BCS, terminated Pursuit of Yield Investing and the subsequent June 25, 2014, trade lower Nation Investment, EFA, coming on more losses in the European Financials, EUFN, marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude.

Under liberalism, meaning freedom from the state, it was the bankers, corporations, government, entrepreneurs, and citizens of democracies who were the legislators of economic value and the legislators of economic life that shape one’s means and one’s ends.

Now, under authoritarianism, it is the currency traders, bond vigilantes, and regional fascist leaders working in public private partnerships and in regional governance, who are the legislators of economic value and are the legislators that shape one’s means and one’s ends.

Raúl Carrillo asks Where Does Money Come From? That’s Our Question.

With the rise to power of the British Empire and then the US Dollar Hegemonic Empire, the world economic system has based upon a debt based money system featuring currencies and credit.

Liberalism, meaning rule by oligarchs, featured fiat money, defined as sovereign currencies, backed up by treasury debt of democratic nation states; examples of sovereign money include the Australian Dollar, FXA, the British Pound Sterling, FXB, the Swedish Krona, FXS, the India Rupe, ICN, and the Brazilian Real, BZF.  Through the liberal monetary policies of  the world central banks and schemes of credit liquidity, the world has attained peak money, as is seen in Major World Currencies, DBV, and Emerging Market Currencies, CEW, trading to rally highs, on soaring World Treasury Debt, BWX.

Authoritarianism, meaning rule by tyrants, features diktat money, defined as the mandates of regional fascist leaders for regional security, stability and sustainability, backed up by trust in regional framework agreements.

Out of a global credit bust and financial breakdown, the Ten Toed Kingdom of Regional Economic Governance, with toes built in the mire of diktat and totalitarian collectivism, will emerge. The world will be based upon a new debt based money system featuring diktat and debt servitude.

Formerly one was a citizen of a soveign nation state residing under the rule of law. Now one is a resident residing in a region of economic governance under policies of diktat and schemes of control.

Soon there will be a run on money, beginning first with the Bond Mutual Funds, Bond ETFs, and then the Money Market Funds; look for exit restrictions and exit taxes of all types.

The Speculative Leverage Investment community created, administered, and regulated, the flow of economic resources; it has established peak sovereignty and peak seigniorage, providing peak wealth and peak fiat money. Soon regional fascist leaders will direct the factors of production, oversee fiscal spending, exact taxes, and manage banks, which will be integrated with the government and be known as government banks, or gov banks for short.

Money is the script of government; an example is SNAP Food Stamps. Sovereigns coin money out of their sovereign authority. Seigniorage belongs to the sovereign power that issues money. Sovereigns provide seigniorage, that is moneyness for economic experience, specifically for one’s life experience either in prosperity or in austerity.

Central banks, together with corporate banks have provided seigniorage; increasingly regional fascist leaders will provide seigniorage as Jesus Christ, operating in the economy of God, a concept presented by the Apostle Paul in Ephesians 1:10, on October 23, 2013, opened the First Seal of the Scroll of End Time Events, and released the Rider on The White Horse, who has given the Bow of Economic Sovereignty, to bond vigilantes to effect global coup d etats to call treasury interest rates higher, and in so doing transfer sovereignty from democratic nation states to regional sovereign leaders; these having sovereign authority are establishing the seigniorage of diktat, and are providing diktat money for one’s economic life experience.

Media Stocks, PBS, rose 3% as Breakout reports Supreme Court Kills Aereo, And Cord Cutters Dreams. To the dismay of cord-cutters everywhere, the Supreme Court put the kibosh on Internet television service Aereo.

The court ruled that Aereo, which transmits broadcast TV channels over the Internet to its subscribers, was just like a cable television service, which must pay licensing fees to broadcasters in return for showing copyrighted programs. Aereo had argued it merely rented a tiny, dedicated broadcast antenna to each of its thousands of customers, who have a right to watch the copyrighted programs and shouldn’t have to pay licensing fees.

Stocks of broadcasters, which had sued to shut Aereo down, shot up on the ruling, led by Sinclair Broadcasting (SBGI), up 15%, and CBS (CBS), which gained 6%. More-diversified network owners Walt Disney (DIS), Twenty First Century Fox (FOXA) and Comcast (CMCSA) were up about 1%.

A ruling in favor of Aereo could have upset the current system that requires cable providers to pay billions of dollars a year to broadcasters such as CBS and Sinclair. Cable companies could have set up their own multiple antenna systems, mimicking Aereo, for example.

On Thursday, June 26, 2014, Peter Schwarz of WSWS posts EU summit In Ypres: The End Of The European Union In Its Current Form In the runup to the Ypres summit, the debate over who should be the next president of the European Commission escalated to a point that makes any compromise virtually impossible.

The president of the European Council, Herman Van Rompuy, is opening today’s EU summit in the Belgian city of Ypres. The 28 heads of state and government are due to pay tribute to the hundreds of thousands of troops who died on the battlefields of the First World War around the town in Flanders. “It will be a moving ceremony as we will be testifying to what Europe is: a project of peace, solidarity and cooperation”, Van Rompuy commented.

In fact, Ypres is likely to be a symbol for the opposite: national discord, social conflict and war; and for the end of the European Union in its current form.

In the run-up to the summit, the conflict over who should be the future president of the European Commission escalated to a point that makes any compromise virtually impossible. British Prime Minister David Cameron is determined to prevent the election of former Luxembourg government leader Jean-Claude Juncker, who is supported by the majority of the EU parliament and of government heads. A vote, which Cameron will lose, seems inevitable. For the first time in the history of the EU, the influential head of the Brussels bureaucracy with its 33,000 employees will not be determined by consensus.

Cameron has become a victim of the genie he himself released from the bottle. In order to stanch the influence of the anti-EU UKIP party and EU-skeptics in his own Tory Party, he has denounced Juncker as the embodiment of European “federalism”. The British tabloid press has eagerly taken up the theme, with the Daily Mail describing Juncker as a man “notorious for fanatical federalism” and someone who has “pursued with dogged determination a vision of political and economic union which defies popular will, cultural identities, democratic principles and the merest common sense”.

This is a gross exaggeration. The Luxembourg Christian Democrat, who in his 19-year reign transformed the Grand Duchy with its half million inhabitants into a tax haven for banks and large corporations, shares similar views to Cameron on many political issues. As head of the Euro Group, Juncker played a key role in rescuing ailing banks with billions of euros in public money. The British charges against him contain a kernel of truth, however, in that he is suspected of placing the interests of the euro zone countries above those of the City of London.

What bothers Cameron in particular about Juncker is the fact that he was proposed by the European Parliament for the post of president of the Commission. Cameron is of the opinion that the head of the Brussels bureaucracy should be nominated exclusively by the heads of state and government as representatives of nation states, rather than by the parliament, a central EU institution.

The Ypres summit takes place in the shadow of May’s European elections, which saw a massive popular backlash against almost all the ruling parties in Europe and the EU as a whole. Well over half of the electorate stayed away from the ballot box, while a fifth voted for parties that criticize or reject the EU. Under conditions where the Social Democrats and the European left support the EU, right-wing, nationalist parties were able to profit from the anti-EU sentiment. In the UK, UKIP emerged with the biggest vote, and in France, the National Front.

While the UK increasingly distances itself from the EU, the proponents of a strong EU are reacting to the election result with fresh attacks on the working class. This is the essence of the dispute over the future handling of the Stability Pact, which, along with the controversy over Juncker, dominated the run-up to the summit.

French President François Hollande and Italian Prime Minister Matteo Renzi, both Social Democrats, have expressed their support for Juncker—but only under the condition that the stringent austerity targets of the Stability Pact be applied more flexibly. They have the support of the German SPD chairman Sigmar Gabriel, who is Economics Minister in Merkel’s grand coalition. Gabriel took part in a meeting of Social Democratic government leaders earlier this week in Paris to prepare the EU summit.

The goal of the Social Democrats is not to stop the massive social cuts made in recent years. On the contrary, the relaxation of austerity targets is aimed at giving necessary time to implementing massive reforms to the labor market, thereby improving economic competitiveness at the expense of the working class. Renzi has set himself the goal of catapulting Italy from 65th place in the world competitiveness rankings of the World Bank to 15th place. His role model is the “Agenda 2010” introduced by SPD Chancellor Gerhard Schröder (1998-2005), which created a huge low-wage sector in Germany.

The Süddeutsche Zeitung summarized the plans of the Social Democrats as follows: “Governments ready to impose noticeable changes on their citizens—e.g. loosening up the protection against dismissal, abolition of automatic pay increases or reducing subsidies—should get more time to reduce budget deficits and debt.”

European governments are aware that this will provoke massive social resistance. On the eve of the summit, and largely ignored by the media, the relevant European ministers adopted provisions for implementing a so-called “solidarity clause”, which regulates the Europe-wide deployment of military, police and other security forces in crises which have a “serious impact on people, the environment or property”. This includes control of protests and riots.

Also on the agenda of the Summit is the signing of the economic part of the Association Agreement with Ukraine. Refusal to sign this agreement led to the coup against former Ukrainian President Viktor Yanukovych, which was spearheaded by fascists and backed by the EU.

Originally the summit was also to decide on increased sanctions against Russia. Following a retreat by the Russian president, however, this will probably not take place. With the signing of the Association Agreement, however, which binds Ukraine tightly to the EU, the summit will makes clear that the EU is maintaining its aggressive offensive against Russia.

In June 26, 2014, financial marketplace trading Nation Investment, EFA, traded unchanged, as Asia Excluding Japan, EPP, was led higher by CHXF, EWH, KROO, YAO, ECNS, ENZL, EWT, EPHE, as China stocks rose as the first IPOs in four months were well-received, while India, INP, SCIN,  Poland, EPOL, ESR, and Turkey, TUR, traded lower.

World Financials, IXG,  traded unchanged as European Financials, EUFN, and Emerging Market Financials, EMFN, traded lower.

World Stocks, ACWX, traded higher, as Metal Manufacturing, XME, such as AA, CSTM, HAYN, CVR, SXT,  KALU, SLCA, CENX, and Global Miners, PICK, and Steel, SLX, traded higher on higher Base Metals, DBB.

Commodities, DBC, traded lower as Oil, USO, and Natural Gas, UNG, traded lower.

The Bull Flattening continued, as is seen in the Flattner ETF,  FLAT, rising in value. The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, flattened, as is seen in the Steepner ETF, STPP, trading lower in value. The 10 30 yield curve appears to have achieved maximum flattening, suggesting that the rally in US Treasuries, TLT, while it may continue, is approaching completion.

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.53%, and appears that it could fall once again to 2.49%. Of note, Premium REITS, KBWY, Closed End Funds, GCE, Mortgage REITS, REM, and Energy Partnerships, AMJ, EMLP, MLPJ, Global Real Estate, DRW, Financial Preferreds, PGF, traded to a new all time highs on the lower rate; and Leveraged Buyouts, PSP,  Global Utilities, DBU, and International Telecom, IST, traded near their previous highs, while Dividends Excluding Financials, DTN, traded lower.

The trade lower in the Benchmark Interest Rate, ^TNX, reinvigorated the debt trade, and carry trade darlings, that is the Global Wireless, Utility, and Telecom Stocks, great short selling opportunities.

On Thursday, June 26, 2014, a double top high in Credit Investments, AGG, was nearly achieved as the European Summit convened, and as investors sought a “safe haven” investment from falling World Stocks, ACWX. Chinese Credit, DSUM, traded to a new rally high, supporting the Chinese Yuan, CYB. And Eurozone Credit, EU, rose near its previous multiple top rally high, supporting European Stocks, EZU, from selling off, despite a falling EUR/JPY, coming from a rallying Yen, FXY, over a failing to rally Euro, FXE. The stronger Yen, FXY, has driven the Japanese Small Caps, JSC, much higher over Japanese Stocks, EWJ.

Lorenzo Totaro of Bloomberg reports “As Italy’s borrowing costs fall to new lows, its debt is rising to the most ever. The country owed 5% more in April compared with a year earlier, with debt reaching 2.15 trillion euros ($2.9 trillion) (presented in Yahoo Finance Chart, ITLY.  That matches the outstanding borrowing of Germany, the largest economy in Europe and the most of any country on the continent. While Germany is scheduled to grow 2% this year, Italy will expand 0.3% in 2014. This year, Italy foresees increasing its debt ratio to 135% of gross domestic product from 133% in 2013”.

The take-away concept is that the investor’s greed has turned, specifically that the monetary policies of the world central banks monetary policies have  crossed the rubicon of sound monetary policy and has made money good “investments bad”, with the European Financials, EUFN, and Nation Investment in Ireland, EIRL, Greece, GREK, Europe Small Cap Dividends, DFE, are the worst of risk assets. Clearly NBG, IRE, DB, CS, UBS, and BCS, are failed investments. And Aerospace and Defense Investments, PPA, such as GT, GD, LMT, NOC, HRS, ESL, MOG-A, are comprised investments, at risk for going down the drain as a political initiative emerges to kill the Ex-Im Bank.

BrainyQuote relates Grover Norquist as having said, Our goal is to shrink government to the size where we can drown it in a bathtub.

Arnold King ask When To Kill The Export-Import Bank?  Under current conditions mercantilism works, so this is exactly the moment when ending an export-support program really would cost jobs. Pointer fromMark Thoma. I say that the right time to kill it is any time you can. If killing the Ex-Im bank istea-party mischief, then I say let’s have more such mischief.

The AEI’sTom Donnelly writes, The worst thing about the defense loan program is that it only applies to our richest and best allies, NATO Europe, Israel, Japan, South Korea, the ones who can most afford to finance arms purchases on their own,  and does nothing for real at-risk states in Africa, Latin America or the Middle East. The FMS-DELG duo has hampered, not helped the Pentagon’s security “partnering” efforts. In today’s environment, and particularly when China aims to replace Russia as the alternate, non-US source of front-line military equipment, the United States government needs a bigger, better and more aggressive export credit agency. The Congress should rejuvenate, not exterminate, the Ex-Im Bank. His case for the Export-Import Bank speaks for (i.e., against) itself.

The Eurozone’s leading banks are insolvent financial institutions, and the European periphery  countries such as Ireland and Greece are insolvent sovereigns.  Insolvent banks and insolvent nations cannot provide investment seigniorage, and cannot support regional and global economic growth.

As foretold in Bible Prophecy of Revelation 13:1-4, out of waves of Club Med, sovereign, banking, and corporate insolvency, new sovereignty, that of the Beast Regime, and new seigniorage, that is the seigniorage of regional fascism, will rise to provide governance and economic experience through diktat money, that is the mandates of regional fascist leaders for regional security, stability, and sustainability.

The Banker Regime has developed peak moral hazard; the world’s debts cannot be repaid, and under the Beast Regime, seen in Revelation 13:1-4, Europe’s forthcoming Sovereign, seen in Revelation 13:5-10, and its Seignior, seen in Revelation 13:11-18, will rise to rule the world, seen in Daniel 9:25, and apply all debts, to all the people, that is every man, woman and child on planet earth, as is seen in Revelation 13:19.

On Friday June 27, 2014, Canada,EWC, CNDA, traded higher on a higher Canadian Dollar, FXC. Mexico, EWW, traded higher. The National Bank of Greece, GREK, and Banco Santander, SAN, led the European Financials, EUFN, lower.  Emerging Market Financials, EMFN, and Far East Financials, FEFN, traded lower. Canada’s Bank, RY, BMO, BNS, Mexico’s Bank, BSMX, Panama’s Bank, BLX, Columbia’s Bank, CIB, and US Bank, BK, traded higher. Greece, GREK, and Spain, EWP, led the Eurozone, EZU, lower. Sectors PBS, ITB, OIH, IGN, CQQQ, RZG, RZV, and FONE, traded higher. In Yield Bearing Investments, Global Infrastructure, IGF, Financial Preferred, PGF, Energy Partnerships, AMJ, EMLP, AMJ, Utilities, XLU, Global Real Estate DRW, traded to  new rally highs.

The bond vigilantes, have tenaciously yielded the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, calling it higher from 2.49%, to its close this week at 2.53%.

Junk Bonds, JNK, traded lower, confirming that Pursuit of Yield Investing is history. Demand for risk assets, that came via money manager capitalism, is being relegated to the dustbin of history. An investment demand for gold, GLD, has commenced as investor seek genuine safe haven investment in the physical possession of gold bullion.

With the see saw destruction of fiat wealth underway, that is with World Stocks, ACWX, Nation Investment, EFA, and Global Financial Institutions, IXG, underway, and Credit Investments, AGG, moving to a double top high, global economic deflation will get seriously underway as investors deleverage out of Currency Carry Trade Investments, and derisk out of Debt Trade Investments, as well as out of High Yield Debt, such as JNK, LWC, EU, EMB, HYD, EMLC, BABS, HYXU, PZA, in Leveraged Buyouts, PSP, such as DLPH, in Real Estate Investment, such as BX, and in Global Banks, such as SAN, and in Regional Banks, such as EGBN is being relegated to the dustbin of history.

The bond vigilantes will have a hay day, together with the currency traders, in effecting coup d etats world wide, resulting in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, and in driving the Benchmark Interest Rate, ^TNX, ever higher, sparking a dramatic rise in inflation, be a source of economic deflation, and birth the new normal government of regional fascism, replacing all current forms of government such as Crony Capitalism, European Socialism, Greek Socialism, Chinese Communism, where the investor and investment choice, is replaced by the debt serf and debt servitude as the centerpiece of economic activity.

An inquiring mind asks what has driven stocks ever higher? Benson te writes Stocks Continues On With Record Run. Record stocks in the face of contracting economy, so what’s the connection?  Who says stocks are about the economy? Aside from retail investors driving record stocks, and the just off the record in margin debt, a bigger factor has been corporate buybacks.

Sigmund Holmes notes According to Reuters, 1st quarter share weighted earnings amounted to $258.8 billion. So companies in the S&P 500 spent 93% of their earnings on buybacks and dividends. It’s been all the rage in this cycle to look at “shareholder yield” which is a combination of buybacks and dividends, something I find too clever by half considering the past track record of management led buybacks. But if you think that is a useful metric, you have to ask yourself, is a 93% payout ratio sustainable? I guess we do have the answer to one question though. We know why capital spending has been so punk.

The rising price of Gold, GLD, reflects risk avoidance, and communicates that an investment demand for safe assets has commenced. Wealth can only be preserved by dollar cost averaging into the physical possession of gold bullion.

Those into short selling may want to consider using a basket of daily managed Inverse ETFs, as collateral, such as STPP, XVZ,  MLPS, GLD, GYEN, GEUR, GGBP, EUO, YCS, as well as DDG,  EUM, YXI, DOG, SEF, EFZ, PSQ, REK, MYY, RWM; with the latter Proshares 100% Bear Market ETFs, presented in their combined ongoing Yahoo Finance Chart.

I foresee rising currency volatility, as investors start to derisk out of debt trade investments, and deleverage out of currency trade investments, as greed has to turned to fear, specifically fear that the world central banks monetary policies have crossed the Rubicon of sound monetary policy and have made money good investments bad, as well as the fear that said policies no longer stimulate global growth and trade; this being seen in the Global Growth And Trade ETF, DNL, trading lower.

Therefore I expect the Short of the Euro, EUO, to increase in value over the Short of the Yen, YCS, which is presented in in their combined ongoing Yahoo Finance Chart; and this straddle of the two currencies should expand and could serve as the basis for collateral in a short selling strategy.

Look for the Proshares 200% Bear Market ETFs, such as SQQQ, DUG, SGG, BZQ, RXD, SKF, EPV, SCC, SZK, and EFU, as is seen in their combined ongoing Yahoo Finance Chart, to start to trade higher

And look for the Direxion 300% Bear Market ETFs, such as GASX, SOXS, FAZ, ERY, EDZ, DPK, DRV, BRZS, YANG, and EURZ, as is seen in their combined ongoing Yahoo Finance Chart, to start to trade higher

III …  In the News

TradingFloor posts Saxo Bank Chief Investment Officer Jakobsen relates Why Juncker’s EU Appointment Would Be A Violation. If as expected, Jean-Claude Juncker is soon appointed President of the European Commission, it would be a “total violation” of the results of last month’s European elections which saw a big rise in support for anti-Europe parties.

UK Conservative MP John Redwood posts What Difference Will The Appointment Of Mr Juncker Make?  The new President of the Commission will be very powerful, because he will be the master of compromises between individual member states and between the Council and Parliament, driving relentlessly forward with the usual centralising agenda. At the end of this new Commission, like its predecessors, member states will have lost more  power and the EU will have gained it.

The Telegraph posts Jean Claude Juncker Appointed To Head Up The EU. Keeping Britain in the EU “has got harder”, the Prime Minister said, after he was outvoted by 26 to two in his attempt to prevent Mr Juncker becoming the European Commission president.  The result emboldened Eurosceptic MPs and Ukip supporters who want to leave the EU. However, Mr Cameron said he would wage a “long, tough fight” to reform Brussels before campaigning for Britain to remain in the EU in an in-out referendum he has promised to hold in 2017.

Testosterone Pit posts Last Time Lenders Did This, They Triggered The Financial Crisis. During the first quarter, 3.7 million credit cards were issued to subprime borrowers, up a head-scratching 39% from a year earlier, and the most since 2008. A third of all cards issued were subprime, also the most since 2008, according to Equifax. That was the glorious year when “subprime” transitioned from industry jargon to common word. It had become an essential component of the Financial Crisis. As before, subprime borrowers pay usurious rates. These are people who think they have no other options, or who have trouble reading the promo details, or who simply don’t care as long as they get the money. In the first quarter, the average rate was 21.1%, up from 20.2% a year ago, while prime borrowers paid an average of 12.9% on their credit cards, and while banks that are lending them the money paid nearly 0%.

USA Today posts Chicago Lays Off 1,150 Teachers And Staff

Cecchetti & Schoenholtz call for overnight lending facility for overnight lenders, and for facilities to deal with bank runs within the shadow banking system Reverse Repo Risks.

Zero Hedge posts Spain To Create Tax On Bank Deposits.

Reuters reports Risks Rising For China’s Commodity Traders. Pledging commodities to a bank using a warehouse receipt as proof of ownership, while agreeing to buy the cargo back at a set point in future, is a popular way to raise finance in global commodity markets.

It took off in China as traders sought to profit from the difference in global interest rates in the wake of the 2008 credit crisis: borrowing in dollars to invest in China’s sizzling shadow banking market often through non traditional wealth management products linked to property where the gap between returns and funding costs could be as much as 10 percentage points.

ETF Daily News reports Up to $80 Billion Gold Backed Loans Are Falsified, Chinese Auditor Warns

Reuters reports Argentina Deposits Debt Payment, But US  Court Blocks Payout

In Iraq News, Pentagon Sets Up Iraq Command: 500 Troops in Iraq, More Comin. And UNZ reports It May Be Too Late for a Unity Government. And Antiwar reports Iraq’s Shiite MPs Preparing to Replace Maliki.

Peter Van Buren & Tom Engelhardt post in Antiwar Shredding the Fourth Amendment in Post-Constitutional America.  

The Times of Israel posts US House Panel Approves Expanded Hezbollah Sanctions.

Reuters reports Obama Administration Expands Affordable Housing Plan. The Obama administration said on Thursday it would tap Treasury funds to bolster the construction of affordable rental housing and extend the life of a program aimed at helping homeowners avoid foreclosure. The announcement by Treasury Secretary Jacob Lew was timed to coincide with the fifth anniversary of the Making Home Affordable program, an Obama administration initiative launched at the height of the economic crisis in 2009 to revitalize the housing market.

Bamboo Investor posts China Ting Group, A Garment Maker, Said Two Borrowers Defaulted On Entrusted Loans It Made Through Ningbo Bank Corp And Bank of Communications.  Bloomberg News reports China Ting Says Borrowers Default on Entrusted Loans. China Ting Group Holdings Ltd. (3398), a garment maker, said two borrowers defaulted on entrusted loans it made through Ningbo Bank Corp. and Bank of Communications Ltd. The stock fell.

Zhongdou Group Holdings Ltd. and Hangzhou Zhongdou Shopping Centre Co. failed to make interest payments on schedule on loans worth 160 million yuan ($26 million), China Ting said in a Hong Kong exchange filing yesterday. Entrusted loans, advances between companies arranged through banks, are part of China’s shadow banking system that regulators are seeking to rein in. Some of the entrusted funds, which totaled 8.2 trillion yuan as of the end of 2013, were being directed to industries that face lending curbs from the government, according to the People’s Bank of China.

Bespoke Investment posts Global Home Price Values. The real winner among the 11 economies is New Zealand.  Home prices there have gone up by more than 93% since 2000, the best performance of any advanced economy.  It’s no surprise then that the Reserve Bank of New Zealand hiked interest rates at their last meeting.

The New Yorker posts The Rise Of The Absolutist. Ted Cruz is an unyielding debater, and the far right’s most formidable advocate.

Daily Bell posts Opt-out of Common Core, Opt-into the Ron Paul Curriculum

Barry Gray of WSWS posts Drone Memo On Drone Killings Of US Citizens Makes Case For Presidential Dictatorship. The Obama administration memo constitutes prima facie evidence of crimes against international law, the US Constitution, and the democratic rights of the American people. And PopSci posts Lockheed’s Vision: Autonomous Drones With Lasers

Across The Curve posts Detailed Analysis of the Situation in Iraq. The Long War Journal blog has a lengthy post on the situation in Iraq and how it may play out. The authors paint a gloomy picture and think that it will be difficult for the government to overcome the insurgents without outside help.

Robert Wenzel posts Warning Financial Troubles Mount for Puerto Rico Signaling worsening financial trouble for the island, Puerto Rico’s governor, Alejandro Garcia Padilla, on Wednesday proposed a legal means to revamp the debt of some its largest public corporations, which provide vital services like electricity, Michael Corkerywrites in DealBook. The new law is meant to quell concerns that Puerto Rico’s inability to file for federal bankruptcy protection would set off a chaotic scramble among creditors in the case of a default. Investors say the proposal raises the threat that one of Puerto Rico’s agencies could falter soon.

Reuters reports Puerto Rico agency debt slumps on downgrades, restructuring law. Puerto Rico public corporation debt slumped on Friday after a new law that allows agencies to restructure their debts sparked fears of an imminent default and led to a slew of downgrades on the electricity, highway, and water authorities.

There are many vulnerabilities in the municipal bond market right now. Yesterday, I reported on problems in Harvey, Illinois (SEE: Tip of the Iceberg in Illinois? SEC Obtains Court Order to Halt Fraudulent Bond Offering by City of Harvey, Ill.)

Frank Dimora posts Bible Prophecy Foretells Of Two Soon Coming Middle East Wars, these being the Psalms 83 War which is centered upon Syria, and the Ezekiel 38 War which is centered upon Israel.

Mr Dimora relates The War spoken about in Ezekiel 38 takes place when Israel thinks they are living in safety without any walls to protect them, we believe the Psalms 83 war will take place at the time Israel and the Arabs are still calling for peace and safety and, at the time when Israel is protected by all their bars, gates, and walls.

The Bible prophesied Psalm 83 War emerged in the Middle East on June 23, 2014, as Jason Ditz of Antiwar posts Israeli Airstrikes Kill 10 Syrian Soldiers.  Attack Destroyed Tanks, Artillery Inside Syria.  The war will soon expand as The Times of Israel posts Jordan May Ask Israel to Go to War Against ISIS, and as Antiwar post US-Backed Syria Rebels Crumbling in Face of ISIS.

Russia will be fully engaged in the Ezekiel 38 War, as God relates, “I will turn you around and put hooks in your jaws to lead you out with your whole army, your horses and charioteers in full armor and a great horde armed with shields and swords: it will suffer a terrific loss as it moves into Syria. The Northern Bear is starting to growl, as is seen in the Zero Hedge report Putin Fires Warning Shot.

The Daily Sheeple reports Red Heifer Discovered – Major Obstacle To The Rebuilding Of The Jewish Temple Removed. Up until now, one of the major barriers to the rebuilding of the Jewish Temple in Jerusalem has been the lack of a red heifer.  A qualified red heifer has not been seen in the land of Israel for nearly two thousand years, and without one it would not be possible to resume Temple worship.  But now a candidate has been found that could change everything.  The Temple Institute in Jerusalem has released stunning video footage of a red heifer that they believe meets the Biblical requirements.

This red heifer was born in the United States, and the owners of the red heifer contacted the Temple Institute in order to receive instructions about how to care for it.  It is hoped that this red heifer will eventually be transported to the land of Israel and be used for the purification of the priests and the vessels that will be used in a rebuilt Jewish Temple.

This is a very big deal, because without a red heifer the Temple would never be rebuilt.  So needless to say, the video footage that you are about to see is creating quite a stir in Jewish communities throughout the world.  The Temple Institute contacted a documentary filmmaker to film this red heifer, and this video was just released to the public earlier this month

If you are not familiar with the Temple Institute, it is an organization located in the heart of Jerusalem that is dedicated to making preparations for the rebuilding of the Jewish Temple.  The Institute has created a whole host of items that are intended to be used in a future Temple including priestly garments made to Biblical specifications, a seven-branched Menorah made of pure gold, a golden Incense Altar and a golden Table of Showbread.

But without the ashes of a red heifer, all of those preparations are in vain. Before the Temple can be rebuilt and Temple worship can be resumed, a perfect red heifer must be found. And now one has been discovered.

According to Orthodox Jewish authorities, a suitable red heifer cannot even have a single black hair.  So finding such a creature is not easy.  According to Jewish tradition, only nine such red heifers were found during the entire time when the first two temples were standing.

All of this has huge implications for world events.

Traditionally, many Orthodox Jews have believed that the spotting of a red heifer would herald the coming of the Messiah.

And if this red heifer does indeed turn out to be a suitable candidate, one of the biggest obstacles to rebuilding the Jewish Temple in Jerusalem will have been removed.

For Christians, this is an extremely exciting development as well.

The Bible tells us that there will be a Temple standing in Jerusalem in the last days, and that the Antichrist will defile it.

But that Bible prophecy could never be fulfilled until a red heifer was found.

Yes, there are still many more obstacles standing in the way of the Jewish people rebuilding the Temple.  For one, the Islamic world would go into convulsions if Israel tried to build anything on or near the Temple mount at this point.

However, the Temple Institute and a whole host of Orthodox Jews are absolutely determined to make the rebuilding of the Temple a reality, and now they appear to be one giant step closer to achieving that dream.

Mike Mish Shedlock posts French Private Sector Contracts Second Month. “France is back in recession, with rising costs and falling output prices as well. Thank the socialist policies of Francois Hollande for this result.” I relate that the report highlights that the much feared economic deflation has intensified.

Mr. Shedlock continues, “Government spending accounts for close to 57 percent of French GDP, a truly inane percentage.” I relate that France is a failed socialist nation; its economy is defined by municipal government and agricultural production, and these no longer provide economic seigniorage, that is economic moneyness to support France as a sovereign nation.  Socialist France is a cancer within the common currency union known as the Eurozone.

Bloomberg reports Ukraine to Extend Cease-Fire as President Signs EU Pact. Ukraine will extend a cease-fire in its fight against separatist rebels today after President Petro Poroshenko signed a European Union accord rejected by his predecessor that sent the country spiraling into crisis

IV … A new direction for your blog author.  I’ve been blogging ever since April of 2010 when Greece was shut out of the bond market by the bond vigilantes and Herman Rompuy engineered Greek Bailout I, on the concepts of sovereignty and seigniorage.

Greece gave birth to democracy; as Greek Left Review communicates in Review Of The Greek Debt Crisis, Greece has become a wretched society and failed nation state within the common currency union known as the Euro.

It is now time to move on and do a new thing.

Perhaps the new thing will be focusing on narcissism, that is the ism of the psychopath and the sociopath, that is the morally insane individuals; these are the ones with a mask of sanity, that is just a facade of normalcy.

Benjamin Buehne writes in Conscious Life News Psychopaths. There is a theory that is gaining a foothold on the internet known asPonerology (the science of Evil).  The antisocial motivation of essential psychopaths is seen in the Silvia Cattori Political Ponerology remark “They also learn very early how their personalities can have traumatizing effects on the personalities of non-psychopaths, and how to take advantage of this root of terror for purposes of achieving their goals”

Claudia Moscovici providesa clear example on the psychopathic mindset when it comes to hypocrisy.  Although she speaks of psychopaths in terms of romantic relationships, the mindset she describes is consistent regardless of the context.

“Honesty” means “My truth,” or “Saying whatever gets me what I want at the moment.”

“Nothing’s ever my fault. If I do something harmful, it’s because you (and others) weren’t good enough for me.” Unless you learn to decipher the psychopathic code, you’re likely to be “lost in translation.” If I put my mind to it, I could write a whole dictionary of “psychopath-speak” and its translation into regular human language.

Every so-called “truth” psychopaths utter is momentary and contingent upon their immediate gratification. Since their feelings are shallow, so is their truth-value. If you add “for now” to their declarations of love, they may sometimes ring plausible. For instance, during the euphoric seduction phase, psychopaths may believe when they tell a girlfriend that they love her and want to spend the rest of their life with her. But, as my novel, The Seducer, illustrates, their passion isn’t grounded in any empathy, love or commitment.

180 Rule asks Why Do Psychopaths Lie. Why lie about innocuous details such as what they had for lunch? Actually there is a method to their madness. The psychopath’s lies are usually 180 degrees the opposite of the truth. These lies serve the purpose of misdirection.

V … The New Normal Weather is Extreme Weather. NBC Nightly News with Brian Williams Heavy Rains Flood Season,With Extreme Weather: The threat of flooding, hail and tornadoes is expected in regions throughout the nation and June has proven to be a month of weather extremes.

VI … Conclusion. Out of disinvestment from debt trade investments and currency carry trade investments resulting in a soon coming credit bust and global financial system breakdown, known as Financial Armageddon, as prophesied in Revelation 13:3-4, new sovereignty and new seigniorage is coming.

The new normal governance is regional pooled sovereignty replacing democracy; and the new normal moneyness is diktat replacing investment choice, as the singular economic dynamo of regionalism powers up establishing regional security, stability and sustainability.

The Global ZIRP monetary policies of the world central banks have not provided economic recovery, as they were not designed for such; rather they changed the primary function of money to serve as the basis of fiat wealth investment, and birthed the investor, and investment gain, as the centerpiece of economic activity, as can be concluded by countless news reports.

My Budget 360 posts The Chasm Between The Real Economy And The Stock Market. And USA Watchdog reports Corporate Empire Created Failed Global Economic System. And Gavyn Davies in FT Blog asks How Close Is The Fed To Mission Accomplished? And House of Debt posts Terrible Recovery. Here is real GDP indexed to the quarter before each recession for all 10 recessions since 1950, taking into account this morning’s revision. Notice the significant bend downward in the last quarter for the 2007-2009 recession (solid red line). It makes the recent recovery look even  worse relative to previous recoveries

Global ZIRP began in 2008 with Paulson’s Gift, which became Ben Bernanke’s QE1, where the worst of investments, that is Distressed Investments, such as those traded by Fidelity Mutual Fund, FAGIX, were traded out for money good US Treasuries; according to Morningstar, Fidelity Capital & Income is Ranked number 1 out of 742 like investments.

The final phase of Global ZIRP, is known as peak finance, and has produced a stupendous moral hazard based peak wealth, which has come via the three economic dynamos of creditism, corporatism, and globalism, providing support for investing characterized by

1) Purchase of High Yielding Debt, JNK, LWC, EU, EMB, HYD, EMLC, EMCD, BABS, HYXU, PZA,

2) Purchase of Pursuit of Yield Investments, DBU, XLU, DRW, FNIO, REM, REZ, KBWY, SEA, AMJ, DTN; this as Financial Sense posts Fixed Income Risk Appetite Headed For Euphoria. As Aggregate Credit rose to a double-top high,  Global Real Estate, DRW, also put in a double-top high.

3) Pursuit of Nation Investment in these eight nations, SCIN, INP, EPHE, ENZL, EWA, EDEN, EWP, GXG, as well as these eight nations TUR, THD, ARGT, GAF, EWZ, EGPT, VNM,  EWS,

4) Purchase of Energy Production and Energy Service Investments XOP and IEZ,

5) Purchase of Defensive Equities, IPW, OIH, KIE, PAGG, KXI, XLU, IHF, IYR,

6) Purchase of  Global Growth and Trade Investments, TAN, SOXX, PJP, FONE, IBB, QTEC, COPX, XTN, FXR,

7) Safehaven investing in Popular Notes And Bonds, SHY, EU, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, MBB.

Inveterate, buy and hold investor, Eddy Elfenbein posts Falling Earnings, Higher PEs. As investors, our concern isn’t the macro economy but corporate profits. Monday is the end of the second quarter, and soon Corporate America will report earnings results. What’s interesting is that this earnings season will be the first one in several quarters in which we haven’t seen forecasts lowered just before earnings came out. As we all know, Wall Street loves playing the game of guiding analysts lower, then beating those much-reduced expectations.

This time, earnings forecasts have come down some, but not much. The consensus on Wall Street is for the S&P 500 to report earnings of $29.40 for Q2 (that’s an index-adjusted figure). That’s down about 2.5% in the last year, which is very small compared with recent quarters. Typically, analysts overestimate early on, and the forecasts are gradually pared back as earnings season approaches. For now, Wall Street expects full-year earnings of $119.60 for the S&P 500, which means the index is going for about 16.4 times this year’s earnings.

Yet, in a pivotal change, on Tuesday June 24, 2014,the see saw destruction of fiat wealth got strongly underway, as Equity Investments, VT, Global Financials, IXG, Nation Investment, EFA, Small Cap Nation Investment, and Yield Bearing Investments, joined Credit Investments, AGG, in trading lower; this coming on the trade lower in Ireland, EIRL, in Greece, GREK, and the European Financials, EUFN, and as a result we will see falling PEs, not increasing PEs.

Disinvestment out of debt trade investments such as Rental Landlord, Blackstone, BX, and deleveraging out of currency carry trade investments, in particular the European Financials, EUFN,  such as NBG, IRE, RBS, LYG, BCS, the European Small Cap Dividends, DFE, Gulf Dividends, GULF, International Dividend Dogs, IDOG, Water Investments, FIW, brought Pursuit of Yield Investing to an end on June 24, 2014, and in so doing terminated the Banker Regime’s power of Global ZIRP, which has been largely responsible for the dynamos of creditism, corporatism, and globalism, which served to create the investor as the centerpiece of economic activity.

Tuesday June 24, 2014, marked an inflection point in economic history: the world pivoted from the age of currencies and credit, and into the age of diktat and debt servitude, where the investor and investment gain is no longer the centerpiece of economic activity, but now, the debt serf and debt servitude is the centerpiece of economic activity.

Please consider that the June 5, 2014 Mario Draghi ECB Mandate for ZIRP and Targeted LTRO, together with the June 21, 2014, Mario Draghi ECB Press Announcement, address secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation; and serve as the EU Economic Manifest, that is the Charter Call and Club, for Eurozone regional governance, and have birthed the debt serf, and debt servitude, as the centerpiece of economic activity.

Just as President Nixon in taking the US off the gold standard was the genesis event of the Banker Regime, in like manner, the two Mario Draghi Announcements of June 2014, were the genesis event that created the Beast Regime, where European Citizens have been called upon to share some sovereignty now. As time goes on ever increasing sharing of sovereignty will be required.  Monetary sovereignty, and banking sovereignty, now resides in Frankfurt; soon fiscal sovereignty and economic sovereignty will exist in Brussels and Berlin; fiscal federalism will establish a One Euro Government.   Eventually the periphery nations will be like hollo moons, revolving around planet Belgium and planet Germany.

Economic life experience will no longer center around buying and selling (or lending) national currencies for US treasury bills, nor will it be centered around the issuance of Treasury Debt by Eurozone Nations such as Italy or any nation for that matter.

The two two Mario Draghi announcements of June 2014, have commenced the end of national currencies, and have birthed regional currencies, regional exchanges, and  regional economic governance.

Dollarization, defined as the tie that binds countries together, is coming undone. As the economic dynamos of creditism, corporatism, and globalism, wind down as investors derisk out of debt trade investments and deleverage out of currency carry trade investment, sovereign currencies, will sink into the Pit of Financial Abandon; and Dollarization will be a relic of a bygone era.

Doug Noland speaks to Dollarization, asking Sound or Unsound?  During the past 22 years, ROW holdings of U.S. Financial Assets have inflated $21 TN, or over 1,000%. Essentially, the U.S. has unrelentingly flooded the world with dollar balances. This helps explain a lot.

The consequences of the massive inflation/devaluation of the world’s reserve currency have for a long time been readily apparent.

After ending the ’90s at $6.209 TN, ROW holdings of U.S. Financial Assets doubled (again) in just over six years. The mortgage finance Bubble period (2002-2007) saw ROW holdings surge $8.7 TN, or 116%, to $16.2 TN. It’s my view that the historic dollar devaluation during this period played a major role in precarious Bubble excess throughout the Eurozone (especially at the periphery). The crisis year 2008 saw U.S., European and global financial chaos. During that year, ROW holdings dropped an unprecedented $813bn to $15.386 TN.

In the 21 quarters since the end of 2008, ROW holdings have jumped $7.585 TN, or 49%. The world was once again literally flooded with dollars. The global government finance Bubble thesis posits that these dollar balances inundated the emerging markets, fueling unprecedented Credit growth, financial Bubbles and economic malinvestment. China, in particular, succumbed to Bubble Dynamics on an historic scale.

Is Global Finance sound or unsound?

Please consider that Dollarization and Global Finance came to an end with the June 5, 2014 Mario Draghi ECB Mandate for ZIRP and Targeted LTRO, and together with the June 21, 2014, Mario Draghi ECB Press Announcement, which addresses secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation; and through its call for sharing of sovereignty, serve as the EU Economic Manifest, that is the Charter Call and Club, for Eurozone regional governance, and have birthed the debt serf, and debt servitude, as the centerpiece of economic activity.

The singular dynamo of regionalism will be winding up on the failure of Credit, AGG, and the death of currencies, DBV, and CEW. Regionalism is predicated  upon the process of de-dollarization.

Given the world’s debt based money system, money cannot exist without trust in sovereigns; fiat money existed as people trusted in the monetary authority of the world central banks, such as the US Fed, the ECB, together with asset managers, such as Blackrock, BLK and Eaton Vance, EV.

Fiat currency is coming to an end; the nature of money is changing; it has been based upon investment choice and credit; it will increasingly be based upon diktat and debt servitude.

Monetary nationalism is being replace with monetary regionalism, where people trust in the monetary authority and economic authority of regional leaders. Seigniorage profit will be retained within the region of origin; and supply chains will be regional rather than global.

The father of the Euro, Robert Mundell’s seminal article, “A Theory of Optimum Currency Areas,” asks the question, “What is the appropriate domain of the currency area?” He relates  “It might seem at first that the question is purely academic,” and he observes, “since it hardly appears within the realm of political feasibility that national currencies would ever be abandoned in favor of any other arrangement.”

Beyond the Euro, optimum currency areas, are now emerging via regional framework agreements, which feature undollar bargaining economic transactions, a case in point being the China Russia Energy Deal, whereby oil is no longer priced in Dollars, and which birthed Eurasia as a region of economic governance; eventually ten such regions will become well defined, and eventually ruled by a king within each region.

Voice of Russia reports De-dollarization Continues: China Starts Direct Currency Trading With UK.  A rejection of Bretton Woods is underway. The US Dollar is no longer the world reserve currency; increasingly, in places like Cambodia, and Sierra Leone, and Vietnam, the Dollar will no longer be King. Dedollarization is the process of establishing new monetary sovereignty and new seigniorage.

The dollar’s privileged status as global money is coming to an end. The Milton Friedman liberalization of money has come to an end as the Mario Draghi regionalization of money has commenced.

Dollarizing countries, such as the Philippines, EPHE, will soon be giving up independent monetary policy as a tool of government macroeconomic management; and will be participating in regional monetary and economic policy.

Dollar Hegemony, and the US Dollar Hegemonic Empire, is literally dissolving into a Ten Toed Empire, presented in bible prophecy of Daniel 2:25-45, where ten toes of regionalism, that is ten regions of economic governance and totalitarian collectivism, are emerging.

Economic globalization is coming to an end; that is the international trade liberalization and financial liberalization accompanied by a significant increase in flows of goods and services, and an even larger increase in the gross flows of capital well above the needs to finance trade observed by Crotty in 2009, and described by Matias Vernengo, is a characteristic of the bygone era of credit and age of currencies.

Economic regionalization is commencing, and is characteristic of the new age of diktat and debt servitude. What Jeffrey Frankel calls “credibility in a bottle”, will be the word, will and way of regional economic leaders, and characterize the era of diktat and age of debt servitude.

I’ve been thinking on International Living, and relocating to Panama, a dollarized nation.

Simon Black, The Sovereign Man posts Notes From The Field Date: March 8, 2012 Reporting From: Panama City, Panama. Panama is a dollarized economy. In fact, since Panama’s independence wasengineered by JP Morgan in 1903, the country has never circulated its own currency. Officially, Panama’s currency is the ‘Balboa’, though it has been pegged to the US dollar at parity since inception, and US dollar notes are the only currency in circulation.

The United States can print all it wants, and, at least until now, export the worst of the inflationary effects overseas to those poor suckers in Asia who keep buying Treasuries. Panama cannot export its inflation to the same extent, so rising prices have made a permanent home down here in the tropics over the last few years.

Perhaps Costa Rica may be a better International Destination.

Out waves of Club Med, that is the PIGS, sovereign, banking and corporate insolvency, and its resulting economic deflation, the new money, diktat money will emerge as the standard for economic life experience, as people come to trust in the mandates of regional fascist leaders, for regional security, stability and sustainability.

VII … Investment Strategy: I recommend that one start to dollar cost average an investment in gold bullion.

Gold bullion can be held in audited vaults, and spread around the world for safety, and covered by an insurance policy.

Gold can be held in physical Internet Trading Platforms, such as GoldMoney or BullionVault, and sold as needed.

Gold can be held in the Merk GOLD TRUST, the deliverable Gold ETF (OUNZ).  It’s an ETF with the option to take physical delivery of gold.

 

The Mario Draghi ECB Mandate Of June 5, 2014, And The Announcement Of June 21, 2014, Serve As The EU Economic Manifest, That Is The Charter, Call, And Club, For Eurozone Regional Governance

June 22, 2014

This post is available in Google Documents format here

Financial Market Report for the week ending June 20, 2014,

1) … Introduction. Credit becomes surreal as Shinzō Abe announces Third Arrow and the BoJ prepares to sell GJBs and purchase equities, and as investors pursue the most toxic of Junk Bonds and Emerging Market Bonds.

1A) … BoE’s Mark Carney, sees things as they really are, that there is a war of economic sovereignty between the bond vigilantes and the world central banks; and has communicated the truth that a rate hike is coming sooner than the market thinks; this drove the British Pound Sterling, FXB, yet higher; its chart looks like it has peaked out. Since April 1, 2014,, a stronger British Pound Sterling, FXB, has been driving the UK Stocks, EWU, higher, yet the UK Small Caps, EWUS, lower.

Ed Yardeni, writes The UK Is Hot (excerpt), but it is bound by the bond vigilantes, who having the Bow of Economic Sovereignty, are starting to call interest rates higher world wide.

1B) … Reuters reports Shinzō Abe Announces Third Arrow.

Japan’s government late Monday released a draft of Prime Minister Shinzo Abe’s long-awaited growth strategy.

This included already-flagged policies such as a plan to cut the corporate tax rate and other steps like a promise to ease regulation in agriculture and allow more foreign workers to be employed in the housekeeping and nursing sectors.

“I think the latest moves out of the Abe administration will be very important for sentiment, especially for global investors who had lost some faith in the reform efforts,” said Charles Blankley, CIO at Gemmer Asset Management in San Francisco.

“I think that [sentiment] will clearly turn around in the second half of this year,” he told CNBC Asia’s “Squawk Box” Tuesday.

1C) … Tyler Durden posts Liquidity Is Becoming A Serious Issue As Japan’s Bond Market Death Goes Global.

While we noted last week the death of the Japanese bond market as government intervention has killed the largest bond market in the world; it is now becoming increasingly clear that the dearth of trading volumes is not only spreading to equity markets but also to all major global markets as investors rotate to derivatives in order to find any liquidity.

Central planners removal of increasing amounts of assets from the capital markets, thus reducing collateral availability, leaves traders lamenting “liquidity is becoming a serious issue.” While there are ‘trade-less’ sessions now in Japanese bonds, the lack of liquidity is becoming a growing problem in US Treasuries (where the Fed owns 1/3rd of the market) and Europe

Japan’s bond market is dead; and so is its stock and FX market. As Bloomberg reports Bank of Japan’s Bond Paralysis Seen Spreading.  Ten-year bonds yielded 0.595 percent as of 12:55 p.m. in Tokyo, the lowest globally. The benchmark rate fell to an all-time low of 0.315 percent on April 5, 2013, the day after the BOJ unveiled record stimulus, before surging to 1 percent the following month.

“It’s difficult because the (retail JGB) business is shrinking,” Hiroshi Kunimura, the director of fixed-income trading in Tokyo at Barclays Plc, one of the 23 primary dealers obliged to bid at government bond auctions. “Because we’re in an environment where traders take positions at auctions only to sell them at BOJ buying operations, trading volumes with investors struggle to increase.”

Kuroda on June 13, 2014 kept the BOJ’s pledge to accumulate 50 trillion yen of JGBs a year, equal to 42 percent of planned issuance for the fiscal year started April 1 in a bid to boost inflation to 2 percent.

Easing expectations. Forty-two percent of economists forecast Japan’s central bank will expand monetary stimulus in October, which displaced July as the most popular pick for action, according to the Bloomberg survey conducted June 3-6.

Japan’s government bond market is becoming increasingly reliant on BOJ easing, leaving it vulnerable to shocks, according to Deutsche Securities Inc.

“Investors in Japan assume that the BOJ will continue to buy JGBs vigilantly next year and the year after,” said Makoto Yamashita, the chief Japan rates strategist at Deutsche Securities, a primary dealer.

“They take it for granted they can sell those bonds bought expensively to the BOJ as more and more notes disappear from the secondary market. It’s too frightening to think what might happen when the BOJ tapers.”

Sumitomo Mitsui and Daiwa Securities Group Inc. said in April there’s no effective strategy in Japan’s low-yield, low-volatility environment.

Japan’s notes due in more than a year were the worst performers since Dec. 31 among the 26 debt markets tracked by Bloomberg and the European Federation of Financial Analysts Societies, gaining 1.2 percent. Government debt returned 2.9 percent in the U.S. and 4 percent in Germany.

“It’s sad how idle the JGB market is,” said Toru Yamamoto, a former trader for foreign bonds, derivatives who is now the chief strategist at Daiwa Securities Co. in Tokyo. “Coping with BOJ purchases is like running a marathon, if it’s short-distance, you can still push yourself, but in a long run, you will run out of energy.

The Bank of Japan’s unprecedented asset purchase program has released a creeping paralysis that is freezing government bond trading, constricting the yen to the tightest range on record and braking stock-market activity.

“All the markets have been quiet,” said Daisuke Uno, the Tokyo-based chief strategist at Sumitomo Mitsui Banking Corp. “We’ve already seen the BOJ dominance of JGBs since last year, but recently participants in currency and stock markets are also decreasing as those assets have traded in narrow ranges.”

“The flows on both the buying side and selling side continue to fall,” said Takehito Yoshino, the chief fund manager at Mizuho Trust & Banking Co., a unit of Japan’s third-biggest financial group by market value. “Falling volatility is a very serious problem for traders and dealers who are unable to get capital gains.”

Chart shows The US is getting that way as the Fed owns one third of the market

The world shifts to derivatives trading to find liquidity. The boom in fixed-income derivatives trading is exposing a hidden risk in debt markets around the world: the inability of investors to buy and sell bonds.

Bloomberg reports Bond’s Liquidity Threat Is Revealed In Derivatives Explosion. As bond trading has slumped, the notional value of over-the-counter contracts soared fivefold in the past decade to a record $710 trillion, based on the latest data from the Bank for International Settlements compiled by Deutsche Bank AG.

Volume on Italian futures, which give buyers the right to purchase the nation’s debt at a future date and price, has soared more than 800 percent since trading of the contracts began in 2009, data compiled by Bloomberg show. By contrast, average daily trading in Italy’s $2.43 trillion market for government bonds, Europe’s largest, has tumbled 57 percent in the past decade, according to the Ministry of Finance.

For 10-year note futures, a total of 140.4 million contracts have traded in the first five months of the year, approaching last year’s total of 149.8 million, the most on a year-to-date basis going back to 2007, according to CME Group Inc.

Weekly trading of Treasuries with maturities between seven years and 11 years has fallen to $96.3 billion, a 32 percent drop from a year ago, data compiled by the New York Fed show.

“This is a global phenomenon,” Yvette Klevan

No one knows how badly this will end.  “There is risk that people won’t be prepared,” Richman said by telephone June 9. “The move in yield could be quicker and more dramatic than it has in the past. That’s something we are on the lookout for.”

“Investors in Japan assume that the BOJ will continue to buy JGBs vigilantly next year and the year after,” said Makoto Yamashita, the chief Japan rates strategist at Deutsche Securities, a primary dealer. “They take it for granted they can sell those bonds bought expensively to the BOJ as more and more notes disappear from the secondary market. It’s too frightening to think what might happen when the BOJ tapers.”

And with that not only have the central planners broken the largest and historically most liquid markets in the world but have forced investors into leveraged derivatives positions (in order to find liquidity for their exposure-seeking) which themselves are entirely over-promise (relative to the underlyings) and under-collateralized with any quality collateral.

As we concluded previously. assume tomorrow the real black swan appears and all the liabilities: traditional and shadow, promptly demand collateral delivery. Well, the $11 trillion shortage would mean that risk values of, for example the S&P, would be haircut by a factor of, say, 75%. Or back to the proverbial 400 on the S&P 500.

Still think owning real high quality collateral, not of the paper but of the hard asset variety such as gold, is a naive proposition, best reserved for fringe lunatic, tin foil hatters and gold bugs? Go ahead then: sell yours.

1D) … In credit market news

Bloomberg reports Sewage-to-Fertilizer Plan Shows No Junk Bonds Stink

WSJ reports Ecuador, Kenya Government Bonds Entice Yield Hunters. In the race for bigger returns, investors are clamoring for debt issued by countries with less-than-stellar credit ratings.

Ecuador sold $2 billion worth of 10-year bonds Tuesday, marking a return to international capital markets after defaulting in 2008. That deal came on the heels of Kenya’s first-ever international-bond sale, which attracted $8 billion worth of orders for two chunks of bonds totaling $2 billion. The Kenya deal was the largest-ever debt sale by an African country.

These two deals, which carry junk ratings, are the latest in a string of bond sales by countries off the beaten track. Many investors now are embracing issuers—and the hefty interest payments on their bonds—that have been shut out of global credit markets until lately. Driving the demand for this debt are the easy-money policies of the world’s major central banks, which has depressed yields on debt of wealthy nations.

Many money managers consider Ecuador and Kenya to be “frontier” markets, a loosely defined term used to refer to countries that are a step below emerging markets but often have better growth prospects.

In 2008, the South American country defaulted on $3.2 billion in debt. Mr. Correa at the time called the debt “illegal” and “illegitimate.”

Bloomberg reports Busier-Than-Heathrow Ambition Spurs Turkey’s Biggest Loan. Banks are buying into Turkey’s ambition to create one of the world’s busiest aviation hubs as they prepare to finance the country’s largest corporate loan. Five Turkish companies contracted to build Istanbul’s third airport are going to banks for about 4.5 billion euros ($6.1 billion). Corporate finance is flowing in Turkey as the lira stabilizes and government borrowing costs decline amid an alleviation of political tension since regional elections in March. The nation is investing in aviation infrastructure to support Turkish Airlines, THYAO, as it builds a long-haul business to compete with European rivals. The call for funds comes as Turkey faces heightened geopolitical risks from neighboring Iraq.

Bloomberg reports JGB Selloff Looms as Post Office Joins GPIF’s Cuts Prime Minister Shinzo Abe’s success in spurring inflation risks triggering a Japanese government debt selloff as the second-biggest JGB holder may begin switching to higher-yielding assets.

Japan Post Holdings Co. sold an unprecedented 15.7 trillion yen ($154 billion) of the notes in the fiscal year ended March 31. It has about 178.9 trillion yen remaining. That’s more than double the total of all domestic bond holdings at Government Pension Investment Fund, the third-largest owner, which is

shifting into stocks and overseas securities.  The appeal of notes that offer the world’s lowest yields is

waning as Abe’s stimulus policies succeed in spurring the fastest consumer-price increases since 1991. Citigroup Inc. expects Japan Post’s units to offload as much as 63.8 trillion yen of the debt and  increase the weight of equities as it readies for an expected listing next year.

President Nishimuro said in April Japan Post wants to list its banking and insurance units soon after the parent company’s offering, which he had earlier indicated may take place by April 2015. Nishimuro said at the time the company shouldn’t change its investment strategy and will keep its JGB holdings.

“Japan Post units have risks they can take and cannot take, so they wouldn’t simply follow GPIF,” said Ryutaro Kono, the chief Japan economist in Tokyo at BNP Paribas SA. “The government is telling GPIF to buy stocks to boost prices, but it’s not the case with Japan Post.”

The yen’s 18 percent plunge last year, the sharpest annual drop since 1979, has helped boost price growth by increasing import costs. The currency traded at 102.22 per dollar as of 4:48 p.m. in Tokyo yesterday. Consumer prices excluding fresh food rose 3.2 percent in April from a year ago, equivalent to a 1.5 percent increase when the effects of a sales tax increase that month are excluded, according to the Bank of Japan. Some of the major insurance companies that are not state owned are already seeking higher returns by investing in foreign debt. Nippon Life Insurance Co., Meiji Yasuda Life Insurance Co. and Sumitomo Life Insurance Co., announced plans in April in increase purchases this fiscal year. “We are revising allocations as inflation picks up,”

JGBs due in more than a year were the worst performers since Dec. 31 among the 26 debt markets tracked by Bloomberg and the European Federation of Financial Analysts Societies, gaining 1.3 percent. Government debt returned 2.6 percent in the U.S., 2.8 percent in the U.K., and 4.1 percent in Australia. “The risk is that there wouldn’t be any companies that will buy JGBs when the BOJ exit becomes closer,” said Yasuhide Yajima, the chief economist at NLI Research Institute in Tokyo.

Bloomberg reports Japan’s Exports Decline In May On Weak US Asian Demand

2) … In this week’s financial marketplace trading.

2A) In Monday June 16, 2014, financial marketplace trading, the great unwinding of Equity Investments coming from the world central banks’ stimulus, appeared to picked up steam from the prior June 11, 2014 sell off, as Middle East geopolitical tensions drove Gulf States, MES, Turkey, TUR, Egypt, EGPT, Russia, RSX, ERUS, Poland, EPOL, and Developing Europe, ESR, lower.  South Africa, EZA, traded lower. Philippines, EPHE, and Indonesia, IDX, IDXJ, traded lower as Emerging Market Currencies, CEW, traded lower.  India, INP, SCIN, traded lower as the currency traders called the India Rupe, ICN.  The Argentine stock market, ARGT, has literally started to crash, as The Guardian posts Argentine Debt Crisis Fears Grow After US Supreme Court Ruling. And Reuters reports Argentines Want Debt Deal As Economic Woes Pile Up.

Dividends Excluding Financials, DTN, Energy Partnerships, MLPJ, AMJ, EMLP, Global Integrated Energy, IPW, Energy Production, XOP, such as FANG, WLL, CLR, EOG, CRZO, PXD, XEC, COP, NBL, BCEI, Energy Service, OIH, Semiconductors, SOXX, and Medical Devices, IHI, traded to new all time highs. Utilities, XLU, traded higher, but remain below their recent highs. Gulf Dividends, GULF, traded lower.

Emerging Market Local Currency Bonds, EMLC, Emerging Market Bonds, EMB, and Emerging Market Corporate Bonds, EMCD, traded lower, as bond vigilantes began call Emerging Market Interest Rates higher.

Bloomberg reports Kurds Grab Fourth-Largest Iraq Oilfield Amid ISIL Advance. Kurdish troops were defending Iraq’s fourth-biggest oilfield against Islamist militants after deploying outside their semi-autonomous region in the country’s north to seize the deposit claimed by the central government. More than 100,000 Kurdish fighters, known as peshmergas, are guarding a “front line” from Iraq’s eastern border with Iran to the northern town of Fishkabur near Turkey

Business Insider reports There’s A Staggering Humanitarian Crisis On The US Border, And It’s Only Going To Get Worse.

Wave of humanity’: Border Patrol overwhelmed by flow of illegal immigrants. At daybreak in this border town, two women from Guatemala, one with a small child strapped to her back, wait patiently on the levee overlooking the Rio Grande.

Ed Yardeni posts Eurozone Recovery Remains Lackluster (excerpt)

2B) … In Tuesday June 17, 2014 marketplace trading, the see saw destruction of fiat wealth seemed to intensify, (this commenced with the June 5, 2014, Mario Draghi ECB Mandate for NIRP and TLTRO), as greed seemed to turn to fear, specifically the fear that the world central bank’s monetary authority has crossed the rubicon of sound monetary policy and has made money good investments bad.

The bond vigilantes have control on the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, $TNX,  and are calling it higher from the recent 2.49%, to 2.65%, thus causing disinvestment out of Credit Investments, causing Aggregate Credit, AGG, to trade lower.

Junk Bonds, JNK, the lever of debt trade investing, traded lower.

Asset Managers, such as BEN, AMP, VOYA, Regional Banks, KRE, such as OZRK, SIVB, FITB, HBAN, SBNY, BBNK, Stockbrokers, IAI, Investment Bankers, KCE, Insurance Companies, KIE, The Too Big To Fail Banks, such as BK, BAC, WFC, USB, PNC, as well as by the most speculative of investments, such as TAN, SOXX, PNQI, XRT, CQQQ, SOCL, IGN, SKYY, FDN, XRT, the most risky of investments, such as RZG, RZV, Manufactured Housing, CVCO, Materials, such as PYZ, PKB, SLX, XME, COPX, Paper & Packaging, Industrial Electrical Equipment, International Industrial Companies, Electronics, Diversified Industrial Producers traded higher; the S&P 500 Midcaps, MDY, having a PE of 19, traded to a new rally high.

Eurozone Small Cap Dividends, DFE, and UK Small Caps, EWUS, traded lower.

Global debt deflation, is underway, coming from the bond vigilantes calling the Benchmark Interest Rate, ^TNX, higher, and calling Interest Rates higher world wide as well, with the result that currency traders have commenced competitive currency devaluation, successfully selling Major World Currencies, DBV, and Emerging Market Currencies, CEW.

Australia, EWA, KROO, and Australia Dividends, AUSE, led Asia Excluding Japan, EPP, lower, as the currency traders sold the Australian Dollar, FXA, as Business Week reports Aussie Declines as Central Bank Says Recovery Uncertain.

The Emerging Markets, EEM, were led lower by Egypt, EGPT, Columbia, GXG, The Philippines, EPHE, Nigeria, NGE, and Chile, ECH.  Brazil, EWZ, and Brazil Small Caps, EWZS, traded lower, as the currency traders sold the Brazilian Real, BZF, and the Emerging Market Currencies, CEW, as the bond vigilantes once again called the Emerging Market Interest Rates higher, as is seen in Emerging Market Local Currency Bonds, EMLC, and Emerging Market Bonds, EMB, trading lower.

And the currency traders sold the Japanese Yen, FXY, in anticipation of the BoJ announcing further monetary easing, causing Major World Currencies, DBV, to trade lower.

Credit is peaking out, as is evidenced in Floating Rate Notes, FLOT, topping out, and as is evidenced by World Stocks, VT, topping out over Aggregate Credit, AGG, that is VT:AGG,

FT in Video Report posts Don’t Worry About Inflation.

Out of the soon coming failure of credit, that is out fear that borrowers will not repay lenders, Headline Inflation is seen increasing; this is confirmed by the ratio of the Long Term Tips, LTPZ, to 10 Year US Government Notes, TLT, that is LTPZ:TLT, trading higher, and the Proshares UltraPro 10 Year TIPS/TSY Spread, UINF, trading higher. Headline Inflation was reported by Reuters April Consumer Prices Post Biggest Gain In 10 months; and was reported by DSShort May Consumer Inflation Rises To Fed Target. Inflation is the investor’s warning sign to exit fiat investments and to invest in hard assets, that is to start to dollar cost average into the possession of gold bullion.

Under Janet Yellen’s leadership, The Fed Reserve will be developing an exit strategy; it will be one of establishing Financial Stability, this will complement the June 5, 2014, Mario Draghi, ECB Mandate of NIRP and TLTRO, as well asThe June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 And Quantitative Easing To Include Not Only Government Bonds, But Also Private Sector Loans, As Well As To Surrender Some Sovereignty, to address secular stagnation, defined as low growth, low employment, low inflation, and the threat of economic deflation.

The ECB posts June 21, 2014, Telegraaf Interview With Mario Draghi, Daghi says unlimited liquidity through 2016 is the ECB signal on rates, and when prompted The ECB has taken many measures, but has not undertaken any quantitative easing, i.e. has not purchased bonds, the ECB Chariman responds, “Quantitative easing can include not only government bonds, but also private sector loans. We will discuss that when the time comes.”

AP reports ECB President Draghi Says Eurozone States Should Surrender Some Financial Sovereignty

In the interview with Dutch newspaper De Telegraaf published Saturday, June 21, 2014, Draghi said “economic policy cannot be a purely national matter” because of the impact European countries’ policies have on each other.

Much has been undertaken to close the gaps in Economic and Monetary Union, stricter budget rules and a banking union. Is everything now in place?

“The banking union is a major step forward in the direction of a more complete monetary union. The crisis has shown that the economic policies of one country have a clear impact on other countries. Economic policy cannot be a purely national matter. Where fiscal policy is concerned, a certain degree of Union-wide discipline is already given. But the marked imbalances between euro area countries are due to a lack of structural reforms in some countries. The next step to be taken is to subject structural reforms, too, to Union-wide discipline.”

Current economic policy coordination in the euro area is merely a first step?

“Yes, indeed, it is merely a first step.”

What will the second step look like?

“That is a matter for the political domain to decide. In the case of the budget agreements, sovereignty has been shared among Member States. That should also be done with respect to the labour market, competitiveness, bureaucracy, agreements on the internal market. Sovereignty needs to be shared at a level other than the national sphere. That is where I stop. Because now there are several options for politicians to choose from. You could grant greater powers to the European Commission, or to the Member States within the European Council, or you could create new European institutions. That is not for me to decide.”

The contention of some politicians that EMU is complete is thus not correct?

“No, far more is necessary for a perfect monetary union.”

Is a budgetary authority necessary at the euro area level, a fund for the compensation of weak countries?

“That is a highly political issue. Compliance with existing rules would be enough. But it is clear that my predecessor in office, Trichet, made a strong case for a budgetary authority.”

The Mario Draghi ECB June 5, 2014, Announcement of NIRP and TLTRO, and the June 21, 2014, Press Conference Statement calling for a surrender of some sovereignty, come to represent the important assertion of a unified experience, and serves as an early statement in the long process to establish Eurozone economic governance, where diktat provides seigniorage, that is moneyness, replacing democratic nation governance, and the traditional seigniorage of economic choice

Out of soon coming credit crisis and global financial system meltdown, coming from the rise of the Interest Rate on the US Ten Year Note, ^TNX, as well as derisking out of debt trades, and deleveraging out of currency carry trades, Money Market Funds, such as Vanguard’s VMMXX,  Regional Banks, KRE, such as HBAN, and Asset Managers, such as STT, BLK, will be integrated into the government, and become known as the Government Banks, or Gov Banks for short. Please note that said fund charges a fee in excess of its yield, in order to maintain its constant one dollar value.

The Primary Dealers, who hold Interest Rates Swaps, that they were literally gifted under POMO, and thus are short Treasuries, and whose customers are short 10 Year US Government Notes,  TLT, will likely be forced into becoming Gov Banks as well.

Across The Curve posts Reverse Repo. Citing FT article New York Federal Reserve Takes On Key Role In Repo Market. While the growing presence of the Fed in the market has been welcomed by money market funds keen to transact with the central bank, it comes with risks for the central bank and the broader financial system.

Bill Dudley, New York Fed president, warned last month that if use of the repo facility were to grow too quickly it might “result in a large amount of disintermediation out of banks through money market funds and other financial intermediaries into the facility. This could encourage further enlargement of the shadow banking system.”

Without a cap on use of repo with the Fed, investors who ordinarily lend to banks could instead flock to the central bank in times of market stress, exacerbating a flight from funding of banks, he warned

Other market participants have been supportive of the Fed’s new role.

“The facility could also enable the Fed to become a ‘dealer of last resort’, just as it is a lender of last resort to regular banks. This would ensure a troubled shadow bank could always find a counterparty in the market,” Paul McCulley, chief economist at Pimco, wrote in an opinion piece for the Financial Times this week.

Fitch said the relationship between banks and government money market funds had changed since the Fed launched the RRP. The likes of Citigroup, Bank of America, Crédit Agricole, Goldman Sachsand RBCnow rely less on money market funds for funding, while BNP Paribas, Deutsche Bankand Barclays conducted the largest volumes of repo funding with these players as of May 31, 2014.

The first step in developing the Exit Strategy will be capital controls, specifically an exit charge, that is an exit levy, on withdrawing funds from bond funds as well as money market funds. David Stockman posts A Horror Show Called “Fed-Gate” May Be Coming To Your Bond Fund Soon.

The historically rising value of M2 Money Stock reflects that money market funds have served as risk adverse savings accounts. Their constant one dollar value cannot be sustained now that the Benchmark Interest Rate, ^TNX, has risen from 2.49% to 2.62%, and as both 1-3 Year Treasury Bonds, SHY, and Mortgage Backed Bonds, MBB, have fallen in value, on the failure of trust in the monetary policies of the world central banks to sustain investment growth as well as global growth and trade.

Fiat money is defined as the combination of Major World Currencies, DBV, Emerging Market Currencies, CEW, and Aggregate Credit, AGG.

Through the monetary policies of the world central banks and abundant choices of debt trade investing such as KATE, LAMR, and KR, and carry trade investing, MKTAY, PUK, NMM, money has become cheap, credit has become surreal, and wealth has become totally fiat.

The failure of money has commenced, as all three of its components are now trading lower from their market top highs. The death of currencies, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, the Chinese Renminbi, CYB, CHLC, CNY,  and the Indian Rupe, ICN, communicates the soon coming beginning of extinction of all investors, specifically the risk adverse investor, the fixed income investor, and the risk purposeful investor. These are like the wooly mammoth, who was frozen instantly in place, by a rush of freezing air or water, as presented By John D. Keyser in Earth Rings and Frozen Mammoths.

Wealth can only be preserved by investing in and taking physical possession of gold bullion and by savings held in gold based Internet trading accounts such as Gold Is Money and Bullion Vault.

Reuters reports Fewer Roadblocks To Bondholder Bailins The Bank Recovery and Resolution Directive published last week in the EU Official Journal is an important building block for effective resolution and underpins our view that extraordinary support for senior creditors is becoming less likely, Fitch Ratings says. Some aspects of resolution are still evolving, but there was sufficient uncertainty about sovereign support to prompt our Outlook revisions in March: around 60 EU bank ratings are now on Negative Outlook because of diminishing support. The Directive gives authorities a comprehensive suite of resolution tools. We believe the bail-in tool to be the most effective because there are fewer practical hurdles.

2C) ... In Wednesday June 18, 2014 marketplace trading, Nation Investment, World Stocks,  Junk Bonds, Emerging Market Bonds, and Emerging Market Local Currency Bonds, soared to new highs as investor continued risk on investing and pursuit of yield investing on Janet Yellen comments.  

Investors drove Equity Investments strongly higher on comments from Janet Yellen on the lack of any over valuation, by rebounding economic activity, by the expectation of economic expansion to proceed at a moderate pace, and by the recent inflation data as heading towards the Fed’s target.

Reuters reports Fed Keeps Faith In Recovery. At an afternoon news conference, Fed Chair Janet Yellen provided a long list of reasons for short run confidence, from resilient household spending to an improving jobs market. Though officials slashed their growth forecast for 2014 from 2.9 percent to a range of between 2.1 percent and 2.3 percent, Yellen said that was the result of “transitory” factors like a severe winter and that a rebound was underway.

“Economic activity is rebounding in the current quarter and will continue to expand at a moderate pace,” she said. “The economy is continuing to make progress towards our objectives” of full employment and 2 percent inflation”

But Yellen said there had been “a slight decline of projections pertaining to longer term growth” that prompted Fed officials to lower their view of the expected long-term federal funds rate from 4 percent to 3.75 percent. That is below the 4.25 percent historical level identified by New York Federal Reserve President William Dudley.

Nation Investment, EFA, traded to a new rally high, being led so by Japan, EWJ, and Japan Small Caps, JSC, as Reuters reports BOJ to Provide Almost 5 Trillion Yen to Banks to Boost Lending; and in Asia, by EWT, ENZL, EZA, EWC, CNDA, EWS, EWSS, EWT, EWA, KROO, VNM, EWM, EPHE, in Europe by EWU, NORW, EDEN, EFNL, EWN, GREK, EWP, EWI, in the Emerging Markets, EEM, EWX, DBEM, by ARGT, EWZ, EWZS, GXG, TUR, ECH, EWW, and also by worldwide by RSX, ERUS, ESR, EPOL, EZA, EWC, YAO.

Ireland, EIRL, traded lower, as Seamus Coffey of Irish Economy asks Will there be a “state aid” investigation? RTE isreporting that [t]he European Commission is to open a formal investigation into Apple’s tax arrangements with Ireland. An announcement is expected to be made by Competition Commissioner Joaquin Almunia tomorrow. If the Commission decides not to progress with an formal investigation there would only be a limited reputational bump for Ireland but there would have been benefits in terms of reduced uncertainty.  If a formal investigation is announced it is bad news for the certainty of the Irish corporation tax regime. The best outcome for Ireland would be a short (< 12 months) investigation.  The actual outcome would, perhaps surprisingly, not be the most important factor.

World Stocks, VT, traded to a new rally high, being led so by Precious Metal Mining, GDX, GDXJ, SIL, SILJ, Materials, PICK, SLX, XME, COPX, and High Beta ETFs, IHI, CQQQ, IGV, PBS, RXI, PNQI, FDN, SOCL, XTN, IBB, PJP, CARZ, IYC, PBJ, RZG, SKYY,  XRT, RZG, TAN, CVCO.  Of note, Consumer Services, IYC, has a stunning PE of 20. Semiconductors, SOXX, traded lower.

The S&P 500, SPY, traded to a new higher, with Fedex, FDX, blasting strongly higher.

Global Financials, IXG, traded higher, approaching its former high, being led higher by Japanese Stock Broker, NMR, Japanese Banks, MTU, MFG, SMFG, Brazil Banks, BBD, ITUB, India Banks, IBN, HDB, Mexico Bank, BSMX, and Asset Managers, such as BLK, BEN, PFG, AMP, BX.

Defensive Stocks, DEF, traded to new rally highs, being led so by IPW, OIH, PAGG, KIE, KXI, XLU, IHF, IYR, DBU.

In Yield Bearing Investments, DTN, traded vertically higher, as Utilities, XLU, Telecom, IST, Global Utilities, DBU, Global Infrastructure, IGF, International Dividend Dogs, IDOG, Leveraged Buyouts, PSP, European Small Cap Dividend, DFE, Euro Stock 50, FEZ, traded higher.  Energy Partnerships, AMJ, and, MLPJ, traded lower; but EMLP, traded higher.

Commodities, DBC, traded higher, being led higher by Base Metals, DBB. Gold, GLD, and Silver, SLV, traded higher.

The rally in Equity Investments was so strong that it upset the recent gains of currency traders, who were forced out of their short positions in the Brazilian Real, BZF, and the Australian Dollar, FXA. Major World Currencies, DBV, traded up to its previous rally high. Emerging Market Currencies, CEW, traded strongly higher, but remains below its recent rally high.

All Credit Investments, with the exception of European Credit, EU, traded higher, taking AGG, higher, but not enough higher to offset the destructionism of the bond vigilantes who on June 2, 2014, forced a strong sale in debt investments. The Benchmark Interest Rate, ^TNX, traded lower from yesterday’s 2.65% to 2.62%, which stands slightly higher from its Friday June 13, 2014 value of 2.60%. US Ten Year Notes, TLT, are a loss leading Credit Investment.

Junk Bonds, JNK, surged to new highs. Emerging Market Local Currency Bonds, EMLC, and Emerging Market Bonds, EMB, traded vertically higher, attaining their previous highs.

2D) … In Thursday June 19, 2014, marketplace trading. Nation Investment, EFA, traded strongly higher to a new rally high, as the US Dollar, $USD, UUP, capitulated and trades lower, turning Major World Currencies, DBV, lower, from their ongoing rally high, as currency traders call all other sovereign currencies higher.

Spain, EWP, and Banco Santander, SAN, traded to new rally highs, as European Credit, EU, traded higher on the day.

Japan, EWJ, JSC, rallied higher, to their early January 2014 highs.

Asia Excluding Japan, EPP, traded higher, as Australia, EWA, KROO, traded up to their previous rally highs and Australia Dividends, AUSE, recovered; while Vietnam, VNM, and Indonesia, IDX, IDXJ, traded lower.

Canada, EWC, CNDA, the UK, EWU, Denmark, EDEN, Taiwan, EWT, Golumbia, GXG,  Peru, EPU, and Chile, ECH, traded higher.

China, YAO, ECNS, CAF, ASHS, ASHR, Russia, RSX, ERUS, India, INP, SCIN, Brazil, EWZ, EWZS, Norway, NORW, and European Small Cap Dividends, DFE, traded lower. Reuters reports Argentina Says Next Bond Payment ‘Impossible’, Default Looms

Global Financials, IXG, traded higher as Far East Financials, FEFN, trade higher, and as China Financials, CHIX, Emerging Market Financials. EMFN, and Stockbrokers, IAI, traded lower,

World Stocks, VT, traded higher, being led so by Gold Miners, GDX, GDXJ, Silver Miners, SIL, SILJ, Copper Miners, COPX, Global Industrial Miners, PICK, Consumer Staples, KXI, Small Cap Consumer Staples, PSCC, Food and Beverage, PBJ, Medical Devices, IHI, International Energy, IPW, Energy Production, XOP, Energy Service, OIH, Automobiles, CARZ.  On the other hand, China Technology, CQQQ, traded lower, on lower Chinese Financials, CHIX.  Solar Energy, TAN, traded lower. Retail, XRT, traded lower from its rally high; CNBC reports Coach Closing 70 Sores As Sales Suffer

Pursuit of Yield Investments traded higher, being led so by North American Energy Partnerships, EMLP, Smart Grid, GRID, Utilities, XLU, International Dividend Dogs, IDOG, Premium REITS, KBWY, Leveraged Buyouts, PSP, and Dividends Excluding Financials, DTN.

Commodities, DBC, traded higher, being led higher by Base Metals, DBB and Gold, GLD, and Silver, SLV, which exploded higher.

Peak wealth has been attained with Utilities, XLU, topping out; its 2.6% rise this week evidences that pursuit of yield investments has run its course; and Global Integrated Energy, IPW, and Global Agriculture, PAG, topping out, evidences the termination of defensive stock investing.

An Elliott Wave 5 High has been attained in the S&P 500, it has come via ever rising Major World Currencies, DBV, and Emerging Market Currencies, CEW, and Aggregate Credit, AGG. In other words, peak moral hazard of the world’s debt based money system has been attained via a zenith in fiat money.

The US Dollar as the international reserve currency, together with the sovereignty of democratic nation states is at its peak, and has produced awesome seigniorage based upon fiat money, which in turn has defined the investor as the centerpiece of economic activity.

Now, with the bond vigilantes, having the bow of economic sovereignty, they together with the currency traders, are effecting coup d etats world wide, with the result being that regionalism is replacing creditism, corporatism, and globalism.

And now The Islamic State in Iraq and the Levant (ISIS), a jihadist group, who carry the Black Flag, as seen in CFR Report, has overnight created a rapidly expanding nation in Iraq and Syria, that threatens to overrun the Kurds in northern Iraq as well as the Shiites in Baghdad.  It is a proto-state, that is an unrecognized nation, having de facto sovereignty, which is active even in Lebanon, destabilizing there with an attempted assassination attempt.

The Telegraph reports in video Islamic Army Of Iraq Founder: Isis and Sunni Islamists Will March On Baghdad. The Founder of Islamic Army of Iraq, who was once described by the US as a top terrorist target, explains how the fight against ‘American or Iranian occupation’ has united Isis and other Sunni Islamists in the Battle for Baghdad.

Patrick Martin of WSWS posts Obama Exploits Iraq Crisis As Pretext For War Against Syria  The Obama administration made clear on Thursday that a major deployment of US forces in the Middle East will include military strikes beyond the borders of Iraq.

Elaine Meinel Supkis posts US To Bomb Al Qaeda In Iraq While Increasing Arms To Al Qaeda In Syria: Thank You, AIPAC

John Redwood United Kingdom Member of Parliament writes The Outbreak Of Religious War In Iraq Should Not Lead To UK Or US Military Intervention.

Frank Dimora posts Bible Prophecy Foretells Of Two Soon Coming Middle East Wars, these being the Psalms 83 War which is centered upon Syria, and the Ezekiel 38 War which is centered upon Israel. It’s easy to imagine that the US will be involved.

Psalm 83 tells us the Ishmaelites, Edom, Ammon, Amalek, Hagarenes, Gebal, and the Philistines will attack Israel.  Who are these nations described as Old Testament territories?  In our modern times, these are the nations of Jordan, Lebanon, Iraq, Saudi Arabia, Egypt, the Palestinians, and Syria.

The War spoken about in Ezekiel 38 takes place when Israel thinks they are living in safety without any walls to protect them, we believe the Psalms 83 war will take place at the time Israel and the Arabs are still calling for this Peace and safety and, at the time when Israel is protected by all their bars, gates, and walls.

The new sovereignty of regional economic governance is rising, as is seen in the emergence of Eurasia, through the Russia-China energy compact as well as The June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 and Quantitative Easing to Include Not Only Government Bonds, But Also Private Sector Loans, as Well As  A Call To The Surrender Of Some Sovereignty.

And a new seigniorage based upon diktat money, is emerging; it features regional statism to establish regional security, stability, and sustainability, where the debt serf is the centerpiece of economic activity.

The pursuit of yield rally, the defensive equity rally, the emerging market rally, and the European nation rally, are now complete, as is seen in the ongoing Yahoo Finance chart of Utilities, XLU, India Small Caps, SCIN, India, INP, Spain, EWP, Turkey, TUR, and Brazil, EWZ, topping out, evidencing the end to debt trade investing and currency carry trade investing.

Investments in Spain, EWP, such as its bank SAN, exemplifies the zenith of debt trade investing.

Investments in Emerging Markets, such as in India’s, Tata Motors’, TTM, Turkey’s TKC, Brazil’s  BRFS, CPL, TSU, ELP, CIG, EBR, seen in combined ongoing Yahoo Finance Chart, exemplifies the zenith of currency carry trade investing, which has been based upon the lowering of yield of sovereign debt. The rising value of debt of these democratic nation states has produced currency carry trade leverage over the Japanese Yen, FXY, to produce stunning investment gains.

The genius of Milton Friedman’s floating currencies, and the genius of Ben Bernanke’s Global ZIRP, has come to an end now that the bond vigilantes, are in control of the Bow of Economic Sovereignty, that is the Benchmark Interest Rate, ^TNX, and are calling interest rates higher globally.

Speculative leveraged investing, that came via Asset Managers, has come to an end. Companies which have securitized and traded in financial products, such as Voya Financial, VOYA, are tombstones on the bygone era of credit and the age of currencies.

The Bear Steepening that commenced in early June 2014, continued the week ending June 20, 2014, as The 30 Year US Government Bonds, EDV, The 10 Year US Government Notes, TLT, and Long Duration Corporate Bonds, LWC, traded lower.  Risk Free Credit, FLOT, traded to a new all time high.

The Bull Flattening of the 10 30 US Sovereign Debt Yield Curve $TNX:$TYX, came to an end on June 2, 2014, as is seen in Steepner ETF, STPP, steepening in value in June. The surge in Oil, USO, and the  investment demand for Gold, GLD, as well as the failure of the government in Iraq and an enduring civil war in Ukraine, has not yet been priced into inflation; there has only been a tiny rise in the ratio of Long Term Tips. LTPZ, to US Ten Year Notes, TLT, that is in LTPZ:TLT.

Junk Bonds, JNK, traded lower. The Long Term Corporate Bonds, LWC, is now tied with Emerging Local Currency Debt, EMLC, and European Debt, EU, in leading all of the High Yield Debt, JNK, LWC, EU, EMB, HYD, EMLC, EMCD, BABS, HYXU, PZA, lower, on the exhaustion of the world central bank’s monetary authority.

It is Jesus Christ, who on October 23, 2013, opened the First Seal of the Scroll of End Time Events, and released the Rider on the White Horse, seen in Revelation 6:1-2, who has the Bow of Economic Sovereignty, to begin economic coup d etats world wide, by empowering the bond vigilantes to commence calling the Benchmark Interest Rate higher from 2.49%.

And it is Jesus Christ, who on June 11, 2014, opened the Fourth Seal of the Scroll of Scroll of End Time Events, and released the Rider on the Pale Horse, seen in Revelation 6:7-8, (compelling Equity Investments to trade lower on the trade lower in the EURJPY, following the ECB Mario Draghi Mandate of NIRP and LTLRO) who introduces economic deflation replacing economic inflation, the result of which is economic death replacing economic life.

A see saw destruction of the components of fiat wealth, these being Equity Investments, and Credit Investments, is underway, on the failure of Sovereign Currencies, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, and the India Rupe, ICN, trading lower in value.

2E) … In Friday, June 20, 2014, financial marketplace trading, the stock market actually pivoted from a bull market to a bear market.

With the trade lower in Major World Currencies, DBV, and Emerging Market Currencies, CEW, the June 5, 2014 Mario Draghi ECB Mandate of NIRP and TLTRO becomes the EU Economic Manifest that serves to pivot the world from the age of credit and currencies and into the age of diktat and debt servitude.  The June 5, 2014 Mario Draghi Mandate becomes the “manifest direction” for regional economic governance in Europe.

All currencies are either peaking or have peaked out in value, reflecting the failure of democratic nation state sovereignty. Out of soon coming economic chaos, more specifically a credit bust and global financial system breakdown, termed Financial Apocalypse, and foretold in Revelation 13:3-4, regional sovereign leaders will provide diktat to drive regional economic activity.

Nation Investment, EFA, traded lower from its market top high, as Asia Excluding Japan, EPP, traded lower with Emerging Asia, GMF, Taiwan, EWT, Singapore, EWS, EWSS, South Korea, EWY, Australia, EWA, and New Zealand, ENZL trading lower.

The Emerging Markets EEM, EWX, traded lower, on lower Emerging Market Currencies, CEW, and lower Emerging Market Local Currency Bonds, EMLC. Currency hedging no longer provides positive investment gains, as is seen in Hedged Emerging Markets, DBEM, trading lower. Vietnam, VNM, Turkey, TUR, Indonesia, IDX, IDXJ, Emerging Africa, GAF, and Emerging Europe, ESR, traded lower.

Canada, EWC, CNDA, traded to a new rally high, on a rising Canadian Dollar, FXC, which reflects the rally in Oil, USO, and Gold, GLD, which Canada produces. Sweden, EWD, traded lower on a lower Swedish Krona, FXS.

Global Financials, IXG, traded lower from its rally high, as Emerging Market Financials, EMFN, European Financials, EUFN, and Far East Financials, FEFN, traded lower.

In Yield Bearing Investments, Dividends Excluding Financials, DTN, traded to a new rally high; while Emerging market Dividends, EDIV, Emerging Market Infrastructure, EMIF, Global Infrastructure, IGF, Utilities, XLU, International Telecom IST, Gulf Dividends, GULF, traded lower.

World Stocks, VT, traded unchanged at its rally high, as Energy Services, OIH, traded higher, while Energy Production, XOP, topped out, and Global Integrated Energy, IPW, traded lower.  Other sectors trading lower included Global Agriculture, PAGG, Insurance, KIE, and Steel, SLX, with World Steel Association posting May 2014 Crude Steel Production Exceeds Last Year’s Production.  

The pivoting from a bull stock market to a bear stock market is seen in the Emerging Market Bear Market ETFs, EUM, EEV, and EDZ, trading higher; the periphery sell off will soon proceed to become core sell off, as sovereign currencies trade lower on debt deflation.

Most of the Inverse Market ETFs, STPP, XVZ, EUO, YCS, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM, are now trading higher, evidencing that peak wealth has been attained; these could be used as collateral for the basis of short selling.

The pivot from bull market to bear market is seen in  Convertible Securities, CWB, topping out in value, and the 20 20 Target Date ETF, TDH, trading 1.5% lower, and the International Quality Dividend Defensive, IQDE, trading 2.0% lower, and the S&P Buy Write, PBP, trading 2.1% lower in value for the week.

The age of financialization and securitization is over, though, finished, and done, as is seen in the Proshares Short MSCI EAFE, EFZ, trading higher in value. The age of regional economic governance has commenced with the June 5, 2014, Mario Draghi ECB Mandate of NIRP and TLTRO.

The peaking out in risk assets comes with rising headline inflation, and has produced an investment demand for Gold, GLD, and Silver, SLV. The demand for safe assets, that is gold and silver, is seen in the rallying value of gold relative to sovereign currencies, and is presented in the ongoing Yahoo Finance chart of the ETFs, GLD, GYEN, GGBP, and GEUR.

John Templeton said “Bull markets are born on pessimism, grow on scepticism, mature on optimism and die of euphoria.”

The economic data reports scheduled for next week, on consumption and on consumer confidence may be the actual triggers which propel the stock market lower.

Aggregate Credit, AGG, traded higher with Junk Bonds, JNK,  which traded to a new rally high, suggesting that Total Credit has surged and is now trading lower from its grand swell higher.

3) … In this week’s news and in commentary

3A) ... Fred Brauer answers the question, “Why did Dave Brat beat Eric Cantor in Virginia’s Republican primary”, relating Yes, Brat’s Victory Was About Immigration.  I reply that those Inside The Beltway wanted a “pure Republican”, that is one who makes “no compromise” with Democrats. Of note, Dave Brat had support from right wing pundits Ann Coulter and Laura Ingram.

3B) … Just exactly where do the 1% reside?

Wikipedia relates that they reside in million dollar homes, in such places as The Beltway’s Potomac, MD, or the Upper West Side of Manhattan, or Upper East Side of Manhattan. And wealth demographer Stephen Higley relates they reside in the Higley Elite 100 Neighborhoods, such as the Carderock-The Palisades neighborhood, which is one of The 25 Richest Neighborhoods in America.

Betsy Schuman relates the Palisades community in Bethesda is a small neighborhood of approximately 79 homes in a park-like setting near the canal off MacArthur Boulevard. The Palisades is filled with both traditional and transitional colonials and contemporary homes on lovely treed lots. The lot sizes range from approximately .80 – 3.24 acres.

El Observatorio del Desarrollo Urbano y Territorial posts America’s 1,000 Richest Neighborhoods.

And Richard Florida of City Lab posts America’s 1,000 Richest Neighborhoods. America’s “one percent” are a privileged bunch. It takes an adjusted gross income of almost $400,000 to be counted among those who make up the country’s top earners. Together, the top 1 percent account for nearly 20 percent of reported taxable income in the US.  Overall, the one percent are heavily concentrated along the East and West Coasts. And despite all the talk about gentrification and the movement of the uber-affluent back to the cities, their numbers are overwhelmingly concentrated in the upscale suburbs of America’s increasingly bi coastal economy – places like Greenwich, Connecticut; Bethesda and Potomac, Maryland; Coral Gables, Florida; and Newport Beach, California

Des Moines, Iowa, is not where the 1% reside, but it is a major center of the US insurance industry and has a sizable financial services and publishing business base. In fact, Des Moines was credited as the “number one spot for U.S. insurance companies” in a Business Wire article and named the third largest “insurance capital” of the world; it is known as Hartford of the West. Zip Code is 50301. In 2010, Forbes magazine ranked the Des Moines metropolitan area first on its list of “Best Places For Business And Careers,” based on factors such as the cost of doing business, cost of living, educational attainment, and crime rate.

3C) … I reside in a jungle of abuse with the vilest of predators.

Here in downtown Bellingham, WA, it’s a world characterized by melancholy, alienation, bleakness, disillusionment, disenchantment, ambiguity, moral corruption, and evil of every type; many psychopaths and their girlfriends live here; such be alpha males and their alpha females, who go around biting, ripping, and devouring whoever they may; these have used me many times as a fire hydrant to piss on; and I can assure you it is a most unpleasant experience. There is no law against intimidating or harassing people. I have come to appreciate The Third Man, a film noir; yes it really appeals to me. Distance Learning presents The Five Rules of Film Noir

AMC Filmsite relates Film noir genre films (mostly shot in gloomy grays, blacks and whites) thematically showed the dark and inhumane side of human nature with cynicism and doomed love, and they emphasized the brutal, unhealthy, seamy, shadowy, dark and sadistic sides of the human experience. An oppressive atmosphere of menace, pessimism, anxiety, suspicion that anything can go wrong, dingy realism, futility, fatalism, defeat and entrapment were stylized characteristics of film noir. The protagonists in film noir were normally driven by their past or by human weakness to repeat former mistakes.

Fog’s Movie Reviews relates The Third Man is set in Vienna, in the aftermath of WWII. The film was shot on location there, and the recovery is still evident. Rubble and wreckage are often present, as are scaffolding and repair efforts. The city is policed by multi-national security forces. The locals suspicious and untrusting. It’s a destabilized world.

Enter Holly Martins. He’s an author of pulp novels who’s a bit down on his luck. He’s been offered a job by his college friend, Harry Lime. When he arrives in Vienna, however, he discovers his friend Lime is dead. He was struck by an automobile and killed just prior to Martins’ arrival.

While attending Lime’s funeral, he is shocked yet again. He’s informed that Lime was an unscrupulous war profiteer. A notorious black market racketeer.

Harry Lime is not dead at all. In legendary movie moment, a light suddenly turned on from a window above illuminates a man hiding in the shadow of a doorway. It’s Harry Lime. His death was faked.

Now that he’s revealed himself to Martins, Lime also reveals his motivations. In an infamous scene, Martins and Lime ride a ferris wheel and discuss his crimes. It’s a chilling scene. The smug, cold-blooded Lime espouses his self centered world view, demonstrating no remorse whatsoever for his victims. Instead, he shows a callous disregard for human life, even boasting that his profits came without income tax. He alternately threatens and attempts to bribe Martins to join him.

Harry Lime’s girlfriend-mistress, Anna Schmidt, being passionately in love with Harry, seen in image here, remains loyal to him as the movie’s drama unfolds.  The more review continues here.

Geri Jeter writes Z is For Zither Composed for the zither by Anton Karas, who also played the solo instrument, The Third Man score often is described as a stellar example of the film composer’s art.

According to a November 1949 Time magazine article: “The picture demanded music appropriate to post-World War II Vienna, but director Reed had made up his mind to avoid schmalzy, heavily orchestrated waltzes. In Vienna one night Reed listened to a wine-garden zitherist named Anton Karas, [and] was fascinated by the jangling melancholy of his music.” Roger Ebert wrote, “Has there ever been a film where the music more perfectly suited the action than in Carol Reed’s The Third Man?”

If one were to ask Anna Schmidt, “Why were you passionately in love with Harry Lime?” The answer would come back, “I loved the rebel”. There are some women who before the age of fiveteen, who have crossed the rubicon of morality so many times, that they come to love only evil men, and give themselves passionately to them in every way, mentally, sexually, and emotionally. Nothing should be done to help these women, as nothing can be done to help them; they live in emotional quicksand. The only thing one can do is refer them to Donna Anderson who writes Why You Can Become Addicted To A Sociopath/Psychopath.

The bad thing about their love addiction is that in their passion, they lose all moral perspective and become incapable of virtuous speech and behavior, as well as incapable in manifesting in good ethical regard for others.

I know a number of women like Anna Schmidt; and they consistently tell me “I am free”’; to which I say nothing, but very much want to say, “no you are a slave to sin”. And I know some women, who are so Godly, that I have come to believe, they were made God’s child in the womb. Some might say they had no adult conscience, and have not reached the age of reason, and could not have been born again. I reply what constitutes reason?  Some women, are nudged by God in the womb, and respond with an “uh-huh”, and thus are born again at that time, and emerge into the world, God’s child. Such be the election of grace.

3D) … Who is a libertarian? What is Libertarianism

Victor J. Ward posts in Economic Policy Journal Libertarian-Socialism = Righteous-Wickedness.  He writes “I agree with everything mentioned in the post: It’s Here: Libertarian-Socialism. But I wanted to comment on one section of Will Moyers’ article.

Moyers says: How can we combat racism? Property rights and non-agression. How should humans approach sexuality and gender? Property rights and non-agression. What is the place of hierarchies in society, whether it’s families or workplaces or financial classes? Property rights and non-agression. What role — if any — should religion and superstition play in society? Property rights and non-agression.

And to Moyers, I say: Yes, that’s correct. Moyers writes in an attempt to say that libertarians have an extremely limited answer to some of life’s most pressing questions. In truth, however, continue reading”

I am not a libertarian; I am a christian; one cannot be both; I am beginning to understand, that under libertarianism, there is individualism and no public anything; no public roads, no public transportation, no public schools; no public statue, not even of Murray Rothbard. The flag of the libertarian is Don’t tread on me; and the banner of the libertarian reads The Individual way is the right way. For libertarians, justice is freedom from public ownership.

3E) … Are you a feminist? Do you need feminism?

Economic Policy Journal posts  I Don’t Need Feminism Because

3F) … WSWS posts Bulgaria suspends construction of South Stream pipeline.

The EU and US have forced Bulgaria to halt construction of a pipeline that would allow Russian gas supplies to Europe to bypass Ukraine

3G) … Democracy fails in Iraq.

The WSJ reports Iraq’s Top Shiite Cleric Calls for New Government. ‘Effective’ Government Needed That ‘Avoids Past Mistakes’.

Zero Hedge post Iraq Fighting Intensifies, Battle For Refinery, PM On The Rocks.

Dan Sanchez posts in Lew Rockwell Cheney Launched A War That He Knew Would Be Futile And Catastrophic Simply To Establish Republican Rule.

3H) … Mankind seeks the sovereign experience of God, that is to create human life.  Bible prophecy relates that as it was in the days of Noah, so it shall be in the days of the coming of the Son Of Man, Matthew 24:37-39.  Back in Noah’s time, fallen angels had sex with women, as an attempt to modify the gene pool, and corrupt the lineage of the forth coming Messiah and Redeemer of mankind. Today, scientists seek the sovereign authority of God, that is to create human life.

Technology Review posts Genome Editing. The ability to create primates with intentional mutations could provide powerful new ways to study complex and genetically baffling brain disorders.

NPR posts The Transhuman Future: Be More Than You Can Be  How is it that we define a human? Is it our body? Our genome? Our behaviors? Our self-awareness? Our compassion? Our minds? All of these and then something more? What now may be obvious to most people about being human will become less so as we become progressively more integrated with technology both inside and outside our bodies. Transhumanism, according to the dictionary on my Apple laptop, is defined as “the belief or theory that the human race can evolve beyond its current physical and mental limitations, especially by means of science and technology.”

3I) … As described in Daniel 2:25-45, God is a empire builder.

And He labors in dispensation, that is in the household stewardship of the economy of God, to perfect every age, bringing it to completion, much like a ship’s captain completes the manifest before setting sail, as is described in Ephesians 1:10.

Jesus Christ stirred the investor’s greed so as to leave no debt trade unbought, (ie KR, and NMM) and for no carry trade investment unsecured (ie Columbia, GXG).

Investment mania produced peak moral hazard, what is properly described as an Empire of Debt, on Thursday June 19, 204.

Elaine Meinel Supkis posts Obama Sends More Troops, Drones, Bombs To Iraq.

Her article describes the empire building activity of God, which was foretold in the second year of the reign of Nebuchadnezzar by the prophet Daniel in the interpretation of the King’s Statue of Empires dream as presented in Daniel 2:25-45, where two iron legs would rise to rule the world in hegemonic power; these have been the British Empire and the United States.

Now with the end of the US Dollar as the international reserve currency, and disinvestment out of debt trades and deleveraging out currency carry trades, the global kick ass, might makes right, final Global Hegemon, is literally dust blowing in the wind.

Ms Supkis misportrays the future relating “Europe is going to get yet another lesson in Realpolitik, Antiwar reports Russia Halts Ukraine Gas Shipments.  This will wreck the economy in Western Europe and include a flood of criminals pouring out of Ukraine to exploit open borders and the devolution of Europe dissolving into fragments will continue while the British Royals parade multiple babies about the planet, crowing about ruling the remnants of their old empire”.

US Dollar Hegemony, as well as the US Dollar as the international reserve currency is history as Brandon Smith of Alt-Market.com, posts in Zero Hedge Energy Markets Are On The Brink Of Crisis.

Modern wars are rarely, if ever, fought over resources, despite what the mainstream gatekeepers might tell you. If a powerful nation wants oil, for instance, it lines the right pocketbooks, intimidates the right individuals, blackmails the right officials or swindles the right politicians. It has no need to go to war when politicians and nations are so easily bought. Modern wars, rather, are fought in order to affect psychological change within a particular country or population. Wars today are fought to cover up corrupt deals and create desperation. Oil is used as an all-encompassing excuse for war, but it is never the true cause of war.

In reality, oil demand has become static and is even falling in many parts of the world, while new oil and gas-producing fields are discovered on a yearly basis. Petroleum is not a rare resource — at least, not at the present. And the propaganda surrounding the “peak oil” Armageddon scenario is pure nonsense. Oil prices, unfortunately, do not rise and fall according to supply – instead they rise and fall according to market tensions and, most importantly, the value and perceived safety of the U.S. dollar. Supply and demand have little to do with commodity values in our age of fiat manipulation and false investor perception.

A very real danger within energy markets is the undeniable threat that the U.S. dollar may soon lose its petrodollar status and, thus, Americans may lose the advantage of relatively low gas prices they have come to expect.

The U.S. dollar’s world reserve status is nearing extinction. Multiple major economies now trade bilaterally without the use of the dollar; and with foreign conflicts on the rise, this trend is going to become the norm.

In the past week alone, Putin adviser Sergey Glazyev recommended to the Kremlin that a coalition of nations be formed to end the dollar’s reserve status and initiate a form of economic warfare to stop “U.S. aggression”.  Of course, anyone familiar with the escapades of international banking cartels knows that it is the money elite that dictate U.S. aggression, just as they dictate the policy initiatives of Russia.  I would note that there is only one currency exchange structure that could be used at this time to shift global forex reserves away from the dollar system, and that is the IMF’s Special Drawing Rights.

The argument has always been that the IMF is a U.S. controlled institution, however, this is a faulty assumption.  The IMF is a Global Banker controlled institution, a front organization for the Bank of International Settlements, which is why the recent refusal by the U.S. Congress to vote on new capital allocations for the IMF has resulted in the world’s central bank threatening to remove U.S. veto power.

The IMF is owned by a cartel of banksters and it is ready to replace the USD with SDRs, as is seen in their PDF report.

Aside from the potential impact on oil prices which will compound on the growing global inflationary pressures, a regional conflict will destabilize global trade, as Benson te has written; and will  be a genesis factor in the rise of regional economic governance.

Bible prophecy of Revelation 13:1-4 foretells that out of waves of Club Med sovereign, banking and corporate insolvency, the Beast Regime is rising to replace the Banker Regime. There will be no exit by any nation from the Eurozone. Leaders will meet in summits to renounce national sovereignty and announce regional pooled sovereignty where regional fascist leaders will work in policies of diktat and schemes of control to establish regional security, stability and sustainability.  The EU will serve as a model for regional integration, for all of the world’s ten regions, where totalitarian collectivism unifies people in gulags of debt servitude.

Germany will once again rise to be a military power. Peter Schwarz writes in WSWS The German President’s Call To Arms. At the end of a three-day visit to Norway, the German president reiterated his call for a more aggressive German foreign policy. And Johannes Stern writes in WSWS The Crisis In Ukraine And The Return Of German Militarism. And Johannes Stern writes German Militarism And The US Debacle In Iraq. The German bourgeoisie is responding to the debacle of US imperialism in Iraq by intensifying its campaign for militarism and war. Ulrich Ripper writes in WSWS German Foreign Minister Steinmeier Agitates For War. The demand for a German leadership role in Europe and the world has never been so shamelessly and forcefully raised.

Shipping Stocks, SEA, traded decisively lower, on Wednesday, June 17, 2014, evidencing the rise of the region of Eurasia, as Bloomberg reports China Blocks European Shipping Pact, Sending Maersk Down. China blocked the formation of a global alliance by the world’s three biggest shipping lines in a surprise move that ignored Western approval of the plan and sent AP Moeller-Maersk A/S MAERSKB shares tumbling the most in two years.

God will soon fulfill his word of prophecy of  Revelation 13:5-10, which presents there is waiting in the wings of Europe stage, the most capable of sovereigns, perhaps this one is Jean Claude Juncker.  Out of the European Debt Crisis, the Sovereign will step into the limelight, and through cunning and shrewdness rise in power to rule, as is seen in Daniel 8:6-8, and be accompanied in power by the Seignior, that is top dog banker, who in coining money, takes a cut, as foretold in Revelation 13:11-18. Their word, will and way will provide economic direction unifying all of the Eurozone. This New Charlemagne and his Monetary High Priest, will eventually come to rule the world, in a one world religion, from their capital in Jerusalem, as foretold in Daniel 9:25.

3J) … The stage is being set for the rise of a King of the North … as well as for the rise of a King of the South.

Will Egypt’s Sisi rise to be the prophesied King of the South?  Johannes Stern of WSWS reported in March 2014 Egyptian Coup Leader al-Sisi Announces Presidential Candidacy.  Sisi is a US backed dictator prepared to use fascistic methods to suppress the working class at the behest of its imperialist patrons and international finance capital.

Or will an Islamic Caliphate from the nation of ISIS, rise to be the prophesied King of the South? Blessed Economist posts Isis Iraq

Bible prophecy of Daniel 11:11 and Daniel 11:40-42 foretells that a confederation of North African and Middle East countries will form an Islamic Empire, which will produce the King of the South, who will eventually go to war against the King of The North, that is Europe’s soon coming Sovereign, presented in Revelation 13:5-10, who is the Prince who is to come, that being the Prince of the people.

Daniel 11:11 “And the king of the South shall be moved with rage, and go out and fight with him, with the king of the North, who shall muster a great multitude; but the multitude shall be given into the hand of his enemy.”

Daniel 11:40 “At the time of the end the king of the South shall attack him; and the king of the North shall come against him like a whirlwind, with chariots, horsemen, and with many ships; and he shall enter the countries, overwhelm them, and pass through.”

Scott at Prophecy Update wrote in August 2013 EU Convenes Emergency Meeting On Egypt: EEAS Back In The News. We know from Daniel 9:27 that the coming antichrist will “confirm” the covenant with the many, and part of any confirmation of a peace deal in the Middle East will include some kind of peace-keeping forces. It requires some degree of speculation, but it seems obvious that any plan will have to consider a combination of border control forces and forces on the streets to maintain peace. The EEAS was formed for this very purpose, and the fact that this group was born in the revived Roman Empire becomes a compelling story for a prophecy watcher.  If the EEAS is considering involvement in Egypt it is very easy to see similar maneuvering whenever the covenant of Daniel 9:27 is confirmed. This story is worth watching closely.

3K) … The creation of the debt serf is underway in France. Pierre Mabut of WSWS posts Socialist Party Government Ignores Mass Protest To Attack French Culture Workers’ Jobless Benefits Ten thousand entertainment industry workers protested outside the Ministry of Culture in Paris on Monday as part of strike action throughout France.

Anthony Torres of WSWS posts Workers Speak Out Against Privatization Of French Railways. Approximately 1,000 demonstrators gathered in Paris on June 17 to protest the Socialist Party government’s planned privatization of the French railways.

3L) … Elaine Meinel Supkis posts Obama Claims Unilateral War Powers Thanks To Bush Jr. War On Terror Act

3M) … Business InsiderMark Cuban Warns That A Housing Bubble-Like Bust Is Coming To America’s Colleges.

3N) … Pagan Events and Festivals for the Summer Solstice

Bad Witch posts Pagan Events and Festivals for the Summer Solstice.

Facebook posts Crop Circles And UFO Community.  Matthew Williams provides us his latest wonderful short aerial Youtube Video on yesterdays crop circle near Alton Barnes, Wiltshire, UK,  Woodborough Hill Crop Circle 20-6-2014.

Please consider that Stonehenge was built in circular form, as a landing site for UFOs piloted by fallen angels. Bible UFO posts There Are Ten Bible Verses That Describe Chariots As Vehicles. And Bibliotecapleyades posts Ezekiel’s Wheel

It was the pre-Christians, who over the centuries, warred with the Druids, who were judges, doctors, diviners, sages, and mystics, and who worshipped the fallen angels; the pre-Christians finally succeeding in tearing down the “Altar to the Gods”. Druidry fosters love of the land, earth and the wild, Stonehenge relates; of course Christianity fosters love of God and others.

The University of North Carolina Chapel Hill posts Fall Of The Druidesses. The introduction of the Christian religion was the final blow that ended the egalitarianism of Celtic society.

4) … Conclusion: The extinction of the investor is underway, as the Mario Draghi ECB Mandate Of June 5, 2014 And The Announcement Of June 21, 2014, serve as the EU Economic Manifest, that is the Charter, Call, and Club, for Eurozone Regional Governance.

Outside of the embrace by President Nixon of Milton Friedman’s Free To Choose concept of floating currencies, in 1971, the June 5, 2014, Mario Draghi Mandate of NIRP and TLTRO, together with The June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 And Quantitative Easing To Include Not Only Government Bonds, But Also Private Sector Loans, As Well As A Call To Surrender Of  Some Sovereignty, is the singular most important event of modern economic history, as some investors are coming to the realization that the monetary policies of the world central banks have crossed the rubicon of sound monetary policy and have made traditional “money good” investments bad, and as such have sold out of European Small Cap Dividends, DFE; this at a time when Spain, EWP, and its bank, Banco Santander, SAN, have been trading to new rally highs, as demand for European Credit, EU, has remained strong.

Global ZIRP birthed the investor as the centerpiece of economic activity. Central bank monetary policies of credit liquidity funneled money to the investor for investment gain.

Zero Hedge reports Global Millionaires Increase By Most Since Dot Com Bubble, Control Record $52 Trillion In Wealth. In similar presentation, Keven Warsh and Stanley Druckenmiller of the WSJ post The Asset-Rich, Income-Poor Economy. The Fed’s balance-sheet recovery hasn’t stirred business investment, an opportunity killer for workers.

The Great Financial Recovery produced peak moral hazard the week ending June 20, 2014, as Total Credit likely flowed to its grand finale high.

Beginning June 2, 2014, the bond vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49% to 2.62%, and are yielding this Bow of Economic Sovereignty to effectively establish coup d etats globally, enabling the currency traders to introduce competitive currency devaluation, causing some investors to derisk out of debt trades, such as Shipping, SEA, and others to deleverage out of currency carry trades, such as European Small Cap Dividends, DFE, resulting in a see saw destruction of fiat wealth, that is destruction of both Equity Investment, and Credit Investments, such as the Zeroes, ZROZ, the 30 Year US Government Bond, EDV, and the  US Ten Year Notes, TLT, which are leading Aggregate Credit, AGG, lower.  World Stocks, VT, are no longer able to leverage higher over World Debt, AGG, as is seen in the combined chart, VT:AGG, flowing lower.

Dissolution of the Banker regime is underway as investors are selling out of Nation Investment, in particular the Gulf States, MES, Argentina, ARGT, Egypt, EGPT, Turkey, TUR, Indonesia, IDX,  IDXJ, and the Philippines, EPHE.

The dynamos of the age of credit and the era of currencies, are winding down on the failure of credit and the death of currencies, these being creditism, corporatism, and globalism; and are starting to cause the extinction of the investor, which will be similar to the extinction of the wooly mammoth, who was frozen instantly in place, by a rush of freezing air an/or water, as presented By John D. Keyser in Earth Rings and Frozen Mammoths.

The singular dynamo of the age of diktat and the era of debt servitude, is winding up on the derisking out of debt trades and deleveraging out of currency carry trades, this being regionalism, and together with the emergence of Eurasia, through the Russia-China Energy Compact, as well as the June 5, 2014, Mario Draghi Announcement of NIRP and TLTRO, and The June 21, 2014, Mario Draghi ECB Press Announcement of Unlimited Liquidity Through 2016 And Quantitative Easing To Include Not Only Government Bonds, But Also Private Sector Loans, As Well As A Call To Surrender Some Sovereignty, like a spring of warm water, has birthed the debt serf for debt servitude.

Just as the Magna Carta is seen to be a seminal document of English history, so the Russia-China Energy Compact and the two June 2014 Mario Draghi ECB Announcements are seminal announcements that serve as the EU Economic Manifest, that is “Charter, Call and Club”, for Eurozone regional economic governance, which will be replicated in every one of the world’s ten regions, and in totalitarian collectivism unifying all of mankind’s seven institutions, establishing The Beast Regime, out of waves of Club Med sovereign, banking, and corporate insolvency, in fulfillment of bible prophecy of Revelation 13:1-4.

Josh Snyder posts in Economic Policy Journal Anarcho-Capitalism – In One Lesson. While reading Lew Rockwell’sAgainst the State: An Anarcho-Capitalist Manifesto, I encourage you to re-read 1984.

It’s clear that we need a revolution, not of violence but of words.  The pen is truly mightier than the sword and the real checks and balances on perpetually expanding government across the world are not the Magna Cartas and the Constitutions, it’s books like Lews, ones that spread the reality and expose the State for what it truly is – a malevolent entity, hellbent on enriching itself at the expense of the rest of us. Lew reminds us of this throughout, this is NOT the theoretical foundation of the movement,For a New Liberty and the Ethics of Liberty are the groundwork, but this is a brilliant “Lesson” on why this movement is necessary and growing by providing real examples of how the current American regime is so tortuous and so disastrous for the world that there is only one survivable alternative Anarcho Capitalism

Frankly there is no survivable alternative; there is only one hopeful outcome, that being reliance upon the Oikonomia of Jesus Christ.

Lew Rockwell, in building on Libertarians concepts of Rothbard, Spooner, Molinari, Hans Hoppe, and others, has failed to build on the Greek word Oikonomia, from which we derive economics, and which implies a financial component to intentional kinship options, where a steward, who acis in dispensation, that is in management of all things, for the completion of every age, brings all things therein to completion, as presented by the Apostle Paul in Ephesians 1:10.

Furthermore Mr Rockwell, has failed to build on the Gospel, that is the Good News, of The Revelation of Jesus Christ, that is the unveiling and manifestation of Jesus Christ, as presented by the Apostle John, who in his 90s, while living in exile, on the Isle of Patmos, was given a dream by angels of end time events, specifically, “Those things which must shortly come to pass”, as presented in Revelation 1:1.

And Mr Rockwell has failed to build on the Bible prophesied, dissolution of the US Dollar Hegemonic Empire; and its replacement by the Ten Toed Kingdom of Regional Economic Governance, featuring ten regions of toes of iron diktat and clay totalitarian collectivism, as presented in the Statue of Empire prophecy of Daniel 2:25-45.

The Oikonomia of Jesus Christ, provides a life experience of holiness, meaning divinity, upon which one grows in grace, meaning resource, and in truth, meaning that which is reliable for belief, or which is a trustworthy promise.

A gold rally developed on June 20, 2014, as risk assets peaked out in value. A number of investors fear that the June 5, 2014, Mario Draghi Mandate of NIRP and TLTRO, has crossed the rubicon of sound monetary policy and has made traditional “money good” investments bad.  And hence an investment demand for gold arose on Thursday June 19, 2014, as is seen in the chart of the Gold ETF, GLD, blasting higher.

Spot Gold, $GOLD, closed high at $1,320, as the US Dollar, $USD, UUP, closed lower at $80.40. With the rise in the Benchmark Interest Rate, ^TNX, from 2.49%, in June 2014, to 2.62%, which is going to destroy all fiat money and feat wealth, Gold has commenced its Elliott Wave 3 of 3 higher; these are the most dynamic and powerful of all up waves, and they produce the bulk of the wealth increase on the way up to their Elliott Wave 5 High. In the age of debt servitude, the physical possession of gold bullion, and the diktat of regional fascist leaders will be the only form of enduring wealth.

The currency traders in selling the world’s leading sovereign currencies, following the bond vigilantes, in calling the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note,  ^TNX, higher from its October 23, 2013, value of 2.49% to 2.62%, and in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening from its June 2, 2014, low, have underwritten the currency traders in commencing the final phase of the business cycle, that being Kondratieff Winter.

Risk-on investing is over; risk-off investing is the new investment normal. Risk assets, having been inflated by Global ZIRP’s pursuit of yield, have topped out in value, and is driving the wily to derivative contracts and to take physical possession of safe assets, these being gold bullion and some silver bullion.

The World Enters Kondratieff Winter On The Trade Lower In The Euro

June 14, 2014

Financial market report for the week ending June 13, 2014,

This post can be found in Google Documents format here

1) … Introduction. The June 11, 2014 trade lower in the Euro in response to the June 5, 2014, ECB NIRP Mandate of Mario Draghi, pivots the world into the Ten Toed Kingdom of Regional Economic Governance and commences Kondratieff Winter, the final phase of the business cycle. Libertarian Chris Rossini writes in Economic Policy Journal Man-Made Laws Are Never Permanent. If there’s one thing that is perfectly certain, it’s that government is not omnipresent, not omniscient, and certainly not permanent. The Roman Empire is no longer here, neither are the Mongols, nor the Spanish, Portuguese, or British Empires. No doubt they all saw themselves (and their man-made rules) as permanent too. But nothing that is man-made is permanent. The saying “from dust to dust” has been around for so long, yet enough people still can’t grasp its truth. Governments spring up, they loot until they reach the limit, and then the intense desire for survival kicks in to reverse course. If the reversals were never to occur, that would be it! Humanity would be finished.

 

There be an omnipresent and omniscient God, who in bible prophecy, ordained from eternity past that there be sovereign governments, issuing sovereign currencies, that is in fiat money; and that one day a Ten Toed Kingdom, seen in Daniel 2:25-45, known as the Beast Regime, seen in Revelation 13:1-4, arise out of waves of Club Med sovereign, banking, and corporate insolvency, to rule the world in diktat money, via policies of diktat in every one on the world’s ten regions, and via schemes of debt servitude, in all of mankind’s seven institutions, to establish regional security, stability, and sustainability.

 

By God’s ordination, the China Russia Deal has destroyed The US Dollar as the International Reserve Currency, and has given notice that undollar bartering agreements will be the basis for the new Eurasia region of economic governance, the WSJ reports Paul Volcker Calls For A New Bretton Woods Conference. Former Federal Reserve Chairman Paul Volcker called last month in Washington for a new Bretton Woods, the 1944 conference of World War II Allies that set up an international gold-exchange regime; his remarks received little media attention. GATA reports Russian Companies Prepare To Pay For Trade In Renminbi.

 

Since 1913, with the creation of the Creature from Jekyll Island, the world has been operating on a debt based money system, and will do so to the end of time. Public debt cannot be repudiated; it will be applied to every man, woman and child on planet earth; furthermore human government cannot be nullified; nor can it be ever be thrown off; it will rule, under the sovereignty of Jesus Christ, until He  returns.

 

With the 1971 Milton Friedman Free To Choose mandate of sovereign currencies implemented by President Nixon, the US Dollar Hegemonic Empire rose in power to replace the British Empire. The most recent empire came to its zenith with the Thursday, June 5, 2014, Mario Draghi, ECB Mandate, of TLTROs and a Negative Interest Rate Policy.  His word, will and way is the economic law of the Eurozone, and has pivoted the entire world from liberalism’s economic systems of capitalism, socialism, communism, into the singular economic system of regionalism.

 

The week ending June 13, 2014, the US Dollar, $USD, closed at 80.62, up from its June 6, 2014, close of 80.42.

 

Doug Noland writing in Safehaven Sound or Unsound? As follow-up to last week’s quarterly “flow of funds” analysis, I’ll take a brief look at the Rest of World (“ROW”) category. ROW now holds an incredible $22.971 TN of U.S. Financial Assets. To put this number into some perspective, ROW holdings began the nineties at $1.874 TN. Ballooning U.S. Credit and attendant unprecedented Current Account Deficits saw ROW holdings surge $4.335 TN, or 230% during the nineties. During the past 22 years, ROW holdings of U.S. Financial Assets have inflated $21 TN, or over 1,000%. Essentially, the U.S. has unrelentingly flooded the world with dollar balances. This helps explain a lot.

 

The consequences of the massive inflation/devaluation of the world’s reserve currency have for a long time been readily apparent.

 

In the 21 quarters since the end of 2008, ROW holdings have jumped $7.585 TN, or 49%. The world was once again literally flooded with dollars. The global government finance Bubble thesis posits that these dollar balances inundated the emerging markets, fueling unprecedented Credit growth, financial Bubbles and economic malinvestment. China, in particular, succumbed to Bubble Dynamics on an historic scale.

 

It is my view that if not for the massive inflation of U.S. Credit (dollar devaluation), it would have been impossible for the Chinese Credit system to have operated without any constraint for so long. Unfettered cheap Chinese finance has allowed massive overinvestment throughout scores of industries (not to mention apartment units!). The world now faces the consequences: “disinflationary” pressures on many things as well as the specter of major unfolding Chinese financial issues.

 

On Wednesday, June 11, 2014, pent-up disinflationary pressures released as global debt deflation commenced, as the chart of the EUR/JPY currency carry trade showed a strong turn lower, as the currency traders called the Yen, FXY, higher, and the Euro, FXE, lower, on the failure of trust in the monetary policies of the world central banks to continue to stimulate investment gains, as well as global growth, with the result that investors derisked out of World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, and by which the world passed through an inflection point and entered into Kondratieff Winter, the final phase of the Business Cycle, where regional fascist leaders rule in diktat, to establish regional security, stability and sustainability.

 

2) … Details of this week’s financial marketplace trading reveal derisking out of debt trades and deleveraging out of currency carry trades, has introduced destructionism replacing inflationism.

 

2A) … On Wednesday, June 11, 2014, Competitive currency devaluation, coming at the hands of the currency traders calling the Euro, FXE, lower, caused investors to deleverage out of currency carry trades with the result of a stock market reversal from its Elliott Wave 5 High Top. The trade lower in Equity Investments commences the beginning of Kondratieff Winter, and evidences the beginning of the extinction of the investor.

 

Nation Investment, EFA, was led lower by Eurozone Small Caps, DFE, such as TNP, Eurozone Stocks, EZU, such as PT, IR, LYB, CBI, ALU, PHG, BUD, SNY, NVO, NXPI, ERIC, ENL, LUX, UN, and Eurozone Nations, such as Portugal, PGAL, Italy, EWI, Ireland, EIRL, Greece, GREK, and Spain, EWP.  Airbus stock falls sharply as Bloomberg reports Emirates Cancel $16 Billion Of New Airbuses.  Major Countries, Denmark, EDEN, Norway, NORW, Sweden, EWD, Switzerland, EWL, traded lower.

 

The Emerging Markets, EEM, and EWX, were led lower by Turkey,TUR, India, INP, India Small Caps, SCIN, Indonesia, IDX, Chile, ECH, and Argentina, ARGT. Yet Columbia, GXG, traded higher.

 

Global Financials, IXG, were led lower by European Financials, EUFN, such as DB, UBS, CS, NBG, SAN, IRE, India Earnings, EPI, Stock Brokers, IAI, such as TROW, AMTD, SCHW, Investment Bankers, KCE, such as JPM, MS, Regional Bankers, KRE, such as HBAN, FITB, RF, SNV, The Too Big To Fail Banks, such as BAC, C, KEY, USB, WFC, Life Insurance Companies, such as GNW,  PFG, PUK, LFC, AEG, AEL, PRI, LNC, TMK, MET, and Asset Managers, such as BLK, IVZ, CG, LAZ, BEN, AMP, JNS, VOYA, CNS, LM, BR, IVZ, STT, BK. Columbia’s Bank, CIB, traded higher.

 

World Stocks, VT, were led lower by Airlines, such as DAL, UAL, AAL, US Infrastructure, PKB, Automobiles, CARZ, Manufactured Housing, CVCO, Homebuilders, ITB, Transportation, XTN, Global Industrial Producers, FXR, Aerospace, PPA, Consumer Services, IYC, Food And Beverage, PBJ, Small Cap Pure Growth Stocks, RZG, and Small Cap Pure Value Stocks, RZV.

 

Yield Bearing Sectors were led lower by Utilities, XLU, PUI, Smart Grid, GRID, China Real Estate, TAO, Global Infrastructure, IGF, Emerging Market Infrastructure, EMIF, Real Estate, IYR, and Shipping, SEA, such as SBLK, DRYS, DLNG, DAC, SB, and TNP. Their trade lower evidences the beginning of the extinction of the fixed income investor; this comes as Tyler Durden posts The Baltic Dry Index Is Having Its Worst Year Ever. Of note Shipping Stocks, SEA, relative to The Baltic Dry Index, $BDI, that is SEA:$BDI, has levitated into the moon, on pursuit of yield investing.

 

Dividends Excluding Financials, DTN, were led lower by BA, D, NEE, HD, ADP, HPQ, WM, JWN, GE. JNJ, PEP, F, GPC, MSFT, DOW, DIS. MCD, and HON.

 

Agriculture, PAGG, such as CAT, traded lower.

 

Materials, MXI, such as EXP, MLM, VMC, and USCR, traded lower.

 

Miners, PICK, such as RIO, AA, and SCCO, traded lower.

 

Credit Services, such as AXP, DFS, V, MA, HEES, and URI, traded lower.

 

Closed End Funds, GCE, traded lower.

 

Gold and Silver Miners, GDX, GDXJ, SIL, SILJ, traded higher from their recent lows, as Gold, GLD, traded higher with the trade lower in Equity Investments.

As of June 11, 2014, most all Equity Investments began trading lower from their rally and market top highs, commencing an investment demand for gold.

 

Base Metals, DBB, traded lower, with Tin, JJT, Aluminum, JJU, Copper, JJC, Nickel, JJN, and Lead, LD,  as the WSJ reports Owners May Move Metal From China. Operators of metals warehouses in South Korea and Taiwan are receiving inquiries about moving metal held in the Chinese port of Qingdao to their facilities in the wake of an investigation into potential irregularities at the port, according to people at three warehouse companies. Metal owners are looking to shift their stocks from China to warehouses in the region that are licensed by the London Metal Exchange

 

Aggregate Credit, AGG, traded higher, yet resides below May, 28, 2014, rally high, having been led lower by the 30 Year US Government Bonds, EDV, the US Ten Year Notes, TLT, and Long Term Corporate Bonds, LWC.  Emerging Market Bonds, EMB, and Junk Bonds, JNK, traded lower. Thus all Credit Investments are trading lower from their rally and market tops, evidencing the failure of credit. Zero Hedge reports Bank of America Shocker: New Commercial Loan Plunge Is Largest Since Lehman.

 

The currency traders in selling the world’s leading sovereign currencies, following the bond vigilantes, in calling the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note,  ^TNX, higher from its October 23, 2013, value of 2.49% to 2.64%, and in steepening the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, seen in the Steepner ETF, STPP, steepening, have underwritten the currency traders in commencing the final phase of the business cycle, that being Kondratieff Winter.

 

Hans Mikkelsen of Merrill Lynch Research relates Bond Funds In Retreat. As our interest rate strategists have highlighted one of the key contributors to lower interest rates this year has been short covering of bearish Treasury positions, as institutional investors capitulated on the view that interest rates should go up. The retail investor version of this capitulation manifested as tapering inflows and outflows from interest rate defensive products, such as short term high grade funds and loans, and the return of sizable inflows to assets whose returns are adversely impacted by rising rates – such as HG (ex. short term) and EM. Of course on the retail side (mutual funds/ETFs) we have found that flows tend to follow returns and, with HG (ex. short term) and EM leading financial markets with class leading performance in the first part of the year, this shift is no surprise in hindsight. However, as interest rates have increased this month the relative return performance has flipped.

 

Needless to say economic growth is impossible given that investors are starting to derisk out of debt trades and deleverage out of currency carry trades. A lower Euro, relative to the Yen, and higher interest rates are incompatible with global economic growth.

 

It is Jesus Christ, who on October 23, 2013, opened the First Seal of the Scroll of End Time Events, and released the Rider on the White Horse, seen in Revelation 6:1-2, who has the Bow of Economic Sovereignty, to begin economic coup d etats world wide, by empowering the bond vigilantes to commence calling the Benchmark Interest Rate higher from 2.49%.

 

It is Jesus Christ, who on June 11, 2014, opened the Fourth Seal of the Scroll of Scroll of End Time Events, and released the Rider on the Pale Horse, seen in Revelation 6:7-8, (compelling Equity Investments to trade lower on the trade lower in the EURJPY, following the ECB Mario Draghi Mandate of NIRP and LTLRO) who introduces economic deflation replacing economic inflation, the result of which is economic death replacing economic life.

 

With a see saw destruction of the components of fiat wealth underway, and a trade higher in most of these Inverse Market ETFs, (STPP, XVZ, EUO, YCS, CMD, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM) the short selling opportunity of a lifetime has commenced.

 

Soon the US Dollar, $USD, UUP, will buckle and trade lower with the rest of the World Major Currencies, DBV, as well as the Emerging Market Currencies, CEW, which will invigorate the  investment demand for Gold, GLD, whose price will rise from its current range of $1,240 to $1,260.  Gold is in the middle of an Elliott Wave 3 Up, and as such only God knows how high it will go.

 

Doug Casey of Market Sanity posts US In Eye Of Gigantic Financial Hurricane

 

Zero Hedge posts New Commercial Loan Plunge Is Largest Since Lehman

 

Bloomberg reports Currency Carry Trades Rise In ECB’s Negative Rate World

 

Reuters reports Hundreds Killed As ISIL Gains Ground in East Syria

 

UNZ reports Battle To Establish Islamic State Across Iraq/Syria.

 

McClatchy reports Maliki Seeks State Of Emergency After al-Qaeda Seizes 2nd Largest Iraqi City

 

NYT reports Exhausted And Bereft Iraqi Soldiers Quit Fight

 

Zero Hedge reports Al-Qaeda Jihadis Loot Over $400 Million From Mosul Central Bank, Seize Saddam’s Hometown.

 

Zero Hedge reports Al Qaeda Militants Capture US-Made Black Hawk Helicopters In Iraq.

 

Antiwar post Yesterday Mosul, Today Tikrit: Al-Qaeda Seizing Much of Iraq’s NW

 

Antiwar posts Not What the US Planned: Al-Qaeda Tears Down Syria-Iraq Border

 

WSWS reports Al Qaeda Offshoot ISIS Captures Mosul From Iraqi Government Forces.

 

Business Insider reports ISIS Now Controls A Shocking Percentage Of Iraq And Syria/

 

CS Monitor posts Why Mosul’s Fall Is a Signature Moment in Iraq

 

Bloomberg reports Maliki Turns to Militias to Halt al-Qaeda Onslaught. As his army flees from an al-Qaeda splinter group, Iraqi Prime Minister Nouri al-Maliki is rallying Shiite militias to defend his government, raising the specter of civil war in OPEC’s second-biggest oil producer. In a televised news conference yesterday Maliki urged citizens to take up arms after the Islamic State of Iraq and Levant group seized control of the northern city of Mosul, stealing weapons and helicopters from police and army bases as Iraqi government forces fled. He vowed to build an army of volunteers to “pull the thorns out by ourselves.”

 

CS Monitor posts Hezbollah Stronger Than An Arab Army, Israel Documents

 

Bloomberg reports Iraq Bonds Slump on Mosul Seizure as Stocks Drop Most Since 2012. Iraqi bonds plunged and stocks fell the most in two years after fighters from a breakaway al-Qaeda group took control of Mosul in a move highlighting Prime Minister Nouri al-Maliki’s weakening grip on the country.

 

Reuters reports Palestinian Reconciliation Pact Threatened by Disunity

 

Business Insider posts How Google’s New Satellite Company Is Going To Change The World.

 

The WSJ reports Alibaba Launches U.S. Shopping Site 11 Main

 

Ukraine Rejects Gas Offer as Talks End Without Deal. Ukraine rejected a Russian proposal for the price of future natural-gas deliveries as European Union-brokered talks in Brussels ended without an agreement.

 

The largest government bond market in the world saw no futures trades in the morning session last night.  Zero Hedge reports Japanese Bond Futures Volume Collapses To Zero Even As Service Sector Implodes.

 

David Stockman writes In Effect, The BOJ Is The Bond Market, That Is, The Buyer Of First, Last And Only Resort. After endless prodding by the Abe government, Japan Pension Fund Plans Massive Bond Dump Into Dead Mark. Japan’s pension system (GPIF) will now begin to massively dump hundreds of billion of JGBs, so that it can reduce its bond holding from 60% of its $1.3 trillion portfolio to 40%. This is being done, of course, to stimulate the Japanese economy by putting pensioners in harm’s way. The cash to be derived from this program of bond dumping will used to purchase Japanese and international equities, along with real estate, private equity, hedge funds and other “alternative asset” classes. And who will buy negative return bonds to be dumped by the GPIF? Why the BOJ. In Japan, all financial roads lead to the printing press.

 

Cantor said to leave house leadership on July 31.  Republicans have been jockeying for Eric Cantor’s leadership position after his election upset last night. Wall Street Lost A Friend Last Night. Adam Munter posts in Economic Policy Journal David Brat Unscrubbed  There is a lot of stuff in the news about David Brat’s victory over Eric Cantor. In the end, it matters little when one statist wins over another. And in Breitbart Profile Of David Brat, A native of Alma, Michigan, Brat attended Hope College, obtained a Masters in Divinity from Princeton Theological Seminary, and has a Phd. in economics from American University  As a professional economist, Brat says “the Austrians are pure theory with no data. I like them. The Road to Serfdom [by Hayek] is on the money.” But Brat does not consider himself a proponent of the Austrian school. “If you had to peg me, I’m close to the Milton Friedman, Chicago School,” he told Breitbart News.

 

2B) … On Thursday, June 12, 2014, World Stocks, VT, were led lower by a trade lower in Transports, XTN, Global Industrial Producers, FXR, Retail, XRT, Aerospace, PPA, Global Consumer Discretionary, RXI, Medical Device Manufacturers, IHI, US Infrastructure, PKB, Small Cap Pure Growth, RZG. and Small Cap Pure Value, RZV.

 

Automobile Dealerships, PAG, SAH, ABG, KAR, AN, KMX, LAD, traded lower from their market top highs evidencing the end of risk-on investing.

 

Aluminum Producers, Timber Producers, WOOD, Miners, PICK, Materials, MXI, Coal, KOL, Steel, SLX, and Metal Manufacturing, XME, as as Base Metals, DBB, Palladium, PALL, and Platinum, PPLT, traded lower.

 

Energy Producers, XOP, and Global Energy Producers, IPW, traded higher as Commodities, DBC, traded higher, to strong resistance, as Energy, DBE, Oil, USO, Brent Oil, BNO, Unleaded Gas, UGA, and Natural Gas, UNG, traded strongly higher.

 

Gold, GLD, and Silver, SLV, traded higher, taking Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, higher, confirming the beginning of the investment demand for gold.

 

The May 2014 Commerce Department Retail Sales Report shows Retail and food sales came in below expectations, rising by just 0.3 per cent, well below the 0.7 per cent rise expected by analysts. The report also revised the estimate for April 2014 Retail Sales growth from 0.1 per cent to 0.5 per cent.

 

Drug Stores, WAG, RAD, CVS, and Grocer, KR, DEG, and Department Store, DDS, M, led Retailers, XRT, lower, reflecting the failure of trust in the world central bank’s monetary authority and the death of currencies, in particular the Euro.

 

Nation Investment, EFA,were led lower by Thailand, THD, Indonesia, IDX, and Chile, ECH.

 

Global Financials, IXG,  traded lower on lower Emerging Market Financials, EMFN.

 

Dividends Excluding Financials, DTN, traded lower.

 

Closed End Funds, GCE, traded to a new rally high.

 

The Australian Dollar, FXA, continued to a new rally high, taking Major World Currencies, DBV, to a new rally high.

 

Robert Sinche of Pierpont Securities writes Japanese Pension Fund Asset Shift Weakens Yen. The adjustment, sought by the Abe Administration, is not only to attempt to increase returns that have lagged other large global funds (a Bloomberg report indicates that over the 9 years ended March 2013 the GPIF generated a 2.8% average return compared to 5.2% for the Norwegian Government Pension Fund and 7.3% for CalPers) but also to help generate faster growth within the Japanese economy. The latter claim seems a bit weak, resting on the assumption that the GPIF can allocate resources to fast-growing companies better than can “the market”, although the Abe Administration would like to claim this shift as part of their “growth strategy”. While a large allocation shift in favor of domestic equities may boost market indexes and wealth, that hardly qualifies as a “growth strategy” designed to increase the rate of potential growth within an aging economy. Much like the effort to raise inflation, the focus appears to be the outcome rather than the process to achieve it – higher inflation (the desired outcome) resulting from a weaker currency and higher consumption taxes hardly seems to be economic improvement.

 

Will US fixed income markets benefit from the potential allocation shift of perhaps $65bn into foreign debt? If concentrated in a short period into the Treasury market, such a flow might have a meaningful impact, particularly if concentrated in the long end of the curve. However, against the backdrop of the expected tapering of Fed monthly purchases from $85bn per month during most of last year down to zero by late this year, the proposed allocation shift does not appear to be a dominant factor in driving US Treasury yields meaningfully for anything more than a short period.

 

Is there an investable impact of the shift? Maybe it is a result of my traditional FX focus, but a weaker JPY seems to provide an more attractive investable theme. While a flow of about $125bn into foreign denominated assets (equities and bonds) may not be a huge factor when diversified among many countries, markets and securities, if it takes place all that flow would involve selling the JPY versus some other currency. Indeed, one could wonder whether the Abe Administration is partly (mainly?) viewing the asset allocation shift as another factor helping to weaken the JPY, a pricing shift that could both increase measured inflation and provide another (modest) boost to the export/corporate sectors.  In the historic context of a large current account (CA) surplus in Japan, a $125bn capital outflow might not have been a significant force weakening the JPY. But as we have noted on a number of occasions, the traditional CA surplus is  no more, primarily a casualty of the persistently strong JPY, rising energy imports after the earthquake/tsunami changed the composition of electricity production and sluggish global growth trends. Moreover, there is a possibility that the increased allocation to foreign assets by the GPIF encourages private-sector investors also to increase their non-JPY asset holdings, increasing the capital outflow from Japan.

 

Aggregate Credit, AGG, traded higher, on a higher 30 Year US Government Bond, EDV, and a higher US Ten Year Note, TLT, which forced the Interest Rate on the US Ten Year Note, ^TNX, lower to 2.59%.   The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as traded by the Steepner ETF, STPP, traded lower to 37.90, where it waits to spring to life, with a rising Benchmark Interest Rate, $TNX,  to utterly destroy Credit Investments, which are trading lower from their May 2014 highs.

 

2C) … On Friday, June 13, 2014, World Stocks, VT, traded slightly higher as Energy Service, OIH, Energy Producers, XOP, and Global Integrated Energy Companies, IPW, traded higher. Social Media, SOCL, Solar Energy, TAN, and Semiconductors, SOXX, traded higher. Design Build, FLM, traded lower.

 

Nation Investment, EFA, traded unchanged, as China, YAO, and Chinese Financials, CHIX, traded higher, on this week’s higher Chinese Yuan, CYB; and as South Korea, EWY, and its banks, KB, and SHG, traded lower; and as European Financials, EUFN, such as DB, LYG, UBS, CS, Greece, GREK, and its bank, NBG, traded lower.

 

UK Small Caps, EWUS, traded lower as the British Pound Sterling, FXB, rallied strongly, sustaining Major World Currencies, DBV, at its rally high.

 

India, INP, India Small Caps, SCIN, and India Earnings, EPI, traded lower as the India Rupe, ICN, traded strongly lower, forcing Emerging Market Currencies, CEW, to trade lower.

 

In Yield Bearing Investments, European Small Cap Dividends, DFE, Premium REITS, KBWY, Industrial Office REITS, FNIO, and Smart Grid, GRID, traded lower.

 

Closed End Funds, GCE, such as CSQ, AWP, PFL, RCS, EIM, UTF, IFN, HHY, and EMD, traded lower; their trade lower evidences the end of pursuit of yield investing; these have risen 7.5% YTD, and pay a 7% yield.

 

Gold, GLD, traded higher, taking Gold Miners, GDX, GDXJ, higher, confirming the beginning of the investment demand for gold. Spot Gold, $GOLD, rose its recent low of $1,240 to close at $1,275.

 

Aggregate Credit, AGG, traded lower on the day, and unchanged on the week as Junk Bonds, JNK, traded strongly higher, to a new rally high.

 

3) … At the end of the age of fiat wealth, credit flows like the Nile in flood stage.

 

3A) … Across The Curve relates Vivianne Rodrigues of the FT posts Investors Lap Up Ultra Long Corporate Bonds. An article regarding the robust demand for 50 year bonds and the explosion of issuance in that lightly issued sector. Once again it is the yield whores driving the trade. One investor noted how the 50 year bond he just bought yields 30 basis points more than the 30 year bond of the same company.

 

3B)  … Credit liquidity underwrites currency carry trade investing in the Emerging Markets, EEM,  in Emerging Market Bonds, EMB, and in Emerging Market Local Currency Bonds, EMLC, especially Columbia, GXG, and its bank, CIB.  

 

Andrea Jaramillo of Bloomberg reports Colombia Is Handing Carry Trade Investors The Best Returns In The World.  Investors who buy riskier assets with money lent from nations with lower borrowing costs have reaped a 9.47 percent gain in Colombia in the past three months as the central bank liftsinterest rates and the peso appreciates the most of any currency. The nation’s local debt has returned 13.2 percent in dollars, more than double the average gain for emerging markets.

 

WhileMexico surprised investors by cutting rates last week, Colombia increased benchmark borrowing costs for a second straight month in May to keep inflation in check as economic growth accelerates. With swaps indicating the central bank will raise rates by a full percentage point to 4.75 percent by year-end,Banco Bilbao Vizcaya Argentaria is recommending that investors snap up Colombian bonds due 2024.

 

“Colombia’s cycle calls for more rate hikes, opposite to a lot of these countries in the region,” Carolina Ramirez, a strategist at BBVA’s Colombia unit, said in a telephone interview from Bogota. “The carry trade is attractive.”

 

The latest central bank survey published May 12 shows analysts expectannual inflation to accelerate to 3.19 percent by year-end, which would be the highest annual rate since June 2012. The economy will expand 4.5 percent this year after growing 4.3 percent in 2013, according to the median forecast in a Bloomberg survey.

 

The peso has jumped 8.9 percent against the dollar in the past three months, data compiled by Bloomberg show.

“Larger returns given the hiking cycle add to the peso’s strengthening trend,” Armando Armenta, an economist at Deutsche Bank AG, said by phone fromNew York. “Colombia’s peso bonds should continue outperforming in dollar terms.

 

Banco de la Republica will raise borrowing costs to 4.25 percent by year-end to tame inflation, BBVA’s Ramirez said. She predicts yields on Colombia’s 2024 bonds will fall to 6 percent by September from 6.28 percent.

 

“Colombia is lifting rates for the right reasons,” Ramirez said. “The economy is growing and the central bank needs to keep inflation under control.”

 

3C) … Commodity backed lending spurred China investment. Daniel Inman, Fiona Law and Enda Curran of WSJ report The commodity-backed loans at the center of a probe into an alleged financial scam at a Chinese port are part of a ramp-up in offshore borrowing by Chinese companies that Beijing is looking to tamp down. As Chinese authorities tightened credit at home in the past year, local firms instead looked abroad for financing. Asian-Pacific banks alone had $1.2 trillion in loan exposure to China at the end of 2013, up two-and-a-half times from 2010, according to Fitch. A chunk of the borrowing has been by Chinese firms taking out short-term overseas loans backed by commodities, part of an effort to lock in gains by borrowing offshore at lower rates, and investing the money at higher rates on the mainland. This lending has complicated Chinese policy makers’ attempts to slow rapid credit growth in the nation’s so-called shadow banking sector.  Foreign banks have stepped up commodity-backed lending to China in recent years, a profitable business that now is looking increasingly shaky.

 

3D) … Credit for automobile purchases has risen to an all time high, and has underwritten a great swell in automobile sales and has produced record investment in the automobile industry.    

 

In the Great Financial Recovery, that is from 2008 to June of 2014, credit liquidity coming from Global ZIRP, and pursuit of yield investing, has underwritten automobile sales. and has underwritten investment in the Automobile Industry, CARZ, which traded lower from its rally high the week ending June 13, 2014, evidencing the failure of trust in the world central banks to stimulate investment gains and global economic growth.

 

The week ending June 13, 2014, Small Cap Pure Value Stocks, RZV, traded lower from their market top, as Automobile Dealerships, PAG, SAH, ABG, KAR, AN, KMX, LAD, traded lower from their highs evidencing the end of risk-on investing.

 

Katy Burn of WSJ reports More Loans Come With Few Strings Attached. Kate Spade, KATE, a junk rated company got a $400 million term loan requiring no regular financial targets.

 

Lending to weaker companies on easy terms is becoming more and more common as investors’ appetite for higher yielding debt grows stronger and the Federal Reserve keeps money flowing at ultralow rates. Since the financial crisis, companies have been able to borrow more without offering investors what were once considered standard protections against possible losses.

 

More than half of the loans in the $747 billion U.S. market for loans made to junk-rated companies don’t have financial “covenants,” triggers that could cause a borrower to shore up its health, including periodic tests of overall debt levels and cash flow to cover scheduled interest payments. Thus far this year through Thursday, 62% of leveraged loans lacked these regular requirements, up from 57% for all of 2013, according to S&P Capital IQ LCD.

 

Leveraged loans, including loans with and without financial covenants, now yield 5.03% as of Wednesday, compared with 3.81% for investment-grade corporate bonds, according to JP Morgan JPM data, and about 2.59% on the 10-year Treasury note.

 

By having fewer strings attached to their loans, borrowers are once again able to build flexibility to take on more debt or to pay dividends to owners such as private-equity firms.

 

Kate Spade, KATE, borrowed to refinance debt in April, and its $400 million term loan required the New York-based company to maintain no regular financial targets, according to Xtract Research.

 

Federal Reserve Governor Daniel Tarullo said in February that there was “greater investor appetite for risky corporate credits, while underwriting standards have deteriorated.”

 

Covenant-lite loans comprise 54% of loans in a leveraged-loan index run by J.P. Morgan Chase. That is the highest in the bank’s index data going back to 2007, and it is up from 46% at the end of last year.

 

Issuance of leveraged loans in the U.S. has reached $531 billion so far this year, compared with $549 billion to this point last year, which was the busiest pace since 1987, said Thomson Reuters’ LPC unit.

 

Auto World News reports The Auto Industry Had Its Strongest Annual Sales Rate Since Before The 2008 Recession.

 

Jalopnik reports Car Sales In The US  Exceeded Expectations In May as SAAR hit 16.8 million units, compared to a pace of 15.5 million last May, which makes it the strongest month since early 2007.  Freep relates May Auto Sales Soar To 7 Year High As Weather And Easy Credit Lure Buyers. New vehicle sales soared in May to levels not seen since last decade’s housing bubble, fueled.

Who is winning? People who sell trucks and crossovers, of course. Chrysler was up 17%, GM up 13%, and Ford up 3%. Toyota, as well, hit a 17% increase (on the back of a lot of incentives) and Nissan was up 19%.

 

Motor Trader reports New Car Finance Sales Rise 4% In April. The number of new cars sold on finance in April grew 4% to 69,030 units, according to the latest figures from the Finance & Leasing Association.

 

In the 12 months to April, numbers were up 18% to 847,047 vehicles, reflecting the huge surge in PCP sales over the period.

 

For used cars, sales on finance rose 9% in April to 88,741 units and in the 12 months to April were up 20% to 975,164 units.

 

Geraldine Kilkelly, Finance & Leasing Association, head of research and chief economist, said: April was a quieter month for the car finance market following a strong performance in March.

 

Consumer car finance growth remained robust, with volumes 19% higher in the first four months of 2014 than in the same period last year.

 

FLA motor finance providers are optimistic about future growth prospects.  The Q2 2014 Retail Motor Finance Survey results showed that more than 60% of respondents expected new business growth in excess of 10% in each of the new car, used car and light commercial vehicle finance markets over the next year, she said.

 

Atif Mian and Amir Sufi of House of Debt post Spending Worries? The growth in new auto purchases has been much stronger in low credit score zip codes over the past two years. In 2014, the growth was more than twice as strong in low credit score zips relative to high credit score zips.

 

So total spending is being driven in large part by auto purchases, and auto purchases are being driven in large part by purchases by low credit score individuals. What explains this pattern?

 

A very sharp rise in auto loans, especially to low credit score individuals. We showed this pattern in aprevious post. It also makes intuitive sense. Wage growth has been pretty stagnant, especially among middle and lower income Americans. So it makes sense that the only way low credit score individuals are able to buy cars is by taking on debt. They certainly haven’t seen improved income.

 

So what is the big picture? One view is that all of this is benign. Credit conditions were overly tight during the Great Recession, and now credit is flowing back to low credit score individuals who are purchasing cars at a fast clip. We should expect durable purchases by low credit score individuals to help fuel a spending recovery.

 

Another view, closely related to the secular stagnation idea, is that the only way we can generate real demand is by lending to individuals that have low income and low income prospects. The financial system is channeling funds toward individuals for whom economic circumstances remain poor, which offers only a fleeting boost to spending. This is closely related to arguments we make in our new book,House of Debt.

 

Can debt-fueled purchases of new autos continue to drive the spending recovery? This is a pattern worth watching closely.

 

Subprime automobile credit service company Nicholas Financial, NICK, traded slightly lower after Eddy Elfenbein posts The Nicholas Financial-Prospect Capital Deal Is Dead

 

Global ZIRP has incentivized risky lending and thereby established an unsound financial and economic system.

 

Sarah Mulholland of Bloomberg report Subprime Trading Like It’s ’07 in Car-Loan Bonds  In the market where auto loans to people with spotty credit are bundled into bonds, the difference in yield between the lowest-rated securities and the safest has narrowed to the least since August 2007, according to Wells Fargo & Co. data. Demand for the bonds is translating into cheap funding for lenders, allowing them to make even more loans though payments more than 60 days late are on the increase.

 

Investors are turning to riskier debt to boost returns as stimulus measures from central banks around the world suppress interest rates. The European Central Bank last week became the first to take one of its main rates below zero, underscoring the lengths to which policy makers are willing to go to jumpstart growth more than five years after the worst financial crisis since the Great Depression.

 

“People have to reach further and further,” said David Schawel, a money manager at Square 1 Bank in Durham, North Carolina. “The objective now is to reach a certain yield target instead of feeling good about the underlying credit.”

 

Issuance of securities backed by the debt has reached $10 billion this year, up 5 percent from the pace in 2013 through May 30, according to Wells Fargo. Total sales of $17.6 billion last year were more than double the $8 billion sold in 2010, when securitized-debt markets started to revive after all but shutting down amid the 2008 financial crisis.

 

Aided by low interest rates, the U.S. auto industry has been one of the bright spots of the economic recovery. Vehicle sales rose 11 percent to 1.61 million in May, bringing the annualized pace to 16.8 million, the most since February 2007, according to researcher Autodata Corp.

 

The economy contracted at a 1 percent annualized rate from January through March, the first decline in three years. An unexpected drop in spending on health-care services means gross domestic product probably shrank even more in the first quarter, according analysts at JPMorgan Chase & Co. and Pierpont Securities LLC

 

Tidewater Motor Credit, a Virginia Beach, Virginia-based lender, sold $145 million of bonds last week that are backed by 7,438 loans carrying interest rates ranging from 9.45 percent to 26.55 percent, deal documents show. The transaction marks the first asset-backed bond offering for the company since 2012, according to data compiled by Bloomberg.

 

GM Financial Inc., the subprime lender acquired by General Motors Co. (GM) in 2010, boosted its asset-backed bond sale by $200 million earlier this month to $1.4 billion in its largest such offering since 2007, according to data compiled by Bloomberg.

 

Bond investors were paid a yield of 120 basis points more than the benchmark swap rate to buy the bonds rated BBB and maturing in four years in the June 3 sale. That compares with a spread of 175 basis points on similar debt sold in November.

 

The subprime auto segment has ballooned since contracting following the financial crisis.  Private equity firms, attracted by the high margins, have flocked to the business during the past three years. New York-based Blackstone Group LP (BX) acquired Irving, Texas-based subprime lender Exeter Finance Corp. in 2011, the same year that Perella Weinberg partnered with CarFinance Capital LLC.

 

The influx of new players to the business has fueled concern that companies are lowering underwriting standards to win business.

 

“Subprime auto lending from banks, captive finance companies and credit unions continues to increase and is pressuring more traditional subprime lenders to lend to ever-weaker borrowers to maintain lending volumes,” Moody’s Investors Service analysts led by Peter McNally wrote in a January report.

 

The percentage of subprime auto loans that are more than 60 days late rose to 2.75 percent in March from 2.24 percent a year prior, Standard & Poor’s said in a report last month, citing the latest available statistics. The delinquency rate on loans to the most creditworthy borrowers was about flat at 0.28 percent.

 

Some lenders are pushing back against deteriorating underwriting standards, becoming less willing to extend loans to increasingly risky borrowers, according to Moody’s. Borrower credit scores for used car loans improved in the fourth quarter of 2013 for the first time since 2010, the rating company said in an April report.

 

Lengthening loan terms and rising debt burdens relative to the value of a vehicle show that lenders are still taking on more risk, the Moody’s analysts led by McNally wrote in the report.

 

“Since lenders will still continue to vie for borrowers, we don’t expect a major slowdown in subprime lending,” the Moody’s analysts said. “Competition will continue to pressure the credit quality of new originations as lenders fight for business.”

 

4) … The rise of the jihadist nation ISIS establishes the reality that a Ten Toed Kingdom of Regional Economic Governance is rising out of the meltdown of the US Dollar Hegemonic Empire.

 

CNS News posts Abu Bakr al-Baghdadi, Announces The Islamic State Of Iraq and Syria, ISIS. And Robert Fisk posts Sunni Caliphate Has Been Bankrolled by Saudi Arabia And Real Clear Politics posts Welcome To The Jihadi Spring.

 

Ruth Sherlock of the Telegraph reports Generals In Army Handed Over Entire City To al-Qaeda Inspired ISIS Forces. Three army deserters tell the Telegraph how Mosul, the second biggest city in Iraq, was given to terrorists by senior Iraqi army officials. Military deserters have painted a devastating picture of the inability of the Iraqi army to stand and fight, telling The Telegraph how entire divisions surrendered Mosul, Iraq’s second city, without firing a single shot. Speaking from the Kurdish city of Erbil, the defectors accused their officers of cowardice and betrayal, saying generals in Mosul ‘handed over’ the city over to Sunni insurgents, with whom they shared sectarian and historical ties. With Sunni insurgents now threatening the capital Baghdad the eyewitness accounts from the deserters’ reveal how sectarian enmity has, in the space of mere weeks, destroyed the Iraqi national army, which the US government spent billions of dollars to build.

 

Across The Curve posts Obama Channels Hamlet. The Leader of the Free World just concluded a statement and a truncated press conference before a flight to North Dakota and he stated that there would be no decision on Iraq for several days. I think that it took JFK and his associates less time to respond to missiles in Cuba in 1962 than it will have taken this Administration to respond to this real and present danger in Iraq. Maybe our role as super power is shifting and eroding as the pendulum of history swings in the direction of China but I think that the President highlights the fact when he insists that we need a change of attitude in Iraq and the cooperation of the major players there. For now we are the most powerful nation in the world and our interests are threatened. Why is he temporizing?

 

The Hill posts White House Faces Worst Case Scenario With Iraq Meltdown

 

Stratfor Intelligence reportsThe Logic Underpinning The Militant Offensive In Iraq. The transnational jihadist movement has since sought to exploit the ensuing anarchy in the region. The rise of the Iranian-led Shiite camp over the last decade or so has created an additional opportunity for jihadists to mobilize Sunni fighters from Muslim-majority countries and among Western expatriates.

Despite its audacious offensive, the Islamic State in Iraq and the Levant remains mindful that it has two still formidable Iranian-backed Shiite regimes blocking its path. To the west, the al Assad regime in Damascus has turned the tide against the rebels,giving rise to a stalemate. To the east, it faces the al-Maliki regime, though political and security conditions in Iraq have sharply deteriorated since the withdrawal of U.S. forces at the end of 2011. Power struggles among the country’s three principal groups (Shia, Kurd and Sunni) have weakened Baghdad’s writ, creating the opening that enabled the recent jihadist offensive. Refocusing on Iraq offers a way to force Iran and its Shiite allies to reallocate resources in Syria to defending their position in Iraq, which contains sites of greater significance to Shiite Islam. It could even help them break the stalemate in Syria. The shift toward Iraq enables the militant group to deflect criticism that it has been fighting with fellow Sunnis and even Salafist-jihadists in Syria.

The Islamic State in Iraq and the Levant knows that its opportunity in Iraq will not stay open for long given that demographic trends in Iraq favor the Shia. It also recognizes its limits among Iraq’s Sunnis. Most important, it understands the convergence of U.S., Iranian and Turkish interests that is underway; for different reasons, none of these three countries can tolerate its expansion in Iraq.

This means the group knows it is not in a position to seize Baghdad just yet. For now, it must try quickly to consolidate itself in the Sunni-dominated provinces of Anbar, Ninawa and Salah ad Din, as well as the mixed provinces of Kirkuk and Diyala. It knows that the outside countries will not send ground forces into Iraq’s Sunni areas and instead will rely on air power and special operations forces against its fighters.

Therefore, the Islamic State in Iraq and the Levant will limit itself to establishing a presence in western Iraq similar to what it has in eastern Syria, where outsiders will fear to tread and where neither the Shiite-dominated central government nor the Kurdistan Regional Government can impose its writ. If the jihadist group can survive, any amount of space where it can enjoy freedom of activity will suffice for its purposes of establishing an emirate in the roughly contiguous cross-border area, affording it strategic depth and a launchpad for later offensives against Baghdad and Damascus.

 

Stratfor posts Worsening Violence in Iraq Threatens Regional Security. The growing reach of the Islamic State in Iraq and the Levant has escalated an already brutal campaign in Iraq. Alarmingly quick advances by the militants across an important region of the Middle East could draw in regional powers as well as the United States.

Using hit-and-run tactics, the Islamic State in Iraq and the Levant, also known as ISIL, has sought to keep Iraqi security forces dispersed and under pressure. ISIL has achieved this by striking at areas where security forces are weak and withdrawing from areas where Baghdad has concentrated its combat power. The jihadists have been working hard to improve their tradecraft by developing skill sets ranging from staging complex ambushes to using Iraqi army equipment effectively in surprise raids. ISIL has also sought to better develop its ties with local Sunni communities.

As far back as the days of al Qaeda in Iraq and its predecessor, Jamaat al-Tawhid and Jihad, founded by Abu Musab al-Zarqawi, militancy has had a presence in Anbar province — and indeed in Mosul. During the Iraq War, the U.S. military considered Mosul one of the key gateways for foreign al Qaeda in Iraq fighters to enter the country. ISIL operations in Mosul and the wider Nineveh province are unsurprising. What is surprising is the degree of success that ISIL has managed to achieve in its latest offensive in the region.

Beyond Iraq, a number of countries are immediately affected by ISIL. The Syrian battle space bleeds heavily into Iraq due to a porous border, accelerated by the almost total collapse of Syrian army border crossing posts. Since January, ISIL has been heavily involved in fighting with more moderate Syrian rebel factions, as well as with Jabhat al Nusra, the official al Qaeda franchise in Syria. As the fighting has worn on, ISIL has gradually released its hold in western Syria and turned its attention to the Raqqah and Deir el-Zour governorates. Deir el-Zour was particularly important for ISIL as it allowed it to maintain a direct supply link with its established presence in western and northern Iraq, especially in Anbar province. Through this supply link, ISIL has been able to transfer experienced foreign fighters and captured Syrian army equipment to Iraq, including vehicles and anti-tank guided munitions. It has also replenished its stock of ammunition and explosives, greatly aiding operations in Iraq.

The Syrian conflict is affected by the ISIL push in Iraq in two ways. The first is that the jihadists may divert large numbers of fighters from Syria to its Iraq push, which would open ISIL to more pressure in Syria. The second impact is the withdrawal of large numbers of Iraqi Shiite militants,men that have been fighting alongside the Syrian army,leaving to concentrate their efforts back home against ISIL. Such a withdrawal would be unpopular in the Syrian regime because it would take away an important source of manpower.

Having succeeded in its Mosul operations, ISIL will continue to take advantage of its momentum and push its gains at a time when the Iraqi government is scrambling to recover from significant losses. As well as taking large portions of the city, ISIL militants seized many weapons and military vehicles as well as the contents of Mosul’s central bank. They also freed several thousand prisoners from a local prison, potentially adding more fighters to their cause.

Stretching from the north of Mosul through Tikrit to the south and toward Baghdad along the Tigris River Valley, ISIL is striving to maintain a continuous line of pressure running through what is practically the northern spine of populated Iraq. The Tigris River Valley contains a number of key strategic energy areas, including the oil refinery near Baiji. Although the refinery is still under state control at this time, the areas where ISIL is operating largely match areas where al Qaeda in Iraq was active during the height of the Sunni insurrection in Iraq from 2004-2006. As opposed to a first-time assault or new offensive, ISRAEL’s actions speak more of a resurgence into historical areas of operations.

As well as continuing to push forward, the Islamic State in Iraq and the Levant will largely seek to avoid stand-up fights against well-equipped and determined Iraqi army units, though they have held their ground against such forces in Al Fallujah and Ar Ramadi. The wide-ranging, mobile and rapidly dispersed ISIL forces have a key advantage when it comes to maneuvering in battle over the slower, mechanized units of the Iraqi army. While ISIL maximizes its impact against a disorganized Baghdad, the jihadist group seeks to consolidate its control over territory in heavily Sunni areas, where it has already made significant inroads with the local population. Ambitiously, these areas of control could include large portions of the north as well as Anbar Province.

More realistically, it would mean greater ISIL presence in the longer term and, in some cases, direct control in Anbar and possibly other provinces such as Nineveh and Salah ad Din. Working toward this goal, the Islamic State in Iraq and the Levant will continue to focus on its revitalized effort to dismantle the Awakening movement, a coalition of tribal elements that was instrumental in pushing al Qaeda in Iraq out of Anbar the first time, drawing Sunni tribes back into its fold in the process.

Ankara is also watching the events in Iraq with considerable attention. Not only are Turkish citizens directly implicated in the conflict, with a number of Turks reportedly seized by ISIL militants, but the Turkish government also maintains an important stake in energy development in northern Iraq. Ankara has long been involved in politics between Baghdad and the Kurdistan Regional Government on issues surrounding the delivery of energy. Turkey is also increasingly concerned about the growing reach of ISIL and has already clashed with militants on its border with Syria. Turkey is especially wary of the potential for attacks by ISIL, attacks that would exploit the long border that runs from the Mediterranean to Iran. While Turkey has been hesitant to directly send forces against ISIL in Syria, the fact that the Islamic State in Iraq and the Levant has seized large numbers of Turks, including the consulate staff from Mosul, may push Ankara to become more directly involved in the crisis.

Iran has long sustained the regime in Syria, as well as indirectly supporting al-Maliki’s government in its fight against Sunni jihadists in Syria and Iraq. The growing reach of ISIL, and its ever-closer presence to Iran, is sure to raise considerable anxiety in Tehran. Iran can therefore be expected to further bolster its support for al-Maliki as well as for Shiite proxies across Iraq. In supporting al Maliki’s fight, Tehran finds itself very much aligned with Washington.

The United States will avoid sending significant forces back into Iraq, but Washington will ramp up its efforts to contain the ISIL threat by delivering vital equipment such as helicopter gunships, Hellfire missiles, communications equipment, large volumes of small arms and ammunition. This assistance, coupled with a common regional interest to contain the Islamic State in Iraq and the Levant, will likely contain the threat to northern and western Iraq.

Though Iraq’s southern energy corridor will probably be spared, the Sunni belt in central Iraq and the territories disputed between the central government and the Kurdistan Regional Government will face rising sectarian stress, in line with ISIL’s designs for the region.

 

Miami Herald reports  Iranian Commander ‘In Charge’ in Baghdad Fight. And Antiwar reports Iran Deploys Troops to Baghdad to Fight Against al-Qaeda.And McClatchy reports Pro Iran Militias Become Iraq’s Only Defense Against ISIS Advance.

 

Patrick Cockburn asks in UNZ Birth Of A Sunni Caliphate Or Just Presage to More War?

 

Bloomberg posts Black Banner in Mosul as Caliphate Edicts Rule Iraqi Lives. The Islamist militants who swept into Mosul had a simple message for residents of the northern Iraqi city: The path to a caliphate comes with clear rules. Lots of them.

 

Jihadism comes of age as Mike Mish Shedlock posts New Rules for Iraqis: Repent or Die, Say 5 Daily Prayers, Women Not Allowed Outside; Grim Massacres

 

Justin Raimondo asks Iraq War III?

 

Economic Policy Journal posts Platts Map Shows Iraq’s Oil and Gas Pipelines Around Iraq’s Oil Hub of Kirkuk Kurdish forces took control of the Iraqi northern oil hub of Kirkuk on June 12 to protect the major oil field against advancing Sunni militants in a move that appeared to ease concerns over control of Kurdistan’s growing oil infrastructure. Iraq’s North Oil Company (NOC) headquarters in Kirkuk and the nearby Kirkuk oil field remains in government control, a senior NOC official said.

Armed groups allied to the Islamic State of Iraq and al-Sham, known as ISIS or ISIL, have attacked a number of oil facilities across the north of Iraq since Monday, including the 320,000 b/d Baiji refinery and Bai Hassan oil field. ISIS took over the major city of Mosul in a two-day offensive ending Tuesday, followed by a push further into the Salahaddin, Kirkuk and Diyala provinces. But Kurdish peshmerga fighters said they have moved to halt the militants advance. “We tightened our control of Kirkuk city and are awaiting orders to move toward the areas that are controlled by ISIL,” Brigadier General Shirko Rauf of the Kurdish peshmerga security forces told AFP.

The defensive moves means the militants are less likely to move further east to threaten oil fields being developed inside the semi-autonomous Kurdistan by foreign players.

 

Bill Roggio posts in The Long War Journal The Battle Plan Which ISIS Will Employ To Strangle Baghdad

 

Economic Policy Journal relates, Tyler Cowen, who teaches at Koch-funded George Mason University and is general director of the Koch-funded Mercatus Center calls for War For Economic Growth,

 

There be a sovereign Lord God, who ordained from eternity past that there be sovereign governments, issuing sovereign currencies, that is in fiat money; and that one day a Ten Toed Kingdom, seen in Daniel 2:25-45, known as the Beast Regime, seen in Revelation 13:1-4, arise out of waves of Club Med sovereign, banking, and corporate insolvency, to rule the world in diktat money, via policies of diktat in every one on the world’s ten regions, and via schemes of debt servitude, in all of mankind’s seven institutions.

 

5) … ACPAC fears the Obama Administration push for Palestinian technocratic government will lead to East Jerusalem becoming the Palestinian Capital,

 

ACPAC fears technocratic governance will lead to Jerusalem being shared, and thus precluding “Jerusalem as the undivided capital of Israel”.

 

The Jerusalem Post reports Unified Senate Sends Obama Message on Palestinian Unity

 

6)Money Market Funds and Banks will be integrated into the government and become known as the Goverment Funds and the Goverment Banks, or Gov Funds, and Gov Banks, for short.  

 

Across The Curve posts Money Fund Accounting. The SEC has been arguing and analyzing methodologies for harsher regulation of money funds for several years. The root of the discussion is the run on the funds which began following the Lehman bankruptcy and subsequent breaking of the buck at the Reserve Fund in the fall of 2008.

 

The SEC has before it two proposals. One would force riskier funds to float and the second proposal would hold the buck but would allow for a limitations on redemptions. I do not get it. Why not just tell the funds that they are required to mark to market each and every day with clarity and precision?

 

If investors are uncomfortable with the volatility which that produces they can by the three month bill or park their money in an FDIC insured account.

 

Compelling money funds to mark to market will enlighten and educate investors and would allow the market place to weed out those firms which take imprudent risk.

 

Under Janet Yellen’s leadership, The Fed Reserve will be developing an exit strategy; it will be one of Financial Stability.

 

Out of soon coming credit crisis and global financial system meltdown, coming from the rise of the Interest Rate on the US Ten Year Note, ^TNX, as well as derisking out of debt trades, and deleveraging out of currency carry trades, Money Market Funds, such as Vanguard’s VMMXX,  Regional Banks, KRE, such as HBAN, and Asset Managers, such as STT, BLK, will be integrated into the government, and become known as the Government Banks, or Gov Banks for short. Please note that said fund charges a fee in excess of its yield, in order to maintain its constant one dollar value.

 

The Primary Dealers, who hold Interest Rates Swaps, that they were literally gifted under POMO, and thus are short Treasuries, and whose customers are short 10 Year US Government Notes,  TLT, will likely be forced into becoming Gov Banks as well.

 

The first step in developing the Exit Strategy will be an exit charge, that is an exit levy, on withdrawing funds from bond funds as well as money market funds.

 

7) … Conclusion. The world enters Kondratieff Winter on the trade lower in the Euro, in response to Mario Draghi’s ECB NIRP and TLTRO mandate, which pivots the world out of liberalism, and into authoritarianism, where the diktat of regional sovereigns provides seigniorage.

 

The June 10, 2014, and June 11, 2014, trade lower in the Euro, FXE, evidences the death of currencies.

 

Fiat money, defined as the combination of Aggregate Credit, AGG, and Major World Currencies, DBV, in particular the Euro, FXE, and Emerging Market Currencies, CEW, in particular the India Rupe, ICN, is starting to die.

 

With the Euro, FXE, trading lower, coming on the failure of trust in the world central banks’ monetary authority to continue to stimulate investment gains and global growth, sovereign currencies, are no longer floating, they are sinking; and as a result, World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, are trading lower; fiat wealth is starting to die. On can follow the death of fiat wealth with this Finviz Screener of Common ETFs.

 

Robert Wenzel posts The Oil Industry Employment Boom. Energy sector technologies such as fracking and oil shale extraction are creating an employment boom in the oil sector.

 

The employment boom has come as investors have plowed great sums into the Leading Energy Producers,  CRZO, PXD, XEC, FANG, COP, CLR, EOG, NBL, BCEI, and WLL as well as the Leading Frackers, CJES, BAS, RES, and EXH.  The Energy Producers, XOP, and the Global Integrated Energy Companies, IPW, alike, are unable to leverage higher on the price of Oil, USO, and Natural Gas, UNG.

 

Economic growth that came during in the Great Recession was a byproduct of invesment gains, that came through debt trade investing in the most speculative of investments such as Real Estate Developer, BX, Industrial Office REITS, FNIO, Mortgage REITS, REM, Residential REITS, REZ,  Premium REITS, KBWY, as well as the most wild of currency carry trades, such as in Ireland’s, EIRL, MNK, IR, JHX, ICLR, RYAAY, COV, ACN, STX, and IRE.  Of note Bloomberg reports Condo Towers Rise From Boston to L.A. in U.S. Rebound. For the first time since the U.S. housing crash, new condominium towers are sprouting in downtown Boston, Seattle and Los Angeles as developers bet on the return of the riskiest type of residential real estate.

 

Global ZIRP produced the perfect moral hazard based prosperity. Now, ECB NIRP is introducing the most absolute austerity as foretold in Bible prophecy of Daniel 7:7, where fiat money and fiat wealth will be pulverized into dust.

 

There has been an economic death; and there has been a economic birth.

 

The death of sovereign currencies communicates, such as the Euro, FXE, and the Indian Rupe, ICN,  establishes that the sovereignty of the Banker Regime has come to an end. And, the June 5, 2014, Mario Draghi, ECB, Mandate for TLTROs, and a Negative Interest Rate Policy, that being a sovereign mandate, communicates that the sovereignty of the Beast Regime is rising to govern mankind’s economic, political and social life; it manifests as a Ten Toed Kingdom, ruling in the iron of diktat of regional governance in the all of the world’s ten regions, and occupying in the clay of totalitarian collectivism in every one of mankind’s seven institutions.

 

The seigniorage of investment choice came through the economic dynamos of creditism, corporatism, and globalism. Now, the seigniorage of diktat, comes through the singular dynamo of regionalism. The NYT reports Leader in Austerity Push Appointed Head of Greek Central Bank

 

There can be no popular action as perceived by Liberal economists such as Mark Thoma who weeps  Synthesis Lost. “I am coming around to the idea the intervention may also be needed to redistribute income as an offset for those who reap where they never sowed”.

 

There will ever be never be any human action, as presented by the Austrian economists such as Cato Institute’s, John Allison, an Objectivist, who advocates Free Markets, and who communicates The Importance Of Opportunity Cost.

 

There is only the divine action of the Son of God, specifically the stewardship of Jesus Christ for the perfection of every age, epoch, and time period, as presented by the Apostle Paul in Ephesians 1:10, who produced peak wealth the week ending June 6, 2014, and who pivoted the world into Kondratieff Winter, the final phase of the business cycle, the week ending June 13, 2014.

 

Jesus Christ prompted the ECB Chairman Mario Draghi to announce the NIRP and TLTRO Mandate of June 5, 2014, and in response the Euro traded lower, causing investors to derisk out of debt trade investments in European Grocer, DEG, and deleverage out of currency carry trades in European Financials, EUFN, Eurozone Stocks, EZU, European Small Cap Dividends, DFE, and EU Nations, such as Portugal, PGAL, Italy, EWI, Ireland, EIRL, Greece, GREK, and Spain, EWP, thus terminating the investor.

 

Having matured the paradigm and age of liberalism, meaning freedom from the state, where the investor was the centerpiece of economic action, Jesus Christ is now developing that of authoritarianism, where through the ECB Chairman Mario Draghi’s June 5, 2014, Mandate of NIRP and TLTRO, the debt serf is being established as the centerpiece of economic activity.

 

Having completed peak moral hazard, Jesus Christ is going to apply all the debts, public and private, to all the peoples of the world.

 

The Fifty Worst Neighborhoods In America

June 14, 2014

(This post is under development)

1) Mobile, AL,

Birmingham, AL,

Bakersfield, CA,

East Los Angeles, CA

Stockton, CA

Hartford, CT

New Haven, CT

Wilmington, DE

Gainesville, FL

Miami, FL,

 

11) Atlanta, GA

Danville, IL

Englewood, IL

Rockford, IL

Louisville, KY

New Orleans, LA, 70118

Springfield, MA

Philadelphia, MA

Detroit, MI

East St Louis, MO,

 

21) Jackson, MS

Hickory Lenoir Morganton, NC

Camden, NJ

Newark, NJ

Bronx, NY 10468

Buffalo, NY

Rochester, NY

Syracuse, NY

Cincinnati, OH

Dayton, OH

 

31) East Cleveland, OH

Wilkinsburg, PA

Harrisburg, PA

North Philly, PA

Pittsburgh, PA

South Philly, PA

Providence, RI

Greenville, SC

Spartanburg, SC

Knoxville, TN

 

41) Nashville, TN

Memphis, TN,

Lake Highlands, TX, 75231

Sunnyside, Houston, TX, 77033, home to Quanell X, whose real name is Quanell Ralph Evans

Beaumont, TX

Brownsville, TX

McAllen, TX

Huntington, WV

Charleston, WV

Washington, DC

These neighborhoods are characterized by high levels of crime, poverty, infant mortality, premature birth, and obesity.

Mario Draghi’s ECB June 5, 2014 Mandate Establishes Peak Fiat Wealth And Births The Beast Regime

June 9, 2014

Financial Market Report for the week ending June 6, 2014.

This post is available in Google Documents format here

1) … The world achieved peak wealth the week ending June 6, 2014 as Mario Draghi births the Beast Regime with the ECB Announcement of June 5, 2014 of a Targeted LTROs and a negative interest rate policy.

Russian scientist Kondratieff discovered that modern economies move through a series of four seasons and thus a business cycle of spring, summer, fall and winter exists. With the traded higher in World Stocks, VT, the week ending June 6, 2014, the world passed came to the climax of the fall season of economic experience, and is set to enter the final season that being Kondratieff Winter.

Ralph Nelson Elliott developed the Elliott Wave Theory in the late 1920s, which presents that stock markets and thus economies move through a series of five waves, with the fifth wave, producing a zenith. A stock market top, an Elliott Wave 5 High, was attained the week ending 6, 2014, and is set to enter an Elliott Wave 1 Down.

1A) … Monday June 2, 2014, marked an inflection point in world economic history, as Credit Investments traded lower, as currency traders sold the Japanese the Japanese Yen, FXY, on realization of The Failure Of Abenomics: Domestic Sales Collapse, Inflation Soars, Tyler Durden reports. Investors fear that the monetary policies of the world central banks have crossed the rubicon of sound monetary policy and have made “money good” investments, particularly credit investments, bad; resulting in a strong trade lower in Bonds, BND.

The lower Japanese Yen, FXY, stimulated Nation Investment in Japan, EWJ, JSC, and in Far East Financials, FEFN, to trade higher. And currency traders sold the Brazilian Real, BZF, which stimulated Brazil, EWZ, EWZS, and Brazil’s Energy Company, PBR, Home Builder, GFA, and Airlines, GOL, to trade lower.

Seeing US Government Debt, that is the US 30 Year Government Bonds, EDV, and the US Ten Year Notes, TLT, overvalued, the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher above 2.49% to 2.53%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, as is seen in the Steepner ETF, STPP, steepening, and the Flattner ETF, FLAT, flattening.

Risk-on investing turned to risk-off investing in Credit Investments. There was a credit market upheaval on June 2, 2014, as the ascending wave of credit that defined the paradigm and age of liberalism reversed. A review of Popular Notes And Bonds, shows Eurozone Credit, EU, Junk Bond, JNK, Global Junk Bonds, HYXU, Longer Duration US Corporate Bonds, LWC, US Corporate Bonds, LQD, International Corporate Bonds, PICB, Emerging Market Local Currency Bonds, EMLC, Emerging Market Bonds, EMB, Mortgage Backed Bonds, MBB, 30 Year US Government Bonds, EDV, US Treasuries, TLT, Municipal Bonds, MUB, and World Government Bonds, BWX, traded lower, on the failure of trust in the world central banks’ monetary authority. Bond Trader Across The Curve posts “There was real money selling today and the street had no capacity to absorb it”.

Philip Lane posts in Irish Economy Joint BoE/ECB Paper On Reviving The European ABS Market. Versions of QE depend on a well-functioning ABS market and this joint paper outlines the various reforms required for this market to operate at a sufficient scale ECB PDF Document Presented Here.

To the dismay of Austrian economists, the world has operated on a debt based money system. Since 1971, at the encouragement of Milton Friedman, investment in sovereign currencies has sustained Nation Investment and Small Cap Nation Investment, EFA, largely through the endeavors of Global Financial Institutions, IXG; all of which sustained Yield Bearing Investments such as the International Dividend DOGS, IDOG, and International Telecom, IST.

Since 1971, when the US went off the gold standard, floating currencies have been the wheels upon which the global economy has operated.

With the trade lower in Major World Currencies, DBV, in May 2014, and now with the trade lower in Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, as well as Credit, AGG, on June, 2, 2014, fiat money, defined as the combination of the two, is starting to die.

Soon fiat wealth, defined as the combination Equity Investments and Credit Investments, will start to die, as the former joins the latter in trading lower.

The sawing asunder of fiat wealth, coming from the bond vigilantes in calling the Benchmark Interest Rate, ^TNX, higher from 2.49%, will soon commence the start of Kondratieff Winter, the final phase of the Business Cycle.

Under the paradigm and in the age of liberalism, meaning freedom from the state, Global ZIRP produced the investor, as the centerpiece of economic action, driving up Risk Assets, such as Small Cap Pure Value, RZV, as well as Global Growth and Trade Assets, such as Energy Service, OIH.

Beginning in May, 2013, the bond vigilantes, not the world central banks, have been setting the Benchmark Interest Rate, ^TNX. And now on June 2, 2014, in calling it higher above 2.49 % to 2.53%, are in the process of terminating the investor as the centerpiece of economic activity, and have introduced the new paradigm and age of authoritarianism, where the debt serf is the centerpiece of economic action.

There no longer be any human action as perceived by the Austrian economists, there is only the destructive action of the bond vigilantes, who having the power of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, and its enforcing authority of The Rider on the White Horse, galloping with greater intensity over planet earth, seen in Revelation 6:1-2, will continue to be hiking interest rates, and that at a rather quick pace.

The bond vigilantes are literally busting apart the sovereignty of the Banker Regime of world central banks and democratic nation states. Out of its ruins, the Beast Regime of regional governance and totalitarian collectivism will rise to rule the world, establishing regional fascism in each of the world’s ten regions and totalitarian collectivism in the world’s seven institutions, as foretold in bible prophecy of Revelation 13:1-4, where sovereign regional leaders rule in policies of diktat and in schemes of control.

The age of Disney, DIS, and its Magic Kingdom, as well as the age of fixed income investing ended June 2, 2014, with the Interest Rate on the US Ten Year Note, ^TNX, rising above 2.49% to 2.53%.

Martin Frost writes Today, we are faced with another Kondratieff Winter (depression) when the majority of the world anticipates economic expansion. Each individual needs to weigh the risk of depression in light of Kondratieff’s work.

The bond vigilantes effected a historic global economic coup d’etat on June 2, 2014, by calling the Interest Rate on the US Ten Year Note, ^TNX, higher above 2.49% to 2.53%. Liberalism’s dynamos of economic activity, creditism, corporatism, and globalism, failed on June 2, 2014, with the result that inflationism has turned to destructionism.

This inquiring mind asks just who are the bond vigilantes? They are the Primary Dealers and their clients!! Zero Hedge posts Clients Are The Most Net Short Treasuries Since 2006, JPMorgan warns.

As investors derisk out of debt trades, and delverage out of currency carry trades, regionalism will be the new dynamo of economic activity establishing the paradigm and age of authoritarianism, whereby out of soon coming Financial Armageddon, that is a global credit bust and financial breakdown, leaders will meet in summits to renounce national sovereignty and announce pooled regional sovereignty to establish regional security, stability and sustainability, this being foretold in bible prophecy of Revelation 13:1-4, and Daniel 2:25-45.

US Government Debt is no longer a safe haven investment. The rally in Bonds, BND, that started in January 2014, came to an end on June 2, 2014, as the longer duration US Government Debt, EDV, are now starting to sell off faster than the medium duration US Government Debt, TLT, this seen in the ratio of EDV:TLT, trading lower. Bonds, BND, and US Treasuries, TLT, are no longer safe assets.

The death of currencies commenced in May 2014, as is seen in Major World Currencies, DBV, such as the Euro, FXE, the British Pound Sterling, FXB, the Swiss Franc, FXF, and the Swedish Krona, FXS, trading lower; and the death of currencies, is accelerating in June 2014, with the Emerging Market Currencies, CEW, such as the Brazilian Real, BZF, trading lower. And, the failure of credit commenced in June of 2014, as is seen Aggregate Credit, AGG, trading lower.

Credit Investments failed on June 2, 2014, as the Yen, FXY, traded lower on the failure of Abenomics; confirmation comes from Floating Rate Notes, FLOT, trading lower from its late May 2014 high.

Quote of the Day “The single biggest threat to the global economy is the threat of deflation.” says CNBC commentator Ron Insana. Economic deflation will come like a viper out of the failure of fiat money and fiat wealth, destroying the very fabric of societies across the globe. Economic deflation is already underway in Italy, and it is a result of the tremendous level of corruption in society, coupled with paralysis cause by socialism’s resistance of economic reforms.

Ambrose Evans Pritchard of the Telegraph reports Europe remains a jobless swamp, despite the Spanish miracle. Italy lost 68,000 jobs in April, according to the country’s data agency ISTAT. The total employed fell to 22,295,000. Italian unemployment rose to 13.6pc. For youth it has climbed to a modern-era high of 43.3pc, implying very serious damage to Italy’s long-term economic dynamism due to labour hysteresis. The employment rate dropped to 55.2pc. Ageing workers are giving up the search for jobs, chiefly in the Mezzogiorno, and returning to their patches of land in impoverished early retirement.

As Eurozone Stocks. EZU, top out on EUR/JPY currency carry trade investing, and as European Small Cap Dividend Stocks, DFE, top out on European Credit, EU, liquidity, the economic gap between capitalized Germany and socialized France is greater than ever.

Zero Hedge posts The Most Worrying Chart For Europe’s Stability, A Bloomberg Brief. The difference in economic performance (and mood) between France and Germany, often referred to as the European “engine,” is at a record high. This disparity is likely to weaken France and isolate Germany further, heightening political tensions and indecision in the euro area.

Eurozone Credit, EU, traded lower as Zero Hedge posts Here Comes QE In Financial Drag. David Stockman viaContra Corner blog relates the WSJ report The ECB And Bank of England Outline Options to Boost Asset-Backed Securities Market. The European Central Bank and Bank of England on Friday outlined options to reinvigorate the market for bundled bank loans, which was “tarnished” by the global financial crisis, saying a better-functioning market for asset-backed securities can help boost lending to the private sector, particularly small businesses.

Yes, the ECB is now energetically trying to revive the a market for asset-backed commercial paper (ABCP) – the very kind of “toxic-waste” that allegedly nearly took down the financial system during the panic of September 2008. The ECB would have you believe that getting more “liquidity” into the bank loan market for such things as credit card advances, auto paper and small business loans will somehow cause Europe’s debt-besotted businesses and consumers to start borrowing again thereby reversing the mild (and constructive) trend toward debt reduction that has caused euro area bank loans to decline by about 3% over the past year. What they are really up to, however, is money-printing.

Here’s the thing. The ABCP market is not a place where hard-pressed business borrowers or consumer’s can find a new source of credit outside the banking system. Instead, it is a financial engineering arena in which banks will have a chance to mint phony overnight profits through an accounting expedient known as “gain-on-sale”.

What that means is that when credit card receivables or small business loans are “bundled” by their commercial bank issuers and sold into an off-balance conduit which issues ABCP against these “assets”, the life-time profits of these loans can be booked instantly. Indeed, modern technology allows the credit card swipe to be booked as a profit nearly the same nanosecond as it happens, and accounting convention allows the profits from a 7-year car loan issued at 110% of the vehicle’s value to be recorded virtually at the time it rolls off the dealer lot.

In short, Europe has more than enough inflation and doesn’t need a revived ABCP market to generate loans for the un-creditworthy. Today’s announcement is just part of Draghi’s desperate attempt to deliver QE next week in a manner which will not elicit a loud “nein!” from his German overseers.

Jenny Cosgrave of CNBC reports Eurozone Manufacturing Growth Slowest In 6 Months

Premium REITS, KBWY, such as Retail REITS, SLG, GGP, Residential REITS, such as EQR, AVB, ESS, AIV, MAA, Global Infrastructure, IGF, such as MIC, Industrial Office REITS, such as BXP, STWD, Hotel REITS, such as CHSP, HST, SOHO, Regional Banks, KRE, and the Chinese Financials, CHIX, traded higher. Base Metals, DBB, traded higher, stimulating Global Miners, PICK, slightly higher.

A review of the Leading S&P 500 Companies, shows that the S&P 500, SPY, and Transportation, XTN, led by Delta Airlines, DAL, and Disney, DIS, and Energy Service, OIH, and Global Industrial Producers, FXR, led by Halliburton, HAL, and Illinois Tool Works, ITW, traded to a new all time high on a slightly lower price of Oil, USO.

Arin Ray of Celent posts Big Banks Exit Commodity Trading The retreat of the big banks from commodity business has been driven by tighter regulation, stricter capital requirements, increasing political pressure and lower profitability in recent times.

1B) … On Tuesday June 3, 2014, The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening. Credit Investments continued to trade lower on the exhaustion of the world’s central banks’ monetary authority, reflecting a historic inflection of one of the two components of fiat wealth, with the other being Equity Investments.

The bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher. Loss leading Aggregate Credit ETFs, AGG, of the day included EDV, TLT, EMB, LWC, MBB, LQD, and EMLC, reflecting that investors abandoned longer duration and the emerging market local currency debt.

Since the first of the year running through the end of May 2014, the wise credit investor has been long duration and long the worst of debt, as is seen in the ongoing Yahoo Finance Chart of the Flattner ETF, FLAT, and Distressed Investments, FAGIX, Junk Bonds, JNK, Build America Bonds, BABS, Long Term Corporate Bonds, LWC, The Zeroes, ZROZ, and Defensive Stocks, DEF, trading higher.

Yet liberalism’s debt trade investing, seen in High Yield Debt, JNK, LWC, EU, EMB, HYD, EMLC, BABS, HYXU, PZA, in Leveraged Buyouts, PSP, in Real Estate Investment, BX, in Spain’s Bank, SAN, as well as currency carry trade investing, seen in European Small Cap Dividend, DEF, is being relegated to the dustbin of history, as signs of risk-on investing are waning, and signs of risk-off investing in Nation Investment are emerging, such as the trade lower in Eurozone periphery nations, Portugal, PGAL, Ireland, EIRL, Italy, EWI, Greece, GREK, but not yet Spain, EWP, coming on the trade lower in the Euro, FXE.

Debt trade returns YTD have been JNK 5%, LWC 10%, EU 2%, EMB 87%, HYD 10%, EMLC 4%, BABS 13%, HYXU 3%, PZA 9%; these are now part of a bygone era.

The end of the age of investment choice is at hand, and the age of debt servitude awaits.

The Guardian posts Mario Draghi Faces Moment Of Truth As Man With Power To Steady Eurozone The European Central Bank governor has charmed the markets with words. But this week he must make bold policy decisions to unite a region increasingly driven by economic disparities … And Bloomberg posts Draghi Primes ECB as Inflation Scarcity Alarms Officials … And Mark Dow of Yahoo’s Daily Ticker says “There’s no way out”: Not much ECB can do to help Europe’s economy,

Questions arise. Will the Benchmark Interest Rate, that is the Interest Rate on the US Ten Year Note, ^TNX, jump higher? Will European Credit, EU, tumble? Will Aggregate Credit, AGG, trade lower with Credit Investments across the board trading lower? Will the Euro, FXE, that took a hit in May 2014, on anticipation of Mario’s Move, take another hit? Will Equity Investments trade lower?

Equity Investments are headed lower for sure, as the ratio of World Stocks, relative to Aggregate Credit, that is VT:AGG, is topped out; with underlying credit investments selling off, Equity Investments are destined to sell off as well, as Sober Look posts Markets Now Expect Shock And Awe From The ECB. Unless we see “shock and awe” from the central bank, global markets will be quite disappointed.

The end of the pursuit of yield is at hand as “shock and awe” will not be forthcoming, and World Stocks, VT, Nation Investment, EFA, and Global Financials, IXG, will trade lower, and an Elliott Wave 5 High completion of the S&P 500, presented in Safehaven chart article TheWaveTrading Weekly Technical/Elliott Wave Analysis (SPX, DOW, NDX, XLF, IWM) is at hand.

Thus, fixed income investing will be a losing proposition, and Yield Bearing Investments, such as Dividends Excluding, DTN, will be led lower by debt trade investments such as Leveraged Buyouts, PSP, and carry trade investments such as Water Resources, PHO, and Global Utilities, DBU, and International Telecom, IST, as is seen in their ongoing combined Yahoo Finance Chart with the Zeroes, ZROZ.

Soon it will be global ZIRP no more, as the Bond Vigilantes continue to manifest, having seized the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, beginning in May of 2013, from the Creature from Jekyll Island.

With the trade lower in Credits Investments, seen in Bonds, BND, trading lower on June 2, and June 3, 2014, the world is passing through a historic inflection point where the investor, most importantly, the fixed income investor will be going extinct, and the nature of governance will be changing from the democracy of nation states to the fascism of sovereign regional leaders.

In bearish news Quartz posts The 35 Economic Charts From May You Really Should See

1C) … On Wednesday, June 4, 2014, the S&P 500, traded by the ETF, SPY, rose to a new all time daily high, as the Defensive Sectors, Health Care Providers, IHF, and Insurance, KIE, such as AIG, as well as the Growth Sectors, Semiconductors, SOXX, Design Build, FLM, Energy Service, OIH, Transports, XTN, and Apple, APPL, traded to new all time highs. China Technology, CQQQ, and Global Energy Producers, IPW, PBR, TOT, SSL, SNP, E, RDS-B, BP, traded lower, (while Energy Producers, XOP, CLR, APC, EOG, EQT, CRZO, and COP, traded higher on the day).

Regional Banks, KRE, such as SNV, HBAN, RF, BBNK, SBNY, OZRK, The Too Big To Fail Banks, RWW, such as WFC, Stockbrokers, IAI, Investment Bankers, KCE, and Far East Financials, FEFN, traded higher, while China Financials, CHIX, traded lower.

In Yield Bearing Sectors, Energy Partnerships, AMJ, MLPJ, EMLP, such as MMP, SEMG, TRGP, SXL, ACMP, ETE, OILT, MPLX, LNG, OKS, and Shipping, SEA, traded to new all time highs; while China Real Estate, TAO, Brazil Financials, BRAF, Australia Dividends, AUSE, and Smart Grid, GRID, traded lower.

Commodities, DBC, traded lower, as Gold, GLD, traded lower, and as Oil, USO, traded lower to the edge of a massive Diamond Triangle Consolidation Pattern, to close at 37.50, and as Agricultural Commodities, RJA, and Base Metals, DBB, traded lower, as Commodity Currencies, CCX, traded lower. Zero Hedge reports Copper’s Long-Term Bear Trend Is Resuming, BofA Warns. Southern Copper Corp, SCCO, traded lower, on a lower price of Copper, JJC, as Economic By Design posts Copper Exchange Stocks Approaching Pre Crisis Levels.

Closed End Funds, GCE, such as UTF, traded to a new rally high.

The investor’s trust in the monetary policies of the world central banks to continue to stimulate investment gains, as well as to continue global economic growth, has been the basis for World Stocks, VT, US Stocks, VTI, Eurozone Stocks, EZU, Asia Excluding Japan, EPP, and the Emerging Markets, EEM, rallying strongly from January 2014 through May 2014, as is seen in their combined ongoing Yahoo Finance chart.

Support for the bull market in Equity Investments has been underwritten by Major World Currencies, DBV, such as the Euro, FXE, and Emerging Market Currencies, such as the Brazilian Real, BZF, which have now fallen lower.

And support for the bull market in Equity Investments has been underwritten by the major types of Credit Investments, as seen in the combined ongoing Yahoo Finance Chart of Distressed Investments, FAGIX, US Ten Year Notes, TLT, Junk Bonds, JNK, 30 Year US Government Bonds, EDV, Mortgage Backed Bonds, MBB, European Credit, EU, and Emerging Market Local Currency Bonds, EMLC, all of which except for Distressed Investments are now trading lower.

Bond Trader, Across The Curve, posts Frothy Bulls. The WSJ reports Danger Territory: Bullish Sentiment Hits Extreme Levels. Bullish sentiment in the stock market is reaching rarified levels which in past cycles have augured for severe corrections. Prior highs came in August 1987 and October 2007.

An inquiring mind asks, will investors faith in the monetary policies of Mario Draghi be shaken by the ECB Policy Statement of Thursday, June 5, 2014? Will there be a strong stock market reversal?

Credit Writedowns posts Repairing The Transmission of Monetary Policy Through Asset-Backed Securitisation.

I comment that there is nothing wrong whatsoever wrong with the transmission of monetary policy of the ECB. To frame the conversation as Credit Writedown posts, is a distraction from reality, and drives the communication suggesting that the ECB’s policies are for economic growth; frankly they are not, just as the FED’s policies are not, and the BOJ are not, and the PBOC are not.

The policies of the world central banks, through Global ZIRP, have been investor centric, and any economic growth has been secondary in nature.

1D) … On Thursday, June 5, 2014, ECB money printing brought results. Investors took Mario Draghi’s, long awaited monetary policy announcement as credit stimulative. World Stocks, VT, Nation Investment, EFA, and Yield Bearing Investments, such as Dividends Excluding Financials, DTN, traded to new all time highs, leveraging higher over Global Financials, IXG, which traded to a new rally highs. The S&P 500, SPY, rose strongly to a new all time high.

Growth and trade leaders, Semiconductors, SOXX, Global Industrial Producers, FXR, Transportation, XTN, and traded to new all time highs. Energy Producers, XOP, traded strongly higher. Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, which have sunken terrifically in value, were buoyed by the ECB Chairman’s policy statement, which rallied Gold, GLD, and Silver, SLV.

The High Beta Sectors, Networking, IGN, Internet Retail, FDN, Nasdaq Internet, PNQI, China Technology, QQQQ, Software, IGV, and Aerospace, PPA, rose strongly

The riskiest of Equity Investments, that is European Small Cap Dividend, DFE, Small Cap Pure Value, RZV, such as HEES, URI, Small Cap Pure Growth, RZG, Small Cap Industrial, PSCI, Building Materials, Emerging Market Small Caps, EWX, and Credit Services, such as AXP, rose strongly, providing insight that investors see the ECB’s policy statement as supporting risk-on investing.

Eurozone Stocks, EZU, such as ORAN, rose to new rally highs, leading Norway, NORW, and Denmark, EDEN, to new all time highs.

Greece, GREK, Italy, EWI, Spain, EWP, France, EWQ, Austria, EWO, Finland, EFNL, Portugal, PGAL, and Netherlands, EWN, led the European Nations, and Nation Investment, EFA, to new rally highs.

Emerging Market Small Caps, EWX, and Egypt, EGPT, and Turkey, TUR, recovered from recent losses, and traded strongly higher, drove Emerging Markets, EEM, to new a new high, evidencing that investors perceived the ECB’s Chairman’s monetary policy statement, as supportive of the Banker Regime.

India, INP, and India Small Caps, SCIN, traded to new all time highs. Argentina, ARGT, and a number of its stocks, such as EDN, traded to a new rally high.

Malaysia, EWM, Vietnam, VNM, Philippines, EPHE, led Asia Excluding Japan, EPP, higher on the day. Japan, EWJ, and Japan Small Caps, JSC, traded higher, on the day.

US Stocks, VTI, traded to a new all time high.

Global Financials, IXG, were led higher by the credit sensitive Regional Banks, KRE, The Too Big To Fail Banks, RWW, Investment Bankers, KCE, Stockbrokers, IAI, and Chinese Financials, CHIX. European Financials, EUFN, such as Spain’s Banco Santander, SAN, and associated Brazil’s Banco Santander Brazil, BSBR, as well as Argentina’s Banks, GGAL, BFR, BMA, BBVA, and India’s HDB, IBN, traded to a new all time highs. Life Insurance companies, such as Netherland’s, ING, rose near their recent highs.

The most interest rate sensitive of the Yield Bearing Sectors, Gulf Dividends, GULF, Smart Grid, GRID, Water Utilities, PHO, and Electric Utilities, PUI, which had recently sold off, rose strongly.

The debt leveraged International Dividend Dogs, IDOG, Leveraged Buyouts, PSP, Global Utilities, DBU, such as China’s HNP, and International Infrastructure, IGF, traded strongly higher, rising up near their recent highs.

Ongoing pursuit of yield, drove Shipping, SEA, Energy Partnerships, AMJ, MLPJ, EMLP, Premium REITS, KBWY, and Industrial Office REITS, FNIO, to new rally highs. Residential Retail REITS, REZ, such as AIV, ESS, traded to new rally highs; these are likely the most credit leveraged investments of all time, and as a group have a stunning PE ratio of 38.

Closed End Funds, GCE, up 9%, YTD, traded to new all time highs.

Credit Investments, AGG, such as European Credit, EU, traded higher, as the Interest Rate on the US Ten Year Note, ^TNX, traded slightly lower to close at 2.58%. Junk Bond, JNK, up 5%, YTD, traded to a new all time high; it being the only Credit Investment that resides at an all time high, after all other debt traded lower earlier in the week, with the bond vigilantes calling the Benchmark Interest Rate, ^TNX, higher from last week’s close.

The ratio of Long Term TIPS, LTPZ, to 10-20 Year US Treasury Notes, TLT, that is LTPZ:TLT, and the Benchmark Interest Rate, ^TNX, trading above 2.49%, communicates that today’s strong rise in Equity Investments, is a blow off market top. Confirmation of such comes from the ratio of World Stocks, VT, relative to Aggregate Credit, that is VT:AGG, trading at a spectacular all time high.

Equity Investments cannot be sustained much longer over Credit investments. There is a limit to which the speculative leveraged investment community can drive stocks ever high.

Those who were invested long in Equity Investments patiently waiting for the June 5, 2014, Mario Draghi ECB Monetary Policy Statement were richly rewarded; their risk appetite satisfied, as Eddy Elfenbein posts The S&P 500 Rallied For The 14th Time In The Last 19 Sessions, and as Bespoke Investment reports The World is Overbought.

This inquiring mind asks, in what way does Mario Draghi’s ECB June 2014 Monetary Policy of cutting rates, imposing negative interest rates on its overnight depositors and offering banks new long-term funds, fight low inflation and boost the euro zone economy?

Merkelnomics writes ECB Enters Uncharted Territory – With one Foot. According to the ECB, these TLTROs will have a maturity of around 4 years. Counterparties will be entitled to borrow, initially, 7% of the total amount of their loans to the euro area non-financial private sector, excluding loans to households for house purchase, outstanding on 30 April 2014. Lending to the public sector will not be considered in this calculation. The maximum volume of such TLTROs could amount to around 400 bn euro. Two TLTROs will be conducted in September and December this year. Then, from March 2015 to June 2016, all counterparties will be able to borrow, quarterly, up to three times the amount of their net lending to the euro area non-financial private sector, excluding loans to households for house purchase, over a specific period in excess of a specified benchmark. The interest rate on these TLTROs will be fixed at the current ECB’s refi rate plus a fixed spread of 10 basis points. In our view, these TLTROs look like a reversed funding-for-lending scheme: the more lending commercial banks provide to the private sector, the more cheap funding they can get. Full allotment.

And this inquiring mind asks further, will Mario Draghi’s ECB’s LTRO monetary policy generate sufficient aggregate demand to pull the Eurozone economy up out of deflation? And does the new policy address the longer-term issue of government debt sustainability.

The bond vigilantes, that is the Primary Dealers, and their clients, have been in control of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, ^TNX, since May of 2013, and have been calling it higher from 2.49%, to 2.58% where it stands today. With the result that debt deflation commenced in Major World Currencies, DBV, and Emerging Market Currencies, CEW, and which in turn commenced destruction of Aggregate Credit, AGG, in June 2014.

Thus fiat money, defined as the combination of Major World Currencies, DBV, and Emerging Market Currencies, CEW, together with Aggregate Credit, AGG, is starting to die. The death of fiat money in June 2014, is an inflection point in mankind’s history.

The failure of Sovereign Currencies has commenced, beginning with the Swedish Krona, FXS, and the Brazilian Real, BZF; and is an economic and political coup d’etat, that has commenced destructionism which is seen in Nation Investment in Sweden, EWD, and Brazil, EWZ, EWZS, trading lower.

The deflationary potential of unwinding currency of carry trade investments and associated debt trades, countervails against anything the ECB has done, or has announced. The tailwinds of economic deflation will be the perfect storm to introduce Kondratieff Winter, which will produce many new normals, as the world has passed from the paradigm and age of liberalism, meaning freedom from the state, into that of authoritarianism, with the death of sovereign currencies in May 2014, and June 2014.

The Mario Draghi ECB NIRP of June 5,2014, introduces risk James Hamilton writes in Econobrowser It’s Unambiguously A Tax On The Banking System that undermines efforts to replenish capital buffers. If you have concerns about financial stability, such a move is contraindicated. A variety of institutions– money market funds, customers’ accounts with private banks, brokerage accounts, are all set up on the assumption that the customers won’t lose any money held in those accounts. Remember that “breaking the buck”– the possibility that investors would discover they’re vulnerable to a capital loss on money market funds– was a key concern of U.S. policy-makers in 2008 as something that could have triggered a run on some financial institutions and instruments.

All things have fathers, that is starters.

The Banker Regime was born in 1971 on the genius of Milton Friedman’s principle of Free to Choose Floating Currencies; and fiat money came of age, where QE1 and Global ZIRP birthed the investor as the centerpiece of economic activity.

The Beast Regime was born in June 2014 on the genius of Mario Draghi’s imposing NIRP, that is negative interest rates, on its overnight depositors; and diktat money has come of age, where the June 2014 Mario Draghi ECB Mandate birthed the debt serf as the centerpiece of economic activity.

Inflation was the economic dynamic of growth coming from the exercise of investment choice, which was supported by the dynamos by creditism, corporatism, and globalism; these engines of democratic nation state governance are winding down, on the death of sovereign currencies.

Destruction is the economic dynamic of deflation coming from derisking and deleveraging out of investment choice, which is countervailed by the dynamo of regionalism; this engine of regional economic governance is winding up, as leaders meet in summits and workgroups to renounce national sovereignty and to announce regional pooled sovereignty, coming from regional framework agreements, such as seen in the Russia China Energy Deal, which has created the Eurasia region of economic governance, and is creating diktat money, defined as the mandates of sovereign regional leaders to establish regional security, stability and sustainability.

In similar vein, Peter A. Petri and Michael G. Plummer report in Econobrowser that initiatives for regional trade facilitation and regional integration are underway. Asia Pacific Regional Integration. Even ardent champions of multilateralism like Jagdish Bhagwati are now advising governments to pursue regional negotiations. Relative to GDP the outward-oriented ASEAN economies of Vietnam (14 percent) and Thailand (8 percent) would gain most. Most encouragingly, launching a feasibility study of FTAAP has now emerged as a key Chinese objective as China hosts APEC in 2014. The idea is an ambitious, comprehensive, inclusive, outward-oriented FTA by 2020. In short, the mega regionals of the Asia-Pacific region offer pathways toward deeper economic integration. Asia-Pacific economic integration may well reinforce the global trading system. The region has always championed “open regionalism”, measures that emphasize trade creation and increasingly inclusive agreements. Mega regional accords in the Asia-Pacific could emerge as the ultimate “building blocks” of multilateralism.

Thus both peak fiat wealth, defined as the combination of Equity Investments and Credit Investments, as well as the Beast Regime were established by Mario Draghi’s June 5, 2014 ECB Mandate.

The Japan-like “pernicious negative spiral” of deflation will intensify as investors are forced to deleverage out of EUR/JPY funded currency carry trades in Eurozone Companies such as France’s debt trade Telecom Provider Orange, ORAN.

A lower Euro, FXE, is coming, but it will not help boost exports, as all currencies will be falling together into the Pit of Financial Abandon.

Up until today, the ECB has done as much as the northern Europeans would let it. Mr. Draghi has figured out how to get them to do even more. The negative interest rate announced by Mario Draghi in effect has regionalized the Eurozone’s banks; it has established a defacto banking union. Throughout the world, banks, via regionalism, will be absorbed into the regional government and become known as Government Banks or Gov Banks for short.

Tyler Durden writes NIRP Has Arrived: Europe Officially Enters The “Monetary Twilight Zone”. Kiss money markets, which together with Repos are one of the core components of shadow banking, goodbye. From Bloomberg “A deposit rate at zero will be of particular support to banks in southern Europe because it could help encourage some flow of credit,” said Callow. “A negative deposit rate can be damaging for money markets.” Negative rates would destroy the business model for money- market funds, which would face the prospect of paying to invest, said Societe Generale economist Klaus Baader.

Negative interest rates on bank excess reserves caused Germany’s Deutsche Bank, DB, to immediately trade 2.6% lower on the June 5, 2014 Mario Draghi ECB announcement.

The Mario Draghi, ECB Negative Interest Rate Policy of June 5, 2014, means that banks which have their monies parked overnight at the ECB will pay a security fee, that is a 0.1% surcharge for the privilege of participating in the economic stability and sustainability of the Eurozone. Welcome to the age of diktat money, where regional leaders are sovereign and issue mandates that establish regional security, stability and sustainability.

John Rubino posts Welcome to the Currency War, Part 16: Interest Rates Go Negative. (Mario Draghi’s policy) won’t stop the eurozone’s downward spiral because liquidity doesn’t fix insolvency. In other words, if the system’s collateral isn’t as valuable as the debt it supports, then the system is in trouble. And coercing banks into making more loans against inadequate collateral will not help the situation.

The euro will fall due to rising supply, which is the same thing as saying that the dollar will soar. This will be deflationary for the US, producing a string of “unexpected” misses in corporate earnings, GDP and inflation.

A deflating Euro is already turning US based corporations lower; the formerly soaring Refineries, VLO, MPC, PSX, HFC, are now trading lower, on the lower Euro.

Currency deflation coming from the hands of the currency traders selling the Euro against the Yen, and from the June 5, 2014, Mario Draghi mandate, are globally destabilizing things, which export economic deflation and create economic deflation worldwide.

My Budget 360 posts Central Banks And A Global Soft Default. Global central banks are fully addicted to the opiate of debt. The financial system has created a rentier class that chases investment yield even when the economy isn’t necessarily growing. Think about that for a second. Why should someone expect a guaranteed return at any point in an economic cycle if the real economy is actually contracting? The U.S. for example while trying to play the role of responsible manager of debt is going full throttle when it comes to debt issuance. We have a spending, revenue, and financial system problem in the way incentives are structured.

A soft default by any other name. The U.S. outside of a couple of years, has spent more than it takes in for well over a generation year over year. We continue to spend money we don’t have courtesy of foreign investors and our Fed that continues down the QE road. Yet these actions have consequences. You have global funds coming back home to roost for the elixir of cheap goods. The result? For most people we are now importing low wage capitalism. In many metro areas local families are now competing against big real estate investors and in some cases foreign investors merely to purchase a home to live in. There is always a cost to borrowing cheaply.

$6 trillion are now owed to foreign investors. Some tend to think this comes with no strings attached. Of course there are strings attached. A generation of people were able to enjoy a strong dollar, high wages, and plentiful cheap goods.

You can see that the Great Recession caused us to run some epic deficits. But what was the end result? Pricing out regular families from buying a home? Making college unaffordable to millions unless they commit to a lifetime of student debt? Giving access to healthcare but making premiums so high that most are seeing more of their funds consumed by these changes? Since most Americans are cash strapped and deep in debt, it appears that we have been auctioning off our debt to global yield chasers. The results for the top one percent have been fantastic. For the rest, not so much.

Assume that rates went up to 6 percent overall which is a low rate overall given the global risk in the market and we are looking at paying roughly $1 trillion per year simply on the interest expense without lowering any of the principal balance. So think about that next time you hear about taper talks and gear up for more non-reported inflation to consume most of your daily cost of living.

This is a soft default by any other name and central banks are going to do everything they can to inflate the debt on their books away.

I respond, yes it is a soft default, and through on going money printing operations, the central banks have indeed inflated the debt on their books, but that has finally come to an end with the Mario Draghi June 5, 2014 Mandate of Negative Interest Rates.

The wisest of all banks were those the Primary Dealers who demanded and received Interest Rate Swaps as part of POMO, and who went started to go short US Treasuries, TLT, beginning in January 2014, as the long-duration trade, EDV:TLT, and the flattening yield curve, FLAT, commenced, as now their shorts will start to increase in value and as their positions in Interest Rate Swaps soar as the Benchmark Interest rate increases in value.

Austrian Economist, Benson te, writes (The ECB’s Announcement) Is Really Camouflage For Perpetual Debt Accumulation. Aside from Negative Deposit Rates, the ECB has placed in the pipeline more easing measures. From ZH, the much anticipated additional measures have been revealed:

-DRAGHI UNVEILS PACKAGE OF TARGETED LTROS, WORK TO PREPARE QE

-DRAGHI SAYS INITIAL SIZE OF TARGETED LTRO PLAN IS 400 BLN EUROS

-ECB EXTENDS FIXED RATE FULL ALLOTMENT, SUSPENDS SMP STERILIZING

-DRAGHI SAYS PACKAGE INCLUDES PREPARATIONS FOR ABS PURCHASES.

In other words, even more actions along what was expected: keep in mind the last time the ECB did €1 trillion in LTROs it did exactly nothing to boost inflation or the “real economy.” Furthermore, the ABS purchases aren’t activated: just being “prepared.” However, what was not revealed was the biggest wildcard: European QE, which as we said repeatedly, won’t happen until Europe’s deflation is far worse, if ever.

All these represent no more than subsidies, as I previously commented. Governments around the world have been forcing a ‘reverse Robin Hood’ redistribution of plundering the Main Street in favor of the Wall Streets of the world through a variety of financial repression policies such as blowing bubbles, bank deposit haircut, negative deposit rates and more.

Yet there is no such thing as a free lunch. Every action has a consequence. Unproductive spending and malinvestments will backfire. As the great Austrian economist Ludwig von Mises presciently warned The age-old disapprobation of interest has been fully revived by modern interventionism. It clings to the dogma that it is one of the foremost duties of good government to lower the rate of interest as far as possible or to abolish it altogether. All present-day governments are fanatically committed to an easy money policy. As has been mentioned already, the British Government has asserted that credit expansion has performed “the miracle … of turning a stone into bread.”

A Chairman of the Federal Reserve Bank of New York has declared that “final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.” Many governments, universities, and institutes of economic research lavishly subsidize publications whose main purpose is to praise the blessings of unbridled credit expansion and to slander all opponents as ill intentioned advocates of the selfish interests of usurers.

The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

It is sad to see that that the average citizens of the world have been treated like guinea pigs by monetary authorities, for an age old experiment that not only transfers resources from society to the political class and their cronies but importantly has been DESTINED for failure: quasi booms morph into horrific busts. When real savings have been substantially diminished relative to misallocated capital, then expect and prepare for a global economic depression in a not so distant future.

Soon there is coming a day that will mark an inflection point in mankind’s history as the paradigm and age of investment choice will terminate, as investors derisk out of debt trades, such as seen in this Finviz Screener, and deleverage out of currency carry trades, such as seen in this Finviz Screener, and this Finviz Screener, and this Finviz Screener of Global Banks, on awareness that the monetary policies of the world central banks no longer support investment gain, or global growth and trade, and in so doing introduce the age of debt servitude.

As European leaders argue over Jean-Claude Juncker’s candidacy for the top job at the European Commission, Telegraph posts Jean-Claude Juncker profile: ‘When it becomes serious, you have to lie’.

1E) … On Friday, June 6, 2014, World Stocks, VT, rallied to a new all time high as the riskiest of Equity Investments such as European Small Cap Dividend, DFE, Small Cap Pure Value, RZV, Small Cap Pure Growth, RZG, Small Cap Industrial, PSCI, Emerging Market Small Caps, EWX, and Building Materials, rose strongly.

Global Growth, DLN, Sectors Energy Service, OIH, Transportation, XTN, Global Industrial Producers, FXR, Semiconductors, SOXX, Design Build, FLM, Automobiles, CARZ, Aerospace And Defense, PPA, Energy Production, XOP, as well as Defensive Sectors, Insurance, KIE, and Consumer Staples, KXI, rose strongly to new rally highs.

Global Financials, IXG, rose to a new all time high as Spain’s Banco Santander, SAN, led European Financials, EUFN, Credit Services, such as AXP, Regional Banks, KRE, Investment Bankers, KCE, strongly higher.

Yield Bearing Investments such as Brazil Financials, BRAF, India Earnings, EPI, Leveraged Buyouts, PSP, Water Resources, FIW, and Global Utilities, DBU, rose strongly,

Nation Investments, EFA, rose to a new all time high as the Emerging Markets, EEM, EWX, led by Vietnam, VNM, Philippines, EPHE, Thailand, THD, Developing Europe, ESR, Egypt, EGPT, Turkey, TUR, Argentina, ARGT, Brazil, EWZ, EWZS, popped to a new rally high as Emerging Market Currencies, CEW, traded strongly higher over the Japanese Yen, FXY; in particular India, INP, SCIN, EPI, traded strongly higher on a higher India Rupe, ICN. Developed nations Norway, NORW, Mexico, EWW, and Singapore, EWS, traded to a new rally high. South Africa, EZA, Russia, RSX, ERUS, Gulf States, MES, and Sweden, EWD, traded strongly higher.

The awesome Equity Investment rally of June 5, 2014, and June 6, 2014, was one of investor mania coming from the Mario Draghi ECB promise of Targeted LTROs, as well as NIRP, without checking out the details of exactly the announced monetary policy will provide sufficient stimulus to pull the Eurozone out of economic deflation.

Past credit stimulus has not provided sufficient inertia to pull the Eurozone out of economic deflation. David Stockman writes In truth, the Euro zone has had an explosion of bank credit growth to the private non-financial sector. Outstanding bank loans grew at a 7.5% CAGR during the 10-years ending at the eve of the financial crisis in early 2008. During those halcyon days there was obviously nothing wrong with the bank credit machinery—especially given the fact the euro zone money GDP grew during the same decade at only a 4.4% CAGR. Expressed in absolute dollar terms, the gain borders on a borrowing frenzy. During that decade, nonfinancial debt outstanding in the euro zone grew by the equivalent of $7 trillion—which is to say, by an amount equal to the entire loan book of the US banking system on the eve of the crisis.

The inflation trade in Equity Investments, that is World Stocks, VT, Nation Investment, EFA, Global Financial Institutions, IXG, and Dividends Excluding Financials, DTN, coming on the liberal monetary policies of the world central banks, was was a risk free trade.

Zero Hedge reports No More Risk: VIX Plunges Below 11 For The First Time In Years. The Inverse Volatility ETFs, XIV, SVXY, soared, and the Volatility ETFs, VIIX, VIXY, plummeted as is seen in their combined ongoing Yahoo Finance Chart.

Please consider the concept of the Apostle Paul presented in Ephesians 1:10, that being that Jesus Christ is in charge of the economy of God and appointed world central bank leaders, Ben Bernanke, Janet Yellen, Shinzo Abe, and Mario Draghi as his point men; and that these were the greatest liberators in history, and that they led the greatest liberation movement of all time. They set the investor free, to experience economic life in the world central bank’s monetary policies of investment choice and schemes of credit to pursue investment gains. .

The June 5, 2014 Mario Draghi ECB Announcement of NIRP and Targeted LTROs, produced a stunning moral hazard based prosperity in fiat money, and produced the zenith of liberalism, defined as freedom from the state, as investors drove World Stocks, VT, Nation Investment, EFA, Global Financials, IXG, and Dividends Excluding Financials, DTN, to produce peak Equity Wealth, while Peak Currency Wealth, DBV, and CEW, was achieved in the third week of May 2014, and Peak Credit Wealth, AGG, was achieved the week ending May 30, 2014.

The age of currencies and the era of credit came to an end the week ending June 6, 2014, as stock investors drove Equity Investments, manifesting as three long candlesticks in the weekly chart of the S&P 500, SPY, to their grand finale high, at a time when the bond vigilantes, called the Interest Rate on the US Ten Year Note, ^TNX, higher to 2.59%.

Peak Equity Wealth is seen in the chart of World Stocks, VT, relative to Aggregate Credit, AGG, that is VT:AGG, rising parabolically, and then peaking in value in the week ending June 6, 2014.

The Mario Draghi ECB announcement of NIRP and targeted LTROs produced a blow off stock market top on Friday June 6, 2014, and at the same time has birthed the Beast Regime, to replace the Creature from Jekyll Island, which ruled in liberal policies of investment choice and in schemes of credit. Soon out of the waves of Club Med sovereign, banking, and corporate insolvency, it will rise to rule the world in authoritarianism, in policies of diktat in every one of the world’s ten regions, and in schemes of totalitarian collectivism in all of mankind’s seven institutions.

The age of diktat and the era of debt servitude commenced on the June 5, 2014, with the mandate of Mario Draghi for a 0.1% surcharge on money held overnight at the ECB.  His word, will and way, will compel the debt serf, to experience economic life in regional fascist leader’s policies of regional economic governance, which establish regional security, stability and sustainability.

Thus the Mario Draghi announcement of NIRP and targeted LTROs was both a climax event, one of peak wealth. and also a genesis event, one of the beginning of a new economic age of authoritarianism.

In a stunning denial of reality, Reuters reports ECB’s Coeure: Rates To Diverge From UK, U.S. For Years. Euro zone interest rates will diverge from those in the United States and Britain for a number of years, European Central Bank (ECB) Executive Board member Benoit Coeure told France Inter radio on Saturday. Speaking after the ECB this week cut rates to record lows, Coeure said they would remain around that level for a long time, whereas central banks in the United States and UK would at some point raise rates. “Clearly what we wanted to indicate on Thursday is the fact that monetary conditions will diverge between the euro zone on one hand and the United States and the United Kingdom on the other for a long period, which will be several years,” he said. “We are going to keep rates close to zero for an extremely long period, whereas the United States and the United Kingdom will at some point return to a cycle of rate rises.” Coeure said this should help to weaken the strong euro, which is threatening economic recovery and importing disinflation. French President Francois Hollande has been calling for months for ECB action to weaken the currency.

Truth is that he bond vigilantes are in control of the Interest Rate on the US Ten Year Note, ^TNX, and are using this Bow of Economic Sovereignty, to effect coup d’etat worldwide, which have caused derisking out of debt trade investments such as Ireland’s Bank, IRE, and deleveraging out of currency carry trade such as Ireland’s, Software Manufacturer, FLTX, and Medical Lab, ICLR.

Through global debt deflation, coming at the hands of the currency traders, following upon the work of the bond vigilantes, all currencies, will be falling ever lower than the Japanese Yen, resulting in all Credit Investments, including European Credit, EU, trading ever lower, inducing the dreaded economic inflation worldwide.

All things have a beginning and an end.

The 1971 Milton Friedman Call for Free to Choose Investing and Floating Currencies, created a great fiat money swell. And the Ben Bernanke QE1 of trading out money good US Treasuries for Distressed Investments, regenerated the global financial system, whereby the Banker Regime birthed the investor, and has finally culminated the age of currencies and the era of credit, producing peak fiat money and peak fiat wealth. The June 5, 2014, Mario Draghi ECB announcement of NIRP drove Equity Investments to their Elliott Wave 5 High.

Now said announcement has birthed the age of diktat and the era of debt servitude, where the Beast Regime will rule in policies of diktat in regional governance in every one of the world’s ten regions, and in totalitarian collectivism throughout mankind’s seven institutions.

The short selling opportunity of a lifetime has emerged; and an investment demand for gold will soon arise.

On Friday June 6, 2014, the Inverse Market ETFs, as a group, traded strongly lower; these include XVZ, STPP, EUO, YCS, CMD, DNO, MLPS, SAGG, DTYS, JGBS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, DDG, PSQ, REK, MYY, RWM, These could be used selectively and under wise management to serve as the basis for collateral in a short selling investment strategy.

Thus it is failure of credit, and the death of currencies, that will cause the death of fiat wealth, which is defined as the combination of equity investments and credit investments. And as such, the short selling opportunity of a lifetime, in equity investments, is now. Better yet, an investment demand for gold will commence as investors seek safe investment in hard assets. One way to invest in gold is to start to dollar cost average into OUNZ, The Deliverable Gold ETF. The investor should start to dollar cost average into the purchase and possession of gold bullion.

The rally in Emerging Markets, EEM, such as TUR, THD, EWZ, GAF, IDX, EPHE, GXG, EGPT, and SCIN, that came via the pursuit of yield and the duration trade in Credit Investment is over, through, done, and over.

Since the beginning of 2014, the Japanese Topix, ITF, had been the worst performing stock developed stock market, as is seen in the ongoing Yahoo Finance chart of ITF, EZU, EEM, VTI, EPP, coming on debt deflation, as Investors went short the Yen, FXY, and long the Euro, FXE, driving the EUR/JPY, higher. Now with the death of currencies, it is time for all the other nations to experience debt deflation.

Bloomberg reports Shinzo Abe orders overhaul of Japanese Pension Fund’s Investments. The push to move the changes forward is good for the market,” said Masaru Hamasaki, a Tokyo based senior strategist at Sumitomo Mitsui Asset Management. “Revamping the allocations three months after the pension review came out will be quite a tight schedule, but if the prime minister has asked for this I think they’ll do it by then.”

Investors are watching for Japan’s cautious retirement-savings managers, led by the fund, to shift into shares as the Bank of Japan spurs inflation that risks eroding the value of bonds. The Topix index of equities slipped 5.3 per cent this year as of last week, adding pressure on Abe to prove his policies can spur a sustained economic recovery. Trust banks, which often buy and sell on behalf of pension investors, are putting the most money into local stocks in five years as foreigners sell, fuelling speculation that the fund is already buying.

The fund may change its strategy in August and putting 20 percent of its assets into local stocks would not be too much, Yasuhiro Yonezawa, who heads its investment committee, told the Nikkei this week. That compares with a current target of 12 per cent.

Trust banks made 250 billion yen in net purchases of Japanese equities last week, according to data from the Tokyo bourse. That was the most since the period ended March 27, 2009. The banks have added money to the stock market for five consecutive weeks as the Topix index climbed 2.7 percent and foreigners reduced holdings by 83 billion yen during the period.

“Given that it’s the biggest net purchase since stock prices plummeted during the financial crisis, you’d have to speculate that the fund or corporate pensions were doing the buying,” said Shoji Hirakawa, chief equity strategist at Okasan Securities. “It’s likely the fund is doing what it can to prepare for allocation changes. The market was expecting them to buy next fiscal year, but it looks like they’re already doing it.”

Trust banks have bought a net 574 billion yen of Japanese shares this year, while foreign investors sold 1.4 trillion yen, the TSE data shows. That contrasts with 2013, when Topix’s 51 per cent surge was accompanied by record foreign buying and the banks sold four trillion yen of shares.

The Topix slumped as much as 13 per cent this year up to an April 14 low as the yen strengthened and investor optimism about Abe’s revival strategies waned. The equity gauge has rebounded 8.8 per cent from that low as of Thursday. It remains the worst performer among developed markets.

2) … There be many new normals.

2A) …The new normal way of life is compliance to mandates of regional leaders.

Commodities, DBC, trading lower, and Aggregate Credit, AGG, trading lower reflect the reality that disinvestment out of debt trade investment and currency carry trade investments has pivoted the world out of the paradigm and age of liberalism into that of authoritarianism, where the Beast Regime rules.

This monster is completely different than the Creature from Jekyll Island; as it has feet of a bear, mouth of lion, and the stealth of a leopard, and is foretold to manifest most strongly out of Mediterrean, read Club Med, waves of sovereign insolvency, banking insolvency and corporate insolvency.

The former fiat of choice is being replace by the new fiat of diktat coming from the Beast Regime’s regional fascist leaders, which establishes regional security, stability and sustainability, and enforces debt servitude in each of the world’s ten regions, and throughout all of mankind’s seven institutions, this being foretold in Bible Prophecy of Revelation 13:1-4.

As investors derisk out of debt trades and deleverage out of currency carry trades, the Banker Regime’s dynamos of creditism, corporatism and globalism are winding down the fiat of credit and the fiat of currency; and the Beast Regime’s singular dynamo of regionalism is powering up the fiat of diktat and the fiat of debt servitude.

In an economic move establishing regional security, stability and sustainability, supply lines become regional replacing former global ones. Damien Cove of the NYT reports As Ties With China Unravel, US Firms Head to Mexico.

James Brewer of WSWS reports Michigan Senate Passes Detroit “Grand Bargain” Package. The legislation includes a financial oversight panel that will extend the bankers’ dictatorship over Detroit for at least another 13 years.

The new normal in the age of authoritarianism is that the word, will and way of fascist leaders directs economies. Bloomberg reports Obama Said To Propose Deep Cuts To Power Plant Emissions. Fox News reports Coal-state lawmakers rally against power plant emissions crackdown. Coal-state lawmakers, accusing President Obama of using a back door to impose strict emissions limits on power plants, are rallying to slam that door shut, claiming the plan would cost jobs and jack up electric bills. In Kentucky, West Virginia, and other states that rely on coal to fuel their own economies, and that help generate power for everybody else, officials vowed Monday to introduce legislation halting the newly announced EPA plan.

2B) … The new normal price system is the beastly price system.

Econbrowser posts Commodity Prices And Resource Scarcity. The technological advances that led to the broad trend of falling real food prices often seen in the graphs above are well understood. The Green Revolution, improvements in irrigation, fertilizer, pesticides, and hybridization, managed to keep significantly ahead of Malthus’s diminishing returns. One could make a case that Yamada and Yoon’s statistical trend lines, which see the world as still in the midst of a broad downward trend in the relative price of many agricultural products, will turn out to be a correct prediction of what we’ll see over the next decade.

I respond that the falling real food prices will increase, as the World’s Major Currencies, DBV, and Emerging Market Currency Prices, CEW, started to decline in May 2014, and it will take more of these to buy Agricultural Commodities, RJA, which are priced in US Dollars.

Econobrowser continues, The graphs below include a number of extractive commodities; for copper, tin, and lead, it’s more difficult to dismiss the price surge over the last decade as a temporary anomaly.

I respond that the price of Copper, JJC, has been inflated by liberal PBOC credit liquidity policies, by the China Shadow Banking practice of stockpiling copper as collateral for loans, and by ever increasing currency carry trades such as the EUR/JPY, until January 14, 2014, when it started to deflate.

Econobrowser concludes, There is no question that the relative price of any commodity is subject to competing long-run pulls from increasing marginal cost on the one hand and improving technology on the other.

I respond please consider that the relative price of commodities, especially agricultural commodities, is going to soar, as investors derisk out of debt trade investments and currency carry trade investments, and as authoritarianism’s singular economic dynamo of regionalism increasingly replaces liberalism’s three dynamos of creditism, corporatism and globalism.

A new price system is emerging; it will neither be afixed price system where prices are set by the government, nor will it be free price system; the new normal price system is the beastly price system, where prices operates on diktat money, and where prices are governed by the Four Horsemen of the Apocalypse, in particular, The First Horseman, and The Fourth Horseman; these are The Rider on the White Horse, seen in Revelation 6:1-2, who introduces regional governance via coup d’etats replacing democracies, and The Rider on the Pale Horse, seen in Revelation 6:7-8, who introduces economic deflation replacing economic inflation, the result of which is economic death replacing economic life.

Wikipedia relates “The fourth and final horseman is named Death. Known as “the Pale Rider“, of all the riders, he is the only one to whom the text itself explicitly gives a name. Unlike the other three, he is not described carrying a weapon or other object, instead he is followed by Hades (the resting place of the dead). However, illustrations commonly depict him carrying a scythe (like the Grim Reaper), sword or other implement.

The Rider on the Pale Horse introduced the beastly price system on Friday May 30, 2014, by forcing investors to sell commodity ETFs, DBC, and GSG, lower on May’s trade lower in the Major World Currencies, DBV.

Said another way, debt deflation, specifically currency deflation, coming at the hands of the currency traders, on fears that the world’s central banks’ monetary policies have crossed the rubicon of sound monetary policy and have made “money good” investments bad, has pivoted Commodities, DBC, GSG, lower in price, on lower Commodity Currencies, CCX, with the result that investors sold investments in Steel Producers, SLX, such as OSN, GSI, X, AKS, NUE, GGB, SID, MTL, PKX, Global Industrial Miners, PICK, such as VALE, RIO, BHP, Coal Miners, KOL, Uranium Miners, URA, and Rare Earth Miners, REMX.

Bond vigilantes and their partners, the currency traders, set the price system, with the result being economic deflation, as Jesus Christ as is presented in Revelation 6:6-8, has opened the Fourth Seal of the Scroll of End Time Events, and released the Rider of Pale Horse. A repeat of 1914 is underway, as Lord Grey famously said, “the lamps are going out all over Europe.” This time, it’s not a metaphor.

Ongoing currency carry trade disinvestment is going to be highly destructive economically. The result of debasement of the world’s currencies will be economic destabilization, economic deflation, and economic death.

Given currency deflation in the Euro, FXE, the British Pound Sterling, FXB, the Swedish Krona, FXS, and the Swiss Franc, FXF, as well as the India Rupe, ICN, and the Brazil Real, BZF, economic growth is impossible.

Economic growth was a largely a side benefit, that came from investment gains, flowing from the credit stimulus of Global ZIRP. Economic growth was a function of the investor pursuing investment gain in the bygone era of currencies, and the age of credit.

News reports illustrate economic death. BBC reports ‘Conflict Minerals’ Deadline Looms for US Technology Firms.

This inquiring mind asks what will become of the Alcoa Aluminum Ingots Manufacturing Plant, located in Ferndale, WA, given global debt deflation.

2C) … The new normal education system is the fascist education system

Nick Barrickman of WSWS posts New Orleans Recovery School District Set To Convert Entirely To Charter Schools. With the closing of its last five traditional public schools, New Orleans is set to become the largest city in the US with an all charter school district.

In 2010, the city was awarded $1.8 billion to renovate its schools as a part of the disaster assistance given by FEMA. One of the key stipulations of this funding permitted the city to construct new facilities which could then be handed over to private operators, rather than rebuild the remaining traditional schools. The Post story notes that many of these rebuilt schools have simply been given to charter operators free of charge.

The move to shutter the remaining traditional schools is unpopular with the city’s population; a recent poll conducted by the Cowen Institute for Public Education Initiatives at Tulane University showed that only 41 percent of New Orleans residents supported the move.

3) … Jane Stanton Hitchcock, relates Imagination Is The Key To Life.

News reports, books, literature, websites, television and radio programs, can inspire one to imagine worlds and people that do not exist, or they inspire one to properly perceive reality.

Blessed Economist posts Person: Imagination. The imagination is like the memory, but whereas the memory relates the past, imagination focuses on the future.

Dreams appear in our imagination. So do our daydreams. If they are from God, they can be powerful motivators. If they are from the devil, they can scare and cripple us.

The imaginations of evil men are full of evil. The Lord saw how great the wickedness of the human race had become on the earth, and that every imaginations of the thoughts of the human heart was only evil all the time (Gen 6:5). From their callous hearts comes iniquity; their evil imaginations have no limits (Ps 37:7). People who fill their imaginations with the benefits of evil will end up enjoying evil.

The spiritual powers of evil can put things into our imagination. When the devil appeared to Jesus, he may actually have appeared through Jesus imagination, because he does not have a physical body. We need to deny those false imaginations as soon as they come, by declaring the word of God.

When we are living in the Spirit, our imagination can perceive what is happening in the spiritual world. Understanding what is happening in the spiritual realms is really important for the Christian life. A few Christians perceive what is happening in the spiritual realms through their external senses. Most of us perceive it in through our imagination when the Holy Spirit displays what is happening there in our imaginations for us. More about this in Spiritual Realms.

Imagination creates empathy. If we can understand what life is like for another person, we can understand why they are behaving the way that we do. “Walk a mile in their shoes”. We should use our imaginations to increase our empathy for other people.

The imagination is a wonderful tool. We should use it for God, to increase our faith and hope, and grow our awareness of events in the spiritual realms.

Through my imagination, I see the Lord, as I listen to InVuBu posts of Lyrics By The Song Title: I See The Lord; and I also see Morpheus The God Of Dreams as I reflect throughout the day, who tells me “Be faithful unto death and I will give you the crown of life”. He does not look anything like a black man wearing sunglasses, but rather He is dark complected Mediterranean and has white flowing hair and red flaming eyes and is surrounded by shimmering leaves of light which are angels.

4) … Prophecy Signs of The Last Days.

4A) … A Prophecy Sign of the end times: Jerusalem The Burdensome Stone.

The prophecy sign of Jerusalem The Burdensome Stone, is found in Zechariah 12:3, ”On that day, when all the nations of the earth are gathered against her, I will make Jerusalem an immovable rock for all the nations. All who try to move it will injure themselves”

Ynet News reports US Congressmen Vow to Work to Keep Jerusalem Undivided.

But on the other side of the Middle East Divide, Hamas has acquiesced, that is has capitulated, that is has tacitly agreed, to recognizing Israel’s right to exist, by accepting the fascism of the Palestinian Authority’s technocratic governance, as Jerusalem Post reports Hamas Official: Formation Of Unity Government Is Surrender On Part Of Hamas

Reuters reports US Says To Work With, Fund Palestinian Unity Government. The United States said it plans to work with and fund the new Palestinian unity government formed after an agreement by the Fatah and Hamas factions, and Israel immediately voiced its disappointment with the U.S. decision.

Palestinian President Mahmoud Abbas swore in a unity government on Monday in a reconciliation deal with Hamas Islamists, who advocate Israel’s destruction.

The United States views Hamas as a “terrorist” organization and the U.S. Congress has imposed restrictions on U.S. funding for the Palestinian Authority, which typically runs at $500 million a year, in the event of a unity government.

Senior U.S. lawmakers said on Monday Washington should suspend aid to the new unity government until it is sure of the Islamist group’s commitment to pursuing peace with Israel.

In its first comment since the Palestinian government was sworn in, however, the State Department stressed that it regarded the new Cabinet as made up of technocrats and that it was willing to do business with it.

“At this point, it appears that President Abbas has formed an interim technocratic government that does not include ministers affiliated with Hamas,” State Department spokeswoman Jen Psaki told reporters at her daily press briefing.

“Based on what we know now we intend to work with this government but will be watching closely to ensure that it upholds principles that President Abbas reiterated today,” she said, referring to Abbas’ commitment to honor past peace deals and the principles underlying the peace process with Israel.

In Jerusalem, an Israeli official, speaking on condition of anonymity, said in a statement to reporters: “We are deeply disappointed by the State Department regarding working with the Palestinian unity government.”

Antiwar posts Israel to Build 3,300 Settler Homes in ‘Retaliation’ for PA Unity

4B) … A Prophecy Sign of the end times: The rise of the Ten Toed Kingdom Of Regional Governance and Totalitarian Collectivism.

The prophecy sign of the Ten Toed Kingdom is found in Daniel 2:25-45.

Robert Wenzel of EPJ posts Ron Paul is out with a video discussing a recent commentary written by neocon columnist Charles Krauthammer.

“Their enhanced partnership (that of China and Russia) marks the first emergence of a global coalition against American hegemony since the fall of the Berlin wall,” Krauthammer wrote of the deal, which will supply China with Russian gas for the next 30 years.

In response, Dr. Paul said in a video that the US is risking much more than Americans might realize by letting the China-Russia deal slip by. According to RP, the multi-billion-dollar agreements will not only cost the US its international influence in the long run, but will decimate the worth of the dollar. “We talked a lot over the years about military blowback: we do things and it comes back to haunt us and Americans ended up getting killed. But there is blowback that comes in different manner, and its economic blowback,” he said

Well yes, Dr. Paul has it correct. The China Russia Energy Deal just slipped by. The regional framework agreement births Eurasia as a region of economic governance where there are undollar bartering economic transactions. And via ECNS.CN The Renminbi Clearing Bank Opening In London This will be quite deflationary to the US Dollar. The China Russia Energy Deal is a fulfillment of the Prophet Daniel’s Statue of Empires, presented in Daniel 2:25-45, where the Two Iron Empires that have ruled the world since 1778, that is the British Empire and the US Dollar Hegemonic Empire, dissolve, and out of void a Ten Toed Kingdom with toes form in the world’s ten regions. These have a miry mixture of iron diktat and clay totalitarian collectivism, where Regional Economic Fascism replaces all current economic systems such as Crony Capitalism, European Socialism, Greek Socialism, Chinese Enterprise, and Communism; and is synonymous with the Beast Regime of Revelation 13:1-4. This governing substance cannot and will not last long.

As foretold in Daniel 7:7, the Wild Beast, the Fourth Beast of a one world government and a one world religion, will rise to govern all, by means of the word, will, and way, of the Sovereign, seen in Revelation 13:5-10, and the Seignior, seen in Revelation 13:11-18, who will provide the chargma money system, that is the 666 money system, where one is required to take the Sovereign’s Mark, seen in Revelation 13:18, in order to conduct any economic activity.

In related offshore investing news, courtesy of Dollar Collapse International Man posts 77,000 Firms Worldwide Sign Up For FATCA. And Daily Bell posts Facing The Invasive Onset Of GATCA, Take Human Action

Opposite Dr. Paul, on the left side of the political spectrum are the Progressives and the Liberals. Sociologist Daniel Little posts Basic Social Institutions and Democratic Equality. The author fails to perceive that God, that is the Sovereign Lord God of the Universe works through Empires, always has and always will; and that the paradigm and age of liberalism, meaning freedom from the state, is coming to an end and that of authoritarianism is commencing. The age of the investor is complete, and the age of the debt serf is underway.

Reuters reports Russia Faces Struggle to Wean Crimea Economy Off Ukraine Supplies

Haaretz reports Blowing Off World Outrage, Netanyahu Seeks New Sanctions Against Palestinian Govt

4C) … A Prophecy Sign of the End Times: A Strong Delusion

The prophecy sign of a strong delusion is found in 2 Thessalonians 2:11.

The IGM Economic Experts Panel presents The IGM forum polls responses to this statement: There is a social value to having institutions that issue liquid liabilities that are backed by illiquid assets. Not one of the economists polled disagrees.

An inquiring mind asks have you considered what constitutes an example of illiquid assets. Benson te provides a good example As Debt Surges, Malaysia’s Shadowy Fund Adds to Systemic Risk.

4D) … A Prophecy Sign of The End Times: The rise of the King of the South

The prophecy sign of the rise of the King of the South is found in Daniel 11:11 and Daniel 11:40-42 .

VOA News reports Egypt’s Sisi Wins 97 Percent; Iran Invited to His Inauguration

4E) … A Prophecy Sign of The End Times: The Mark of the Beast

The prophecy sign of the the Mark of the Beast is found in Revelation 13:18.

Bloomberg announces Amazon Planning to Unveil Smartphone to Vie With Apple’s.

One’s smartphone becomes one’s wallet. Mobile payment technology is now fully established and will serve as the basis for the 666 Charagma Mark of the Beast Money System.

All now be banked, the only unbanked are those without payments such as the genuine homeless.

Physical banks and physical credit unions are obsolete as tap mobile contactless payment technology, such as American Express’ Bluebird Checks with Mobile App, Tap2Pay™ and Tap & Go™, now provide instantaneous payments to others and vendors, and thus provides the foundation for the 666 Charagma Mark of the Beast Money System.

On Track Innovations Ltd announces oti Launches Trio Modular Payments Reader. The Trio Reader handles multiple payment methods in single solution for self service markets.

Secure ID News reports Retailers Create Custom Mobile Wallets With Airtag AIRSHOP enables retailers to launch their own self-branded mobile wallets for fast and advanced ordering, payment, loyalty, geo-location services and couponing.

Secure ID News reports The Macao Special Administrative Region of the People’s Republic of China Has Made The Switch To Contactless Smart Cards For Citizen ID. The card has many applications but one of the main reasons for the move to contactless was automated passenger clearance at the border. Contactless enables quicker throughput and transaction speed and also increases the lifespan of the card since a chip isn’t exposed.

4F) … Prophecy Sign of the End Times: Abnormal weather, drought, as well as rains, snow, and ice.

Zero Hedge posts US Q1 Productivity Misses; Plunges By Most In 6 Years. nonfarm productivity in the frost-bitten US in Q1 plunged at its fastest pace since Q1 2008.

4G) … Prophecy Sign of the End Times: Fraud

The Automatic Earth posts 3 Articles On The Mysterious Missing 100,000 Tons Of Copper And Aluminum that could have far reaching repercussions in commodities and financing markets. As if it’s not nuts enough to use metals as collateral for more metals, what if they were never even there? And how widespread is this?