Archive for July, 2014

News That China Has Bought US Treasuries Prompts Liberalism’s Grand Finale Stock Rally

July 26, 2014

This post is available in Google Documents format here

Introduction

News that China has purchased US Treasuries prompts liberalism’s grand finale stock rally; sovereign currencies have started to fail introducing the death of money; aggregate credit is trading lower introducing the failure of credit, that is failure of trust in the Global ZIRP monetary policy of the world central banks; the world has pivoted out of the age of investing and into the age of debt servitude.

 

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

On Tuesday, July 22, 2014, liberalism’s grand finale stock rally came as Asia Excluding Japan, EPP Emerging Asia, GMF, The Emerging Markets, EEM, EWX, DGS, EMMT, EMIF, EMFN, more specifically the BRICS, EEB, Brazil, EWZ, Russia, RSX, India, and China, YAO, jumped higher taking the Emerging Market Currencies, CEW, higher, on the Financial Sense report that China Buys US Debt At Fastest Pace On Record. This as CNBC reports China’s Debt Soars To 250% Of GDP, and Ambrose Evans Pritchard reports China’s Terrifying Debt Ratios Poised To Breeze Past US Level.

 

China Investments, YAO, CHIX, CHXF, CQQQ, ECNS, CHII, TAO, CHIQ, CHIE, HNP, CHII, CHIM, CHXX, REMX, EWH, traded to new rally highs. Vietnam, VNM, Thailand, THD, Indonesia, IDX, IDXJ,  Singapore, EWS, EWSS, and Australia, EWA, KROO, traded to new rally highs. Taiwan, EWT, South Korea, EWY, New Zealand, ENZL, and Turkey, TUR, traded strongly higher.

 

Emerging Market Financials, EMFN, Brazil Bank, BBDO, India Banks, HDB, IBN, The Chinese Financials, CHIX, Columbia Bank, CIB, Stockbrokers, IAI, Australia Dividends, AUSE, rose to new rally highs. Asset Managers, such as IVZ, BEN, BK, AMP, STT, KKR,  traded strongly higher, most to new highs.

 

Bloomberg reports Record India Bank Issues Seen As RBI Allows Longer Debt. Incentives for Indian lenders to issue longer-dated debt to fund infrastructure and affordable housing will trigger record sales of rupee-denominated bank bonds this year, according to the nation’s biggest underwriter.

 

The trade lower in the Benchmark Interest Rate, ^TNX, to 2.46%, drove Home Construction, ITB, Design Build, FLM, and US Infrastructure, PKB, higher; and Smartphone, FONE, and Transportation, XTB, rose to their former rally highs. Nasdaq Large Caps, QQQ, Health Care Providers, IHF, and Steel, SLX, rallied to a new highs. Pharmaceuticals, PJP, Medical Devices, IHI, Casinos, BJK, Biotechnology, IBB, Internet Retail, FDN, Nasdaq Internet, PNQI, Media, PBS, Social Media, SOCL,  Consumer Discretionary, IYC, Software, IGV, and Energy Service, OIH, traded higher.

 

Global Industrial Miners, PICK, specifically Aluminium Producers, traded to a new rally high, and Copper Miners, COPX, traded strongly higher, as Base Metals, DBB, specifically Aluminum, JJU, traded to a new rally high.

 

Global Real Estate, DRW, and US Real Estate, IYR, Residential REITS, REM, Mortgage REITS, REM, Premium REITS, KBWY, Retail REITS, and Hotel REITS, traded to new rally highs, on the lower Benchmark Interest Rate. Global Infrastructure, IGF, and Global Utilities, DBU, traded strongly higher.

 

The chart of the S&P 500, $SPX, SPY, shows a trade higher to a new all time high.

 

Emerging Market Local Currency Bonds, EMLC, traded strongly higher leading Aggregate Credit, AGG, to a new rally high, as the Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.46% as the case for Interest rates going higher has come of age as David Kotok posts Financial Sense posts Tapering Is Now Tightening.

 

The 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX has flattened considerably, seen in the Flattner ETF, FLAT, trading higher in value. Look for this to now reverse: the yield curve will be steepening, seen in Steepner ETF, STPP, trading higher in value, as the Benchmark Interest Rate, ^TNX, trades higher from 2.49%.

 

Soon Credit Investments, AGG, will join Equity Investments, such as World Stocks, VT, Global Financial Institutions, IXG, Yield Bearing Investments, and Large Cap Nation Investments and Small Cap Nation Investment, EFA, and will be trading lower in value together in a see saw destruction of fiat investments.

 

Bloomberg reports Junk-Bond Indigestion Burns Buyers Gorged on Record Sales. Junk-bond buyers, JNK, are showing signs of indigestion after snapping up a record $361 billion of the debt at the lowest yields on record

 

Sovereign currency debasement is underway, as evidenced by the Euro, FXE, trading strongly lower, yet strangely there was no follow through in the EUR/JPY Currency Carry Trades, nor in Nation Investment in the Eurozone Nations, in fact, Ireland’s, IR, RYAAY, Netherlands, UN, AER, and Finland’s NOK, Frances, ORAN, Belgium’s BUD, and Germany’s SAP, traded higher. CNBC posts

The Stubborn Euro May Have Finally Cracked.

 

Not only is fiat currency debasement underway; but, also fiat wealth debasement is underway on the failure of credit; cases in point is Portugal Telecom, PTI, and the Nation of Portugal, PGAL, and Deutsche Bank, DB, and the Nation of Germany, EWG.

 

Zero Hedge posts NY Fed Slams Deutsche Bank (And Its €55 Trillion In Derivatives): Accuses It Of “Significant Operational Risk”.

 

The WSJ reports Deutsche Bank Suffers From Litany of Reporting Problems, Regulators Said.  Letter From New York Fed Said Some Reports From Deutsche Bank’s U.S. Operations Were ‘Inaccurate and Unreliable’.

 

Now with the US Dollar, $USD, UUP, some have been calling for a new Bretton Woods, fearing that the US Dollar, can no longer serve as the world’s reserve currency. The Telegraph posts The Dollar’s 70 Year Dominance Is Coming To An End .

 

Some say economics is a science, what baloney. Economics is a life experience in the monetary policy of sovereigns, and the seigniorage that they provide. The Banker Regime of democratic nation states, provided the economic experience of prosperity in the monetary policy of investment choice and schemes of credit liquidity and floating currencies.

 

The Banker Regime monetary policy of investment choice has come through what economist Hyman Minsky termed, Money Manager Capitalism, and has produced a number of peak economic events: peak manufacturing, peak transportation, peak oil production and peak moral hazard.

 

Investor Scott Grannis writes of peak manufacturing, peak transportation, and peak oil production.

 

Manufacturing production (the volume output of industrial establishments in mining, quarrying, manufacturing, and public utilities) has increased by 25% in the past five years. It’s almost at a new all-time high. The manufacturing side of the economy survived, and has largely recovered from, its steepest plunge in history.

 

Actual shipments by truck, rail, waterways, pipelines and aircraft, as measured in ton-miles by the Dept. of Transportation, has increased over 25% in the past five years, and is now at a new all-time high.

 

U.S. crude oil production has surged over 70% in the past five years, with the result that the U.S. has surpassed Saudi Arabia as the world’s largest oil producer. Back in 2008 this would have been unthinkable, and it’s all due to the ingenuity of oil producers (i.e., fracking technology).

 

Scott Grannis concludes, It’s still the case that this has been the weakest recovery in history. But it is nevertheless a recovery, and the economy has without question been growing in a real, physical sense.

 

Socialist Nick Beams writes of peak moral hazard.

 

During the post-war boom, the mode of profit accumulation was based on large-scale industrialisation in the US and other advanced capitalist countries. However, this regime of production entered a crisis from the end of the 1960s, when the average rate of profit started to fall.

A fundamental restructuring of the capitalist system resulted. Vast sections of industry were either wiped out or transferred to cheap-labour regions, and profit accumulation in the advanced economies came to be increasingly based on operations within financial markets.

The extent of this restructuring is indicated by the fact that whereas in 1980 the profits of the finance sector in the US amounted to between 5 and 10 percent of all corporate profits, that figure had risen today to 40 percent.

In other words, large sections of capital have cut themselves adrift from the production process and continue to accumulate profit only to the extent that money continues to be pumped out by the central banks to boost the price of financial assets.

These sections of capital have now grown so large that any move to “take away the punchbowl,” as advocated by the BIS, would result in a crash of the entire economy.

 

Nick Beams concludes, The only way to halt the ongoing economic disaster is the abolition of capital itself, that is, the ending of private ownership of the means of production to bring them under social ownership and control, thereby opening the way for rational economic planning.

The tail risk of money manager capitalism will be a Minsky Moment. Out of the ongoing death of currencies, and failure of credit, Financial Armageddon, that is a global financial system breakdown will occur.

 

The result will be that the world will completely pass out of the paradigm and age of liberalism and into that of authoritarianism, where the Beast Regime will provide the seigniorage of diktat money.

 

Leaders will meet in summits to renounce national sovereignty, and announce regional framework agreements, which create regional pooled sovereignty, that is shared sovereignty, to establish regional security, stability, and sustainability, where regional ownership replaces private ownership and private property rights.

 

The Beast Regime of regional economic governance, specifically regional fascism, will provide the economic experience of austerity in the monetary policy of diktat in debt servitude and schemes of totalitarian collectivism.

 

One can follow the death of currencies via this Finviz Screener of Currency ETFs, and one can follow, the failure of credit via this Finviz Screener of Credit ETFs.

 

Debt deflation, that is competitive currency deflation is underway; it arises out of the Bond Vigilantes war with the world central banks for the control of the Bow of Economic Sovereignty, that is the Interest Rate on the US Ten Year Note, $TNX.

 

The trade lower in fiat wealth, that is World Stocks, ACWI, Nation Investment, EFA, Global Financial Institutions, IXG, in June 2014, coming on the death of the Major World Currencies, DBV, specifically the Swedish Krona, FXS, the Euro, FXE, the Swiss Franc, FXF, beginning in June 2014, and the British Pound Sterling, FXB, in July 2014, was an extinction event that commenced the extinction of the equity investor, as is seen in Dividends Excluding Financials, DTN, in Eurozone Nations, in European Financials, EUFN, and in US Regional Banks, KRE, trading lower in value.

 

The world has attained both peak money and peak fiat wealth. The world is passing through an inflection point in economic history, as the seigniorage, that is the coinage of the fiat money and the fiat wealth of Banker Regime is starting to fail.

 

The Business Cycle is one of economic growth and economic deflation that comes from investing. The trade lower in fiat money and fiat wealth beginning in June 2014, pivoted the world into final phase of the Business Cycle, known as Kondratieff Winter.

 

Destructionism is now replacing inflationism as the economic dynamic of the age. Risk-off investing is beginning to replace risk-on investing, documenting that a worldwide bear stock market is beginning to replace a worldwide bull stock market; this is well seen in the Vice Stocks, VICEX, trading lower with the Small Cap Pure Value Stocks, RZV. and the Small Cap Pure Growth Stocks, RZG, beginning in July 2014.

 

On Thursday, July 24, 2014, liberalism’s grand finale stock rally completed as China Investments, YAO, CHIX, CHXF, CQQQ, ECNS, CHII, TAO, CHIQ, CHIE, HNP, CHII, CHIM, CHXX, REMX, EWH, traded to new rally highs, taking Asia Excluding Japan, EPP, to a new all time high, as Bloomberg reports China Manufacturing Gauge Rises To 18 Month High On Stimulus.

 

China, YAO, Turkey, TUR, Egypt, EGPT, and Mexico, EWW, led Emerging Markets, EEM, higher to a new rally high. And Sweden, EWD, Switzerland, EWL, Australia, EWA, KROO, Greece, GREK, Italy, EWI, Spain, EWP, Portugal, PGAL, and Netherlands, EFNL, led Nation Investment, EFA, higher; while New Zealand, ENZL, and Gulf States, MES, traded lower.

 

Emerging Market Financials, EMFN, Investment Bankers, KCE, Stock Brokers, IAI,  Far East Financials, FEFN, European Financials, EUFN, and Regional Banks, KRE, led Global Financials, IXG, higher. The Highly Leveraged Financial Institutions represent excellent short selling opportunities.

 

Nasdaq Internet, QQQ, Social Media, SOCL, Nasdaq Internet PNQI, Internet Retail, FDN, Software, IGV, and Transports, XTN, led World Stocks, ACWI, higher, near its previous rally high, while US Homebuilders, ITB, and US Infrastructure, PKB, traded lower, as NumberNomics posts New Home Sales Fall Lower, and as Zero Hedge reports New Home Sales Collapse 20% From May To Dec 2012 Level, and as Market Watch reports New Home Sales Hit Three Month Low; and as Semiconductors, SOXX, traded lower, suggesting that the three month rally leading technology sector, MTK, is history.

 

The Fed spurred Pursuit of Yield Rally that came through Global ZIRP is over. The higher Benchmark Interest Rate, $TNX, is terminating the unprecedented carry trade and debt trade investing in the Yield Bearing Investments, such as IST, PSP, DBU,  IGF, EMIF, DGS, XLU, IDOG, DRW, REZ, REM, FNIO, KBWY, thus terminating the experience of fixed income investing, DTN. For example Industrial Office REITS, FNIO, which have gone up 100% in 5 years, traded 0.4% lower on the day.

 

On Thursday, July 24, 2014, the S&P 500, $SPX, SPY, traded slightly higher to a new all time high; very likely communicating a US Stock Market, VTI, rally high. The ratio of US Stocks, VTI, relative to US Treasury Bonds, TLT, that is VTI:TLT, and the ratio of World Stocks, ACWI, relative to Aggregate Credit, AGG, that is ACWI:AGG, communicates that stocks have maxed out leveraging over debt.

 

The bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.46% to 2.51%, continuing the see saw destruction of fiat investments. Aggregate Credit, AGG, traded lower, and the 10 30 US Sovereign Debt Yield Curve, $TNX;$TYX, steepened, as is seen in the Steepner ETF, STPP, steepening.

 

Popular Notes And Bonds, such as SHY, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, and MBB, traded lower.  And Inverse Bond ETFS, such as SAGG, JGBS, traded higher.

 

Macronomy posts The Core European bond market picture making new record lows such as the German bund 10 year yield at 1.14% and the French OAT 10 year at 1.56%, at the lowest level since 1746, source Bloomberg Chart. The continuing bull market in bonds, now a third of a century old, is a conundrum to those of us who are not infected by the bug of Keynesianism. It is fully explained by the incentive to earn risk-free profits on a continuing basis, unconditionally offered to bond speculators by the policy of open market operations.  Antal Fekete write Bonds Defy Dire Forecast. In Europe of course, courtesy of our “Generous Gambler” aka Mario Draghi, ECB’s president “whatever it takes” moment in July 2012 has indeed triggered the incentive to earn risk-free profits based on continuing “implicit” guarantees, a subject we discussed in our previous conversation last week. Our dexterous “Generous Gambler” has indeed been highly successful in propelling Spanish bonds gains above Germany. But what our “Generous Gambler” ignores is that generally hyper-deflation can lead to a deflationary spiral in which a deflationary environment leads to lower production, lower wages and demand, and thus lower price levels, which is continuing in Europe as far as we can see from the latest economic data releases.

 

The age of low interest rates and a Flattening Yield Curve, seen in the Flattner ETF, FLAT, flattening, is over through and done, as the bond vigilantes are in control of the Bow of Economic Sovereignty, and are calling the Benchmark Interest Rate, $TNX, higher from 2.49%, effecting coup d etats worldwide, commencing the failure of credit and the death of currencies. The failure of credit is seen in the chart of Aggregate Credit, AGG, topping out in value, as well as is seen in the chart of Distressed Investments, FAGIX, which underwrote QE 1, trading lower in value.

 

This is a fulfillment of bible prophecy seen in Revelation 6:1-2, where Jesus Christ has opened the First Seal of the Scroll of End Time Events, and has released the Rider on the White Horse, who has the Bow Of Economic Sovereignty, and is enabling bond vigilantes and warlords to effect coup d etats world wide, destroying traditional democratic nation state sovereignty, so that the Beast Regime of regional economic governance can rise to govern mankind.

 

Gold Miners, GDX, GDXJ, and Silver Miners, SIL, SILJ, traded lower on a lower price of Gold, GLD, and Silver, SLV. After a seven week rally the Precious Metal Mining Stocks, $HUI, are starting to detach from the price of Gold, as is seen in the chart of GDX:GLD.  For example, KGC, has lost 5% of its value since the rally high.  Austin Galt posts in Safehaven HUI Gold Bugs Fighting To Break Downtrend.

 

In the age of the failure of credit and the death of currencies, wealth can only be preserved by taking physical possession of gold bullion, storing it safely and insuring it under a homeowners insurance policy.

 

The sovereign Lord God, looking down the hallways of time, exercised His Sovereign Will and choose how things would flow. Then He acted, and has been acting, to influence the decisions of people to effect that Will.

 

The debt based money system has produced peak coinage. Now debasement of the coinage of the Banker Regime. specifically fiat money, which commenced in July 2014, with the trade lower in Major World Currencies, DBV, such as the Euro, FXE, the Swiss Franc, FXF, the Swedish Krona, FXS, and the British Pound Sterling, FXB, and specifically fiat wealth, which commenced in July 2014, with the trade lower in Global Financials, IXG, and Nation Investment, EFA, communicates that the world is passing from the fiat of democratic nation state governance into the fiat of regional governance.

 

The fiat money system was fathered by Milton Friedman in 1971, who proposed that the US go off the gold standard, and who proposed the economic paradigm where the investor be free to choose investment opportunities in democratic nation states, where floating currency exchange rates would develop economic trade, global growth and investment gain, and where the US Dollar would serve as the world’s reserve currency. Since then the global finance has been underwritten by a flood of Dollars. But now, the US Dollar, USD, has been rising, unsettling the world’s finance scheme as  Ambrose Evans Pritchard writes Fed Kicks Off Global Dollar Squeeze As Janet Yellen Turns Hawkish

 

Jeff Nelson posts What If We Never Left The Gold Standard? Part II. It was in Part I that I ended by challenging readers to engage in a difficult, mental feat: imagining sanity. Our present pseudo-reality (dubbed “the New Normal” by the Corporate media) has been so insane, for so long, that few of us have any recollections at all of living in even quasi-sane societies.

 

God never ever purposed for a sane society and a sustainable money system, rather He purposed a debt based money system that would underwrite a US Dollar Hegemonic Empire and produce peak moral hazard. Having perfected such, His Son, Jesus Christ, acting as His Steward, in all things, seen in Ephesians 1:10, is pivoting the world out of the Banker Regime, and into the Beast Regime seen in Revelation 13:1-4, which is synonymous with the Ten Toed Kingdom of Regional Governance and Totalitarian, seen in Daniel 2:25-45.

 

On Friday, July 25, 2014, World Stocks, ACWI, Nation Investment, EFA, and Global Financials, IXG, and Dividends Excluding Financials, DTN, traded lower. The world passed through an epic economic inflection point where the monetary policies of the world central banks no longer provide investment gains; the failure of fiat wealth investments has commenced on the exhaustion of the world central bank’ monetary authority.

 

The S&P 500, SPY, traded lower from its Thursday, July 24, 2014, market top high.

 

Growth Sectors, Semiconductors, SOXX, Biotechnology, IBB, Small Cap Industrial, PSCI

Homebuilding, ITB, Transportation, XTN, traded lower.

 

Consumer Sectors, Home Building, ITB, Retail, XRT, Internet Retail, FDN, Global Consumer Discretionary, RXI, Consumer Services, IYC, traded lower.

 

Risk-on investing has turned to risk-off investing, as the High Beta Investments, that is Risk Assets, Small Cap Pure Value, Stocks, RZV, and Small Cap Pure Growth Stocks, RZG, traded lower in value.

Basic Materials, PYZ, traded higher as Global Industrial Minerals, PICK, Copper Mining, COPX, and Coal, KOL, traded lower.

 

Argentina Banks, BFR, GGAL, BMA, India Banks, HDB, IBN, causing Emerging Market Financials, EMFN, and Global Financials, IXG, to trade lower.

 

Defensive Stocks, DEF, traded lower from their market top highs.

 

China Investments continued their rally higher. But, Nations Norway, NORW, Gulf States, MES, India, INP, SCIN, INXX, Russia, RSX, ERUS, Developing Europe, ERUS, Taiwan, EWT, Indonesia, IDX, IDXJ, Australia, EWA, KROO, Argentina, ARGT, and The Eurozone, EZU, traded lower., leading Nation Investment, EFA, lower.

 

This inquiring mind asks, If the monetary policy of the world central bank is one of investment choice, to what degree are the supporting schemes of credit liquidity oversupplied and floating currencies maxed out?

 

To answer this I turn to Doug Noland who relates in Bubbles And Schemes. What is the nucleus of the underlying credit expansion? Answer: Non-productive government debt, speculative leverage and borrowings to support financial engineering. Whose balance sheets/liabilities are growing? Answer: The Fed’s and Treasury’s, along with corporate America. What is the nature of the prevailing financial flows? Answer: Financial speculation – chasing yields and inflating securities prices. How stable are the underlying credit and flow dynamics? Answer: I believe highly unstable and susceptible to changing market perceptions and faltering confidence. What is the role of policymaking and government market intervention? Answer: Profound impact on the markets and real economy. Are there major market misperceptions and resulting mispricings? Answer: Confidence in both ongoing liquidity abundance and the power of central banks has fostered profound systemic mispricing throughout securities and asset markets on a global basis. Is the backdrop consistent with a momentous financial scheme? Absolutely.

 

And this inquiring mind asks, Has peak credit been achieved?

 

To answer this I again turn to Doug Noland who relates in Bubbles And Schemes An abrupt reversal of flows would spell credit tightening trouble. Further, any meaningful deterioration in corporate credit availability would have negative ramifications for an overextended stock market Bubble. As I have written previously, with QE winding down the securities markets are increasingly vulnerable to a destabilizing bout of “risk off.” It wouldn’t require a major derisking deleveraging episode to dramatically alter the marketplace liquidity backdrop.

 

The failure of credit commenced the week ending July 25, 2014, as most Credit Investments traded lower in value at the end of the week. Aggregate Credit, AGG,  now resides below its Wednesday, July 23, 2014, high, which manifested the Evening Star reversal candlestick chart pattern.

 

Mortgage Backed Bonds, MBB, Emerging Market Bonds, EMB, Emerging Market Local Currency Bond, EMLC, World Government Treasury Bonds, BWX, International Corporate Bonds, PICB, High Yield Corporate Bonds, HYXU, Junk Bonds, JNK, Ca Rated Corporate Bonds, QLTC, all traded lower, evidencing the failure of credit. The 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, traded up to their recent rally highs.

 

The Evening Star reversal candlestick chart pattern comes as Elaine Moore of Financial Times reports Emerging and frontier market countries have borrowed a record amount of money in capital markets in the first half of this year, even as central bankers warn that ‘debt market euphoria’ could be storing up trouble for the future. International sovereign bond sales by emerging markets reached $69.47bn in the first six months of the year, a jump of 54% on the same period in 2013. The increase makes 2014 a record year for emerging market government debt issuance so far.

 

And The Evening Star reversal candlestick chart pattern comes as  Ben Bain and Isabella Cota of Bloomberg report Mexico’s riskiest companies have almost doubled their bond sales abroad this year as surging demand for junk debt sends borrowing costs to a record low. Lender Unifin Financiera SAPPI’s offering last week pushed sales of speculative-grade dollar notes from the country to $3.5 billion, a 92% increase from the same period last year and the most since 2011. As the Federal Reserve pledges to keep interest rates near zero, companies in developing countries including Mexico are turning to debt markets to exploit global demand for higher-yielding assets. Yields on junk-rated Mexico corporate debt have tumbled 0.76 percentage point this year and touched an unprecedented 5.23% this month. Average yields in emerging markets have dropped 0.65 percentage point in the same span.

 

The coming demand for safe haven investment will be quite significant; look for exit restrictions on savings accounts and money market funds, that is those accounts which are suppose to maintain a constant one-dollar value, but won’t, as short-term securities, such as Short Term Bonds, FLOT, and Short Duration Treasuries, SHY,  trade lower on higher interest rates across the board following the Benchmark Interest Rate, $TNX, higher from the July 25, 2014, 2.47%. One should immediately begin taking physical possession of gold bullion, storing it safely, and insuring it under a homeowners insurance policy.

 

Scott Grannis relates The M2 measure of money supply has been growing at about a 6.4% annualized rate for over 7 years. This growth is very much in line with the past history of M2, which has grown at an annualized growth rate of 6.4% over the past 15 years and 6.1% over the past 20 years. The lion’s share of M2 growth in recent years has come from bank savings deposits, shown in the graph above.

 

Doug Noland relates M2 (narrow) “money” supply jumped $54.5bn to a record $11.415 TN. “Narrow money” expanded $718bn, or 6.7%, over the past year.

Most definitely look for the value of M2 Money to decline, evidencing the failure of credit, that is the failure of trust in the Banker Regime’s fiat money system.

 

Inasmuch as the failure of credit commenced the week ending July 25, 2014, investments will literally be going up in smoke, as the Interest Rate on the US Interest Rate, ^TNX, continues higher from 2.47%, destroying the basis of Credit Investments, as well as diminishing the basis and effective yield on Yield Bearing Investments; FIW, SEA, IDOG, GRID, IST, and XLU, have already lost principal.

 

The death of currencies that commenced in June 2014, continued intensifying the week ending July 25, 2014. Except for the Chinese Yuan, CYB, almost all the Sovereign Currencies, FXY, FXE, FXC, FXB, FXF, BZF, FXA, ICN, CCX, traded lower, with the result that the US Dollar, $USD, UUP, traded higher. Bespoke Investment Group posts Dollar Index Breakout. I comment that given the rally in the US Dollar, the Banker’s Floating Currency Regime, that came when the US went off the gold standard is history; this being confirmed by the fact that currencies are sinking not floating, and evidencing that there is no investment growth opportunities anywhere in the world.

 

The six year long enduring bull stock market ended July 25, 2014. The prior financial system peak came in 2007, with the failure of what was thought to be “money good” sub prime debt.

 

The world’s economy was regenerated in 2008 as investors came to trust in the US Federal Reserve monetary policy of QE 1, where Distressed Investments, like those traded in Fidelity Investments FAGIX Mutual Fund, were traded out with the banks for US Treasuries, TLT.

 

With the topping out of Equity Investments, the week ending July 25, 2014, trust in the Distressed Investments held by the US Federal Reserve, is now waning, as is seen in FAGIX, trading lower in value; thus trust in the monetary policy of the world central banks of investment choice and related schemes of credit liquidity and floating currencies is faltering.

 

A bear stock market has commenced as a fall lower from the stock market peak has started, as is seen in the Proshares 200% Inverse Market ETFs, such as SSG, and the Direxion 300% Inverse Market ETFs, such as SOXS, trading higher in value.

 

The Inverse Market ETFs, STPP, XVZ, MLPS, GLD, GYEN, GEUR, GGBP, YXI, EUM, DOG, SEF, EFZ, PSQ, REK, MYY, RWM, traded higher, and could be used as the basis for collateral in a short selling investment strategy.

 

The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 24, 2014.

 

In July 2014, Global Growth, DNL, started trading lower, communicating that investors no longer trust the monetary policies of the world central banks to stimulate investment gains, and global economic growth; in recognition of this, AP reports IMF Cuts US and Global Growth Forecasts for 2014.

 

With the failure of credit, seen in AGG, trading lower, on July 24, 2014, and the death of currencies, seen in Major World Currencies, DBV, trading lower in June 2014, the age of investing is over, through finished and done; the age of debt servitude has commenced.

 

Destructionism has replaced inflationism, and is causing destruction of nation investment worldwide.  For example, disinvestment out of debt trade investments, such as the UK’s PUK, ABY, NGG, KNOP, GSL, MANU, and deleveraging out of currency carry trade investments, such as the UK’s BT, SNN, EROS, UL, PSO, RUK, will not only destroy Nation Investment in the UK, EWU, EWUS, but will also introduce economic deflation, and thus compel the development of regional fascism.

 

2) … In the news

AP reports Bulgaria’s Socialist Led Government Resigns Bulgarian Prime Minister Plamen Oresharski has introduced in Parliament the resignation of his left-leaning government, a move that should ease political tensions in the European Union’s poorest member state.

 

Paul Mitchell, of WSWS posts US Pressures Balkan Countries To  Cut Ties With Russia  The push for a renewed offensive in the Balkans to counter Russian influence will be stepped up at a top-level conference next month on the integration of the Balkans into the EU.

 

Bloomberg reports Aviva to Norway Await EU Clarity as Bonds Slide. The prospect that Russia’s state banks will be shut out of European bond markets is prompting some of the region’s biggest money managers to reassess their holdings, as it drives up borrowing costs at the lenders.

 

CNBC reports Zillow (Z) Said To Be Seeking To Acquire Trulia (TRLA).

 

Zero Hedge reports US Manufacturing PMI Drops, Biggest Miss On Record.

 

Bloomberg reports Japan Trade Deficit Expands After Exports Unexpectedly Drop.

 

Zero Hedge reports Japanese Inflation Holds Near 23 Year Highs As Food, Energy, & TV Costs Soar.

 

Mike Mish Shedlock reports France Unemployment New High, Output Down 15th Month; Prices Drop 27th Month; Activity Up in Peripheral Europe; Outlook for Germany. The grim economic news from France keeps piling up. Today, Europe Online reports Number of Unemployed in France Hits New High. According to the Markit Flash France PMI, French private sector output contracts again, albeit at slower pace. The France Synopsis

  • Manufacturing down at sharpest rate in 15 months
  • New business down 4th month
  • Budgets under pressure
  • Input costs rising sharply
  • Output prices down 27th month and accelerating
  • Private sector employment down 9th month
  • Service sector activity improved slightly

 

I side with Steen Jakobsen, chief economist for Saxo bank on the path for Germany, and it’s not a pretty one.

 

Europe is not prepared for a German slowdown, but it is coming. France is obviously hopeless.

 

I comment that France has Municipal Socialism and High Tax Socialism, meaning that the basis of the economy is municipal governance with many impediments to innovation and sky high taxes; this form of economy is increasingly unsustainable.

 

Stefan Riecher of Bloomberg reports German business confidence dropped more than economists predicted to the lowest level since October as weaker growth and escalating tensions in Ukraine weigh on the outlook for Europe’s largest economy. The Ifo institute’s business climate index, based on a survey of 7,000 executives, fell to 108 from 109.7 in June, marking the third straight monthly decline… Today’s report follows a series of weak economic data for Germany that included industrial production dropping for a third month in May, factory orders falling more than economists expected and retail sales decreasing for a second month.

 

Reuters reports Japan Walking Tightrope On Public Debt As Yields Set To Rise.  Japanese long-term interest rates are set to rise as Prime Minister Shinzo Abe’s stimulus policies boost economic growth, Economics Minister Akira Amari said, stressing the need to keep up efforts to rein in the country’s massive public debt.

 

Bloomberg reports Coal Company Pain Accelerates as Bankruptcy Cases Rise. The coal business, after fueling the Industrial Revolution and powering U.S. growth for much of the past century, is now beset by a glut of cheap natural gas and tighter regulation. James River Coal Co. in many ways epitomizes these ills. After filing for bankruptcy almost four months ago with plans to sell its business, the Richmond, Virginia-based company has delayed an auction twice without announcing a buyer.

 

James Pethokoukis writes The Ryan Pro-work, Anti-poverty plan: Thomas Aquinas 1, Ayn Rand 0. The part likely to get the most media intention is Ryan’s “Opportunity Grant” proposal. For states volunteering to participate, 11 existing federal anti-programs – including food stamps, cash welfare, and housing assistance – would be smooshed into a single funding stream for states and include work requirements. Receiving the same amount of federal dough as before, states could then experiment with different ways of providing aid such as partnering with nongovernmental organizations. Ryan: “So if the public and private sector work together, we can offer a more personalized, customized form of aid—one that recognizes both a person’s needs and their strengths—both the problem and the potential.”

Results would be thoroughly tracked and tested by a third party. “In short, more flexibility in exchange for more accountability,” Ryan said. Indeed, that bit about “accountability” is key, even more than the experimentation. To get effective reform, the same people implementing the plan – the “vanguard” Ryan calls them — should be the same ones with accountability and funding authority.

Now some, like CAP, worry that Opportunity Grants would just be block grants meant to cut spending over time and wouldn’t get bigger during recessions. But Ryan stresses this is not a budget-cutting proposal. And if the program moves beyond the experimentation stage, it would “benefit from increasing assistance during recessions.” And certainly there are other questions. Can nonprofits scale up? Will the next House budget reflect the Ryan’s new emphasis on poverty fighting?

But wait, there is even more to the Ryan plan, including expanding access to education through accreditation reform, and giving low-risk, nonviolent offenders a second chance to contribute through prison reform. Yes, this is a severely conservative Republican talking: “Here’s the point: non-violent, low-risk offenders—don’t lock them up and throw away the key. Get them in counseling; get them in job training; help them rejoin and contribute to our society.”

At its heart, the Ryan plan rejects the view that the poor are an undeserving burden on society. Instead, it sees low-income Americans as underutilized assets who need to be reintegrated into the work economy so they and America can reach full potential

2) … Russia’s takeover of Crimea has birthed the region of Eurasia; and ongoing conflict in the Ukraine is fracturing the world into regions of military and economic goverance.  

Out of the death of sovereign currencies, and the failure of credit, liberalism’s three dynamos of creditism, globalism and corporatism are winding down; and authoritarianism’s singular dynamo of regionalism is starting to wind up.

 

The British Empire is history, and The US Dollar Hegemonic Empire is dust blowing in the wind. The Ten Toed Kingdom of regional military and economic governance is emerging where regional fascism will emerge to replace all existing economic systems such as socialism, crony capitalism, socialism and communism, seen in Daniel 2:25-45. This New Empire is synonymous with the Beast Regime of regional governance and totalitarian collectivism, seen in Revelation 13:1-4.

 

Bloomberg reports Yatsenyuk Resigns as Ukraine’s Premier After Coalition Dissolves. Ukrainian Prime Minister Arseniy Yatsenyuk resigned after two parties quit the ruling coalition and President Petro Poroshenko signaled his support for early elections. Yatsenyuk told the parliament in Kiev today that he’s stepping down after losing his allies’ backing and failing to pass legislation. Former world boxing champion Vitali Klitschko’s UDAR and Svoboda, a nationalist group, said they’d leave the coalition and seek a snap parliamentary ballot, according to statements today on their websites

 

Elaine Meinel Supkis posts Yatsenyuk Resigns In Ukraine, Kiev Coup Collapses, New ‘Elections’

Huffington Post relates Ukraine’s Prime Minister Arseniy Yatsenyuk Resigns!  His far right wing fascist government is so unpopular, it fell suddenly.  While the Chocolate King tried desperately to lure the US into a war with Russia, he suddenly gave up.  Meanwhile, Obama, reading script written by Zionist fascists, has dropped the ‘Putin shot down the civilian plane’ for ‘Putin is Firing On Ukraine.  Even with the CIA puppet regime collapsing, they are keeping up the warmongering.

 

This is a clear example of the childish, silly, name-calling, double standard US diplomacy which has become a running joke internationally.  No one can take the US seriously.  Germany and England, having learned nothing from WWI and WWII, have decided to stir this witches’ brew and get WWIII for some idiotic reason.  But Germany’s elites are now getting cold feet due to dim memories of Berlin burning.

This playing with fire to launch WWIII is highly dangerous as NATO is most likely using a Poland base in order to be prepared for blitz against Russia!  Meanwhile, European rights court condemns Poland for hosting secret CIA prisons thanks to everyone eager to help the fascists in the US break international laws and commit war crimes.

 

The FT posts Ukraine’s Prime Minister Quits. Arseniy Yatseniuk, Ukraine’s prime minister, resigned on Thursday after two parties quit the ruling coalition government in a move designed to trigger early elections.  “The fact that the coalition has fallen apart, that laws haven’t been voted on, that soldiers can’t be paid, that there is no money to buy rifles, that there is no possibility to fill gas storages. What options do we have now?” Mr Yatseniuk said in address to parliament

 

Mike Mish Shedlock writes Take Ukrainian Prime Minister Yatsenyuk Announces Resignation. “If no new coalition is formed and the existing coalition in a parliamentary-presidential republic had collapsed, the government and the prime minister have to resign. I announce my resignation because of the coalition’s collapse,” he said.

 

Yatsenyuk also expressed disappointment with Ukrainian parliament’s decision to reject a bill that allows the government to hand over up to 49 percent of the country’s gas transport system to investors from the European Union and the United States.

 

Follow the Money Step by Step

  1. Prime minister Yatseniuk resigned
  2. This will lead to early elections in which pro-Russian members will be ousted from Parliament
  3. Parliament will pass a law selling 49% of Ukraine’s gas and transportation systems to US and European investors.
  4. Ukraine needs the money to pay soldiers to fight an inane war.

 

Far be it from me to propose state ownership of energy pipelines. Yet, here’s the vital question: Think Kiev is going to get full value, in the midst of a war, when it desperately needs money to pay unpaid soldiers?

 

Alex Lantier of WSWS writes Ukraine Prime Minister Resigns As NATO, Australia Prepare Intervention In East. While Washington has been unable to substantiate any of its charges that Russia is responsible for the crash, and evidence increasingly points to involvement by the Kiev regime itself, Australia and the Netherlands are seizing on the crash to justify a provocative intervention in east Ukraine.

Yesterday, Dutch Foreign Minister Frans Timmermans and Australian Foreign Minister Julie Bishop visited Kiev to discuss a military deployment to east Ukraine, ostensibly to secure the MH17 crash site, which is in territory held by anti-Kiev regime forces.

The Netherlands announced they would send 40 unarmed military police to east Ukraine, while Australia is reportedly sending 50 police to London as a first stop on the way to Ukraine.

In the Netherlands, Elsevier’s commentator Eric Vrijsen demanded that Dutch Prime Minister Mark Rutte “threaten to send in these troops in order to up the pressure on the rebels and Russian President Vladimir Putin. And if he does this, he will probably have made up his mind to act on his threat. The Dutch Special Forces (army commandos and the Marine Corps Mars Offs) are internationally respected. Rutte doesn’t have these elite troops at his disposal for nothing.”

 

Reuters reports Australia to Send 100 Extra Police, Troops to Ukraine PM Abbott Says

 

Mike Mish Shedlock posts Who’s Winning the War in Ukraine? Answer May Shock You.  One must step back and ask “What the hell is this war really about?” Is it NATO? Or is it energy?

 

I happen to believe both. Starting from that scorecard, please consider my post on Thursday Ukraine Government Breaks Up: Prime Minister Resigns Over “Vital Laws on Energy and Army Financing”; Follow the Money. Synopsis: The Ukrainian Prime Minister Arseniy Yatseniuk resigned and that will lead to early elections in which pro-Russian MPs will be removed from parliament.

 

In essence, Ukraine will be more pro-NATO. But that’s not all.

 

Biden’s Son, Kerry Family Friend Join Ukrainian Gas Producer’s Board.  Please consider this resignation statement as noted by RIA: “Yatsenyuk also expressed disappointment with Ukrainian parliament’s decision to reject a bill that allows the government to hand over up to 49 percent of the country’s gas transport system to investors from the European Union and the United States.”

 

In response I said “Follow the Money”. I neglected to report precisely where the money flowed.  The Wall Street Journal has all you need to know with this May headline regarding Biden, Kerry, and Ukraine: Biden’s Son, Kerry Family Friend Join Ukrainian Gas Producer’s Board.

 

The Automatic Earth posts Economic Warfare Is it the Kremlin, or the White House, that has redrawn Europe’s borders by force? Or, in different words, does the US care one bit about European borders? Yeah, right. The goal is Russia’s fossil fuels. And Europe blindly follows the call to war, because people like Cameron know how vulnerable and “energy empty” their nations are. Nothing to do with any plane crash, that’s just a handy excuse that’s being played for all it’s worth.

 

CNBC asks How Long Can Russia Go Without Selling Bonds?  The real concern is with Russia’s companies and banks, which face around $83 billion in external debt repayments by the end of the year, he noted. “Unlike the government, most firms do not have large external assets to fall back on,” he said, but he noted the government may step in to assist any systemically important companies. Over the past week, Russia’s corporate bonds within the Emerging Market Corporate Index have seen their yields rise around 79 basis points, according to data from Barclays. Bond yields move inversely to prices.

 

Reuters reports EU Targets State-Owned Russian Banks in Sanctions Plan

 

Ambrose Evans Pritchard posts Russia Vastly Outgunned In Economic Showdown With West

 

And Ambrose Evans Pritchard posts Proposed EU Sanctions Threaten To Shut Russia Out Of The World Financial System.

 

Julie Hyland of WSWS posts EU Foreign Ministers Announce Forceful Measures Against Russia

 

Implode-O-Meter German Economy Hit By US, EU Sanctions On Russia

 

Bernice Napach of Yahoo Finance reports Pity the poor Russian Billionaire; Putin’s Costing Them Billions. Russian government policies helped create many of the country’s billionaires and now they are the reason many of those billionaires are losing billions of dollars of wealth. These oligarchs got rich when the Russian government awarded them control of newly-privatized, state-owned enterprises. But sanctions imposed by the U.S. and European Union to protest Russia’s incursion into Ukraine have erased some of that wealth. As of Monday, the 19 richest Russians lost $14.5 billion so far this year, while the 64 richest Americans gained $56.5 billion, according to Bloomberg Billionaires, which tracks the net worth of the world’s richest people

 

Bloomberg reports German Business Climate Drops In Sign Of Economic Risks.

 

4) …. The world central banks will develop macroprudential policies and macroprudential tools for financial system stability, and in so doing will lead the way into regional fascism.

Please consider reading the Zero Hedge posts The “Gates” Are Closing: SEC Votes Through Money Market Reform.  As well as the Economic Policy Journal post SEC Will Allow Money Market Funds To Stop Redemptions During Tumultuous Periods

 

Liberalism, meaning freedom from government, was fathered by Milton Friedman, who heralded monetary freedom through his Free To Choose Doctrine, and was characterized by wildcat finance, a  Doug Noland term, where bankers waived magic wands of credit creating prosperity.

 

The new paradigm of authoritarianism is emerging. It was heralded by Angela Merkel who said said on November 8, 2013, “We cannot stop halfway. We have to be creative: We have to find our own new solutions.” (The EurActiv Institute, “Merkel Preaches Federalism to MEPs, Warns Britain against EU Exit”.)  It is fathered by Mario Draghi, and is characterized by wildcat governance, where regional fascist leaders waive heavy clubs of diktat enforcing austerity.

 

The ECB chairman on June 5, 2014, in NIRP and Targeted LTRO Announcement called for a charge on money held at the ECB,, and on June 14, 2014, in ECB Press Announcement called for shared sovereignty.

 

Both Mario Draghi, announcements are designed to address secular stagnation, defined as low growth, low employment, and low inflation; yet both introduce monetary controls.

 

Mike Mish Shedlock posts Spain Issues Retroactive 0.03% Tax on Bank Deposits to “Boost Economic Growth and Job Creation”. Via translation from Libre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation

 

Yes, Spain is coming out with “A tool for economic growth and job creation”.

 

There will be many such mandates, that is economic diktat, coming from Eurozone leaders, especially the ECB. The forthcoming diktat; will be “macroprudential regulation tools” designed for financial system stability, as central bank leaders turn away from traditional interest rate policies.

 

David Wessel posts in the WSJ Central Bankers Appear to Line Up their Defenses … And Create The Macroprudential Maginot Line.  It looks like there has been some international coordination of monetary policy rhetoric lately.

 

With price and wage inflation not a concern right now, we aren’t going to raise interest rates and throw a lot of people out of work to avoid excesses in financial markets or to head off possible asset bubbles, they said. There may come a day when our worries about financial stability will prompt us to hike interest rates, but rates are “the last line of defense.” Not now. The “first line of defense” is making the financial system more resilient so it can better withstand shocks and using our supervisory and regulatory “macroprudential tools” to rein in excesses, as we are doing now.

 

This inquiring mind asks, just what are “macroprudential policies”, and “macroprudential tools” for financial system stability? And what might they include?

 

Macroprudential tools are central bank regulations designed for financial stability; frankly they are quite blunt central bank clubs; these tools might be exit taxes from bond funds, another might be capital controls, and yet another might be for banks everywhere to be integrated with the government and be known as the government banks or gov banks for short. In the US most every bank, that is Money Center Banks and Regional Banks, have US Government Treasury Notes, TLT, residing at the Fed. As the Benchmark Interest Rate, $TNX, rises banks might be tempted to withdraw these monies from Mother Fed. So I believe the Fed will put a hold on such action and start to integrate banks into the Fed.

 

The Fed will be changing and morphing into the North American Fed, and will become the Atlantic compliment to the ECB, that is a North American Continent, that is Canada, Mexico, and America Regional Central Bank, which will serve as the singular banking institution for CanMexAmerica, that is the Regional Financial Hub, for the soon coming North American Union.

5) … Private neighborhood emerges in Detroit as tycoon charges teenage women with vandalism.

Zac Corrigan posts in WSWS Dan Gilbert’s New Detroit: Billionaire Land Speculator Witch Hunts For Teens As Graffiti Emerges Near His Property

 

Gilbert has been at the forefront of efforts by the elite to “revitalize” a small enclave for the wealthy and upper middle class in the downtown area (see: “Detroit’s downtown ‘redevelopment’ plan”) that will essentially be off-limits to the majority of the city’s population. This has been accompanied by the forced eviction of hundreds of poor and elderly residents, as well as dozens of artists, from the area. With investments worth tens of millions Gilbert wants to make sure any “riff-raff” that don’t fit in with the sparkling, upscale designs of the “New Detroit” are kept out.

 

Gilbert who holds no elected office, has emerged as the de facto king of Detroit. He wields enormous power over economic and political decisions, enjoys non-stop promotion by a fawning media in Detroit and nationally, and owns a private army to protect his property.

In addition to his hundreds of surveillance cameras, his privately owned Rock Security agents patrol the area 24 hours a day. He owns 60 buildings throughout downtown, many acquired from the city at rock-bottom prices through what he himself has referred to as a “skyscraper sale.” For some buildings he paid as little as $8 per square foot. Downtown rents are now approaching $2 per square foot every month—which means after four months the cost of his “investment” will be fully covered and he will make pure profit from then on.

 

Gilbert’s Quicken Loans mortgage lending companies, and his network of other companies under the “Rock” moniker (Rock Ventures, Rock Gaming, Bedrock, etc), make him the largest employer in downtown Detroit. He owns approximately nine million square feet of downtown real estate, including offices, apartments, the Greektown casino and hotel, as well as shopping, parking structures, and recently the building housing both of Detroit’s daily newspapers, the Detroit Free Press and Detroit News (the papers plan to relocate). Residents therefore work for his companies, pay him rent at their homes, gamble at his casino, shop at his stores, are spied on by his cameras and policed by his hired agents.

 

The situation harkens back to the “company towns” of the 19th and early 20th century, when coal companies or the auto giants controlled virtually every aspect of life.

 

The extreme charge of “malicious destruction of a building” is being handed down for what amounts to a teenage prank, while Gilbert is engaged in the most destructive and parasitic activity, for which he is not being punished but on the contrary lauded and showered with public subsidies. Gilbert has been appointed to the Obama-created Detroit Blight Removal Task Force, which has a budget of $150 million to demolish tens of thousands of houses across the city’s 139 square miles.

 

This will provide even more profit opportunities for Gilbert and other aspiring “entrepreneurs,” while wide swaths of the city, deemed too poor for investment, will be “decommissioned” and their residents driven out by shutting down water, electricity, fire protection and other vital services. As Gilbert once boasted, “For probably the first time in Western civilization, large parcels of vacant, pristine land that have paved streets, utilities of all sorts, cable, phone, water, sewer” were available for the taking, with “everything at affordable prices.”

 

In 1960, Detroit had the highest standard of living of any major American city. After decades of de-industrialization, during which the automakers moved hundreds of thousands of jobs to low-wage areas throughout the US and overseas, it now perennially tops lists of “poorest,” “most dangerous” and “most miserable” big cities in the country. Detroit’s child poverty rate is near 60 percent.

 

The city is currently undergoing the largest municipal bankruptcy in US history, and corporate vandals are looting it of anything they can get their hands on, including constitutionally protected city worker pensions, a publicly-owned (and world renowned) art collection, and one of the nation’s largest municipally owned water and sewerage systems. Thousands of its poorest residents are being shut off from water service each week.

The Obama administration has backed this attack in order to use Detroit as a model to attack public sector workers throughout the country, destroy public services and carry out the wholesale privatization of urban areas.

 

What is happening in Detroit is a massive transfer of wealth to the super-rich that is part of a national and international process. The fortunes of the very rich in the US have seen an historic increase nationwide, with 95 percent of income gains from 2009-2012 going to the top one percent of earners. Gilbert has virtually quadrupled his own wealth to $3.8 billion since the crash of 2008.

 

Gilbert is not the only oligarch in town. Fellow billionaire Mike Ilitch—owner of Little Caesar’s Pizza, the Detroit Tigers and Red Wings sports teams, the Motor City Casino, and much more—recently acquired a 45-block area of downtown for $1, and was given hundreds of millions in public money to finance the building of a new hockey arena and surrounding entertainment and shopping district.

 

Detroit’s unelected Emergency Manager Kevyn Orr, who is overseeing the bankruptcy and officially rules over Detroit as an unchallengeable dictator, has favorably compared Gilbert and Ilitch to bygone tycoons Carnegie and Rockefeller, saying “every great city needs its patrons.”

 

6) … Is one’s economic view predetermined? Does one’s economic view come from nature or nurture or personal education?

Robert Wenzel posts Where Ron Paul Might Be Wrong. Ron Paul has said that he thinks some people are born libertarians and that he himself was born such. There is an understandable natural tendency for life-long libertarians to agree with Ron’s claim. I think he may be wrong.

If it is true that most libertarians are born libertarians, the libertarian movement is in a lot of trouble. At best, I estimate that maybe 5% of the population is libertarian. If you become a libertarian at birth and we have the percentage that are libertarians, then there is little chance we will ever see a libertarian society.

But, as I say, I do not believe people are born libertarians. I believe some people are born with a healthy brain balance between reality, logic and emotions (as contrasted with, for example, pathological altruists). That is, they do not allow emotions to interfere with their understanding of the real world. They recognize reality for what it is and don’t try to emotionally block out clear thinking or go into denial about some things in the world.

Freedom and libertarianism are very logical things. If you have an open mind (no blocking mechanisms operating) and think things through logically, you are going to be a libertarian. But, it’s the thinking logically, and having a correct balance with reality and emotions that people may be born with. Thus, it is very easy for such people to become libertarians early in their life. But it is the logical thinking that we are born with that begins the process, not an inherent libertarian philosophy.

I have talked to many adults who have only come to libertarianism in recent years. They all tend to be very logical, thus, it is not surprising that they would be attracted to libertarianism. In fact, most tell me that in the past, although they might not have been full-fledged libertarians, they had libertarian “instincts.” To me this means that they likely were simply thinking logically about events and society without having a full libertarian perspective presented to them early on. That is, it may just be that while they weren’t exposed to libertarian ideas at an early age, their logical way of thinking was always pushing them in that direction–always suspicious of interventionist and government propaganda.

Thus, if the key to being a libertarian is logical thinking and a healthy balance between emotions and thinking, and exposure to libertarian ideas, then there is a lot more hope for a libertarian society, since the number of current libertarians is certainly only a subset of generally logical thinkers. The more logical thinkers that can be made aware of libertarian logic, the better

 

Wikipedia posts the David M Halbfinger February 5, 2012 NYT article  “Ron Paul’s Flinty Worldview Was Forged in Early Family Life”.

 

From that article, I conclude that it was family life training in morals, meaning virtue, and ethics, meaning relationships with others, that developed the Dr. Paul’s character set of independence, personal responsibility, and frugality. It was this that provided a heart for adulthood learning and communicating Austrian economics.

 

Being an Calvinist, and not an Libertarian, I believe that God, from eternity past, purposed and brought Dr Paul forth to champion Libertarianism, and the call to End The Fed.

 

Most assuredly Dr. Paul is an empath, with a pen, and not a psychopath with a gun; this was by God’s ordination. God provides appointment in all things. He determines the times and places in which one will live; and then provides childhood mentors where some learn to feel after noble things, so that when the age of reason arrives, as in the case of Dr. Paul in his college years, one pursues things intellectually to develop his personhood.

 

7) … According to Nature Economist Elaine Meinel Supkis, the new normal weather is that El Nino Is Dead And Gone. The Watts Up With That ENSO Page, communicates that it is very obvious now that not only is el Nino aborted, we are definitely seeing the beginning of a la Nina cold cycle again.

I comment that the sun is going quiet. The new normal is a quiet sun (for now).

The Daily Mail asks Why Has The sun Gone Quiet? Scientists baffled as sun spots disappear during peak period of solar activity. Researchers are baffled as the sun has gone quiet during a time in its 11-year-cycle when it should be at its most active. Just a few weeks ago it was bursting with sunspots but now it seems to be going days without even developing a single dark spot. Solar physicist Tony Phillips has named it an ‘All Quiet Event.’

Sunspots attract attention because they highlight the part of the sun where solar activity originates. That can mean solar flares or even coronal mass ejections, which happen when material from the son shoots into space. The phenomena occur by highly concentrated magnetic fields which are slightly cooler than the surface of the sun.  Energy builds up as the fields become tangled, and when that energy is released in an explosion it results in a solar flare.

SMH reports Sun Goes Spotless, Baffling Scientists. Some astronomers call it the Big Quiet – the absence of sunspots during what is supposed to be a period of heightened magnetic activity on our sun. For past four or more days, telescopes pointed at the sun have detected only a handful of sunspots, sometimes none at all, in a “very weird” development that is baffling scientists, said Alan Duffy, an astrophysicist at Swinburne University. “Sunspots can change all the time, but when you should be seeing many dozens at any one point of time, it’s quite strange that we’re not seeing any at all,” Dr Duffy said.  “We don’t have any idea why that is.”

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Fed Chairman Yellen Speaks … The Death Of Fiat Money Commences … Turning All Fiat Investments Lower In Value

July 19, 2014

Financial Market Report for the week ending July 18, 2014

This post is available in Google Documents format here.

1) … In this week’s financial marketplace trading

On Monday, July 14, 2014, Marketwatch reports Gold Plunges 2.3% In Biggest Daily Drop of 2014 As Investors Book Profit. “Overall, we believe that physical demand has remained short of expectations, the latest price increase having been driven largely by speculation,” wrote Eugen Weinberg, commodity strategist at Commerzbank in Frankfurt, in a note. Pointing to India, Weinberg said the country’s decision to maintain a 10% import duty on gold and silver “is also likely to have a dampening effect on future gold demand expectations. In conjunction with a rather below-average monsoon season, this points to below-average gold demand from India.” Gold prices ended last week on a down note, but still managed to register their sixth straight weekly gain. Gold had probed four-month lows near $1,244.30 an ounce in early June, rallying to more than $1,337 last week.

On Tuesday, July 15, 2014, Fed Chairman Janet Yellen spoke in Semiannual Monetary Policy Report To Congress, and stocks, commodities, bonds, and currencies all traded lower, evidencing the failure of fiat money.

Nation Investment, EFA, traded slightly lower, and was led lower by Philippines, EPHE, Argentina, ARGT, Europe, EZU, FEU, FEZ, DFE, Sweden, EWD, US Small Caps, IWM, IWC, Peru, EPU, Colombia, GXG, Canada, EWC, CNDA, and Russia, RSX, ERUS, as investors deleveraged out of currency carry trades worldwide, such as the EURJPY.

World Stocks, ACWI, traded slightly lower, and were led lower by the High Beta Sectors, in particular,

Social Media, SOCL, Biotechnology, IBB, Pharmaceuticals, PJP, Small Cap Pure Growth, RZG, Nasdaq Internet, PNQI, Internet Retail, FDN, Biotechnology, TAN, Medical Devices, IHI, IPOs, FPX, and Design Build, FLM.  Of note, Building Materials, such as AAON, GFF, HW, APOG, BECN, AOS, and MAS, traded lower.

Global Financials, IXG, traded unchanged, but Argentina Banks, BMA, GGAL, BFR, BBVA, Spain’s Bank, SAN, and the National Bank of Greece, NBG, traded lower, and led European Financials, EUFN, lower, as Zero Hedge reports Espirito Santo Holding Company Preparing To File Bankruptcy.

Yield Bearing Investments, DTN, trading lower included Shipping, SEA, Water Resources, FIW, International Dividend Dogs, IDOG.

Commodities, DBC, was led lower by a lower price of Oil, USO, BNO, and Natural Gas, UNG, which stimulates Natural Resources, IGE, to trade lower; which were led lower by Copper Mining, COPX, Energy Production, XOP, and Energy Service, OIH.

Gold Miners, GDX, GDXJ, traded lower on a lower price of Gold, GLD. And Silver Miners, SIL, SILJ, traded lower on a lower price of Silver, SIL. The six week rally in the HUI Precious Metal Miners, $HUI, is over, as the chart of the Gold Miners relative to Gold, GDX:GLD, shows a dark cloud candlestick at the top of an ascending wedge.  Money News posts Gold Miner Stock Rally Presages Gains For Gold Itself.

Debt deflation is underway as Credit Investments, AGG, traded lower, as the Interest Rate on the US Ten Year Notes, ^TNX, traded higher from its Friday July 11, 2014, value of 2.52% to 2.55%, chipping away of a broad range of credit investments  Distressed Investments, such as those traded in Fidelity’s FAGIX Mutual Fund, which underwrote QE1, as well as Junk Bonds, JNK, traded lower. Almost all of the most Popular Notes and Bonds, such as TLT, EDV, BWX, FLOT, SHY, LQD, PICB, MBB, traded lower in value from their market top highs.

Major World Currencies, DBV, were led lower by the Canadian Dollar,  FXC, the Euro, FXE, and the Swiss Franc, FXF, and the Emerging Market Currencies, CEW, traded lower, with the result that the US Dollar, $USD, UUP, traded higher. Based on the success of the bond vigilantes in sustaining the Benchmark Interest Rate, $TNX, above 2.49%, the currency traders have commenced global competitive currency devaluation.

On July 2, 2014, the failure of credit commenced as Aggregate Credit, AGG, traded lower in value.

On Monday, July 7, 2014, the destruction of fiat wealth commenced, as risk-on investing turned to risk-off investing, with World Stocks, ACWI, Nation Investment, EFA, Global Financials, IXG, and Yield Bearing Investments, DTN, all trading lower from rally highs, as investors fear that the monetary policies of the world central banks no longer stimulate investment gains nor global economic growth.

Zero Hedge posts Wall Street “Throws In The Towel” On Q3/Q4 Revenue Growth Expectations, Charts Reveal.

This week, on Tuesday, July 15, 2014, the death of currencies commenced as is seen in the Swiss Franc, FXF, Commodity Currencies, CCX, such as the Canadian Dollar, FXC, the Euro, FXE, and the Australian Dollar, FXA, trading lower, on fear that the monetary policies of the world central banks have crossed the rubicon of sound monetary policy and have made money good investments bad; these include Eurozone Nation Investment, such as Spain, EWP,  Italy, EWI, Finland, EFNL, Netherlands, EWN, France, EWQ, Ireland, EIRL, Austria, EWO, Portugal, PGAL, and Greece, GREK, as well as Sweden, EWD, Norway, NORW, Denmark, EDEN, Switzerland, EWL, and the US Small Caps, IWM, IWC; these are all failed nation state investments.

The Eurozone Nations are insolvent sovereigns and cannot provide fiscal investment, economic seigniorage; and exist solely through the credit liquidity of the ECB.

Gary of Between the Hedges posts Los Echos reports ECB’s Praet Says Investment in France Is Acute Problem. The ECB’s chief economist comments in an interview with daily newspaper Les Echos that the pace of recovery in France is disappointing.

One should not be invested in Equity Investments, Nation Investments, Banking Investments, Yield Bearing Investment, or Credit Investments, as the death of Sovereign Currencies, commenced on Tuesday July 15, 2014, after Janet Yellen spoke in Semiannual Monetary Policy Report To Congress.

Fiat Money, defined as the combination of Credit, AGG, and Major World Currencies, DBV, such as the New Zealand Dollar, as well as Emerging Market Currencies, CEW, such as the Philippine Peso, died on Tuesday July 15, 2014, as investors fear that the monetary policies have crossed the rubicon of sound monetary policies and have made money good investments bad.

Bloomberg reports on the Philippine Peso relating Peso Goes From First to Worst as Court Halts Plans. My comment on the article is that the Philippines, EPHE, is an insolvent sovereign.

The week ending July 18, 2014, kicked off the new normal of nation state currency debasement, with nations outside of the Eurozone, such as New Zealand, ENZL, and Russia, RSX, trading lower.

In contrast Mexico, EWW, traded higher as Bloomberg reports Foreigners Can’t Get Enough Bonds In Oil Law Boon.  International investors are boosting their holdings of Mexico’s peso-denominated government debt to a record as lawmakers near a vote on rules to end the nation’s seven-decade-old oil monopoly.

Canada, EWC, also traded higher, largely due to a trade lower in its 10 Year Sovereign Yield.

Please consider that given that Fiat Wealth, That Is The Coinage Of The Banker Regime,  Is Trading Lower In Value, With the Result That The World Has Pivoted Into Kondratieff Winter.

With the failure of credit on July 1, 2014, seen in Aggregate Credit, AGG, trading lower in value as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the world is moving through a historic economic inflection point.

The world is pivoting through peak wealth. Fiat Wealth, defined as World Stocks, VT, Global Financial Institutions, IXG, Nation Investment, EFA, and Yield Bearing Investments, DTN, together with Aggregate Credit, AGG, is is literally being sawn asunder by the failure of trust in the world central banks’ monetary authority to continue to provide investment gain, and global economic growth, as is seen in the Bloomberg reportEuropean Stocks Drop With Treasuries as Commodities Fall, and as is seen in the Zero Hedge reportPeak Abenomics.

The recovery from the Great Recession of 2008-09 has been the weakest ever, the reason being that the nature of money changed with the provision of the Greenspan Put, which became the Ben Bernanke QE1.

From 2008 onward, the Fed’s policy no longer came from theHumphrey Hawkins dual mandate of employment and growth, and thus have not provided economic recovery.  The Global ZIRP monetary policies of the world central banks were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being the creation of awesome fiat wealth inflation, rather than much of any employment gains.

The June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, together with theJune 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, addresses secular stagnation, defined as low growth, low employment, and low inflation; and introduce the new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance, and clay in totalitarian collectivism.

The First Toe will emerge out of Club Med, that is Portugal, Italy, Greece and Spain, sovereign, banking, and corporate insolvency, as a Revived Roman Empire, having a New Charlemagne, Jean Claude Juncker, and a New Monetary High Priest, Mario Draghi, which in soon coming regional economic governance, will serve as a template for like governance, in all of the world’s ten regions, establishing totalitarian collectivism unifying all of mankind’s seven institutions.

Thus a new monster, the Beast Regime, will replace today’s monster, the Creature from Jekyll Island.

These Mandates and the Call serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out of debt trade investments and deleverage out of currency carry trade investments.

There are no social rights in the age of regional governance. Jerry White of WSWS posts Detroit Elites Declare: Water Is Not A social Right

The failure of credit, which occurred on July 2, 1014, and the death of currencies, which occurred on July 15, 2014, are dual extinction events, which will rapidly make the investor extinct; one should not be invested in any fiat investments..

The Bond Vigilantes, being in firm control of The Bow of Economic Sovereignty, that is the Benchmark Interest Rate, will be calling Interest Rates higher worldwide, introducing political coup d etats; out of which the new money, diktat money, defined as the mandates of regional leaders for regional security, stability, and sustainability, will underwrite regional fascism replacing today’s crony capitalism, socialism, and communism.

The Fed will not be rolling over maturing Treasuries and MBS; they will be held to term, with the result the bond vigilantes will be having a hay day causing an ever accelerating destruction of the Fed’s Balance Sheet, rapidly destroying the US Dollar Hegemonic Empire. In its place eventually ten kings will come to rule in each of the world’s ten regions which will feature un-dollar, that is dollar-less, or better said un-dollar, regional bartering exchanges featuring new currencies such as the Petro Yuan.

Now that Global ZIRP, that underwrote property investments of all types,is history look for Real Estate, IYR, and especially Global Real Estate, DRW, to rapidly fall lower in value, as the Benchmark Interest Rate, $TNX, starts to rise from 2.49%.

Inasmuch as destructionism is replacing inflationism, the economic future is one of global economic deflation, and rising headline price inflation.

Bloomberg reports Ukraine Says Russia May Have Shot Down Transport Plane. Ukraine’s Defense Ministry said Russian forces may have shot down one of its airplanes to bolster the Kremlin-backed insurgency and sabotage efforts to end a conflict that’s already claimed hundreds of lives. An An-26 transport plane was shot down in eastern Ukraine today by a “powerful weapon” not previously used by the separatists, probably from inside Russia, Defense Minister Valeriy Geletey told President Petro Poroshenko, according to the president’s website. The plane was hit at 6,500 meters, an altitude shoulder-fired missiles can’t reach, he said. The aircraft was probably struck either by an air-to-air missile from a jet based at Russia’s Millerovo base or a surface-to-air rocket from a mobile ground system, Andriy Lysenko, a ministry spokesman, told reporters in Kiev.

The Daily Star reports NATO Denounces New Russian Troop Build-up On Ukraine border. NATO on Monday said Russia had increased its troops near the Ukraine border to as many as 12,000 after reducing them to less than 1,000 in June, hurting efforts to ease the crisis. “This is not a step in the right direction. It is a step away from de-escalating the situation,” a NATO official said. “Our current assessment is that between 10,000 and 12,000 Russian troops are in the area.”

Public Private Partnership established by the US Intelligence Community. Government Executive posts Amazon’s Huge Cloud Deal With the CIA.  The intelligence community is about to get the equivalent of an adrenaline shot to the chest. This summer, a $600 million computing cloud developed by Amazon Web Services for the Central Intelligence Agency over the past year will begin servicing all 17 agencies that make up the intelligence community. If the technology plays out as officials envision, it will usher in a new era of cooperation and coordination, allowing agencies to share information and services much more easily.

Whiting To Buy Kodiak For $3.8 bln, Create No. 1 Bakken Producer. Whiting Petroleum, WLL, said it would acquire Kodiak Oil & Gas for $3.8 billion in stock, to become the largest producer in North Dakota’s Bakken shale oil formations, eclipsing Harold Hamm’s Continental Resources.

Philip Guelpa of WSWS posts Atlantic City, New Jersey Casino To Close, Sign Of Worsening US Jobs Crisis. The owners of the Trump Plaza resort casino in Atlantic City announced on Saturday that it would close in September, laying off approximately 1,000 workers.

CBS Philly reports Violent Night In North Philly Leaves 2 Dead, 1 Critical.  Because of its high crime rate, North Philly is known as The Badlands. Wikipedia reports There are six zip codes for North Philadelphia: 19132, 19133, 19121, 19122, 19130 and 19123.

On Wednesday, July 16, 2014, Regional Banks, KRE, traded lower, taking the US Small  Caps, IWM, IWC lower.  India, INP, SCIN, INXX, EPI, China, YAO, ECNS, CHXF, CHIX, traded higher; while Brazil, EWZ, EWZS, BRXX, and BRAF traded lower.

On Thursday, July 17, 2014, Bloomberg reports S&P 500 Tumbles, Treasuries Rally On Crises In Ukraine And Middle East. The S&P 500, $SPX, lost 1.2 percent for its first decline of at least 1 percent since April 10. The rate on German 10-year bonds, closed at a record low, driving German Treasury Debts, BUND, to a new high.

Sectors, Semiconductors, SOXX, Solar Energy, TAN, Homebuilders, ITB, Small Cap Consumer Staples, PSCC, US Infrastructure, PKB, China Technology, CQQQ, Nasdaq Internet, PNQI, Copper Miners, COPX, Biotechnology, IBB, Resorts And Casinos, BJK, Social Media, SOCL, Small Cap Pure Growth, RZG, Pharmaceuticals, PJP, Transportation, XTN, Global Industrial Producers, FXR, Medical Devices, IHI, Smartfone, FONE, and Retail, XRT, led World Stocks, ACWI, lower, as Bespoke Investment Group posts  Retail Sales Weaker Than Expected.

Credit Services, V, MA, CIT, AXP, DFS, traded lower.

Legacy Industries, Steel, SLX,  Coal, KOL, Global Industrial Miners, PICK, Timber Production, WOOD, traded lower.

Energy Production, XOP, and Energy Service, OIH, traded lower.

Cement Manufacturers, JHX, CX, JHX, EXP, CRH, led Global Growth, DNL, lower.

Investors derisked out of debt trade investments in the Yield Bearing Sectors such as Emerging Market Dividend, EDIV, Leveraged Buyouts, PSP, Global Utilities, DBU, Water Infrastructure, FIW. International Dividend Dogs, IDOG, Shipping, SEA, International Telecom, IST, Dividends Excluding Financials, DTN, and Global Real Estate, DRW.

Currency carry trades unwound world wide as the Yen, FXY, traded strongly higher. Commodity Currencies, CCX, and Emerging Market Currencies, CEW, traded strongly lower.

Investors deleveraged out of currency carry trade investment in Portugal, PGAL, Italy, EWI, Greece, GREK, Spain, EWP, Netherlands, EWN, Germany, EWG, and Eurozone Small Cap Dividends, DFE, which led the Eurozone, EZU, lower. The US Small Caps, IWM, IWC, traded lower. Russia, RSX, ERUS, New Zealand, ENZL, Developing Europe, ESR,  GUR, Taiwan, EWT, Sweden, EWD, Brazil, EWZ, EWZS, BRXX, BRAF, India, INP, SCIN, INXX, EPI, China, YAO, CHIQ, ECNS, CHXX, CHXF, CHIX, TAO, HNP, South Africa, EZA,  Norway, NORW, Turkey, TUR, Thailand, THD, Chile, ECH, Indonesia, IDX, IDXJ, Emerging Market Infrastructure, EMIF, led Nation Investment, EFA, and the Emerging Markets, EEM, tower, as Market Watch reports European Losses Deepen As Ukraine Crisis Intensifies.

European Financials, EUFN, Far East Financials, FEFN, and Regional Banks, KRE, traded lower, turning Global Financials, IXG, lower.

The Inverse Market ETFs, such as EUM, RWM, MYY, PSQ, EFZ, traded higher; these could be used as the basis of collateral in a short selling investing strategy.

Reuters reports Euro Zone Industry Stumbles In May, Recovery Still Frail.

Open Europe posts Franco German Stand Off Over Eurozone Fiscal Rules Reaches Biblical Proportions.

Trading Floor posts Retreating Renzi Is Proving To Be No Italian Saviour.  Italian Prime Minister Matteo Renzi retreating from reformist agenda. The Italian debt-to-GDP ratio at 133% with prospects of reduction to 60% minimal. Renzi on collision course with fellow Italian Mario Draghi at ECB over debt.

Bloomberg reports Bloomberg Ukraine Says Malaysian Airliner Shot Down Near Russian Border. A Malaysian Airlines jet was shot down over eastern Ukraine killing all 295 people on board, with the government in Kiev blaming pro-Russian rebels.  Yet, Mike Mish Shedlock post Russian news website claimsUkrainian Army Buk Missile Likely Downed Malaysian Plane.

Rosneft Sanctions to Boost Reliance on China Loans. OAO Rosneft (ROSN), the world’s biggest publicly traded oil producer by volume, will rely on deals with China to withstand the latest U.S. sanctions against Russia.

China Rate Swap Jumps as Bond Sales Pulled Amid Default Risk. China’s interest-rate swaps jumped the most in a year and at least four companies scrapped debt sales amid concern the nation faces what would be the second default in its $4.4 trillion onshore bond market. The cost of one-year swaps that exchange fixed payments for the floating seven-day repurchase rate rose 17 basis points, or 0.17 percentage point, to 4.10 percent in Shanghai, according to data compiled by Bloomberg. That’s the biggest increase since July 22, 2013, and adds to a 20 basis-point gain in the last three days. Junk bond yields jumped the most in three months

Gold, GLD, Silver, SLV, traded higher, recovering some of Monday’s losses, taking the Gold Miners, GDX, GDXJ, and the Silver Miners, SIL, SILJ, higher.

Oil, USO, traded higher, taking Energy Partnerships, AMJ, EMLP, MLPJ, higher, while Natural Gas, UNG, traded lower.

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.49% and the 10 30 US Sovereign Debt Yield Curve flattened, as is seen in the Flattner ETF, FLAT, trading higher, and the Steepner ETF, STPP, trading lower, with the result that  the 30 Year Us Government Bonds EDV, The 10 Year US Notes, TLT, Long Duration Corporate Bonds, LWC, Build America Bonds, BABS, Insured Municipal Bonds, PZA, Corporate Bonds, LQD, Mortgage Backed Bonds, MBB, and Municipal Bonds, led Aggregate Credit, AGG, higher to recover to its early June 2014, high.  But Junk Bonds, JNK, Emerging Market Bonds, EMB, Emerging Market Currency Debt, EMCD, and High Yield Municipal Bonds, HYD, traded lower.

On Friday, July 18, 2014, Brazil, EWZ, EWZS, Turkey, TUR, Argentina, ARGT, Indonesia, IDX,  IDXJ, Vietnam, VNM, South Africa, EZA, Egypt, EGPT, Philippines, EPHE, India, INP, SCI, China, ECNS, CHXF,  Turkey, TUR, Thailand, THD, Peru, EPU, and Developing Africa, GAF, traded higher, drawing Emerging Market Dividends, EDIV, Emerging Market Infrastructure, EMIF, Emerging Markets, EEM, Emerging Market Small Caps, EWX, in recovery from losses earlier this week.

Sweden, EWD, South Africa, EZA, Taiwan, EWT, Singapore, EWS, South Korea, EWY, Israel, EIS, Australia, EWA, KROO, Mexico, EWW, Singapore, EWS, Australia, EWA, KROO, traded higher, helping Nation Investment, EFA, in recovery from losses earlier this week.

Sectors, Manufactured Housing, CVCO, Biotechnology, IBB, Solar Energy, TAN, Nasdaq Internet, PNQI, Social Media, SOCL, Internet Retail, FDN, Pharmaceuticals, PJP, IPOs, FPX, Small Cap Pure Growth, RZG, Retail, XRT, Small Cap Consumer Discretionary, PSCD, Small Cap Consumer Staples, PSCC, Small Cap Pure Value, RZG, China Technology, CQQQ, Aerospace, PPA, Semiconductors, SOXX, Transportation, XTN, Small Cap Industrials, PSCI, traded higher, helping World Stocks, ACWI, recover from losses earlier this week.

The Precious Metal Miners, GDX, GDXJ, SIL, SILJ, traded lower, on a lower price of Gold, GLD, and a lower price of Silver, SLV.  The ratio of Gold Mining Stocks, GDX, relative to Gold, GLD, that is GDX:GLD, has risen strongly to resistance and communicates that these will be unable to leverage higher over the price of the precious metals. To preserve one’s wealth, one should start to dollar cost average an investment in gold bullion, store it safely, and insure it with an insurance policy, as well as invest in OUNZ, the deliverable gold ETF, and open an Internet Bullion Trading Account with GoldMoney and Bullion Vault.

Asset Managers, STT, BK, PFG, AMG, BLK, AMG, BEN, Canadian Banks, BMO, BNS, RY, US Bank C, Argentina Banks, BFR, GGAL, BMA, Brazil Financials, BRAF, BSBR, BBDO, BBD, ITUB, India Earnings, EPI, HDB, IBN, and Emerging Market Financials, EMFN, CIB, European Financials, EUFN, Stock Brokers, IAI, Investment Bankers, KCE, JPM, GS, MS, Life Insurer, PUK, Regional Bankers, KRE, and Stockbrokers, IAI, traded higher, helping Global Financials, IXG, recover from losses earlier this week.

The market manifested a short squeeze, with Health Care Providers, IHF, Global Industrial Miners, PICK, Steel, SLX, Aerospace, PPA, Media, PBS, Design Build, FLM, Automobiles, CARZ, Large Cap Nasdaq, QQQ, Credit Services, URI, HEES, V, MA, AXP, DFS, FCFS, Regional Airlines, Foreign Airlines, Major Airlines, Aluminum Producers, and Automobile Dealerships, trading higher on Friday July 18, 2014.

The trade lower in Regional Banks, KRE, and European Financials, EUFN, the week ending July 18, 2014, evidences that these are failed financial institutions, are incapable of transmission of the world central banks monetary policies, and thus are unable to continue to generate liberalism’s economic growth, DNL; such is witnessed by the trade lower in the US Small Caps, IWM, and the Eurozone Stocks, EZU, and the Eurozone Nations, such as Portugal, PGAL, Italy, EWI, Greece, GREK, and Spain, EWP.

In the Yield Bearing Sectors, Water Resources, FIW, Global Utilities, DBU, Global Infrastructure, IGF, Australia Dividends, AUSE, Leveraged Buyouts, PSP, Shipping, SEA, and International Dividend Dogs, IDOG, traded higher, recovering from losses earlier in the week. Rental Management Company, BX, Industrial Office REITS, FNIO, Residential REITS, REZ, Hotel REITS, Retail REITS, Real Estate, IYR, and Global Real Estate, DRW, traded to new rally highs.

The trade lower in the Defensive Sectors, DEF, such as Utilities, XLU, Global Utilities, DBU, International Energy Producers, IPW, Energy Service, OIH, Global Agriculture, PAGG, Consumer Staples, KXI, and Insurance, KIE, evidences the beginning of the extinction of the investor, coming on the failure of credit on July 2, 2014, and the death of currencies, on July 15, 2014.

Aggregate Credit, AGG, settled slightly lower on the day, but higher on the week, and now resides at its June 2014, market rally high. The Benchmark Interest Rate, $TNX, closed the week at 2.49%, with the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX, totally flattened, as is seen in the Flattner ETF, FLAT, trading strongly higher, and the Steepner ETF, STPP, trading strongly lower.

The case for Interest rates going higher has come of age as David Kotox posts Financial Sense posts Tapering Is Now Tightening.

The trade lower in Junk Bonds, JNK, the week ending July 18, 2014, evidences the beginning of the end of the pursuit of yield investing that came with the world central bank’s monetary policies of Global ZIRP.

The trade lower in the Swiss Franc, FXF, the Commodity Currencies, CCX, the Euro, FXE, the Canadian Dollar, FXC, and the Emerging Currencies, CEW, together with the trade higher in the US Dollar, $USD, UUP, to strong resistance, the week ending July 18, 2014, communicates the termination of the Milton Friedman Free to Choose floating currency exchange rate paradigm where the  US Dollar served as the US Reserve Currency.

The  Creature from Jekyll Island died the week ending July 18, 2014; out of the soon coming failure of the Eurozone Nations, and the European Financials, the Mario Draghi and Jean Claude Juncker Beast Regime will rise to establish regional economic governance and totalitarian collectivism, for regional security, stability and sustainability.

2) … Conclusion.  The debt based money system has produced peak coinage …  Debasement of the coinage of the Banker Regime commenced July 15, 2014 … The world is passing from the fiat of democratic nation state governance into the mandate of regional governance.   

The fiat money system was fathered by Milton Friedman in 1971 who proposed the economic paradigm where the investor be free to choose investment opportunities in democratic nation states where floating currency exchange rates would develop economic trade, global growth and investment gain, where the US Dollar would serve as the world’s reserve currency.

Global finance was underwritten by a Flood of Dollars. Ambrose Evans Pritchard writes Fed Kicks Off Global Dollar Squeeze As Janet Yellen Turns Hawkish. A vast wash of dollars flooded the global financial system when the Fed cut rates near zero and then bought $3.5 trillion of bonds. This may now go into reverse.

We still live in a dollarized world. Charles de Gaulle railed against the “exorbitant privilege” of US dollar hegemony in the 1960s, but remarkably little has changed since. The BIS says global cross-border lending by banks alone has risen from $4 trillion to $10 trillion over the past decade, and $7 trillion of this is denominated in dollars. This does not include the dollar bond markets.

What Fed now does arguably has more amplified effects than at any time since the end of gold and the collapse of the fixed-exchange Bretton Woods regime in 1971. This is the paradox of 21st century globalisation.

Much of the dollar business is conducted through European and UK banks, leaving them acutely vulnerable to a dollar squeeze. Such episodes can be ferocious. It was a dollar liquidity shock that turned the Lehman affair into a global banking crisis, instantly engulfing Europe in October 2008.

Emerging markets went into a tailspin last year at the first suggestion of Fed bond tapering. There was a sudden stop in capital flows. The “Fragile Five” (India, Indonesia, South Africa, Brazil and Turkey) were punished for current account deficits. The Fed backed down. The storm passed. There was a second “taper tantrum” earlier this year as the Fed finally began to pare back its $85bn monthly purchases under QE3.

However, that is not the end of story. A study by the International Monetary Fund concluded that the Fed’s QE had pushed $470bn into emerging markets that would not otherwise have gone there. IMF officials say nobody knows how much of this hot money will come out again, or how fast.

The BIS in turn said in its annual report two weeks ago that private companies had borrowed $2 trillion in foreign currencies since 2008 in emerging economies, lately at a real rate of just 1pc. Loans to Chinese companies have tripled to $900bn – some say $1.2 trillion – mostly through Hong Kong and often disguised by opaque swap contracts in what amounts a dangerous carry trade. Countries do not borrow in dollars any longer (mostly) but their banks and industries certainly do.

The report said monetary largesse in the West has destabilised emerging economies in all kinds of ways. One of the worst – and least understood – ways is that they were forced to choose between internal credit bubbles or surging currencies. Most opted for (credit)  bubbles as the lesser evil, holding their domestic interest rates at 300 basis points below the safe “Taylor Rule” level.

This has driven their total debt levels to a record 175 pc of GDP. It may be even worse. China has thrown all caution to the wind, pushing credit from $9 trillion to $25 trillion since Lehman. Its debt levels have reached 220 pc by some estimates. Officials at both the IMF and the BIS privately doubt whether China can extricate itself smoothly from this.

Not all emerging markets are in the same boat. It is meaningless to compare Poland or the Czech Republic with Nicaragua. Yet there is no denying that a long string of countries are in structural crisis, ensnared by the middle-income trap. They have exhausted the low-hanging fruit of catch-up growth. They failed to carry market reforms to varying degrees. Productivity has wilted.

Brazil, South Africa and Russia have all hit the buffers and all have a foot in recession right now, casualties of commodity addiction or the Dutch Disease. The outlook for Russia is utterly bleak. It has blundered into a conflict with the West that will smother investment for years, and it may have to draw down its reserves to cover $700bn of foreign currency debt unless it can tap the capital markets again.

Now these countries – and many others with parallel problems, like autocratic Turkey under Tayyip Recep Erdogan – must brace for a secular rise in global borrowing costs, and as the BIS warns, the world is today more sensitive to interest rates than ever before. As yields on two-year US Treasuries ratchet higher, the US currency will inevitably ratchet with it. “I am convinced that we are close to a major cyclical recovery for the dollar,” said Nomura’s Mr Nordvig.

The dollar did not rally in the tightening cycle of 2004 to 2007 but that was an exception, the result of the EMU bubble, as well as trillions of reserve accumulation by China and the commodity bloc, amid a feverish rotation into euro bonds. That chapter is closed.

This time may look more like the traumatic episodes of the Volcker Fed, or the mid-1990s, both occasions when the world woke up to find the US had not spiralled into decline after all, and latterly was the only superpower left.

The BRICS, the mini-BRICS and much of global finance have taken out a colossal short position on the US dollar. Mrs Yellen has just issued the first margin call.

The global system of moral hazard came to an end on July 15, 2014, when in response to Janet Yellen’s Semiannual Monetary Policy Report To Congress, Major World Currencies, DBV, and Emerging Market Currencies, CEW, traded lower with Aggregate Credit, AGG, as the bond vigilantes sustained the Interest Rate on The US Ten Year Note, ^TNX, calling it higher from 2.49% to 2.54%, terminating the investor and his life pursuit of investment gain. Fiat money died with the death of currencies and the failure of credit on July 15, 2014.

Sovereign currency debasement is underway. The July 15, 2014, Fed Chairman’s served as an inflection point in mankind’s economic history, as investors no longer trust in the monetary policies of the US Fed, and as a result debasement of fiat currencies and fiat investments is underway.

Also fiat wealth debasement is underway on the failure of credit, a case in point is Portugal Telecom, PTI, and the Nation of Portugal, PGAL. Matt Clinch of CNBC reports Portugal’s Bank Woes Just Got More Complicated. In video and print article Otto Dichtl, managing director at Stifel Nicolaus, relates that Portugal Telecom shares slip on credit concerns of merger. “The saga surrounding troubled Portuguese lenderBanco Espirito Santo (BES) took another twist on Wednesday, with the fortunes of a telecoms merger shedding more light on the strength of the country’s banking sector.” Portugal Telecom (PTC-PT) rushed Wednesday to salvage a possible tie-up with Oi, the Brazilian telecoms company, after a possible default by Rioforte, an investment unit of the Espirito Santo Group, called the deal into question. Yields on Portuguese debt rose and investors fled to lower-risk assets. BES’ parent company, Espirito Santo International (ESI), was at the center of concerns after an audit by the country’s central bank in May showed “irregularities” in its accounts. The flames were fanned once again last week when debt repayments to clients on commercial paper issued by ESI were delayed. Shares in another part of the conglomerate, Espirito Santo Financial Group (ESFG), were temporarily suspended on the news, after it cited “material.

The failure of credit, has commenced the explosion of credit bombs, as is seen in the case of Portugal Telecom, PTI, and Nation Investment in Portugal, PGA; said another way debt deflation in unexpected places; the result of which can only result in ever widening waves of destructionism, manifesting as economic deflation in terms of corporations stumbling in providing goods and services, and in laying off employees as corporate balance sheets implode.

A suggested reading on destructionism is the John Rubino post They’re Lying To Us, Part 4: Fake Pensions.

Out of the failure of credit, and the collapse of currencies, liberalism’s dynamos of creditism, corporatism, and globalism are winding down. And authoritarianism singular dynamo of regionalism is winding up.

Out of soon coming global credit bust and financial system breakdown known as Financial Armageddon, regional leaders will meet in summits to renounce national sovereignty and announce shared sovereignty, that is regional pooled sovereignty, where regional framework agreements will provide regional fascism for regional security, stability, and sustainability.

The age of global finance is history on the death of currencies and the failure of credit; the new age is one of regional fascism. The June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, together with theJune 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, addresses secular stagnation, defined as low growth, low employment, and low inflation; and fathers the diktat money system, where in the new economic paradigm the debt serf be compelled to participate in regional fascist and totalitarian collectivism endeavors in a life of debt servitude. 24th Gold reports  EU Bail-ins Coming As Germany OKs Depositor Bail-in.

 

Yann Algan Professor of Economics at Paris School of Economics and University Paris Est, posts in VOX Trust And The Welfare State: The Twin Peaked Curve.

I comment that Sweden and Denmark are characterized by Trust. The key is that both have Sovereign Currencies, and do not use the Euro, a common currency. These nations had sense not to be involved in the common currency debacle.

Trust in Sweden exists because it is cultured to develop there, and because their currency the Swedish Krona, up until March 2013, floated on top of the Euro, in fact it went sky high over the Euro, and because they use a tremendous amount of credit. Trust developed in Sweden because of currency float and credit bloat.

Trust in Denmark exists because it is Europe’s port and because Denmark has benefited from Nation Investment and Carry Trade Investment, as is seen in the relationship of Denmark, EDEN, relative to Europe 50, EFU, that is EDEN:EFU.  If there is one term that describes Denmark it is “global economic powerhouse”, similar to Germany and South Korea. Trust developed in Denmark because of personal industry and unified entrepreneurship.

Wikipedia relates Denmark is a society based onconsensus (dialogue and compromise) with the Danish Confederation of Trade Unions and the Confederation of Danish Employers in 1899 in September Forget (The September Settlement) recognising each other’s right to organise, thus, negotiate.The employer’s right to hire and fire their employees whenever they find it necessary is recognised. There is no officialminimum wage (Danish: minimumsløn) set by the government; the minimum of wages (Danish: mindsteløn) is determined by negotiations between the organisations of employers and employees. Denmark produces oil, natural gas, wind- and bio-energy. Its principal exports are machinery, instruments and food products.

A new trust will developing, that is the trust in the word, will and way of regional leaders, as they provide policies of regional economic governance and schemes of debt servitude in totalitarian collectivism, to establish regional security, stability and sustainability.

The US Dollar, $USD, UUP, is headed higher; but will not inflate dramatically higher like Ambrose Pritchard believes. In fact it may be that Gold will be trading lower in value, as it does, one should be dollar cost averaging into the physical possession of gold bullion, as it is the only safe asset and will eventually be trading higher as all fiat assets trade lower in value.  Gold is in the middle of an Elliott Wave 3 Up, these are the most dynamic and sweeping of all economic waves, as they move higher to their Elliott Wave 5 High.

The trade lower in the Defensive Sectors, DEF, such as Utilities, XLU, Global Utilities, DBU, International Energy Producers, IPW, Energy Service, OIH, Global Agriculture, PAGG, Consumer Staples, KXI, and Insurance, KIE, evidences the beginning of the extinction of the investor, coming on the failure of credit on July 2, 2014, (seen in the strong trade lower in Junk Bonds, JNK), and the death of currencies, seen in the Emerging Market Currencies, CEW, the Euro, FXE, and the Swiss Franc, FXF, trading lower the week ending July 15, 2014.

Look for a grade higher in the Direxion 300% Bear Market ETFs, and the Proshares 200% Bear Market ETFs, which will confirm that the bull stock market has turned to a bear market.

Another technical factor indicating that the stock market has turned from a bull market to a bear market is that while US Stocks, VTI, has sold off only 0.75%, from its rally high, a strong sell off has commenced in the High Beta Sectors from their recent highs, and includes Solar Energy, TAN, Biotechnology, IBB, Social Media, SOCL, Small Cap Consumer Discretionary, PSCD, Small Cap Consumer Staples, PSCC, Small Cap Puree Value, RZV, and Small Cap Pure Growth, RZG.

One of the principles in short selling is to sell into strength. Inasmuch as the market manifested a short squeeze on Friday, July 15, 2014, it would have been wise to go short those sectors being squeezed; which included Emerging Market Small Caps, EWX, Large Cap Nasdaq, QQQ, Manufactured Housing, CVCO, Credit Services, Retailers, Health Care Providers, Global Industrial Miners, Energy Service Companies, Credit Services, Major Airlines, Regional Airlines, Foreign Airlines, Railroads, Aluminum Producers, Automobile Dealerships, and Highly Leveraged Financial Institutions, such as the following BOFI, IBN, SAN, BSBR, BAP, BCA, SHG, WBK, GGAL, BMA, IX, CIB, RY, BNS, PUK, GNW, TMK, BANF, TFSL, WFC, PNC, LM, BR, STT, BK, CHIX, BCH, MTU, MCO, SMFG, BFR, BBVA, BLX, HDB, BMO, NMR, BBD, ITUB, TD, CM, STI, FITB, RF, HBAN, USB, KB, C, AMG, BLK, MS

Outside of the US Stocks there exists a number of short selling investment opportunities which exist in  debt trade investments and currency carry trade investments, as well as in Developed Nation Investment, such as New Zealand, ENZL, Australia, EWA, and Emerging Market Small Caps, EWX, Emerging Market Small Cap Dividends, EDIV, and Nation Investment in the Emerging Market, specifically, Philippines, EPHE, Indonesia, IDX, IDXJ, Vietnam, VNM, Thailand, THD, Turkey, TUR, Columbia, GXG, Emerging Africa, GAF, Argentina, ARGT, Brazil, EWZ, and China Technology, CQQQ.

Short selling opportunities exist across industry groups these include, IEP, NJ, ETN, FTK, GPK, BLL, AA, AAPL, ADBE, MSFT, STLD, LYB, PKOH, IFF, F, SCOR, HBI, REX, TEL, T, DIS, ARG, GT, INTC, HON, LRCX, GPRE, ABT, TBI, CSL, LXK, GLW, CSCO, TER, ADI,  CMG, NFLX, SWKS, SHW, SCSS, EMC, WDC, SIG, and on, and on, and on

Another principle of short selling is to sell at a market top; it would have been wise to go short these revenue sectors as they rose to their market top; which included Rental Management Company, BX, Industrial Office REITS, Premium REITS, Residential REITS, REZ, Hotel REITS, and Retail REITS

Fiat Wealth, That Is The Coinage Of The Banker Regime, Trades Lower In Value, Pivoting The World Into Kondratieff Winter

July 12, 2014

This post is available in Google Documents format here

Financial Marketplace report for the week ending July 11, 2014.

In this week’s financial marketplace trading.  

1) …. The see saw destruction of Fiat Wealth got strongly underway as European Stocks led stocks worldwide lower, as investors assessed equity valuations following the biggest rally since March, and as fears of Greek insolvency arose, and a Portuguese bank failed.

 

On Monday July 7, 2014, Bloomberg reports European Stocks Drop After Biggest Weekly Rally Since March. The Stoxx Europe 600 Index dropped 0.9 percent with all 19 industry groups retreating. The equity gauge rose 1.8 percent last week as U.S. jobs data exceeded economists’ forecasts and commodity producers rallied. The index traded at 15.6 times the estimated earnings of its members on July 4, near its highest valuation since 2009.

 

“What we need to see now is earnings growth,” said Michael Kapler, a portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany. “Companies have to really deliver this time because equities are not so cheap any more. We might have some sort of correction in Europe if this earnings season disappoints, and there will be bigger questions concerning valuations

 

Alcoa, AA, the largest U.S. aluminum producer, unofficially kicks off the U.S. quarterly earnings season when it releases second-quarter financial results after the close of trading tomorrow. Profit for members of the S&P 500 probably climbed 5 percent in the period, while sales rose 3 percent, according to analyst estimates compiled by Bloomberg.

 

In Germany, data from the Economy Ministry in Berlin showed industrial production slipped 1.8 percent in May.

 

Just after last Friday’s July 3, 2014, Bespoke Investment Group report Big Tick Higher in Bullish Sentiment, on Monday, July 7, 2014, risk-on investing turned to risk-off investing, as investors deleveraged out of Euro Yen Carry Trade, that is out of EUR/JPY carry trades, such as RYAAY, AER, TI, SNY, VE, ING, FLTX, ICLR, ASMI, ERIC, MNK, LUX, ORAN, NVO, LYB, STM, EEFT, which drove Eurozone Stocks, EZU, FEZ, and the Eurozone Nations, EWO, EWI, EWP, GREK, EWQ, PGAL, EWQ, EWG, EWN, EIRL, and EFNL, lower, which led Nation Investment,  EFA, lower.

 

The Global Growth Nations, Germany, EWG, Denmark, EDEN, and South Korea, EWY, traded lower. The credit sensitive, US Small Caps, IWM, IWC, traded lower; their trade lower documents the failure of credit.

 

Israel, EIS, traded lower as Zero Hedge reports More Powderkegs: Israel Prepares For Gaza Escalation, Boosts Troops On Gaza Border.

 

Emerging Europe, ESR, traded lower as Zero Hedge reports Russia Rushes To Seal Ukraine-Bypassing Gas Pipeline: Lavrov Pays Bulgaria A Visit. And as AP reports Bulgaria, Russia Push For South Stream Pipeline Blocked By EU

Markus Salzmann posts in WSWS Bulgaria’s Financial Instability Fueled by EU-Russia Conflict. In the May 25 European elections support for the BSP collapsed. The opposition conservatives under former Prime Minister Boyko Borisov, who retains much closer relations with the EU and the US, won a clear victory. The DPS subsequently withdrew its support for the government. As a result, early elections will take place on October 5. The current government is to be replaced by a cabinet of technocrats in August.

The principal point of immediate contention in the conflicts and intrigues in Bulgaria is the building of the South Stream pipeline, intended to transport Russian gas to Bulgaria through the Black Sea, bypassing Ukraine, before going on to Austria and Italy. The building of this pipeline, funded mainly by Russian concern Gazprom, would strengthen Russia’s position against Ukraine significantly. It would be able to transport Russian gas to Europe without Moscow being dependent on transit pipelines in Ukraine.

With the outbreak of the Ukraine conflict, the EU and US stepped up pressure on Sofia to put the building of the pipeline on hold. At the beginning of June, a group of US senators led by John McCain visited the Bulgarian prime minister. Two days after the Americans’ visit, Oresharski announced the halting of the building project.

The US ambassador in Sofia, Marcie Ries, threatened Bulgarian firms involved in the building project with sanctions. She justified this by arguing that the Russian firm Stroytransgaz was involved in the consortium building the €3.5 billion section of Bulgarian pipeline. The US has imposed sanctions on the firm’s financier, the oligarch and ally of Russian President Vladimir Putin, Gennady Timchenko.

The temporary halting of South Stream not only met with opposition in Moscow, but also in Rome and Vienna. The Austrian government demonstratively welcomed Putin to Vienna on June 24, where the chiefs of Gazprom and Austrian energy firm OMV signed a contract for the building of South Stream.

In Bulgaria, the BSP supports the project, while Borisov has announced that in the event of an election victory, he would only continue the construction of the pipeline if the contracts conform to EU regulations. He intends to exclude all the companies on US sanctions lists, i.e., firms close to the Kremlin.

Along with the conflicts over South Stream, a conflict is raging behind the scenes over the billions that are to be invested in its construction. The EU has claimed that hundreds of millions have flowed into the pockets of Russian and Bulgarian oligarchs.

There are suspicions that Bulgarian tycoon Delyan Peevski could be behind the banking crisis. The 33-year-old controls a massive media and business empire and is one of the most powerful oligarchs in the country. He sits in parliament for the DPS. Last year, the government tried to appoint Peevski to head the intelligence services, a move that provoked mass protests.

Several months ago, Peevski fell out with the head and main shareholder of KTB, Tzvetan Vassilev, with whom he had worked together for years. KTB was one of the banks that was on the verge of bankruptcy in late June. It has close ties to the BSP and administers the funds of many state concerns.

A war of words has erupted between Peevski and Vassilev. Both claimed they have received death threats.

Regardless of who was behind the crisis, the near collapse of two major banks due to rumours shows the extreme instability of the country. The head of the German Konrad Adenauer Foundation in Sofia declared that the conflicts were endangering the financial stability of the country. Other analysts fear Bulgaria could be compelled to give up the pegging of its national currency to the euro.

The recent events are reminiscent of 1997, when the Bulgarian financial system collapsed after hyperinflation. Since the 1990s, the Bulgarian lev has been linked to the German mark and subsequently the euro. While the population lost everything at the time and hunger protests broke out in Sofia, a number of oligarchs were able to write off their debts due to the devaluation.

 

In an epic socio-economic change inflationism turned tod destructionism, as risk appetite turned risk aversion, as investors Volatility, ^VIX, trade by XVZ, derisked out of the debt trade in The National Bank of Greece, NBG, Ireland’s Bank, IRE, and Banco Santander, SAN, which led European Financials, EUFN, lower; Argentina’s Bank, BBVA, and India’s Bank, IBN, HDB, led Emerging Market Financials, EMFM, lower; Regional Banks, KRE, Nasdaq Banks, QABA, and Stockbrokers, IAI, led Financial Services, lower; all of which which led Global Financials, IXG, lower; this as Zero Hedge reports European Banks Are In Trouble.

A trade lower in the Risk Assets, that is the High Beta ETFs, TAN, IBB, FEZ, TAN, IBB, PJP,SOCL, RZV, RZG, FLM, FDN, PNQI, XTN, FXR, CQQQ, PBS,  IGV XRT, FPX, led World Stocks, ACWX, lower.

 

Major Airlines and Regional Airlines, led Transports, XTN, lower.

 

Global Producers, FXR, such as GPK, GRA, DOW, SEE, and LYB, traded lower.

 

Investors sold out of the riskiest of Risk Assets.  Rental and Leasing Companies, such as HEES, and URI, led Small Cap Pure Value Stocks, RZV, lower.  And Building Materials, led Small Cap Pure Growth Stocks, RZG, lower.

 

Global Infrastructure, UTF, led Closed End Funds, GCE, lower.

 

Aluminum Companies, such as AA, and Metal Manufacturing Companies, XME, traded lower.

 

Fracking Companies, IEZ, and Energy Production Companies, XOP, traded lower.

 

In the Defensive Sectors, Global Energy, IPW, traded lower, as Bloomberg reports Defense Trade Coming Undone in $2 Trillion S&P 500 Rally

 

The market vane ETFs, Extended Market, VTF,  and Convertible Securities, CWB, traded lower.

 

In the Yield Bearing Sectors, AMJ, EMLP, MLPJ, FIW, SEA, IDOG, IGF, IST, PSP, traded lower.

 

Dividends Excluding Financials,  DTN, led by Dow Chemical, DOW, traded lower.

 

Natural Gas, UNG, UNL, Cotton, BAL, Nickel, NINI, Sugar, SGG, Wheat, WEAT, and Corn, CORN, led Commodiites, DBC, DJP, lower; it appears that Agricultural Commodities, RJA, have hit support, after having gone through a strong sell off, now Base Metals, DBB, will be trading lower on diminished outlook for global growth and trade.

 

Ed Yardeni posts The Four Phases Of The Bull Market.

 

FT reports Short selling drops to lowest level since Lehman.  In the Inverse Market ETFs, MLPS, RWM, YXI, MYY, DOG,  EFZ, PSQ, SEF, EUM, XVZ, traded higher; these could under close supervision serve as the basis of collateral for a short selling strategy. as the S&P 500, $SPX, SPY, has traded lower from its Elliott Wave 5 High.

 

A stock market top is in as the Proshares 200% Bear Market ETFs, SQQQ, SSG, SKF, EPV, SCC, SZK, DUG, EFU, traded higher, and The Direxion 300%  Bear Market ETFs, ERY, FAZ, SOXS, GASX, DPK, YANG, EURZ, traded higher.  Their turn higher evidences that the world stock market has turned from a bull market to a bear market.

 

The world is pivoting through peak credit. Popular Notes and Bonds, SHY, EU, TLT, EDV, FLOT, LQD, LWC, PICB, BWX, and MBB, bounced higher from last week’s sell off, as the Benchmark Interest Rate, ^TNX, traded slightly lower from its recent high of 2.65%, to 2.62%; its likely objective is 2.53%

 

With the failure of credit on July 1, 2014, seen in Aggregate Credit, AGG, trading lower in value as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the world is moving through a historic economic inflection point.

 

The world is pivoting through peak wealth. Fiat Wealth, defined as World Stocks, VT, Global Financial Institutions, IXG, Nation Investment, EFA, and Yield Bearing Investments, DTN, together with Aggregate Credit, AGG, is is literally being sawn asunder by the failure of trust in the world central banks’ monetary authority to continue to provide investment gain, and global economic growth, as is seen in the Bloomberg report European Stocks Drop With Treasuries as Commodities Fall, and as is seen in the Zero Hedge report Peak Abenomics.

 

The recovery from the Great Recession of 2008-09 has been the weakest ever, the reason being that the nature of money changed with the provision of the Greenspan Put, which became the Ben Bernanke QE1.

 

From 2008 onward, the Fed’s policy no longer came from the Humphrey Hawkins dual mandate of employment and growth, and thus have not provided economic recovery.  The Global ZIRP monetary policies of the world central banks were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being the creation of awesome fiat wealth inflation, rather than much of any employment gains.

 

The California Beach Pundit posts “The world has been stockpiling liquidity instead of spending it. The Fed’s expansion of the money supply has only accommodated an increased demand for that money; that’s why it hasn’t been inflationary. But this should soon start to reverse”. And he adds, “Since late 2008, the Fed has pumped up the supply of bank reserves by over $2.6 trillion through its purchases of Treasuries and MBS. About 94% of those additional reserves currently are held by banks in the form of excess reserves”

 

The US Fed’s massive purchases of bonds of all types has served to underwrite the US Dollar Hegemonic Empire, and cause a fantastic Global Credit Bubble, which finally burst on July 1, 2014, as the Bond Vigilantes began calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%.

 

The June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, together with the June 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, addresses secular stagnation, defined as low growth, low employment, and low inflation; and introduce the new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance and clay in totalitarian collectivism, as is foretold in Bible Prophecy of Daniel 2:25-45.

 

These Mandates and the Call serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out ofdebt trade investments and deleverage out ofcurrency carry trade investments.

 

The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014. On July 10, 2014, Global Growth, DNL, traded strongly lower, communicating that investors no longer trust the monetary policies of the world central banks to stimulate investment gains, and global economic growth.

 

Formerly, credit in the Milton Friedman Free To Choose paradigm, underwrote credit, and investment was the way of life.  Now diktat in the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude is the way of life.

 

Credit Writedowns asks The Euro Crisis: Muddling Through, or The Way To a More Perfect Euro Union?

 

The Eurozone sovereigns, that is theEurozone Nation States, with their policies of investment choice and credit liquidity, no longer support investment gain. Because they are insolvent sovereigns and their banks are insolvent financial institutions, the seigniorage, that is the moneyness, of the entire Banker Regime, is beginning to fail.

 

News reports communicate that the Eurozone periphery nations, such as Portugal, Italy, Greece and Spain, are loaded with all types of debt, not just Treasury Debt that cannot be repaid; this includes The WSJ reportBad Property Loans Stick to Italian Banks. A Fraction of bad loans has been bought by investors.  Other news reports consistently communicate that prosperity has been relegated to the dustbin of history by economic deflation; this includes the CNBC reportEurozone Retail Sales Stall As Households Feel Pain.

 

Failed sovereigns and failed seigniorage cannot, and does not provide ongoing economic experience of prosperity; such only provide economic deflation and economic chaos.

 

As foretold in Bible Prophecy of Revelation 13:3-4, that out of the tossing and turning Club Med economic turmoil, new sovereignty and seigniorage will emerge, as regional leaders meet in summits, to renounce national sovereignty and announce shared sovereignty, more specifically regional pooled sovereignty, which will be come though regional framework agreements, whose purpose is to establish regional security stability and sustainability. Do such framework agreements already exist? Open Europe asks Has The ECB Backed German Reform Contracts For The Eurozone?

Bruno Maçães, the Portuguese Minister for Europe, asks in VOX, An Ever Closer Union? He stresses the importance of policy coordination in achieving better integration. One way to do so is via a fiscal union, but this creates unity at the expense of diversity. A second way involves formal contracts and partnerships. But to make this approach less rigid, the political dialogue does not need to be formalised in actual contracts.

 

An ism is a process which establishes life. Economics is based upon a number of isms; the economic foundation of liberalism is giving way to authoritarianism.

 

The very nature of economics changed with the trade lower in Credit Investments. that is Aggregate Credit, AGG, on July 1, 2014.  It was an extinction event, that terminated the debt investor; and the trade lower in Equity Investments, that is World Stocks, VT, Nation Investment, EFA, Global Financial Institutions, IXG, and Yield Bearing Investments, DTN, on July 7, 2014, terminated the equity investor.

 

With investors going extinct, on the failure of credit, and the soon coming death of currencies, liberalism’s dynamos are powering down, and authoritarianism’s dynamos are powering up.

 

The three dynamos of creditism, globalism and corporatism developed the Banker Regime Seigniorage of fiat money that coined fantastic fiat wealth in Equity Investments, VT, Yield Bearing Investments, DTN, Nation Investment, EFA, Banking Investments, IXG, and most importantly Credit Investments.

 

Debasement of the coinage of fiat wealth commenced on Monday, July 7, 2014, on fears that Greece, GREK, is an insolvent sovereign, and its bank the National Bank of Greece, NBG, is an insolvent bank,  Debasement of the coinage of fiat money, specifically debt deflation in Sovereign Currencies, will occur soon, the reason it has happened yet is the strong demand for currencies in Asia, as is seen in the WSJ report Currency Reserves Swell in Asia.  Eventually it will be as in Venezuela, where William Neuman of the NYT posts Profits Vanish in Venezuela After Currency Devaluation.

 

 

Out of failure of trust in the Banker Regime’s monetary policies of investment choice and schemes of credit liquidity, the Beast Regime of Revelation 13:3-4, having healed the apparent deadly wound of its economic head, through the establishment of regional framework agreements, will rise to rule economics, with new monetary policies of diktat and schemes of debt servitude.

 

The singular dynamo of regionalism will develop the Beast Regime’s seigniorage of diktat money, which will coin awesome mandated poverty, where austerity is one’s economic experience.

 

Jesus Christ, operating in the Economy of God, that is the concept presented by the Apostle Paul in Ephesians 1:10, is acting in stewardship of all things economic and political, to complete, mature, and perfect every age. And as presented in Revelation 6:1-2, has opened the First Seal of the Scroll of End Time Events, to release the First Horseman of The Apocalypse, to effect global coup d etats. The Rider on the White Horse, has the Bow without Any Arrow, and has thus given the Bond Vigilantes, the authority to yield the Bow of Economic Sovereignty, to begin calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.49%, to effect investment coup d etat, destabilizing sovereign authority in the Eurozone and in the US. They will be increasingly successful, in calling the Benchmark Interest Rate progressively higher, producing a new sovereignty and a new seigniorage.

 

Fiat Money defined as the combination of Aggregate Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, will soon literally burst apart at the seams.  The failure of Credit came on June 1, 2014, with the trade lower in Aggregate Credit, soon the Sovereign Currencies, will trade lower in value; the death of currencies is at hand; and as John Rubino writes in USA Watchdog, The Money Bubble Will Pop.

 

In the Eurozone, a new sovereign, Jean Claude Juncker, and a new seignior, meaning top dog banker who in the process of coining money takes a cut, Mario Draghi, will lead the way forward in establishing regional economic governance as well as in providing new seigniorage of diktat money, to establish regional security, stability and sustainability. John Vassilopoulos of WSWS reports Greek Government Outlaws Power Workers Strike. 
The Greek government has again used dictatorial measures to end a strike.

 

In the new normal Mario Draghi economy of shared sovereignty, and the new normal Jean Claude Juncker economy of negotiated government, the call of liberals for income redistribution will not be met, as the mandates of these two Eurozone Titans and their soon to be appointed regional fascist leaders, will establish increasing austerity for all of the EU’s citizens; these will be replacement for the World Central Bank economy’s Asset Manager tycoons.

 

The Eurozone will serve as the headquarters, and template, for the development of the Beast Regime of regional economic governance and totalitarian collectivism, which is synonymous with the Ten Toed Kingdom, which is replacing the US Dollar Hegemonic Empire, and the British Empire, now that the 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, are trading lower on the Bond Vigilante’s Call of the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.  Economic Collapse Blog posts The Dollar Is In Peril As Global The De-Dollarization Trend Accelerates. And Larry Summers posts The United States’ Global Leadership Has Eroded.

 

The Chicago Tribune reports Fourth of July weekend toll: 82 shot, 14 of them fatally, in Chicago. For 10 minutes, it seemed like the shooting was everywhere in the South Chicago neighborhood. It started when someone shot and wounded a couple, then two people fired at the shooter, then there was a chase and shots exchanged and a man sitting on a porch was hit. Responding officers kept cutting each other off on their radios as they reported other gunfire in the area late Sunday night and early Monday morning. Then the heavy equipment rolled in: A helicopter and SUVs packed with lockers of rifles. SWAT teams in green coveralls patrolled the streets with uniformed officers.

 

Macronomy posts The Economic Chaos Risks Of The US Fed’s QE Monetary Policies. The FED currently owns about 33% of the outstanding US Federal debt. As funding needs of the US Treasury are diminishing following the sequester, there is less issuance and the FED ownership of bonds in percentage is rising quicker. Should the Central Bank continue buying the same amounts of bonds, it will own 40% of the outstanding in 2014, then north of 50% in 2015. The subsequent volatility on the interest rate market will increase drastically as the liquidity of the bond market disappears, and the currency could debase very quickly, creating a new crisis.

A cause of concern, the bond market repo activity is facing an increasing number of failures (fails to deliver are on the rise exponentially) due to the large FED holding, which has ripple effect on the overall bond market activity.

Economic growth in a society based on consumption requires credit. In order for credit to grow, or in other words banks to lend, collateral must be available. Since the 2007-2008 financial crisis, high quality collateral has slowly but surely become less available.

If Central Banks continue to buy various government bonds (and US Treasuries are among those bonds), the available collateral will trend lower and the economy will stall, or worst spiral down as a credit crunch will occur at some point. So the FED has no other choice than to slow and even stop its QE if it wants the game to go on.

From the Liza Capo McCormick article in Bloomberg on the 7th of July entitled Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar.  “In the relative calm that is the market for U.S. Treasuries, a sense of unease over a vital cog in the financial system’s plumbing is beginning to rise.

The Federal Reserve’s bond purchases combined with demand from banks to meet tightened regulatory requirements is making it harder for traders to easily borrow and lend certain desired securities in the $1.6 trillion-a-day market for repurchase agreements. That’s causing such trades to go uncompleted at some of the highest rates since the financial crisis.

Disruptions in so-called repos, which Wall Street’s biggest banks rely on for their day-to-day financing needs, are another unintended consequence of extraordinary central-bank policies that pulled the economy out of the worst financial crisis since the Great Depression. They also belie the stability projected by bond yields at about record lows.

“You have a little bit of a perfect storm here,” said Stanley Sun, a New York-based interest-rate strategist at Nomura Holdings Inc., one of the 22 primary dealers that bid at Treasury auctions, in a telephone interview June 30.

A smoothly functioning repo market is vital to the health of markets. The fall of Bear Stearns Cos., which was taken over by JPMorgan Chase & Co. in 2008 after an emergency bailout orchestrated by the Fed, and collapse of Lehman Brothers Holdings Inc., whose bankruptcy in September of that year plunged markets into a crisis, was hastened after they lost access to such financing.” – source Bloomberg

 

Remember financial crisis are always triggered by liquidity crisis. From the same article:

 

Liquidity Issues

 

“The effect of all the collateral issues we see now is an indication of not so much how things are, but how bad things will be when you really need liquidity,” said Jeffrey Snider, chief investment strategist at West Palm Beach, Florida-based Alhambra Investment Partners LLC, in a telephone interview June 30. “That’s when you get into potentially dire situations.”

The conditions for repo stress were on display last month. The 2.5 percent note due in May 2024 reached negative 3 percentage points in repo in the days preceding a June 11 Treasury auction of $21 billion in notes to finance government operations.

Dealer Constraints

 

Repo rates have been most prone to go negative, a situation known as specials in the market, in the days preceding an auction as traders who previously sold the debt seek to buy the securities to cover those positions.

In this week’s note and bond sales, the U.S. plans to auction $27 billion of three-year Treasuries tomorrow, $21 billion of 10-year debt on July 9 and $13 billion of 30-year securities July 10.

Signs of dysfunction are coming at a sensitive time for markets. The Fed is paring its stimulus and futures show traders expect the central bank may start raising interest rates in the middle of next year.

The concern is that dealers, which have pared inventories to meet more-stringent capital requirements required by the 2010 Dodd-Frank Act mandated by the Volcker Rule and Basel III, won’t have as much capacity to handle any surge in volumes or volatility.

Securities Industry and Financial Markets Association data show the average daily trading volume in Treasuries has fallen to $504 billion this year from $570 billion in 2007, even though the amount outstanding has risen to more than $12 trillion from $4.34 trillion.

Available Securities

 

Bank of America Merrill Lynch’s MOVE Index, a measure of expectations for swings in bond yields based on volatility in over-the-counter options on Treasuries maturing in two to 30 years, reached 52.7 percent on June 30, almost a record low.

The Fed is partly to blame. Through its policy of quantitative easing, it now owns about 20 percent of all Treasuries, or $2.39 trillion. Banks hold $547 billion of Treasury and agency-related debt.

In addition, the Fed’s holdings have shifted in ways that leave fewer central-bank-owned Treasuries available to be borrowed. The shifts were caused by Operation Twist during the November 2011 to December 2012 period when the Fed sold shorter-dated Treasuries and bought more bonds, plus self-imposed central-bank restrictions on holdings of specific maturities.

 

Stimulus Withdrawal

 

The Fed’s lack of certain holdings “appears to be driving the surge in fails, which has been concentrated in the on-the-run five- and 10-year notes,” Joe Abate, a money-market strategist in New York at primary dealer Barclays Plc, wrote in a note to clients on June 27. On-the-run refers to the most recently issued Treasuries of a specific maturity.

While the Fed has sought to cut risk in the repo market since the crisis, it still sees the chance that rapid sales of securities, known as fire sales, could disrupt the financial system. Fails reached a record $2.7 trillion in October 2008.

Repos are also important to the Fed because it has been testing a program in the market that is seen as a potential tool to withdraw some of its unprecedented monetary stimulus.

Eric Pajonk, a spokesman at the New York Fed, decline to comment on the Fed’s reaction to the movements in recent weeks in the repo market.

The amount of securities financed daily in the tri-party repo market has declined 18 percent an average $1.60 trillion May, from $1.96 trillion in December 2012, data compiled by the Fed show. In a tri-party agreement, one of two clearing banks functions as the agent for the transaction and holds the security as collateral. JPMorgan Chase & Co. and Bank of New York Mellon Corp. serve as the industry’s clearing banks.

 

Supply Falls

 

Another difficulty in the repo market has been the decline in Treasury bill supply, with the U.S. having sold $264 billion fewer short-term bills in the April-through-June period than those that matured, according to John Canavan, a fixed-income strategist at Stone & McCarthy Research Associates in Princeton, New Jersey.

“The repo market itself provides lubricant to the entire Treasury market,” Canavan said in a July 3 telephone interview. “Bills are a key lubricant to the repo market, and the supply of bills has fallen sharply. If this situation were to continue longer-term, it would be a more substantial problem.””  – source Bloomberg.

 

Macronomy relates US Corporate Pension Plans’ Participation In ZIRP. When it comes to our contrarian take on US yields since early January 2014 we argued the following in our conversation Supervaluationism back in May this year: We recently pointed out the strength of the performance of US long bonds as well as the Great Rotation From Institutional Investors To Private Clients. As posited by Cam Hui on his blog Humble Student of the Markets, The Great Rotation Has Indeed Been Triggered By Defined Benefit Pension Funds Locking In Their Profits.

 

One of the chief reason therefore behind this rotation has been coming from US Corporate pensions, as indicated by Gertrude Chavez-Dreyfuss and Richard Leong in Reuters in their article from the 24th of April article, US Corporate Pensions Bet On Bonds Even As Prices Seen falling.  Major US companies including Clorox and Kraft are favoring more bonds in the mix for their employees’ defined benefit pension plans, even amid signs the three-decade bull run in bonds is on its last legs.

 

The $2.5 trillion U.S. corporate pension market enjoyed a robust recovery in 2013, paced by stocks, as the Standard & Poor’s 500 Index rose the most since 1997. That helped pension funds close a funding hole that opened after the global credit crisis of 2008, so that the average corporate pension was funded at about 95 percent at the end of 2013, compared with 75 percent at the end of 2012, Mercer Investments data show.

 

Now that they’re more confident that they have the money to meet their pension obligations, corporate pension managers are pulling back from the perceived risk of the stock market and buying U.S. government and corporate bonds, even though many expect bond prices to fall in coming years.

 

“Even if interest rates rise more than the market predicts, you do get the income component that offsets the price loss of those bonds,” said Gary Veerman, managing director of U.S. Client Solutions Group at BlackRock in New York, which has $4.4 trillion under management, of which two-thirds are retirement-related assets. Beerman’s group advises corporate treasurers how to manage their pensions. The allocation to bonds by the top 100 publicly-listed U.S. companies in their defined benefit pension plans increased to a median of 39.6 percent in 2013 from 35.9 percent in 2010. Stock allocation in the plans fell to 40.9 percent in 2013 from 44.6 percent in 2010, according to global consulting firm Milliman.”

 

“Now they’re in a position to say: ‘I don’t need all those equities because my funding status is in the mid- to low-90s,'” said Dan Tremblay, director of institutional fixed-income solutions at Fidelity unit Pyramis in Merrimack, New Hampshire, which manages more than $200 billion.

 

To further illustrate the “pension fund” effect and the increase in duration risk with the “great rotation” in 2014 from equities to bonds please find below the iBoxx U.S. Pension Index up 11% YTD.

 

The chart tracks the iBoxx U.S. Pension Index, designed to mirror the performance of a typical plan with defined benefits.

 

What our “wealth effect” planners at the Fed should take into account is that rising stock prices may do relatively little to bolster the finances of corporate pension funds. Bonds matter because increases in projected distributions put even more pressure on yield hunting leading to an increase in duration risk exposure and high yield exposure. Volatility in funds’ asset value and relatively low interest rates have made managing pensions increasingly difficult for corporate managers, one of the solution they have found is shifting into bonds and away from stocks

 

As a reminder from our conversation Goodhart’s Law in June 2013: As indicated by CreditSights in their 29th of May 2013 Asset Allocation Trends – 2012 Pension Review: “Key among the prevailing market realities in the post-financial crisis environment has been the extended period Quantitative Easing and the continuation of the Fed’s prevailing zero interest rate policy and in the latest year’s plan asset allocation data there was evidence of the effect this was having. As noted above, historically low interest rates have not only inflated the calculated liabilities of pension plans via the downward pressure on interest rates, they have also deflated assumed plan asset return rates as fixed income has increased as a percentage of plan assets.” – source CreditSights.

 

So much for the great rotation, given, as indicated in the same report from CreditSights: “One of the notable observations from our data analysis was that there was very little change in the allocation across the plans vs. the prior year. The median allocation to equity fell only marginally (from 50.8% to 50.0%) and the allocation to fixed income, rather than increasing, fell from 37.0% to 36.4%. This suggests that the trend towards Liability Driven Investment has slowed. While this, at least in part, likely reflects that the shifts made over the last seven years have better aligned many plans with their desired allocations, it also is undoubtedly influenced by the interest rate environment.

Historically low interest rates across the full maturity spectrum make it an inopportune time to be increasing the allocation to fixed income assets (or to be increasing the duration of those assets in the portfolio!) ”  – source CreditSights.

 

Hence the reason of our Wicksellian stance relating to the distortion created by ZIRP, because of the increasing duration risk which has to be taken by players such as pension funds!

 

On Tuesday July 8, 2014, fears over the solvency of Greece, GREK,and sustainability of its Bank arose, as The National Bank of Greece, NBG, Ireland’s Bank, IRE, Banco Santander, SAN, as well as Lloyds Banking Group, LYG, drove European Financials, EUFN, lower, as Bloomberg reports Greece Resists Troika on Third Bailout as Mario Draghi Protests Delays.

 

In addition to the trade lower in the European Financials, EUFN, Nomura Holdings, NMR, Banco Santander Brazil, BSBR, Argentina Bank, BBVA, Bank of America, BAC, Regional Banks, KRE, led Global Financials, IXG, lower, evidencing the failure of credit which commenced on July 1, 2014,with the trade lower in Aggregate Credit, AGG.

 

The trade lower in Stockbrokers, IAI, Investment Bankers, KCE, such as MS, GS, and the Asset Managers, such as BLK, EV, communicates that the age of securitization and financialization, to coin fiat wealth, which was built on trust in the monetary policies of the world central banks,for investment gain is over, through, finished and done.  The era of the investor is relegated to the dustbin of history.

 

A new age of trust in the mandates of regional fascist leaders to coin totalitarian collectivism for regional security, stability and sustainability is underway. The era of the debt serf has come of age.

 

Michael Ignatieff calls for the development of sovereignty; it’s only a whisper.  Sovereignty And The Crisis Of Democratic Politics. Dani Rodrik, a colleague of mine at Harvard, coined the phrase ‘policy space’ to describe what we need. Every country has to have policy space, by which he means political space. We’ve got too much macroeconomic policy which assumes that one size fits all; one size does not fit all. We need policies that are appropriate to the sovereign conditions and histories of the countries that we live in.

Progressive politics must defend and expand the capacity of sovereign democracies to create the ‘policy space’ they need, instead of swallowing austerity medicine concocted by doctors who know nothing of their patient’s specific needs.

 

I don’t suppose that market regulation is the sum and substance of a progressive politics. There is so much more that a progressive politics stands for: egalitarianism, the rule of law rather than the rule of men, generosity, social compassion, love and respect for learning and innovation. But none of these values can be realised without an economics that resets the relation between market and state.

 

To a degree we haven’t realised, our sovereignty has been emptied out and because it has, our democracy has been draining away. Sovereignty and democracy are linked. We must feel we are masters in our own house, if our politics is to have any meaning for us. Democracy is not a procedure, an instrument or a technique. It is a way of living a set of values of patriotism, equality and fairness, and it creates a sentiment: the blessed feeling that you live in a place where you are not adrift, you are not a prisoner of fate, where you join with citizens to shape your world.This is the value—the sense of mastery—that a progressive politics can and should deliver to its citizens.

More than any one factor for the dissolution of the sovereignty of the British Empire was the rise of Attlee and his Labor Party in the UK.  Robin Phillips, author ofSaints and Scoundrels and writes for a variety of publications; He is currently working on a PhD in historical theology through Kings College, London, posts  Remembering Clement Attlee: a Wolf in Sheep’s Clothing. Attlee’s legacy has been seminal in the internationalism that came to dominate the last half of the 20th century. Mr Attlee suggested that the notion of the sovereign states making its own decisions was “as out of date as would be the heptarchy in these islands.” Elsewhere he wrote, “The Labour Party does not regard the British Commonwealth as an end in itself, but only as a factor in the building up of a world federation.” He hoped the League of Nations would be transitional to a one-world government, describing it “as a beginning of the World Federation which it hopes to see established.”

 

The trade lower in the City of London, Lloyds Banking Group, LYG, on July 8, 2014, from the middle of a broadening top chart pattern, communicates the capitulation of the UK’s David Cameron, to the monetary authority of the ECB, and to the economic sovereignty of the EU. The inertia direction forward for the UK is one More Europe.

 

The monetary policies of the Banker Regime no longer stimulate global economic growth and trade, as is seen in Nation Investment, EFA, trading strongly lower on the trade lower in  the UK, EWU, EUUS, as Shaun Roberts reports Slow Down In The UK’s Rate Of Economic Growth, The Office for National Statistics released this data: Total production decreased by 0.7% between April 2014 and May 2014; Manufacturing was the largest contributor, decreasing by 1.3%.  He adds, In the three months to May 2014, production and manufacturing were 11.3% and 7.2% respectively below their figures reached in the pre-downturn GDP peak in Q1 2008.

 

Norway, NORW, Sweden, EWD, and Denmark, EDEN, traded lower as the Eurozone Financials, EUFN, Eurozone Stocks, EZU, FEZ, European Small Cap Dividends, DFE, and European Nations, led by  Portugal, PGAL, and Greece, GREK, continued lower. India, INP, SCIN, Israel, EIS, and the US Small Caps, IWC, IWM, traded lower. Electric Utility, HNP, and China Technology, CQQQ, led China, YAO, lower; as Bloomberg reports Sensex Falls Over 500 Points The BSE Sensex and Nifty slumped more than 2 percent on Tuesday, marking their biggest single-day fall in over 10 months and retreating from record highs hit earlier in the session, after the railway budget raised worries the government would slash spending.

Nation investment in New Zealand, ENZL, traded to a new rally high as Brown Brothers Harriman reports The New Zealand Dollar Rose To A New  Multi Year High Just Above $0.88.  Fitch lifted the outlook for the country’s AA rating to positive from stable. The central bank meets on July 23 and is expected to hike rates again.  A 25bp hike would be the fourth hike this year and would put the cash rate at 3.25%.

 

In Yield Bearing Investments, Leveraged Buyouts, PSP, Shipping Stocks, SEA, and International Telecom, IST, traded lower.  Dividends Excluding Financials, DTN, were led lower by the debt trade Verizon, VZ.

 

A trade lower in the Risk Assets, that is the High Beta ETFs, TAN, SOCL, FDN, PNQI, CQQQ, IBB, IGV, IGN, PJP, RZV, RZG, PBS, CARZ, FONE, XRT, PPA, QQQ, FPX, forced World Stocks, ACWX to trade lower.  Data Storage Devices, traded strongly lower.

 

On Tuesday, July 8, 2014, fiat wealth, that is the coinage of the Banker Regime, traded lower in value as fears of Greek Insolvency arose, as Mario Draghi pressed Greece for reforms in exchange for a Third Greek Bailout.

 

Aggregate Credit, AGG, bounced slightly higher, but resides below its January 2014, through July 1, 2014 rally high as Popular Notes and Bonds, such as SHY, EU, TLT, EDV, LQD, LWC, PICB, BWX, and MBB, continued to bounce higher from last week’s sell off, as the Benchmark Interest Rate, ^TNX, traded slightly lower from its recent high of 2.65%, to 2.57%, on its way lower to a likely support at 2.53%. Junk Bonds, JNK, traded lower with stocks.

 

Robert Wenzel posts on the strong dynamic of Pursuit of Yield Investing in Puerto Rico Municipal Bonds. Puerto Rican general obligation bonds are rated triple-B minus, the most risky investment grade bonds in the market. The 5.0% coupon maturing in 2041 is trading approximately 25 basis points above the coupon rate. Bottom line: There is little fear in this market, despite the fact that number crunchers view Puerto Rico’s financial situation to be worse than that of Greece. PR GOs should be trading hundreds of basis points higher.

 

Puerto Rico is an insolvent sovereign and has neither investment seigniorage nor fiscal seigniorage; it is a candidate for bondholders to literally own the electricity and water infrastructure and charge whatever rates they may for essential public services.

 

Without access to credit, Puerto Ricans  may come to be beholding to the sovereignty of investment funds such as Franklin Templeton and OppenheimerFunds, for the essentials of life. Most assuredly these people will be living out their lives in perpetual debt servitude.

 

A new paradigm is emerging. Liberalism is giving way to authoritarianism.  Under liberalism bankers, corporations, government, entrepreneurs, and citizens of democracies were the legislators of economic value and the legislators of economic life that shape one’s means and one’s ends.

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

 

Those living in Detroit are no far behind as Muhammad Khan and Shannon Jones post in WSWS Detroit Residents And Water Workers Speak Out Against Water Shutoffs. The city of Detroit is racing ahead with its plans to shut off water to some 150,000 families who cannot afford to pay their water bills.

 

Reuters reports Sarkozy Party Faced With 80 Million Euro Debt Mountain, Audit Shows

 

Real Estate Follies at the end of the age of fiat wealth. Bloomberg reports Office REITs in U.S. Plan the Most Construction in Decade. Office REITs, FNIO, led by Boston Properties Inc. (BXP), Vornado Realty Trust (VNO) and Kilroy Realty Corp. (KRC), are planning to plow almost $11 billion into new projects, triple the amount just two years ago and the most in data going back to 2004, according to research firm Green Street Advisors Inc. Much of that is focused on the coasts, including San Francisco and New York, the areas with the most demand from both tenants and investors.

 

The Israeli Stock Exchange could go extinct because of delisting. Bloomberg reports Unintended Consequences Risk $4.4 Billion Israeli Flight. Israel risks losing 15 billion shekels ($4.4 billion) from the Tel-Aviv Stock Exchange because of efforts to limit control of the economy by the country’s wealthiest families.

 

Bloomberg reports Approaching Reactor Restarts Encourage Utilities To Sell Bonds The Nuclear Regulation Authority is moving toward the first reactor restart under its new safety requirements since the Fukushima disaster started, giving impetus to bond sales by utilities as borrowing costs plunge.

The regulator may submit a safety report on two reactors at Kyushu Electric Power Co.’s Sendai plant on July 16, paving the way for them to come online before year’s end, the daily Yomiuri Shimbun reported this week. The utility is set to sell ¥20 billion ($197 million) in 10-year bonds Friday at 39 basis points over government debt, its lowest spread for such maturities since 2010, a source said.

Kansai Electric Power Co. and Shikoku Electric Power Co. also plan to offer notes this week as investors are drawn by the industry’s higher-than-average yield premiums. Unprecedented Bank of Japan stimulus has pushed down Japanese corporate spreads to a seven-year low of 22 basis points. That for power companies’ debt is 29 basis points, compared with 105 for utilities worldwide, Bank of America Merrill Lynch data show.

“The fact that the government is in favor of restarting reactors is positive because it shows a firm commitment toward the electric power companies,” said Yasuhiro Matsumoto, the senior manager for the financial services industry at ABeam Consulting Ltd. “Once one restart is approved, others will come one after another, and the pace may quicken. You can’t approve one but turn down others.”

The Sankei, another daily paper, said earlier that the nuclear regulator would give the green light to restarting the Kyushu reactors as early as Wednesday.

The draft inspection report is completed and commissioners are examining the approximately 400-page document, NRA Chairman Shunichi Tanaka told reporters the same day. He declined to say when it will be made public.

All 48 of Japan’s functioning commercial reactors are idled for safety checks after a tsunami wrecked Tokyo Electric Power Co.’s Fukushima No. 1 plant on March 11, 2011, and caused the worst nuclear crisis since Chernobyl in 1986.

Utilities’ expenses have mounted as they’ve had to purchase fossil fuel to make up for nuclear energy. The nation’s 11 power companies had combined net losses of ¥482.7 billion in the three months that ended on March 31, compared with a profit of ¥4.7 billion in the same period in 2010 before the Fukushima disaster started, according to data compiled by Bloomberg.

 

On Thursday, July 10, 2014, a Portugal banking crisis sparked a global stock selloff.  Portugal, PGAL, led nation Investment, EFA, lower. A Portuguese bank named after the Holy Spirit is seen failing. Bloomberg reports European Stocks Decline for a Fifth Day as Luxembourg based Espirito Santo Financial Group SA, which owns 25 percent of Portugal’s second-biggest bank by market value, said it decided to suspend its shares. Banque Privee Espirito Santo SA, fully owned by ESFG, said on July 8 that there was a delay in payments of some of the last maturities of short-term debt securities issued by ESI. Portugal’s PSI 20 tumbled 3 percent, the most among 18 western-European markets, sending its seven-day slump to 11 percent. The index trades at its lowest level since October.

 

Open Europe directs to other reports ReutersCity AMTelegraphGuardianBloombergBloomberg 2Forbes:lFortuneTelegraph live blog

 

The value of equities in Portugal, Italy, Greece, and Spain, is falling after rising 13 percent in the first six months of 2014, compared with a 2 percent gain for the market capitalization of stocks in France and Germany. The ratio between the two reached an almost three-year high. The last time shares in the so-called peripheral European nations rallied so much relative to those in the biggest economies, they lost about half their value in the following year.

 

Bloomberg reports Espirito Santo Bonds Tumble to Records Amid Missed Note PaymentsBanco Espirito Santo has been “adequately isolated” by the Bank of Portugal from the financial problems, Parliamentary Affairs Minister Luis Marques Guedes said on July 3. The bank was the only one of the three biggest publicly traded Portuguese lenders that didn’t request state aid after the country received a European Union-led bailout in May 2011.

 

The coinage of the entire Banker Regime is failing, as investors greed has turned to fear that European leaders are unable to contain investment losses from what are most definitely insolvent banks.

 

A new coinage, that of the Beast Regime is emerging, it is totalitarian collectivism to establish regional security, stability and sustainability.

 

Bloomberg reports Draghi Says Brussels Needs Higher Powers as Leaders Quarrel.  European Central Bank President Mario Draghi said the region needs more-centralized powers to push governments to overhaul their economies.

Draghi said in London Speech “There is a case for some form of common governance over structural reforms” … and ..  “This is because the outcome of structural reforms, a continuously high level of productivity and competitiveness, is not merely in a country’s own interest. It is in the interest of the union as a whole.”

Draghi has repeatedly said the ECB’s ultra-loose monetary policy isn’t sufficient to sustain the euro area’s fragile recovery if governments backslide. European Union finance ministers meeting in Brussels this week signaled a willingness to give politicians extra leeway so long as they take measures to fix their economies. They then clashed as Italian Prime Minister Matteo Renzi pushed back against austerity measures.

ECB Executive Board member Benoit Coeure said earlier yesterday that convergence could be complemented by action such as a European effort to increase investment by channeling private savings. It could culminate in the transfer of budgetary responsibilities to the European level, he said in Athens.

“But let me add an important note of caution,” Coeure said. “This can only occur once trust has been restored across countries and within countries, i.e. after growth has resumed, unemployment and inequalities have receded, and economies have sufficiently converged. What we are talking about is a new social contract among European countries.”

 

Reuters reports Draghi Urges Eurozone States To Be Sovereign Together: A Unity Of Sovereignty Should Direct How Needed Reforms Take Place.European Central Bank President Mario Draghi urged euro zone states to respect their joint fiscal rules and extend their cooperation to economic reforms, telling governments they must “learn to govern together”.

While reiterating his message that the ECB is ready to use “unconventional instruments”, code for large-scale asset buying, if needed, he devoted most of a speech in London to pressing for closer European integration to deliver growth and jobs.

“What is essential now is that these rules are enforced,” he said in the text of his speech, a memorial lecture on Wednesday in honour of the late Italian minister and ECB policymaker Tommaso Padoa-Schioppa.

“To unwind the consolidation that has been achieved, and in doing so to divest the rules of credibility, would be self-defeating for all countries,” Draghi said.

His comments come as euro zone policymakers debate the flexibility of their fiscal rules, with Italian Prime Minister Matteo Renzi leading calls to move from austerity to expansion.

Draghi appeared to push back: “Fiscal rules should be viewed in the national debate as promoting growth-friendly fiscal consolidation and not simply as a painful accounting exercise.”

The ECB president added that high debt made countries more vulnerable in the event of financial shocks.

Furthermore, only by showing a willingness to respect common fiscal rules could euro zone states achieve the mutual trust that is a prerequisite for integration in other areas, he said.

Pressing for closer integration, Draghi urged euro zone states to align their approach to structural reforms, efforts to shape up economies by, for example, liberalising labour markets, using the template of the common fiscal rules.

“There is a strong case for us to apply the same principles to the governance of structural reforms as we do to fiscal governance,” he said. “The essential cohesion of the union depends on it.”

The return of market confidence in the euro area stemmed in good part from the efforts made by some countries to shape up their economies after the euro zone crisis took hold, he said.

Establishing rules on structural reforms at a European level could also help governments implement them, he said.

The experience of the International Monetary Fund had shown that, with discipline imposed by supranational bodies, “the debate can be framed not in terms of whether, but in terms of how reform needs to take place.”

European governments are not powerful enough individually to be able to fully exercise their sovereignty alone, Draghi said.

“To serve their purpose, they have to learn to govern together; they have to learn to be sovereign together so as respond to their citizens’ needs,” he added. “Those needs today are growth and job creation.”

 

This inquiring mind asks do you want your savings channeled?

 

The July 8, 2014, Mario Draghi Call For EU Common Governance Over Structural Reforms, is a continuance of the June 5, 2014 Mario Draghi ECB Mandates for NIRP and Targeted LTRO, and the June 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, which addresses secular stagnation, defined as low growth, low employment, and low inflation.

 

Taken as whole, these series of Mario Draghi Mandates and Calls introduce a new global empire, that being the Ten Toed Kingdom, with a miry mixture of iron and clay, forming toes of diktat in regional governance and clay in totalitarian collectivism, as is foretold in Bible Prophecy of Daniel 2:25-45.

 

The Mario Draghi Calls and Mandates serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional economic governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared regional sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out ofdebt trade investments and deleverage out ofcurrency carry trade investments.

 

John Redwood posts The Ghosts Of Hampden, Pym And Eliot Should Haunt Parliament Today. Members of Parliament are heirs to a great tradition. Some of our predecessors took great personal risks to defend  and extend the liberties of Englishmen and women. They fought to prevent the executive government, the Crown, exercising too much arbitrary power at the expense of the people. Today we need to remember that when  Parliament debates whether important matters of criminal justice, recently repatriated to UK control, should be surrendered to the EU. John Hampden, John Pym and John Eliot fought against a Crown which wanted to presume to itself the power to tax without reference to the grievances and rights of those paying the bills. They fought to uphold the right of Parliament to fashion the law and ensure its fair enforcement. John Eliot died prematurely from his stay in prison for refusing to accept Ship money. John Hampden died of his wounds  in an early battle of the civil war. Their cause was just and ultimately upheld. Today the threat to our liberties and right of self government comes not from the Crown but from the EU. Some of us this day will argue against surrendering any criminal justice powers to the EU. We accept the need to co-operate with the police and criminal justice systems of our  neighbours to track criminals and bring them to court. This can be done by bilateral agreements which preserve the authority of the UK Parliament and the sovereignty of the UK electorate. Eliot, Pym and Hampden would expect no less.

 

Open Europe Blog posts Juncker: The next Economic and Monetary Affairs Commissioner Will Be A Socialist

 

Open Europe reports Juncker: I Don’t Believe In A United States of Europe.  During his hearing with Nigel Farage’s Europe of Freedom and Direct Democracy (EFDD) group in the European Parliament yesterday, European Commission President-designate Jean-Claude Juncker said, “I don’t believe in a United States of Europe…I’m not a federalist in the British sense…I’m not someone who wants to reinforce the centre in a stupid way to the detriment of the member states.” He added, “There isn’t such a thing as the European people.” Separately, during his hearing with the Greens group, Juncker said, “There shouldn’t be unfair competition between [EU] countries on corporate taxes” – and advocated a common EU corporate tax base. TimesEuropean VoiceFTWSJEUobserver.

 

Open Europe posts Will The Real Jean-Claude Juncker Please Stand Up?  I relate that Juncker is synonymous with Brussels; and Brussels is synonymous with Juncker.

 

A trade higher in the Yen, FXY, caused Hedged Japan, HEWJ, Japan, EWJ, Japanese Small Caps, JSC, Japanese Small Cap Dividend, DFJ, to trade lower.

 

Hedged Nation Investment, HEFA, Commodity Country, CCXE, Norway, NORW, Sweden, EWE, Denmark, EDEN, Netherlands, EWN, Italy, EWI, Spain, EWP, Greece, GREK, Austria, EWO, Finland, EFNL, Germany, EWG, GERJ, European Small Cap, SMEZ, European Small Cap Dividend, DFE, and Europe, EZU, FEZ, traded lower.

 

Nation Investment, EFA, and Emerging Market Investment, EEM, traded lower as South Africa, EZA, South Korea, EWY, The UK, EWU, EWUS, India, INP, SCIN, Egypt, EGPt, Turkey, TUR, Russia, RSX, ERUS, and Emerging Europe, ESR, traded lower. Vietnam, VNM. Indonesia, IDX, IDXJ, China Small Caps, ECNS, Philippines, EPHE, and Australia, EWA, KROO, traded lower. The credit sensitive US Small Caps, IWC, IWM, traded lower. Bloomberg reports Disputed Indonesia Election Deterring State Street.

 

Zero Hedge posts Europe Tumbles As Banks Lose All 2014 Gains. European Financials, EUFN, Chinese Financials, CHIX, Far East Financials, FEFN, Australia Dividend, AUSE, Japanese Creditor, IX, Japanese Brokerage, NMR, Japanese Banks, MTU, MFG, SMFG, India’s Banks, IBN, HDB, Brazil’s Bank, BSBR, Argentina’s Bank, BSBR, BBVA, Peru’s Bank, BAP, Australia’s Bank, WBK, South Korea’s Banks, WF, KB, Spain’s Bank, SAN, Ireland’s Bank, IRE, Germany’s Bank, DB, UK’s Bank, BCS, Swiss Banks, CS, UBS, and the National Bank of Greece, NBG, traded lower, causing Global Financials, IXG, to trade lower.

 

With the trade higher in Japanese Yen, FXY, and the trade lower in the Euro, FXE, a number of popular Euro Yen Currency Carry Trades unwound. With the sharp trade lower in the EUR/JPY, investors deleveraged out of LUX, NXPI, PHG, VE, UN, E, TOT, RDS-B, ING, and GLOG,

 

All other Sovereign Currencies, with the exception of the Swedish Krona, FXS, traded lower, stimulating the US Dollar. $USD, UUP, to trade slightly higher. Mark Chandler remarks the Swedish Krona and Norwegian Krone have been in play recently as the former surprised with a 50 bp rate cut, and the latter sounded dovish.

 

Bloomberg posts Piggy Banks Being Raided Signal Swedish Housing Dilemma. Increasing numbers of Swedes are turning to family and friends for help in buying a home, sidestepping government efforts to cool soaring housing prices and growth in private debt.

 

While Zachs reports Alcoa Aluminum, AA, traded to a new high, as its earnings topped and turned to profit, Defensive Sectors, DEF, Agriculture, PAGG,International Energy, IPW, Global Utilities, DBU, and Insurance, KIE, traded lower. Industrial Textile Manufacturers, such as MHK, Fracking Companies, such as CJES, BAS, RES, EXH, Design Build Companies, such as TPC, URS, PWR, MTRX, ACM, Building Materials, such as HW, PGII, NTK, EWI, MAS, OC, AOS, BECN, and Sectors, XOP, OIH, CARZ, BJK, PKB, PSCI, PSCD, PSCC, XRT, TAN, WOOD, SLX, PICK, KOL, REMX, led World Stocks, ACWX, lower.

 

Debt trade investment, Blackstone, BX, traded lower. International Telecom, IST, International Dividend Dogs, IDOG, Leveraged Buyouts, PSP, Shipping, SEA, Global Utilities, DBU, and Water Infrastructure, FIW, led Yield Bearing Investments, DTN, lower.

 

The trade lower in International Energy,  IPW, such as E, TOT, RDS-B, SSL, STO, SU, IMO, CNQ, SNP, BP, CVX, XOM, ECA, Energy Services,  OIH, such as SLB, HAL, BHI, NGS, FET, WFT, PDS, NOV, OIS, and Natural Gas, UNG, and DNL, all of which are global currency carry trade investments, communicates that the Global Petro Dollar Empire is being relegated to the dustbin of history. These represent stranded investments; investors will not be committing any new capital investment to Global Natural Resources, IGE, development.

 

All of the Legacy Investment, which underwrite Global Industrial Production, IPN, Global Industrial Miners, PICK, Design Build, FLM, Steel, SLX,and Timber Production, WOOD sectors traded lower. Needless to say, the S&P 500, SPY, is now a failed investment.

 

The chart of the US Dollar, $USD, UUP, shows that it is in the middle of a consolidation pattern, and will soon fall lower.

 

Matthias Chang writes in Global Research The Global Financial Tsunami Endgame: The Petro-Dollar Regime is Finished

 

Peter Koenig writes in Global Research Russia’s Petro-Ruble Challenges US Dollar Hegemony As China Seeks Development of Eurasian Trade

 

Jim Willie CB writes in Market Oracle Ukraine As The US Dollar Waterloo

On July 10, 2014, Gold was established as a safe haven investment while Precious Metal Mining Stocks manifest bearish engulfing.

 

The investment demand for safe assets that began in June 2014 was confirmed, with Gold, GLD, and Silver, SLV, trading higher.

 

The Precious Metal Mining Stocks, GDX, GDXJ, SIL, and SILJ, such as Gold Miner, FNV, AWM, and Silver Miners, SSRI, FSM, manifested bearish engulfing and traded lower; these appear to be topped out in value, while only God knows how much higher gold will go. Bloomberg reports Gold Reaches 16-Week High as Portugal Spur Haven Buying. The Google Finance chart of the Gold Miners, GDX, shows a 26% rise year-to-date, compared to 10% for Gold, GLD. Look for the Gold Miners to disconnect from the price of Gold, GLD, and tumble lower with all fiat wealth investments into the Pit of Financial Abandon.

 

The Interest Rate on the US Ten Year Note, ^TNX, traded lower to 2.53%, with an objective seen lower, somewhere between 2.51% and  2.49. Aggregate Credit, AGG, traded weakly higher. Junk Bonds, JNK, traded strongly lower, down 0.4% for the week.  European Credit, EU, traded lower as Bloomberg reports Greece Cites Market Conditions as Bond Sale Misses Target. Portugal’s bonds led a selloff in securities from the region’s so-called periphery nations this week on instability in that nation’s banks. Greece’s transaction went ahead “despite very unfavorable conditions in international markets and especially in periphery, today and yesterday,” the Finance Ministry in Athens said in a statement.

 

On Friday, July 11, 2014, credit guarantees are seen as worthless. The age of credit featured Wildcat Finance, a Doug Noland term, an era where financiers, bit, ripped and tore each other apart to be top dog banker in investment deals. The age of debt servitude, will feature, Wildcat Governance, where tyrants, bite, rip, and tear one another apart, to be top dog ruler in public private partnerships.

 

Credit guarantees, fraud, and corruption have fueled China’s credit bubble. Mike Mish Shedlock posts Credit Guarantees, Fraud, Corruption Fuel China’s Credit Bubble; Bankruptcies Rock Loan Guarantors; Beginning of the End?

 

Zachary Tracer and Clea Benson of Bloomberg report US Regulators Stiffen Standards for Mortgage Insurers. Radian Group and MGIC Investment are among mortgage insurers that would need to fill a financial gap under new financial strength rules proposed by the Federal Housing Finance Agency. Radian said it would need about $850 million to meet the standard now and expects to be able to comply within a two-year transition period allowed under the rules. MGIC didn’t provide a figure and said it faced a ‘material shortfall.’ Genworth Financial said yesterday that it may need as much as $550 million. U.S. regulators are seeking to stiffen standards for mortgage insurers that back loans sold to Fannie Mae and Freddie Mac to prevent a repeat of the losses the government-backed firms faced in the 2008 financial crisis.”

 

Bloomberg reports McClendon Wildcats For Junk Funding. Aubrey McClendon is returning to his wildcatter roots as the ousted co-founder of Chesapeake Energy Corp. prepares to tap the junk-bond market to help finance what will be the most highly leveraged energy exploration company.

A unit of McClendon’s American Energy Partners LP, NOA, is seeking $1.4 billion, according to a statement from Moody’s Investors Service, which assigned the debt a Caa1 rating. That grade, denoting securities of “very high risk” and “poor credit standing,” reflects undeveloped reserves and “prospective” acreage in Permian Basin drilling rights being purchased from closely held Enduring Resources.

American Energy management and two partner firms are putting up $1.15 billion of equity, leaving potential creditors to finance the bulk of the purchase in a business that will be the most highly leveraged among energy exploration and production companies rated by Moody’s, according to the statement. McClendon previously saddled Chesapeake with $13.3 billion of debt and turned to asset sales in 2012 after falling gas prices led the company to warn it might not be able to service its obligations.

Energy exploration and production companies are the biggest subset of borrowers in the Bloomberg USD High Yield Corporate Bond index, making up more than 7 percent of the $1.44 trillion gauge.

The company’s leverage would be higher than other exploration and production companies rated by Moody’s, which calculates that metric based on debt in relation to reserves and production.

 

India, INP, SCIN, SCIF, SMIN, EPI, traded lower as Keith Jones of WSWS reports India: BJP Tables Right Wing, Pro Investor Budget. The Jaitley budget launched a drive to slash and ultimately eliminate food, fuel and fertilizer-price subsidies. And Jaitley said that increased revenue is a key part of the government’s fiscal consolidation, ie, deficit reduction, strategy. In the budget the government vowed that within the next twelve months it will complete negotiations with the states to replace various state and national taxes with an all-India Goods and Services Tax. Most advanced capitalist countries already have such a consumption tax and it has been an important instrument for implementing a fiscal counter revolution in which the burden of taxation has been shifted ever more from big business and the most privileged to working people. And the government is counting on disinvestment, the partial or complete privatization of public sector companies, to significantly bolster government revenue.

 

The BJP budget outlined ambitious plans to give business, through so-called Private Public Partnerships (PPPs), a pivotal role in the building and administration of all manner of physical and social infrastructure. Jaitley boasted that India is already the world’s largest PPP market.

 

Indian big business is desperate for a quick boost in economic growth so as to escape from large debt-burdens and revive foreign investors’ interest in the Indian economy.

 

This week nation investment loss leaders included:  SCIN, 12.6%, SCIF, 12.3, SMIN, 9.1, PGAL, 9.0, GREK, 7.5, SMEZ, 5.7, EWI, 5.2, EWO, 4.8, IWC, 4.8, EWP, 4.7, EWN, 4.4, EZU, 4.2, INP, 3.7.

 

This week sectors loss leaders included: EPI, 6.4,  TAN, 5.7, SOCL, 5.0, ENY, 4.8, EUFN, 4.3, RZG, 4.3, XOP, 4.2, PSP, 3.9, DFE, 3.8, IAI, 3.9, KCE, 3.8, RZV, 3.7, CQQQ, 3.6, BJK, 3.5, KRE. 3.4.

 

On July 10, 2014, the Banker Regime’s coinage of fiat wealth experienced strong debasement, as investors no longer trust the monetary policies of the world central banks to stimulate investment gains, the development of Global Natural resources, IGE, provide for Global Growth, DNL, procure Nation Investment, EFA, and Emerging Market Nation Investment, EEM.

 

It is out of waves of Club Med, that is Portugal, Greece, Italy and Spain, sovereign, banking, and corporate insolvency, that diktat coming through the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude as the way of life, as investors derisk out of debt trades and deleverage out of currency carry trades.

 

The final phase of the Business Cycle, that is Kondratieff Winter, is an experience in debasement of everything, as destructionism replaces inflationism.

 

Debasement of the coinage of fiat wealth commenced on Monday, July 7, 2014, on fears that Greece, GREK, is an insolvent sovereign, and its bank the National Bank of Greece, NBG, is an insolvent bank,

 

Debasement of the coinage of fiat money, specifically debt deflation in Sovereign Currencies, commenced on July 11, 2014, with a sell by the currency traders of the Canadian Dollar, FXC,

 

Eventually it will be as in Venezuela, where William Neuman of the NYT posts Profits Vanish in Venezuela After Currency Devaluation.

 

 

2) … The world pivots into Kondratieff Winter, the final phase of the Business Cycle.

The Business Cycle is one of investing, and it is an experience in boom and bust caused by the expansion and contraction of credit, where people come to trust in monetary policies of sovereigns, who provide seigniorage, via monetary policies and schemes of control, for economic life.

 

The Cycle’s Abundant Summer came in 1971, when President Nixon went off the gold standard to fund the Vietnam War with Treasury Debt, TLT, and the sovereignty of the Milton Friedman Free To Choose paradigm, underwrote money flows across borders, as credit expanded via the speculative leveraged investment community, with the result that international trade supported investment as the way of life, developing Global Natural Resources, IGE, and establishing global growth, DNL.

 

The Business Cycle’s Bountiful Harvest began in Q2, 2012, with a plummeting of European periphery yields via the Mario Draghi “Do Whatever It Takes” Pledge of LTRO 1, and 2, and completed in Q2, 2014, with a plentitude of credit issuance, that is money creation, as Doug Noland reports in 2014 vs 2007.

 

This year’s booming M&A market has posted the strongest activity since 2007. Second quarter global M&A volume of $1.06 TN was up 72% from the year ago period. Here at home, M&A more than doubled year-on-year to $473 billion, pushing record first-half volume to $749 billion. The proliferation of deals was fueled by the loosest Credit conditions in years. First-half global corporate bond issuance hit an all-time high $2.29 TN. A record $286 billion of junk bonds were issued globally, as average junk yields traded to the lowest level ever. At $642 billion, first-half U.S. investment-grade company bond sales easily posted an all-time high. The first six months of 2014 also saw record issuance of collateralized loan obligations (CLOs). A record number of global IPOs were sold in the first half, with $90.6 billion of offerings 54% above comparable 2013. Led by technology and biotechnology issues, U.S. IPO sales enjoyed the strongest first-half since the height of the technology bubble back in 2000. According to Dealogic, year-to-date total global sales of corporate stock and equity-linked securities reached an unmatched $510 billion, outpacing 2007’s record pace.

 

The entrance into the final phase of the Business Cycle, Kondratieff Winter, is marked by debasement devaluation, and economic deflation. This is seen in the trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower on July 1, 2014.

 

Following, on Tuesday, July 8, 2014, fiat wealth, that is the coinage of the Banker Regime, traded lower in value as fears of Greek insolvency arose, as Mario Draghi pressed Greece for reforms in exchange for a Third Greek Bailout, and as fears of Portugal banking insolvency arose.

 

Then, on July 11, 2014, investors sold out of Commodiites, DBC, DJP; specifically a trade lower in Oil, USO, OIL, BNO and Agricultural Commodities, RJA,  and that together with a sell by the currency traders of the Canadian Dollar, FXC, caused Commodity Currencies, CCX, to trade lower. The Loonie is the first of Banker Regime’s coinage of currencies, to experience debasement.

 

The Banker Regime’s coinage of fiat wealth experienced debasement, as investors no longer trust the monetary policies of the world central banks to stimulate investment gains, nor support  Energy Production, XOP,  the development of Global Natural resources, IGE, provide for Global Growth, DNL, procure Nation Investment, EFA, and Emerging Market Nation Investment, EEM.

 

Economic recession leading to economic deflation is at hand, as BBC reports Falling North Sea Oil Revenue To Hit UK Government Finances.

 

Debt deflation, specifically competitive currency devaluation, is an inherent part of the final phase of the Business Cycle, it doesn’t come though nations selling their currencies, rather it comes through the combined action of bond vigilantes and currency traders carrying out a war of economic destruction against the world central banks; the result of which will be global economic deflation as reported by Nancy Hanover For Profit Education Chain Corinthian College Implodes. Corinthian College plans to sell or close its colleges and trades schools, affecting 72,000 students in the US and Canada.

 

Political will and vision capitulate as the world pivots into Kondratieff Winter. Kathleen Geier posts Dems Abandon Economic Inequality Talk.

 

Syncretism, that is the formation of new religious ideas from multiple distinct sources, emerges as the world enters into Kondratieff Winter. Charisma News reports Heresy Rising: Christian Pastors Embracing New Age Syncretism

 

The economic life experience in Kondratieff Winter is one of debt servitude. Kenneth Rogoff writes in Project Syndicate Europe’s Debt Wish  It is difficult to see how Europe can revive economic growth without significant debt restructuring or rescheduling. Europe’s politicians seem utterly unable to contemplate this scenario, thus placing a huge burden on the ECB.

 

Beginning in 1971 when President Nixon took the US off the gold standard to fund the Vietnam War, the world has been based upon a debt based monetary system. The Eurozone’s debt cannot, and will not forgiven; there will be no debt jubilee.

 

All of the Eurozone debt will be applied to every man, woman, and child in the EU. Through regional framework agreements, the EU will become a panopticon of debt servitude where former citizens of democratic nation states become zines of regional economic governance, these regional debt serfs will be economic zombies living in a land of austerity. Periphery nations will be hollow moons orbiting around Planet Brussels and Planet Germany. The Telegraph reports Germany Gives Green Light To European Banking Union. With the laws, Germany is pressing ahead of EU requirements in protecting German taxpayers from having to foot the bill when a bank gets into trouble. Instead, in a process dubbed a “bail-in”, creditors and owners will have to take losses from 2015, a year before EU rules take effect. The European Central Bank will begin supervision of big banks across the 18 countries that use the euro later this year in a first step in banking union.

 

Kondratieff Winter is characterized by revolution, regional wars, and multiple global wars.

 

Revolution. Marketwatch posts Portugal’s Banking Turmoil Revives Darkest Nightmares About Europe. And Peter Wise of FT reports The Espírito Santos Are No Strangers To Trouble. In the wake of Portugal’s 1974 revolution, several members of the banking dynasty were imprisoned for months by the radical left wing military. After their release, they fled in disguise across the Spanish border to escape probable rearrest. Forty years later, Portugal’s most influential business family again finds itself at the centre of a storm. Fears over the health of Banco Espírito Santo, one of the country’s biggest banks, have triggered a European stock market sell-off and raised questions over Lisbon’s capacity to fend for itself after withdrawing from an international rescue programme. Ricardo Espírito Santo Salgado, 70, head of a business dynasty that goes back almost 150 years, is being forced to step down early after 22 years as BES’s executive chairman as regulators detach the management of the bank from a family riven by rivalries and facing deep financial difficulties.

 

Regional war. Andrea Thomas of Dow Jones reports Germany warned that its economic growth rate slowed in the second quarter because of the Ukraine-Russia conflict and an unusually weak seasonal pick-up this spring, but it stressed that the economy’s overall upward trend was intact. The warning from the country’s economics ministry shows that the stand-off between western countries and Russia over the future of Ukraine has already hurt German companies, the biggest of which are highly exposed to the Russian market.

 

Global war. Turkey, TUR, is very much the World’s Cross Road, and it is continually seeking to retain it status as a viable nation investment destination; this status will end soon.

 

Remo Kernizi remarks Iraq’s recent banning of cargo flights to Erbil and Suleymaniah was meant to punish Turkey and Kurdistan since the only way left for Turkey to export its goods to Iraqi cities is by air (road transport is cut off). It is time Kurdistan declares its independence, own its air space and right to export its crude w/o prospect of legal challenge from Baghdad once and for all.

 

Turkey is going to be the doormat, transit center, and fulcrum point for the Bible prophesied Psalm 83 War, the Ezekiel 38 War, and the rise of the Sovereign to his rule in Jerusalem.

 

Gospel And Prophecy relates Turkey At The Crossroads. Jerusalem was ruled by Turkey a century ago. It had been a part of the Ottoman Empire for four centuries.

 

Over two millennia ago, the kings of the North and South fought repeatedly over the territory of what was then Judah, the ancient nation of the Jews. The two dynasties were the successor states to Alexander’s Greek Empire. Daniel 11 contains a detailed prophecy from the sixth century B.C. that was largely fulfilled in the second century before Christ. However, it was not fulfilled in its entirety. Verses 40-41 of the chapter shows that the final part of the prophecy is still future: “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. He shall also enter the Glorious [Holy] Land, and many countries shall be overthrown.”

 

(Being at the crossroads), the country now known as Turkey will be involved in these end-time events

 

Specifically it is out of waves of Club Med, that is Portugal, Greece, Italy and Spain, sovereign, banking, and corporate insolvency, that diktat in the Mario Draghi Regional Fascism paradigm, underwrites regional economic governance, and debt servitude as the way of life, as investors derisk out of debt trades and deleverage out of currency carry trades.

 

The emergence of a new way of life of debt servitude is seen in the Bloomberg report Turkish Current Account Recovery Exposes Deficit of Trust. Analysts are questioning whether the improvement in Turkey’s, TUR, current-account deficit is sustainable as mounting export risks and prospects for rising imports highlight a key financial vulnerability.

The shortfall narrowed to $3.4 billion in May, according to data published by the central bank today. That took the gap to $19.8 billion in the first five months, down 39 percent from the same period last year. While Turkey’s two-year note yields have posted the second-biggest decline in emerging markets in 2014, analysts including Philippe Dauba-Pantanacce at Standard Chartered Plc say investors aren’t counting on the deficit to keep dropping.

While the central bank is entering a rate-cutting cycle that may boost domestic demand, fighting in neighboring Iraq and a euro-region recovery facing new financial shocks are threatening prospects for exports to Turkey’s biggest markets. The current account is the nation’s “Achilles’ heel,” and improvement may prove “temporary,” Dauba-Pantanacce said.

“A softening of European demand combined with steep headwinds for exports via land on the southern borders might dent the successful export story,” he said by e-mail yesterday. “On the import side, Turkey remains vulnerable to any pickup in domestic demand.”

 

To emphasize, a New Beast, seen in Revelation 13:1-4, is rising to replace the Creature from Jekyll Island. It is headed by A New Charlemagne, seen in Revelation 13:5-10, and a New Monetary High Priest, seen in Revelation 13:11-18. These are rising in sovereignty and seigniorage, to establish the new coinage of totalitarian collectivism it will be the medium of exchange that all trust in for economic life experience.

 

The Banker Regime was characterized by democratic deficit, specifically regulatory capture and  financial intermediation, that is by crony capitalists, such as Johnson and Johnson, JNJ, and by financial intermediaries, such as the Primary Dealers, KCE, such as MS, who benefited from POMO.

 

John Cochrane writes in the WSJ, Ideas for Renewing American Prosperity. Washington is stuck because that serves its interests. Long laws and vague regulations amount to arbitrary power. The administration uses this power to buy off allies and to silence opponents. Big businesses, public employee unions and the well-connected get subsidies and protection, in return for political support. And silence: No insurance company will speak out against ObamaCare or the Department of Health and Human Services. No bank will speak out against Dodd-Frank or the Securities and Exchange Commission. Agencies from the Environmental Protection Agency to the Internal Revenue Service wait in the wings to punish the unwary … in the end, only an outraged electorate will bring change, and growth.

 

The Beast Regime will be characterized by the most extreme type of democratic deficit, specifically regulatory oversight of the factors of production, and economic intermediation, by regional fascists.

 

Open Europe posts May Comes Under Fire For Decision To Opt Back Into European Arrest Warrant;

Grayling relates the whole area of EU justice and home affairs needs to be renegotiated. During yesterday’s Commons debate about the UK opting back in to 35 EU crime and policing laws, Home Secretary Theresa May justified the decision to opt back in to the European Arrest Warrant on the basis that UK law had been changed to introduce a proportionality test, and to allow extradition requests to be turned down if they relate to actions which took part in the UK but are not classified as criminal offences in the UK.  However, the government came under fire from a number of Conservative backbenchers for effectively transferring new powers to the EU. May confirmed that once negotiations between the UK, the European Commission and other member states have been concluded, MPs will vote on the final package.  Justice Secretary Chris Grayling argued that under a majority Conservative government, “The whole area of justice and home affairs needs to be part of [the EU] renegotiation process.” FTTelegraphIndependentTimesGuardianGuardian: Editorial

John Redwood posts European Criminal Justice And The Sovereignty Of The British people. Yesterday, Parliament debated whether to opt back in to 35 of the EU Criminal Justice measures. We have recently rightly opted out of all 135 measures, as we were entitled to under our version of the centralising Lisbon Treaty. I and others told  Parliament why we do not wish to opt back in to anything.

On June 15th 1215 at Runnymede the King conceded an important grant of liberties to Englishmen called Magna Carta. Though this was just one of many evolving constitutional documents thrown up in our history of curbing the powers of  executive government and building a stronger democratic Parliament to curb excessive state power, it has become one of the earliest and most iconic. It gave Englishmen the right to fair trial under English law with proportionate punishments for the guilty. It set up a forerunner of Parliament, an elected council of 25, to supervise the settlement and check up on the government’s good faith in implementing it.

The government plans to celebrate and commemorate this event next year. It is no way to do so by passing control of these important matters of justice to the European Union. I and like minded colleagues fully understand the need for cross border police collaboration, for some common investigations of cross border crime with agencies from other countries, and the need from time to time to extradite possible criminals for trial elsewhere. We do this by Extradition Treaty or agreement with other countries in all but the EU.

The EU wishes us to have different arrangements in the EU, submitting our control and jurisdiction to EU and European Court jurisdiction. This to me is a step too far, and a needless sacrifice of the sovereignty of the British people.

The government argued that the European Arrest Warrant was necessary to get back nasty criminals for trial who had travelled to EU countries. We explained to them that we too wish to see serious crime pursued across frontiers. We wish to have an Extradition Treaty with the EU just as we have such treaties with many non EU countries. That is a better route than putting ourselves under the control of the ECJ and the Commission. We can change, influence or cancel an Extradition Treaty if we wish. Once we have opted into EU criminal justice we are powerless to change anything unless 27 other EU countries, the Commission and the European Parliament agree.

In Kondratieff Winter, austerity is one’s life experience.

WSWS posts It’s Inhumane: Detroit Water Shutoffs Hit Families, Ill And Elderly Residents. Thousands more Detroit families had their water shut off this week as part of the city administration’s plan to cut service to 150,000 households who are overdue on their water bills.

 

Late stage speculative credit bubbles grow into wild animals, for example The Bad Bitch, that is Scarlet Harlot known as Mystery Babylon, seen in Revelation 17:1-5.  God, is calling His People, that is the Elect of God, to come out from the Empire of Deceit, with its slave economy, to experience life in Christ, and the freedom of the economy of God, as presented by the Apostle Paul in Ephesians 1:10.

 

3) … Living in the inner city, that is the downtown area, I have consistently been a bone for psychopaths to chew on.

Skinny Hippo posts Profile of a Psychopath

 

4) … Gold is the only safe asset.

Credit Bubble Stocks posts Silver Is A Very Crowded Long Again. The Silver Miners are in the “sweet spot” being short at today’s price of 20.57. Currently, the market price of Silver is determined by industrial demand. And inasmuch as the world has just entered Kondratieff Winter, the price of silver will soon fall lower with the debasement of all things that takes place in the final phase of the Business Cycle. Beginning in 2015, future price rises above 19.50, the current 200 day moving average, should be bought as such a rise would indicate an investment demand for silver. Gold should be bought and stored in a physically safe place, as it is the only safe haven investment available.

 

5) … Like Duane and Shelly Muir, for me it’s Vacation Time.

Jesus said in Luke 21:28, When these things begin to take place, stand up and lift up your heads, because your redemption is drawing near. Enjoy Johnny Cash, Goin By The Book.

 

Peak Wealth And Peak Money Attained … The World Transitions Fully Into Kondratieff Winter On The Failure Of Credit

July 5, 2014

Financial Market Report for the Week Ending Thursday, July 3, 2014

This post is available in Google Document Format here

Introduction

On Tuesday, July 1, 2014, Credit, AGG, specifically the 30 Year US Government Bonds, EDV, the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, failed, as the Bond Vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, with the result that the world fully entered into Kondratieff Winter, the final phase of the Business Cycle, which commenced when the European Financials, EUFN, the European Small Cap Dividend Stocks, DFE, and the nations of Greece, GREK, and Ireland, EIRL, traded lower in value, on the death of the Euro, FXE, in June 2014.

This inquiring mind asks, Does or did the US Federal Reserve have an anti-inflation mandate or a full employment mandate?

Clearly, the Great Recession and weak recovery are the economic past, what lies ahead?

1) … Global debt deflation is underwriting disinvestment, as the world enters Kondratieff Winter, the final phase of the Business Cycle; with the result that regional economic governance is emerging to replace democratic nation state governance.

In the first half of 2014 hot money flowed into the Australia Dollar, FXA, as investors pursued yield, as is seen in the Bloomberg report Big Four Lead Bond Charge Abroad as Costs Fall  … I relate that the carry trade into Australia, EWA, and KROO, as well as its peer New Zealand, ENZL, is history.

Bloomberg posts Yen Bears Say BOJ Exit Distant as Swaps at ’05 Low: Japan Credit. Interest-rate swaps are signaling the Bank of Japan will lag far behind the Federal Reserve in ending record stimulus, adding pressure on the yen to weaken … I relate that the carry trade in Japan, EWJ, JSC, DFJ, continued vertically higher on July 1, 2014, on the debasement of the Japanese Yen, FXY.

Bloomberg posts Memphis Bond Traders See Ongoing Low Treasury Interest Rates … I relate that the Memphis Bond Traders have it wrong, the Benchmark Interest Rate is moving continually higher, as the Bond Vigilantes have control of this Bow of Economic Sovereignty, as on October 23, 2013, Jesus Christ opened the First Seal of the Scroll of End Time events, and released the Rider on the White Horse, who has the Bow without any Arrows, to begin to effect coup d etats worldwide.

Beginning in July 2014, out of an ever rising Benchmark Interest Rate, ^TNX, climbing from 2.49%, the Bond Vigilantes will soon cause derisking out of debt trades, like those which occurred in the European Financials, EUFN, and deleveraging out of currency carry trades, like those which occurred in the European Small Cap Dividends, DFE, the Eurozone Stocks, EZU, and the Eurozone Nations such as Ireland, EIRL, Greece, GREK, and Austria, EWO. Those invested in EU Equities, were the first casualties in an ongoing war waged by the Bond Vigilantes against the Banker Regime.

World Stocks, ACWX, and Nation Investment, EFA, and Global Financial Institutions, IXG, will be trading lower when Commodity Currencies, CCX, such as the Euro, FXE, the Australian Dollar, FXA, and the Canadian Dollar, FXC, start to fall lower than the Yen, FXY, on the ongoing exhaustion of the world central banks’ monetary authority, as investors increasingly fear that the monetary policies of The Titans have crossed the rubicon of sound monetary policy, and have made “money good” investments bad. This will be seen in the ongoing Yahoo Finance Chart of CCX, FXY, ACWX and EFA. Look for the ratio of EUO to YCS, that is EUO:YCS, to become increasingly negative, forcing investors out of Euro Yen carry trade, that is EURJPY currency carry trades, as well as out of currency carry trades worldwide.

Given that the world operates on a debt based money system, the tug of war between the world central banks and the Bond Vigilantes, has, and always will create money. Trust in the nations’ ability to make good on its debt has underwritten the legitimacy of fiat money.  Now on July 1, 2014, fiat money is dying, as exemplified in the Euro, FXE, trading lower; and diktat money is being established to provide one’s economic life experience.

This inquiring mind asks, What is the origin of our current economic experience? And just like who is coding our economic life experience  now?

Hollywood has it right, in Prometheus like fashion, the Bond Vigilantes are creating a new monster. The Creature from Jekyll Island, is morphing to become something more terrible, that being The Beast Regime of Regional Economic Governance and Totalitarian Collectivism. It is gestating and will be rising out of disinvestment and out of economic deflation, to establish policies of diktat in every one of the world’s ten regions, and schemes of control throughout all of mankind’s seven institution, as foretold in Bible prophecy of Revelation 13:1-4. New Titans will rule this monster, just as the former Titans, Janet Yellen, Ben Bernanke, Mark Carney, Haruhiko Kuroda, have rule the former monster.

Fiat money, defined as the combination of Credit, AGG, and Major World Currencies, DBV, and Emerging Market Currencies, CEW, is starting to die; as exemplified in the Euro, FXE, and is being replaced by diktat money, defined as the diktat of regional sovereign leaders for regional security, stability, and sustainability; with the result that regional economic governance is replacing democratic nation state governance.

On Monday, June 30, 2014, Automatic Earth postsIt’s A Case Of Bad Debt Driving Out Good Money. The difference between debt and equity is the same as that between debt and money. And McNally wrote a great piece on how debt drives out equity in our world, and reaffirms Gresham’s law.

Ralph Atkins, the FT’s capital markets editor, relates Euro Debt Constraining Growth discusses high private sector debt levels in the eurozone with Moritz Kraemer, S&P’s chief sovereign ratings officer. Mr Kramer says Europe is ‘in for the long haul’ on debt deleveraging.

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 isRanked number 1 out of 742 like investments.

The final phase of Global ZIRP, is known as peak finance, and is producing a stupendous moral hazard based peak wealth, which has come via the three economic dynamos of creditism, corporatism, and globalism.

The ongoing Yahoo Finance Chart of the Russell 3000, IWC, illustrates how Stock Buybacks are part of Peak Finance. David Stockman writes Bubble Finance At Work: How The Share Repurchase Mania Is Gutting Growth And Leaving Financial Wrecks. With the stock market returning tobubble territory, stock buybacks for the Russell 3000 amounted to$567.6 billion in 2013. Share repurchases, in the previous bubble, hit an all-time high of$728.9 billion in 2007; right before the financial crisis of 2008 unfolded. It seems, indeed, as if corporate executives become intoxicated by bull markets in stocks. Can you say “buyback fever”?

For followers of Austrian economics, it is understood that stock market bubbles are fueled by the Federal Reserve’s monetary pumping; which goes hand-in-glove with artificially low interest rates engendered by the Federal Reserve. Consequently, misleading interest rate and price signals can cause businessmen to make costly errors in judgment. Since stock buybacks, misguidedly, are consideredinvestments in one’s own business, are we not witnessing a massive clustering of errors with innumerable executive management teams authorizingmalinvestment on a grand scale? Instead of businessmen misreading market signals and mal investing in capital and producers goods, many are male investing in shares of their own companies via stock buybacks.

Peak Finance came through the terminal excesses of the speculative leveraged finance of Minsky Capitalism and is seen in capital flows into High Beta ETFs, such as the IPOs traded by FPX.

Katie Roof of Fox Business reports IPO Mania. The first half of the year is off to the best start since 2000 for U.S. IPOs, according to Dealogic. There have been 154 IPOs raising $36 billion in the first six months of the year, compared to 235 IPOs and $67 billion in the first half of 2000. Leading the pack with the most IPOs is the healthcare sector, which has seen 55 IPOs raising $4.1 billion, largely stemming from a biotechnology boom. Technology has seen the most volume, with $10 billion raised from 33 offerings… Venture-backed IPOs have had a strong turnout with 63 IPOs, compared to 30 in the first half of last year. The last time venture-backed IPOs had a stronger start was in 2000, with 166 deals priced in the first 6 months. In terms of volume, this has been the best year ever for financial sponsors. Fifty-five private equity-backed IPOs have raised $24 billion so far this year.

On Monday June 30, 2014, Commodities, DBC, traded lower on lower Agricultural Commodities, RJA, as CORN, WEAT, JJG, SGG,  and SOYB, traded lower, which turned theDefensive Sector, Global Agriculture, PAGG, lower.

On Tuesday, July 1, 2014, the world passed through a historic economic inflection point, asCredit Investments, that is Aggregate Credit, AGG, specifically the 30 Year US Government Bonds, EDV, the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, failed, as the Bond Vigilantes called the Interest Rate on the US Ten Year Note,  ^TNX,  higher from 2.49% to 2.56%, and which in so doing traded lower from a double top high.

The trade lower in the US Sovereign Debt, means the end of the era of US Dollar Hegemony, establishes the beginning of the end of the US Dollar Empire, and communicates the end of Global Finance.  Inverse Credit Investments, such as JGBS, SAGG, TMV, DTYS, and TTT, traded higher.

Dan Sanchez posts in Medium War Is the Health of The…Economy?   I  reply war has been the health of the economy; but with the trade lower in US Treasuries, US Dollar Global Hegemony is being replaced by regional fascism of the Ten Toed Kingdom of regional economic governance and totalitarian collectivism.

And of  note, the Bond Vigilantes also steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TYX; seen in the Steepner ETF, STPP, steepening.

Currency traders called the Japanese Yen, FXY, lower, and the British Pound Sterling, and two Commodity Currencies, CCX, these being the Australian Dollar, FXA, and the Canadian Dollar, FXC, higher, with the result that most Equity Investments, that is World Stocks, ACWX, traded to new rally highs, as funds flowed out of the Credit Investments, that is Aggregate Credit, AGG, as global debt deflation commenced on July 1, 2014.

The failure of Credit, AGG, on Tuesday, July 1, 2014, propelled the world into Kondratieff Winter, is a painful economic experience, as it involves a see saw destruction of Fiat Wealth, such as the Eurozone Stocks, EZU, and Eurozone Nations, such as Ireland, EIRL, and Greece, GREK.

Junk Bonds, JNK, traded parabolically lower; these are now a failed investment.  Reuters reports Global Investors Pare Risky Bond Holdings, Brace For Sell-off

The 30 Year US Government Bonds, EDV, and the 10 Year US Government Notes, TLT, traded decisively lower. The Pursuit of Yield Rally, that commenced in January 2014, ended on July 1, 2014.

Confirmation of the end of the Pursuit of Yield, comes from 1) Dividends Excluding Financials, DTN, trading below their June 24, 2014, rally high, 2) all of the High Yielding Debt, such as High Yield Municipal Bonds, HYD, with the exception of European Credit, EU, traded lower in value, and 3) risk free money, that is Floating Rate Notes, FLOT, traded sharply lower on July 1, 2014.

Vox writes Managing Credit Bubbles. That is an impossibility! The Global Bond Bubble burst on July 1, 2014, communicating the failure of credit has commenced, with the result that the world is starting to pivot from the age of credit and currencies, and into the age of diktat and debt servitude.

The trade lower in Credit Investments, AGG, is a profound historic change, as debt has been the engine of growth; the global economic future is one of economic deflation, now that debt is trading flower in value.  The Jeremy Warner Telegraph analysis comes too late. We [in the UK] must end this addiction to debt as the engine of growth. There has been no serious attempt to get to grips with the financial cycle, which requires moving away from debt as the engine of growth.

The fact that destructionism is starting to replace inflationism establishes the fact that the world has entered into Kondratieff Winter, the final phase of the Business Cycle.

When Sovereign Currencies, trade lower, debt deflation in Equity Investments, that is World Stocks, ACWX, will get strongly underway as the death of currencies commences.

On July 2, 2014, High Beta Investments, such as Large Cap Nasdaq, QQQ, and  Consumer Service IYC, such as DIS, led Equity Investments,  ACWX,  to a new rally high.

Gulf States, MES, Taiwan, EWT, Greece, GREK, Italy, EWI, Ireland, EIRL, Japan, EWJ, JSC, India Small Caps, SCIN, The US Small Caps, IWM, IWC, Peru, EPU, Columbia, GXG, Vietnam, VNM, Thailand, THD, Argentina, ARGT, The UK, EWU, EWUS, and Canada, EWC, CNDA, led Nation Investment, and Small Cap Nation Investment, EFA, higher to its June 24, 2014 high..

Regional Banks, KRE, Argentina Banks, BMA, GGAL, BFR, BBVA, India Bank, HDB,  Japanese Banks, MTU, SMFG, NMR, IX, Panama Bank, BLX, and, Columbia Bank, CIB, led Global Financials, IXG, higher; but these remain below their June 2014, rally high.

Japanese Small Dividends, DFJ, India Earnings, EPI, Emerging Market Small Cap Dividends, DGS, International Telecom, IST, Shipping, SEA, Leveraged Buyouts, PSP, Global Utilities, DBU, Premium REITS, KBWY, Water Investments, FIW, Emerging Market Infrastructure, EMIF, Global Infrastructure, IGF, Energy Partnerships, AMJ, EMLP, MLPJ, and Regional Banks, KRE, led Yield Bearing Investments higher; while Utilities, XLU, and Mortgage REITS,  REM, traded lower.

On Wednesday, July 2, 2014,  Copper Miners, COPX, Steel Producers, SLX, Global Industrial Miners, PICK, Healthcare Providers, IHF, traded higher, taking World Stocks,  ACWX, to a new rally high, drawing Copper, JJC, and Base Metals, DBB, higher.  Of note, Tesla, TSLA, traded lower.

The chart of the S&P 500, $SPX, SPY, shows a trade higher, to a new all time high.

Australian, EWA, KROO, China Financials, CHIX, Hong Kong, EWH, China, YAO, and Taiwan, EWT, led Asia Excluding Japan, EPP, to a new rally high. The Gulf States, MES, India, INP, Russia, RSX, Eastern Europe, ESR, Thailand, THD, Peru, EPU, Denmark, EDEN, Mexico, EWW, and Argentina, ARGT, traded higher; while Brazil, EWZ, EWZS, BRF, traded lower on a lower Brazilian Real, BZF. Poland, PLND, EPOL, traded lower. China Investments traded higher as Bloomberg postsChina Debt Set for Biggest Quarterly Gain in Two Years on Easing.

In Yield Bearing Investments, Electric Utilities, XLU, such as Dominion Resources, D, traded parabolically lower, leading Dividends Excluding Financials, DTN, lower. Water Investments, FIW, and International Telecom IST, traded lower.  Leveraged Buyouts, PSP, traded to a rally high.  Gulf Dividends, GULF, Australis Dividends, AUSE, China Dividends, CHXF, China Real Estate, TAO, traded higher.

The Bond Vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, strongly higher, and steepened the 10 30 US Sovereign Debt Yield Curve, seen in the Steepner ETF, STPP, trading higher, which drove Aggregate Credit, AGG, strongly lower, on lower 30 Year US Government Bonds, EDV, US Ten Year Notes, TLT, High Yield Municipal Bonds, HYD, Long Duration Corporate Bonds, LWC, Corporate Bonds, LQD, Mortgage Backed Bonds, MBB, and Municipal Bonds, MUB.

Currency Hedged Stocks, HEDG, traded lower, communicating that the way is now down for all stocks.

The nature of our current world is that it operates on a debt based economic system, and this begs the question, what is money?

Libertarian Mark Thurston of The Mises Institute, ask What Is Money?

Social Democracy posts Alfred Mitchell Innes on the Credit Theory of Money

Money is defined as the combination of Aggregate Credit, AGG, together with Major World Currencies, DBV, and Emerging Market Currencies, CEW.

And I present the Modern Credit Theory of Money. Money is defined as the credit and flow that proceeds from a sovereign for one’s economic life experience. Money is the trust of people in the sovereign authority’s monetary policies and schemes for economic life experience; it will either be one of prosperity or austerity; and is determined by the viability of the sovereign’s debt, and the Interest Rate there upon.

Inasmuch as the Bond Vigilantes have called the Benchmark Interest Rate, $TNX, consistently higher from 2.49% to 2.56 on July 1, investors no longer consider the Banker Regime’s credit viable, and as a result, July 1, 2014, establishes peak money, and marks a pivoting from the age of prosperity to the age of austerity.

The Banker Regime’s fiat money, was based upon policies of investment choice and schemes of credit liquidity; it is giving way to the Beast Regime’s diktat money, which is based upon policies of diktat and schemes of debt servitude.

The Banker Regime’s coinage was reworked with Global ZIRP beginning 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.

That coinage has topped out in value; it is becoming debased as investors no longer believe that the sovereign’s policies and schemes can stimulate investment gains in the acquisition of Risk Assets, such as Small Cap Pure Growth Stocks, RZG, such as the Fracking Companies, or Small Cap Pure Value Stocks, RZV, such as the Automobile Dealers, or procure global economic growth.

The ongoing printing of money by the US Fed, has resulted in a relentless rise in the Money Supply which has debased our currency, and is now starting to create Headline Inflation, as reported by numerous news sources.

A new coinage, that being the trust of people in the mandates of fascist regional leaders will be increasing in value, establishing regional kings in each one of the world’s ten regions, as the Ten Toed Kingdom of regional economic governance and totalitarian collectivism (presented in Daniel 2:25-45)  grows in greater economic viability (as foretold in Revelation 17:12).

To be official, money bears the stamp of its sovereign, in the case of the US Dollar, the Pyramid on the back of the US Dollar, and in the case of diktat money, it bears the seal of Mario Draghi.

Eventually out of the total failure of diktat money, the Sovereign, and the Seignior, will rise to rule the world from Jerusalem, in a One World Government, and in a One World Religion, with One Coin To Rule Them All, that is the Charagma Money System, presented in Bible Prophecy of Revelation 13:18, where one takes the Sovereign’s Mark in order to conduct any economic activity.

On Thursday, July 3, 2014, Gold, GLD, traded slightly lower as the Dow, DIA, topped 17,000, and as the S&P 500, SPY, traded to a new rally high, producing peak wealth, coming as investors have sold out of Credit Investments, AGG, as the bond vigilantes called the Interest Rate on the US Ten Year Note, ^TNX, higher to close the week at 2.65%, and steepened the 10 30 US Sovereign Debt Yield Curve, $TNX:$TNX, seen in the Steepner ETF, STPP, steepening.

It was a slaughter house in Credit Investments, as the 30 Year US Government Bond, EDV, and US Ten Year Notes, ^TNX, traded strongly lower.

While the world has achieved peak wealth and peak money, Bonds, BND, are no longer a viable investment. The world is transitioning into the final phase of the Business Cycle, that is Kondratieff Winter, on the failure of credit, that is the failure of Credit Investments, as the Bond Vigilantes have called the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.

European Credit, EU, is now trading lower; in fact all Credit Investments are now trading lower from their rally highs.

Bond King, Bill Gross, is going the wrong way.  Bloomberg reports Pimco’s Bill Gross Bets $200 Million Of His Own Cash On Low Rates.  Bill Gross has wagered almost $200 million of his own money on a bet that interest rates will stay low.

Since 2008, the Banker Regime’s policies of investment choice and schemes of credit liquidity provided six years of  risk-free investing leading to a fantastic swell of Equity Investments.

Today was  no exception, in a strong but of risk-on investing, the legacy sectors, Timber Producers, WOOD, Metal Manufacturing, and Steel, SLX, traded higher. Small Cap Pure Value Stocks, RZV, Small Cap Pure Growth Stocks, RZG, Semiconductors, SOXX, Global Industrial Producers, FXR, Transportation, XTN, Smartphone, FONE, China Technology, CQQQ, Networking, IGN, Media, PBS, Internet Retail, FDN, Biotechnology, IBB, Health Care Providers, IHF, Global Miners, PICK, Copper Miners, COPX, Coal Miners, KOL, Rare Earth Miners, REMX, Automobiles, CARZ, and Consumer Discretionary sectors, Global Consumer Staples, KXI, Global Consumer Discretionary, RXI, Retail, XRT, Consumer Services, IYC, traded higher, taking World Stocks,  ACWX, to a new blow off market top high.

Credit Services, such as AXP, V, MA, DFS, CIT, ECPG, FCFS, PRAA, as well as HEES, URI, traded higher.

China Financials, CHIX, Argentina Banks, BRF, BMA, BBVA, GGAL, and Mexico’s Bank, BSMX, traded higher, taking Emerging Market Financials, EMFN, higher.  Regional Banks, KRE, Investment Bankers, KCE, Insurance Companies, KIE, and Asset Managers, traded higher, taking Global Financials, IXG, higher, to match its previous rally high.

The Philippines, EPHE, China, YAO, ECNS, Hong Kong, EWH, and Taiwan, EWT, led Asia Excluding Japan, EPP, to a new rally high.

Columbia, GXG, Peru, EPU, Mexico, EWW, Argentina, ARGT, Chile, ECH, and Egypt, EGPT, led the Emerging Markets, EEM, to a new rally high.

New Zealand, ENZL, and Netherlands, EWN, both high-beta nation investments, recovered all of last weeks’ losses. The UK, EWU, Canada, EWC, CNDA, Denmark, EDEN, and the Russell 2000, IWM, rose to a new rally highs, taking Nation Investment, and Small Cap Nation Investment,  EFA, to a new rally high.

As a group Yield Bearing Investments, traded unchanged. Electric Utilities, XLU, and Mortgage REITS, REM, plummeted; while China Real Estate, TAO, India Earnings, EPI, and Emerging Market Small Cap Dividends, DGS, China Dividends, CHXF, and Leverage Buyouts, PSP, traded to new all time highs.

Gold, GLD, traded slightly lower, as the US Dollar, $USD, UUP, and US Stocks, VTI, traded higher, as the highly volatile Swedish Krona, FXS, the Australian Dollar, FXA, the Swiss Franc, FXF, and the Euro, FXE, traded lower; Commodity Currencies, CCX, traded parabolically lower.

Please consider that not only has the failure of credit commenced in July 2014, with Aggregate Credit, AGG, trading lower, but also the death of currencies, has commenced as well, with the trade lower in the Swedish Krona, FXS, the Swiss Franc, FXF, and the Commodity Currencies, CCX, such as the Euro, FXE, and the Australian Dollar, FXA.

A new father for a new age. The Monetarist Milton Friedman be dead; and the Regionalist Mario Draghi is rising to take his place.

The debt based money system is starting to crumble, the Milton Friedman Free to Choose paradigm of Floating Currencies is being relegated to the dustbin of history, and in its place the Mario Draghi paradigm of Regional Diktat is rising to provide economic life experience.

Although I am not an Austrian Economist, they correctly champion the principle of the Business Cycle, and the world is entering Kondratieff Winter, its final season, as investors are selling Bonds, BND, on the reality that the monetary policies of the world central banks and their schemes of credit liquidity, that is massive torrents of Fed money-printing, have crossed the rubicon of sound monetary policy and have made money good investments bad, these include Eurozone Stocks, EZU, European Financials, EUFN, and Eurozone Nations, such as Ireland, EIRL, Greece, GREK, and Austria, EWO.

I buy into the Austrian line that gold is economic freedom and QE is slavery. Like the Austrian Economists, Robert Murphy, Robert Wenzel, Lew Rockwell, and Mike Mish Shedlock, I believe that physical possession of gold bullion, is the only reliable, sound, and sustainable investment; and I encourage one to dollar cost average into the purchase, possession, and safe storage of this hard asset.

Noah Smith writes Austrian Economists And Brain Worms Austrianism wraps itself in the rhetoric of personal freedom and conservative politics, laying the free-market rhetoric on thick.

I do not champion personal freedom, nor do I have any free-market convictions, rather I have been force fed the Red Pill by God, and thus have succombed to the concept of the Apostle Paul in Ephesians 1:10, that Jesus Christ acts in dispensation, that is in stewardship of all things political and economic, bringing them to completion and perfection. And having produced peak liberalism, meaning freedom, from the government, that He is now introducing authoritarianism, where regional fascist leaders will establish regional economic governance and totalitarian collectivism, and rule in policies of diktat and schemes of debt servitude.

2) … Will the world move towards a Global Fed or towards regional economic governance?

Towards a Global Fed?

Liberal Economist Brad Delong of the Center for Equitable Growth posts The Federal Reserve Needs to Fulfill Its Global Role. The Federal Reserve these days is focusing well-nigh completely on the state of the US economy. It is broadly happy with its policies. I am not happy with its policies, not even from a narrow domestic demand-management perspective. Since mid 2007 policy has been and remains insufficiently expansionary: behind the curve.

The United States is not just another large open economy in a world of flexible exchange rates capable of following its own monetary policy. The United States is a global hegemon. The Federal Reserve is thus a global central bank: the central bank for the world as well as the United State.

It has a responsibility not just to stabilize output, employment, and inflation and ensure financial stability in the United States. It has a responsibility to successfully manage the world economy in its entirety: that means crafting policy in the interest of the world as a whole, and that means that its policy should take into account and compensate for market, institutional, governance, and policy failures elsewhere. One such areas of concern is the health and stability of growth in emerging markets as they attempt to (a) gain the benefits of capital inflows for development, (b) satisfy North Atlantic demands for open financial markets, and yet (c) manage the resulting instability created by “hot money”, the carry trade, irrational exuberance, and overshooting.

The most extraordinary problem facing the global economy today is the crisis of Europe, and of euros. Europe cannot resolve this crisis. It lacks the institutions of global governments to do so. What needs to happen is the northern and southern Europe need to rebalance their costs this is best done through insulation in the north rather than through deflation in the south. The problem is that European institutions within the euro zone cannot at least as presently constituted, deliver that outcome.

That is a mammoth failure–in labor market flexibility, in the construction of the institution of a single currency that far exceeds what is justifiable on optimal currency-area principles, in what groups and interests are represented to what degree in the governing councils, and in the policies adopted–that it is the Federal Reserve’s duty to craft global monetary policy to attempt to offset and neutralize, to the limited degree that it can.

The fact that the eurozone lacked the labor market flexibility that would make it an optimal currency area meant that adjustment via the regional reallocation of economic activity would be glacial. The fact that the eurozone was a fixed currency zone ruled out adjustment via nominal depreciation.

There were only two roads to recovery: reflation in northern Europe to push up relative costs and boost the north’s demand for exports from the south to allow it to pay off its debts and deleverage, or deflation in southern Europe to push down its relative costs–at the price of deep depression and lost decades. It is in the strong medium- and long-run interest of United States not to have to deal with a Europe swirling with political currents that at the least flirt with nationalism, authoritarianism, and fascism. A world in which the United States has a proven record of fulfilling the trust it has taken on by assuming the role of global economic hegemon–and thus in which the United States is trusted to manage the global economy for the collective common good–is a much better world for the United States then one in which it is not trusted, and in which global macroeconomic management becomes the emergent result of nation-level race to the bottom policy struggles that at best zero-sum.

Or Towards Regional Economic Governance?

With the trade lower in Aggregate Credit, AGG, specifically the 30 Year US Government Bonds, EDV, and the 10 Year US Government Notes, TLT, and Junk Bonds, JNK, coming as the Bond Vigilantes calling the Interest Rate on the US Ten Year Note, ^TNX, higher from 2.49%, the US Fed be dead.

The call of the Benchmark Interest Rate, higher from 2.49% to 2.56%, by the Bond Vigilances, has done what Ron Paul and the Libertarians have consistently called for: an end to the Fed.

The Bond Vigilantes call of the Benchmark Interest Rate, ^TNX, higher from 2.49% to 2.56% on July 1, 2014, ended the Fed, at least the Fed, as it is construed in masterminding Interest Rates lower.

US Treasury Debt is no longer the driving economic force in the world, and as a result the Dollar Standard, Super Imperialism, and the US Dollar Hegemonic Empire, as described by Michael Hudson, just like the previous global empire, the British Empire, is being relegated to the dustbin of history.

The modern day, debt based, fiat money system failed on July 1, 2014, as the Bond Vigilantes, called the Benchmark Interest Rate higher, $TNX, higher from 2.49% to 2.56%.  Throughout history, nation states and empires have died when their debt is no longer seen as trustworthy. The death of the US Dollar Empire occurred on July 1, 2014 as Credit investors were displaced by the Bond Vigilantes calling its 10 Year Note Interest rate higher.

From 2008 onward, the Global ZIRP monetary policies of the world central banks were really never designed for attaining price stability and employment, and thus have not provided economic recovery; rather the monetary policies were designed to change the primary function of money to serve as the basis of fiat wealth investment; and thus birthed the investor, and investment gain, as the centerpiece of economic activity, with the result being awesome fiat wealth inflation.

In contrast, the June 5, 2014 Mario Draghi ECB Mandate for NIRP and Targeted LTRO, together with theJune 21, 2014, Mario Draghi ECB Press Announcement Calling For Shared Sovereignty, address secular stagnation, defined as low growth, low employment, and low inflation.

These serve as the EU Economic Manifest, that is the Charter and Club, for Eurozone regional governance, and have birthed the debt serf and debt servitude, as the centerpiece of economic activity, and will become ever more apparent and defined, as the call for shared sovereignty becomes ever more trumpeted, as economic deflation worsens when investors increasingly derisk out of debt trade investments and deleverage out of currency carry trade investments.

The Business Cycle is one of investing, and its nascent entrance into its final phase, that is Kondratieff Winter, is seen in trade lower in European Financials, EUFN, on June 24, 2014, which is the result of a trade lower in the Euro, FXE, beginning in early May 2014, and its full entrance with the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014.

The Eurozone sovereigns, that is the Eurozone Nation States, with their policies of investment choice and credit liquidity, no longer support investment gain.  Because they are insolvent sovereigns their investment seigniorage has failed.  News reports communicate that the Eurozone periphery nations, such as Portugal, Italy, Greece and Spain, are loaded with all types of debt, not just Treasury Debt  that cannot be repaid; this includes The WSJ Report Bad Property Loans Stick to Italian Banks. A Fraction of bad loans has been bought by investors.  Other news reports consistently communicate that prosperity has been relegated to the dustbin of history by economic deflation; this includes the CNBC report Eurozone Retail Sales Stall As Households Feel Pain.

Failed sovereigns and failed seigniorage cannot, and does not provide ongoing economic experience; such only provide economic deflation and economic chaos.

The Bond Vigilantes, are in control of the Bow of Economic Sovereignty, and in calling the Interest Rate on the US Ten Year Note, ^TNX, from 2.49% have effected an investment coup d etat, destabilizing sovereign authority in the Eurozone, and in the US. They will be increasingly successful, in calling the Benchmark Interest Rate progressively higher.

In the Eurozone, a new sovereign, Jean Claude Juncker, and a new seignior, meaning top dog banker who in the process of coining money takes a cut, Mario Draghi, will lead the way forward in establishing regional economic governance as well as in providing new seigniorage of diktat money, to establish regional security, stability and sustainability.

Liberal Economist asks Are Calls for Income Redistribution Based on Envy or Justice?

In the new normal Mario Draghi economy of shared sovereignty, and the new normal Jean Claude Juncker economy of negotiated government, the call of liberals for income redistribution will not be met, as the mandates of these two Eurozone Titans and their soon to be appointed regional fascist leaders, will establish increasing austerity for all of the EU’s citizens.

The Eurozone will serve as the headquarters, and template, for the development of the Beast Regime of regional economic governance and totalitarian collectivism, which is synonymous with the Ten Toed Kingdom, which is replacing the US Dollar Hegemonic Empire now that the 30 Year US Government Bonds, EDV, and the US Ten Year Notes, TLT, are trading lower on the Bond Vigilante’s Call of the Benchmark Interest Rate, $TNX, higher from 2.49% to 2.56%.

3) … Times are changing: the world central bankers are now communicating their common intention to develop macroprudential regulation tools for financial system stability, and turn away from traditional interest rate policies.   

FT writes Fed Must Not Linger Too Long On QE Exit.

David Wessel posts in the WSJ Central Bankers Appear to Line Up their Defenses … And Create The Macroprudential Maginot Line.  It looks like there has been some international coordination of monetary policy rhetoric lately.

With price and wage inflation not a concern right now, we aren’t going to raise interest rates and throw a lot of people out of work to avoid excesses in financial markets or to head off possible asset bubbles, they said. There may come a day when our worries about financial stability will prompt us to hike interest rates, but rates are “the last line of defense.” Not now. The “first line of defense” is making the financial system more resilient so it can better withstand shocks and using our supervisory and regulatory “macroprudential tools” to rein in excesses, as we are doing now.

This inquiring mind asks, just what are “macroprudential policies”, and “macroprudential tools” for financial system stability? And what might they include?

Macroprudential tools are central bank regulations designed for financial stability; frankly they are quite blunt central bank clubs. Mike Mish Shedlock posts Spain Issues Retroactive 0.03% Tax on Bank Deposits to “Boost Economic Growth and Job Creation”. Via translation fromLibre Mercado, Spain will retroactively tax bank deposits to January 1, 2014 stating the move will boost growth and job creation. Other tools might be exit taxes from bond funds, another might be capital controls, and yet another might be for banks everywhere to be integrated with the government and be known as the government banks or gov banks for short. In the US most every bank, that is Money Center Banks and Regional Banks, have US Government Treasury Notes, TLT, residing at the Fed. As the Benchmark Interest Rate, $TNX, rises banks might be tempted to withdraw these monies from Mother Fed. So I believe the Fed will put a hold on such action and start to integrate banks into the Fed.

The Fed will be changing and morphing into the North American Fed, and will become the Atlantic compliment to the ECB, that is a North American Continent, that is Canada, Mexico, and America Regional Central Bank, which will serve as the singular banking institution for CanMexAmerica, that is the Regional Financial Hub, for the soon coming North American Union.

4) … LBJ’s Grandchild start to receive assistance.

Manchester, Clay County, KY, 40962, is a place of rural concentrated poverty. The Rural Blog posts 6 E. Ky. Coal Counties Are Among U.S.’s 10 Hardest To Live In, New York Times analysis says.

Down With Tyranny posts Politics And Race In Those 10 Worst Counties To Live In In America.

Can you guess where the political sympathies of these poor desperately difficult counties lie? Romney won each white majority county and Obama won each black majority county.

Viral Spell posts Clay County Is The Most Difficult One To Live In Among All US Counties.

PRB posts Clay County Has A Child Poverty Rate Of 50%

WSON Radio reports 2 Eastern Kentucky Labor Unions Endorse Republican Mitch McConnell. Campaign officials announced Monday that officials with the American Federation of Government Employees correction officer locals in Clay and McCreary counties endorsed Mitch Mcconnell because of his history of constituent service. McConnell has pushed for national right-to-work legislation, which many labor unions oppose. McConnell’s Democratic challenger Alison Lundergan Grimes has been endorsed by the Kentucky chapter of the AFL CIO and has promised to vote against right-to-work legislation.

WYMT TV reports Coordinator Chosen For Promise Zone In Kentucky. Kentucky Highlands Investment Corp has picked a program coordinator for the Promise Zone program in eight counties in southeastern Kentucky. Sandi Curd will manage implementation of the Promise Zone strategic plan. She’ll also serve as liaison between Promise Zone communities and the KHIC, which is regional administrator for the initiative. The area of Bell, Harlan, Letcher, Perry, Leslie, Clay, Knox and part of Whitley counties were awarded one of five national Promise Zone designations. The regions will be targeted for tax incentives and federal grants aimed at improving the economy and expanding educational opportunities.

Town Hall/AP posts Obama Unveils First 5 ‘Promise Zones.  President Obama offered a glimpse at his coming State of the Union address and its expected emphasis on economic disparities while announcing five communities that will be targeted for tax incentives and federal grants under a government “Promise Zone” program.

“We’ve got to make sure this recovery, which is real, leaves nobody behind,” he said. “And that’s going to be my focus throughout the year.”

Obama named the new zones, a blend of rural, urban and tribal communities, at a bipartisan White House assembly, underscoring the type of administrative actions Obama wishes to employ that don’t all require congressional action.

Amid a slow recovery that has not reached many at the lowest rungs of the economy, addressing poverty has become an emerging issue in Washington. Obama has made it a central part of his agenda, and leading Republicans, including potential 2016 presidential contenders, are using the 50th anniversary of President Lyndon B. Johnson’s War on Poverty to offer policy proposals aimed at the poor and struggling workers.

Among those attending the White House event Thursday were Senate Minority Leader Mitch McConnell, R-Ky., a frequent critic of Obama economic policies. McConnell says he supports the “Promise Zone” designation for eight economically hard hit counties in his state, though he said the hardship endured in that coal region of the state is partly a result of the Obama administration’s energy policies. Kentucky’s junior senator, Republican Rand Paul, also attended the White House even

5) … In the News

The Mexico American Border is the test bed for developing martial law, and the emergence of Blue Helmet Order in the United States. The WSJ reports Obama Plans Executive Action to Bolster Border Security. President to act after declaring Immigration Legislation dead for this year.

Bloomberg suggests Hartford CT, and Providence RI, are The Riskiest Housing Markets In America.

Marianne Arms of WSWS posts Italian  Comedian Beppe Grillo’s Five-Star Movement Joins Ranks With The Far Right. The alliance with UKIP is confirmation of the right-wing character of Beppe Grillo’s M5S.

Nick Beams of WSWS post Another Global Financial Crisis In The Making, Bank for International Settlements Warns The BIS report is the latest in a series of warnings that the present financial boom is creating the conditions for another crisis.

Lance Roberts of STA Wealth Management posts in Zero HedgeThe Great American Economic Growth Myth.

Forbes postsAustria Falls Out With Bavaria Over Zombie Banks. There’s a nice little storm brewing in the Eurozone core. Reuters reports that the German province of Bavaria is considering legal action against Austria. And it is seeking support for its action not only from the German federal government, but also from the EU.

Open Europe reports Nicolas Sarkozy Placed Under Investigation For Corruption.  Former French President Nicolas Sarkozy has been placed under official investigation on suspicions of “active corruption” and “influence peddling”. He allegedly promised a high-ranking French judge a lucrative job in Monaco in return for confidential information about other investigations relating to the financing of his presidential campaign in 2007. A judge will decide whether Sarkozy will have to stand trial once the investigation is concluded. Meanwhile, a leader in the Times argues, “As the 2017 [French] presidential election draws near – in the same year as a likely British referendum on Europe – [the French Socialists] can also be expected to resort to anti-British obstructionism as a sop to the hard left.” SpiegelEUobserverHandelsblattTimes Reuters DELe MondeLe FigaroFT: CarnegyOpen Europe blogTimes: LeaderBBC

Mike Mish Shedlock posts New Orders for Manufactured Goods Down More than Expected, Inventories Up 18 of 19 Months, Highest Since 1992

RT reports Ukraine’s Reverse Gas Flow From Europe Is Artificial, Putin Says.  And RT reports Legality Of Reverse Gas Deliveries From Europe To Ukraine Are Under Doubt .  And RT asks  Is It legal? Ukraine Seeks To Fill Gas Gap With Reverse Flows.

Mike Mish Shedlock posts Full-time Employment Falls By 523,000!

Money is the trust of people in the sovereign authority’s monetary policies and schemes for economic life experience; it will either be one of prosperity or austerity; and is determined by the viability of the sovereign’s debt, and the Interest Rate there upon. Bloomberg reports that the first sovereign nation to experience a failure of sovereignty and seigniorage is Puerto Rico. Puerto Rico’s Lifeblood Choked Off as Credit Access Ends.

On July 1, Moody’s Investors Service cut the island’s rating to B2, five steps below investment grade. No local government has borrowed at that level, according to data compiled by Bloomberg. Prices on its general-obligation debt yesterday plummeted to record lows.

“They’re done,” said Matt Dalton, chief executive officer of White Plains, New York-based Belle Haven Investments, which oversees $2.1 billion in munis. “They’re not going to be issuing any more debt on the island. I don’t see how they can bring people back to the trough at this point.”

Puerto Rico and its agencies have operated for years on borrowed money — racking up $73 billion, Bloomberg data show — andWall Street made $910 million since 2000 by structuring its debt sales.

If the government can’t sell bonds at affordable rates, it will have to curtail services for its 3.6 million residents, 45 percent of whom live in poverty.

Like U.S. states, Puerto Rico can’t file for bankruptcy protection. Without the ability to issue debt, it will have to limit all spending to preserve money for health, public safety and education, said Sergio Marxuach, policy director at the Center for a New Economy, a research group in San Juan that focuses on economic development

The commonwealth had already begun closing about 100 schools to help balance the fiscal 2015 budget.

“We need to have guards in prisons,” Marxuach said. “We need to have public-school teachers teaching.”

Anything else, he said, “could be fair game.”

Puerto Rico’s economy has contracted about 11 percent since 2006, according to its Planning Board. The unemployment rate of 13.8 percent is more than double the U.S. average.

Still, returns generated by the island’s risky debt made investors eager to lend and allowed the commonwealth to paper over budget gaps. The securities, which are tax free in all states, are held in two-thirds of muni mutual funds.

The commonwealth is trying to put the brakes on. Garcia Padilla last week signed a bill that allows some public corporations to restructure debt outside bankruptcy. While the governor promoted the move as a way to protect general-obligation debt, creditors took it as an affront. Franklin Templeton Investments and OppenheimerFunds  are challenging the law. The Moody’s downgrade followed.

The Puerto Rico Electric Power Authority, which provides almost all the island’s electricity and is a prime candidate for restructuring, may have to choose between paying bondholders and keeping the lights on, Marxuach said.

The utility, which carries $8.6 billion in debt, paid investors for maturing bonds July 1. It now faces $617 million of bank lines of credit that expire this month and next.

Prepa, as the agency is known, may have to implement rolling blackouts on residential customers so hospitals, schools and businesses can function, Marxuach said.

I comment that Puerto Rico is an insolvent sovereign and has neither investment seigniorage nor fiscal seigniorage; it is a candidate for bondholders to literally own the electricity and water infrastructure and charge whatever rates they may for essential public services. Without access to credit, the people may come to be beholding to the sovereignty of investment funds such as Franklin Templeton and OppenheimerFunds, and will most assuredly be living out their lives in perpetual debt servitude.

Hot money flowed to Australia seeking sovereign yield in the first half of 2014, driving Australia, EWA, its Bank, WBK, and Australia Dividends, AUSE, as well as Bae Metal Commodities, DBB, strongly higher.  Bloomberg reports Australian Bonds Delivered The World’s Biggest Gains To Global Investors Last Quarter.  An index of government securities due in more than a year returned 5.5 percent including currency appreciation versus the US Dollar, the most of 26 markets tracked by Bloomberg and the European Federation of Financial Analysts Societies.

Australian bonds also had the best returns for yen- and euro-based investors at 3.6 percent and 6.1 percent, the data show.

Benchmark 10-year bonds yielded 3.55 percent, following a 54-basis-point drop last quarter, the most in two years. Investor demand pushed the yield down to 3.52 percent last week, the lowest level in a year.

The premium over U.S. Treasuries narrowed to 93 basis points, a level not seen since 2006.

Reserve Bank of Australia Governor Glenn Stevens signaled July 1 that investors can rely on the central bank’s 2.5 percent rate, second only to New Zealand’s among major developed nations. Investor demand at sovereign bond auctions last quarter was the strongest since 2012. Stevens warned today that investors are under-estimating the probability of a “significant fall” in the currency.

While the RBA’s benchmark of 2.5 percent is at a record low, it compares to the Federal Reserve’s target range of zero to 0.25 percent. The Bank of Japan’s main rate is close to zero, and that of the European Central Bank is 0.15 percent

I comment that what has amounted to free credit, that is free money, has driven up currency carry trade investment and debt trade investment in quite speculative fashion seen in the ongoing Yahoo Finance chart of Australia, EWA, its Bank, WBK, and New Zealand, ENZL.

Bloomberg reports Riksbank Abandons Debt Fight as Ingves Overruled on Rates.  Sweden’s central bank left containing the consumer debt boom to the government after policy makers made the biggest cut in interest rates since 2009, overruling Governor Stefan Ingves who pushed for a smaller reduction.

Ingves, who advocated a quarter-point cut, was on the losing side of a 4-2 vote as other board members acted to shield the largest Nordic economy from the threat of falling prices. Policy makers, led by Ingves, have been reluctant to lower borrowing costs amid concern it would fuel further growth in record household debt and surging home prices.

“What will this mean for the housing-price market?” Knut Hallberg, an analyst at Swedbank AB, said by phone. “It will go bananas with a big boost to home prices.”

With rates back to levels last seen during the financial crisis, the central bank said it’s now up the government and the regulator to deal with the fallout of the borrowing binge. Property prices have almost tripled since 1995 while consumer debt has almost doubled to a record 175 percent of disposable incomes. Danes owe more than 300 percent and Norwegians about double.

Well-anchored inflation expectations are “incredibly central,” Deputy Governor Cecilia Skingsley said in a speech today in Visby,Sweden. It’s now even more important for the government to take responsibility for debt growth, she said.

Swedes have already responded to the prospect of lower rates. They raised their use of variable-rate mortgages — defined by the Financial Supervisory Authority as risky — to 77 percent of new loans in June. The ratio was 63 percent in 2012, according to data from state-owned lender SBAB.

Swedbank, Sweden’s biggest mortgage lender, cut its three-month mortgage rate by 0.10 percentage point to 2.59 percent yesterday. Svenska Handelsbanken AB, the second-biggest, lowered its three-month rate by 0.05 percentage point to 2.61 percent

The government has been increasing capital requirements for its banks, capped loan-to-value ratios and are pondering how to make more Swedes amortize on their mortgages. Sweden’s financial industry is one of the biggest in Europe relative to gross domestic product, with assets equivalent to four times the $560 billion economy. That’s left Swedes more vulnerable than most to bank crises.

The Riksbank said yesterday that need for action has become more urgent now and that regulators should take aim directly at consumers

The bank has faced criticism and split internally over how to address its dual policy concerns. Nobel laureate Paul Krugman have been among those lambasting the bank and in April described its policy as an example of “sado monetarism” that was creating a deflationary spiral. Lars E. O. Svensson resigned from the Riksbank board last year after failing to convince the majority to focus more on inflation and unemployment.

On July 3, 2014, in immediate response to the Swedish Central Bank lowering of rates, investors fled the Swedish Krona, FXS, and sold out of Sweden, EWD, but not its Automobile Parts Manufacturer, ALV.  The liberal monetary policies of the Swedish Central bank have caused debased of its currency, and disinvestment out of Sweden.

The economic experience of credit growth and currency growth is over.  The new normal economic experience is not only one of the failure of credit, seen in Aggregate Credit, AGG, trading lower in value on July 1, 2014, but also, as is seen in the case of Sweden, EWD, the death of currencies.

Steve Filips and Don Barrett of WSWS relate The Militarization Of American Public Schools: Syracuse, New York’s Fowler High School To Be Reformed  The high school will be closed and transformed into an academy focusing on training students for the military.

And Steve Filips and Dan Barrett also write Syracuse, New York housing in shambles. The low income workers in Syracuse, NY are left little choice but to live in substandard housing.

John Vidal of the Telegraph reports Water Supply Key To Outcome Of Conflicts In Iraq And Syria, Experts Warn. Security analysts in London and Baghdad say control of rivers and dams has become a major tactical weapon for ISIS.

Isis Islamic rebels now control most of the key upper reaches of the Tigris and Euphrates, the two great rivers that flow from Turkey in the north to the Gulf in the south and on which all Iraq and much of Syria depends for food, water and industry.

Rebel forces are targeting water installations to cut off supplies to the largely Shia south of Iraq,” says Matthew Machowski, a Middle East security researcher at the UK houses of parliament and Queen Mary University of London.

“It is already being used as an instrument of war by all sides. One could claim that controlling water resources in Iraq is even more important than controlling the oil refineries, especially in summer. Control of the water supply is fundamentally important. Cut it off and you create great sanitation and health crises,” he said.

Isis now controls the Samarra barrage west of Baghdad on the River Tigris and areas around the giant Mosul Dam, higher up on the same river. Because much of Kurdistan depends on the dam, it is strongly defended by Kurdish peshmerga forces and is unlikely to fall without a fierce fight, says Machowski.

Last week Iraqi troops were rushed to defend the massive 8km-long Haditha Dam and its hydroelectric works on the Euphrates to stop it falling into the hands of Isis forces. Were the dam to fall, say analysts, Isis would control much of Iraq’s electricity and the rebels might fatally tighten their grip on Baghdad.

Securing the Haditha Dam was one of the first objectives of the American special forces invading Iraq in 2003. The fear was that Saddam Hussein’s forces could turn the structure that supplies 30% of all Iraq’s electricity into a weapon of mass destruction by opening the lock gates that control the flow of the river. Billions of gallons of water could have been released, power to Baghdad would have been cut off, towns and villages over hundreds of square miles flooded and the country would have been paralysed.

Some academics have suggested that Tigris and Euphrates will not reach the sea by 2040 if rainfall continues to decrease at its present rate.

News events herald the soon coming Psalms 83 War.  Jason Ditz of Antiwar posts Israel Vows Aid To Prevent Invasion of Jordan

6) … What constitutes a sound investment strategy?

Jeremy Hill of Forbes writes Smart Equities For Creeping US Inflation. Basic materials is the primary sector for long positions to take advantage of creeping inflation.

But such thinking fails to perceive that inflationism in fiat wealth is over through and done.

Global debt deflation is introducing destructionism of every form. Deleveraging out of currency carry trades and derisking out of debt trades is going to literally destroy fiat wealth.

The chart pattern in two of his recommendations show completion. LyondellBasell Industries NV, LYB, a popular currency carry trade, manifested a massive dark cloud covering candlestick; and International Paper, IP, a popular debt trade, manifested a blow off market top candlestick.

One could commence a short selling investment strategy, and use these Inverse Market ETFs as the basis of collateral, as a huge number of short selling opportunities exist, such as Manufactured Home Builder, CVCO, Tool Manufacturer, MKTAY, and Property Manager, Z, all of which are at their market peak.

The best investment strategy is one designed for the failure of credit and the death of currencies.

Short Side of Long postsJune Sentiment Report Hedge Funds Have Been Covering Their Short Bets On PMs. Technically speaking, PMs sector still remains in a downtrend and have to overcome quite a few resistance levels before a bull market is to return.

My take is that those covering their shorts will capitulate, asEquity Investments, VT,  Nation Investment, andSmall Cap Nation Investment, EFA,Global Financial Institutions, IXG, andYield Bearing Investments, such as DTN, trade lower, and that an investment demand for gold, GLD, commenced on June 21, 2014, as a wild bout of purchasing of Gold Mining Stocks, GDX, drove Spot Gold, $GOLD, from $1,275 to $1,315.

I expect the US Dollar, $USD, UUP, to trade higher for a brief period of time asSovereign Currencies trade lower for a while, and thus for Spot Gold, $GOLD, to trade lower to $1,285, before it soars ever higher on the failure of Credit, AGG, and the death of Currencies, DBV, CEW, that is on the death of fiat money. Gold is in the middle of an Elliott Wave 3 Up, that is in the middle of the most sweeping of all economic waves, specifically the one which creates the bulk of the wealth on its way up to an Elliott Wave 5 High.

The trade lower in the price of gold, if it does occur, makes for an excellent buying opportunity, as in a bull market one buys into price dips, just as in a bear market, one sells into pips.

In understanding the value of gold, it is helpful to understand its relationship to empire. Robert Ramsey posts Hidden Secrets of Money II, The 7 Stages of Empire. One of the hidden secrets of money is that each empire goes through 7 stages.      

I recommend that one start to dollar cost average an investment in the physical possession of gold bullion; it can be held

  • in audited vaults, and spread around the world for safety, and covered by an insurance policy.
  • in physical Internet Trading Platforms, such as GoldMoney or BullionVault, and sold as needed.
  • in the Merk GOLD TRUST, the deliverableGold ETF (OUNZ).  It’s an ETF with the option to take physical delivery of gold.

7) … Please consider that out of the Additive Process of 2 Peter 1:5-7, one has experience in Christian ethics.

Economics is defined as one’s life experience in the credit and flow coming from sovereign authority. One’s economics comes from the isms of life, that is the process of branding, where a sovereign establishes identity and experience.

Many will be of the fascist and totalitarian brand of the Beast Regime, and give homage to it, for Bible Prophecy of Revelation 13:3-4, communicates they worshiped and followed after the Beast, saying who can make war against it.

Jesus Christ is the ism of God, that is thedivine nature of theGodhead, by which some come to know the identity of God and have experience in God. The experience of His Sovereignty is one of holiness and of truth as presented in Ephesians 1:4, Hebrews 1:3, and John 14:7.

it is out of this practice that one has identity as a Christian and life experience in Christian ethics, which is defined as the quality and type of relationships one has with others; ethics is the one’s set of moral principles; which are established by one’s values, that is one’s framework for thinking, and activities which motivate.

When one takes Christ’s brand, that being the Gospel, which translated into English means the Good News, then one has identity and experience in His Sovereignty, and becomes a Christian.

There are many other isms; these include Socialism, Communism, Capitalism, and Libertarianism.

When one embraces personal sovereignty and individualism for identity and experience, one practices Libertarianism, and becomes a Libertarian.

One cannot serve two authorities, one will yield to one, and turn away from the other.

Thus, one cannot be a Libertarian and a Christian. An individual is one or the other. And it was a choice made in eternity past by God. One decides to follow Jesus, but that choice is one made by The Sovereign of All, as he looked down the hallways of time and decided to have mercy on who ever he would; it was a decision not based on one’s meritocracy but upon God’s infinite grace and mercy.

It’s my hope that one will follow the Apostle Paul, and be God’s economist, that is one who has life experience out of the sovereignty of Jesus Christ. As one Has life, one comes to greater trust, and grows the credit and flow of His holiness; and one grows in personal satisfaction of His brand.

One’s character, defined as the aggregate of moral and ethical traits, will come out of the person of Chirst  and form the nature of a person.  

Christian faith is not compatible with philosophy, which I define as the vision that guides human action in every field of human endeavor; for those interested in a pursuit of philosophy I recommend The History of Philosophy.

Christian faith is no compatible with the doctrine of Libertarianism as presented by Chris Rossini writing in Economic Policy Journal  Economic Follies With Google’s Larry Page   as Christians believe God alone is sovereign and that his son acts in Dispensation, Ephesians 1:10, providing Divine Action in all things.

8) … A new direction for your blog author.

I feel fortunate that God has given me insight to blog on sovereignty and seigniorage since May of 2010, when Herman van Rompuy, announced that there will be no default on Greek Debt, and came forward with Greek Bailout I.  I am seeking a new experience, I do not know what that will be.

What I really desire to do, is to work as an Economist, Financial Analyst, and Short Selling Strategist, recommending specific stocks to be sold short.